The Country-of-Origin in the Luxury Furniture Industry: A Comparison Between “Made in Italy” and “Made in Portugal”

It is now possible to claim, at this point of the analysis, that the communication of the country-of-origin of products and services as part of a firm's branding strategy can have enduring positive effects as far as consumer perceptions are concerned; this is even more true in the introductory phase of the product’s life cycle and as far as specific product categories are concerned.
In particular, as illustrated in the previous chapter, one of the most relevant aspects to consider in the implementation of a brand communication strategy based on the country-of-origin is the congruity between the offering, its product category, the origin country’s image and the target country’s culture; therefore, when a country is strongly associated with a specific product category in the target market's consumers' minds, its national firms operating in that specific sector will possibly take advantage of communicating their COO in their branding strategy, leveraging this strategic asset to their own benefit. Nevertheless, it has also been recognized that, even if a country is not commonly associated with a specific product category in global consumers’ minds, either because it is an emerging economy not yet internationally well-known or because it is commonly linked with other industries, its national firms willing to compete globally can attempt to associate their offerings with their COO in order to gain international recognition as quality producers and thus enhance consumers' overall perceptions as regard that specific country’s ability in producing the product considered. This will generate positive externalities for all the companies willing to operate internationally in the same market segment in the future, thus improving the general country’s competitiveness. Given the relevance that can have a positive perception held by international consumers with respect to certain product categories for the national economy, both in terms of specific purchase choices and overall competitiveness, it is necessary for modern governments to enact favorable public policies aimed at supporting the efforts made by those national companies; this is of fundamental importance especially for those emerging economies that are competing for a prominent position alongside the more developed countries in an increasingly globalized and interconnected world. Specifically, what they should do is an in-depth analysis of their strengths and weaknesses in terms of international competitiveness, focusing their incentives especially on those sectors that leverage the former and minimize the latter and starting their global path from there.

The present chapter aims to deepen the analysis on the country-of-origin in the specific context of the furniture industry, which is an ever-changing market, both in terms of general trends and as regards the dominance settings between long-term players and new entrants; furthermore, the analysis is based on two rather similar countries from a geographical and socio-cultural point of view, but with a completely distinct international reputation, namely Italy and Portugal.
As a first step, this chapter devotes a paragraph to briefly summarize what has been claimed so far as regards the relevance of COO communication in a company’s branding strategy. The second paragraph explains what the practical value of the country-of-origin effect is in terms of consumer perceptions and its impact on a country’s strength; to this end, an innovative index is presented, namely the FutureBrand’s Country Brand Index, which consists of a ranking of countries according to their brand strength in consumers’ perceptions, and discussed in detail. Afterwards, a thorough overview of the global furniture industry is proposed in the third paragraph, highlighting its recent evolution, current trends and main players; moreover, the sector’s key driving and restraining forces, as well as main features and segmentations, are deeply investigated. The critical market segment of luxury furniture is also investigated separately, with a focus on the importance of design.

The fourth paragraph gets to the heart of the research issue, introducing the Italian performances in general and specifically as far as the furniture industry is concerned; in particular, this has been done through the analysis of the relative positioning of Italy in the world stage, of the “Made in Italy” concept and its main characteristics and of the specific furniture segment in the country. The same is accomplished with respect to Portugal in the fifth paragraph, with the purpose of emphasizing the competitive potential of this country, also in the furniture industry. Finally, the last paragraph contains conclusive considerations on what has been discussed so far, in order to pave the way for the empirical analysis of the next chapter.