Dennis Global Marketing

8/6/2019 Dennis Global Marketing

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College of Technology London

GLOBAL MARKETING

ASSIGNMENT

STUDENT NAME: DENNIS MATHEW

STUDENT ID: 105178-88

UNIVERSITY ID: 1003050

LECTURER: WILSON OZEUM


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Table of Contents

Introduction ................................ ................................ ................................ ................................ 2

Definition of Country of Origin................................ ................................ ................................ .....2

Types of country of origin effect ................................ ................................ ................................ .. 4

Cognitive Effects ................................ ................................ ................................ ...................... 4

Affective Country of Origin Effect ................................ ................................ ............................ 5

The Conation Effect ................................ ................................ ................................ ................. 5

Country of origin and its impact on consumer behaviour ................................ ............................. 5

Country of origin in context Apple (US) ................................ ................................ ..................... 6

Country of Origin in Context Chinese Brands ................................ ................................ ............. 7

Conclusion ................................ ................................ ................................ ................................ ... 7

Bibliography ................................ ................................ ................................ ................................ 8

Introduction

Country of origin, in general, refers to the country where the product or service comes from.

This term is becoming increasingly more and more important in marketing due to

internationalisation of organisations. Due to internationalisation of businesses, consumers are

exposed to several goods from various countries and as a result the country of origin effect has also

become a cue for consumers to make decisions about brands and goods. In many ways country of

origin is similar to stereotyping where consumers make assumptions based on their bias towards a

specific country. This assignment analyses the meaning and the effect of country of origin from a

marketing perspective. The examples used in this assignment are Apple (US) and Chinese brands in

general.

Definition of Country of Origin


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Country of origin is one of the evaluative criteria that are considered by most consumers while

making decisions about goods or brands. Additionally it is one of the elements that help consumers

identify brands and goods (Kurtz, 2008). Country of origin impacts or influences marketing strategies

to a great extent due to the fact that consumers buying behaviour is influenced by the place of

manufacture and also creates barriers to entry in several cases (Chattalas et al., 2008). This is due to

the fact that consumer buying behaviour and perceptions of consumer are among the primary

factors that influenced by the country of origin effect. The country of origin effect can be defined as

a ... consumers general perceptions about the quality of products made in a particular country and

the nature of people from that country(Knight & Calantone, 2000, p.127). For example, Chinese

products are generally looked upon as cheap counterparts of their Western brands (Ille & Chailan,

2011). On the other hand, the goods that are made in the United States are considered to be high in

quality and brands that emerge from the United States may benefit from this generalisation

(Demirbag et al., 2010).

Country of origin, being a type of stereotype, has a great impact on the consumer perception.

Because of the generalisations that accompany country of origin effect, if the generalisation or the

stereotype is negative, it poses a barrier to entry in a new market or it can also pose barriers for

positioning the product in the existing market. On the other hand if the generalisation is positive or

favourable to a particular brand or country, then it becomes easy for marketers to take advantage of

this aspect in order to position the brand effectively (Knight & Calantone, 2000; Hinner & Freiberg,

2010). For instance with respect to Chinese goods, even though the goods may be of high quality

and advanced technology (with respect to electronics), as the country suffers from a low brand

image, it is difficult for Chinese marketers to be able to position themselves as high quality brands in

international markets (Kabadayi & Lerman, 2011). It is also seen that marketers are often faced with

several challenges when they tried to position Chinese brands in the international market due to the

low brand image that the country has. This is especially true with respect to the Western markets

such as the United States market and European market where customers are hesitant to purchase

anything that originates from China (Kabadayi & Lerman, 2011; Ille & Chailan, 2011). On the other

hand, when it comes to goods which are manufactured in the United States, United Kingdom, or

Germany there are automatically seen as goods that are of high quality and technologically

advanced. This is due to the fact that consumers associate high quality with any brand or good that

comes from these countries (Knight & Calantone, 2000).

There has been much research in the area of country of origin effect in marketing. One of the

empirical studies that have been identified by several authors is the study conducted by Schooler in

1965. According to several authors, country of origin effect has more to do with the perceived


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quality of the product or service than the actual quality of the product. This means that consumers

will usually ignore or undermine the actual quality of the product based on the value of the inmates

at the have about the country of manufacture of that product (Onkvisit & Shaw, 2004). It can be said

that the country of origin effect may be used as a guide by several consumers to judge the quality of

the product based on its origin. This is due to the fact that consumers often form images and

opinions about countries which form the basic attitude of the consumers towards that country. As

such the attitudes and beliefs act as the queue for consumers to make decisions about products or

brands that come from those countries (Onkvisit & Shaw, 2004). The value of the brand can also be

affected by the country where the product is manufactured (Pappu et al., 2006). What this means is

that even if a brand has a good value, if the production facility of the brand is shifted to another

country that is perceived to be a low value brand or has a low quality image (as a country), the image

of the brand also takes a beating in the sense that consumers will perceived that the quality of the

brand has reduced (Pappu et al., 2006; Onkvisit & Shaw, 2004). Hence it can be said that withcountry of origin, generalisation affects the perceived value of the goods that come from specific

countries. However, cognitive processing is also linked with country of origin effect where

consumers make decisions about goods coming from specific countries due to the general idea of

the country or the general idea that they have about the products coming from that country(Knight

& Calantone, 2000).

Types of country of origin effect

The primary types of country of origin that have been identified by various authors can be

classified into - cognitive, affective, and conative (Knight & Calantone, 2000).

Cognitive Effects

Cognitive effects of country of origin refer to the behavioural process that takes place when a

consumer makes a decision about a foreign brand. According to the cognitive approach to country of

origin effect, it is seen that consumers respond differently with different levels of knowledge about

the goods of country and the general image that consumers hold about any country (Knight &

Calantone, 2000). One of the cognitive effects is that when consumers have very less information

about the goods of a country, they tend to associate the quality of the products with the perceived

quality of the country that they have (Ahmed et al., 2004). When consumers perceive that a country

possesses a low image, the risk associated with the products of this country will be high.

Consequently, goods that originate from this country will be perceived as low quality goods due to

the risk that is associated with them. Also, when consumers perceive that the image of country is


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good, then they would seek to purchase products from this country in order to enhance their self-

image (Ahmed et al., 2002).

If however, consumers are familiar with products of a certain country; in that case they may

develop a brand image for the country of origin, depending on the goods and their quality (Ahmed et

al., 2004). In this case cognitive process takes place in a more informed way; in the sense that

consumers are aware of the quality of the products that originate from this country. For example, if

a consumer is well aware of brands such as Apple and Microsoft in the technology sector, and does

not know the origin of the brands, then, when the consumer gains knowledge about the origin of

these brands, he or she will automatically rate the country depending on the products and their

quality. As such, this cognitive behaviour is called a summary construct country of origin effect by

Ahmed et. al. (2004).

Affective Country of Origin Effect

In the affective approach, the country of origin effect is related to the emotional benefits and

symbols that are associated with countries by consumers. In this approach, country of origin is

mainly influenced by consumers attitudes and opinions (Knight & Calantone, 2000). For example,

the mere mention of country could trigger emotions, attitudes are opinions in a consumer based on

past experience or based on what the consumer has learned at a young age. In this case, products

may be deemed to be favourable or unfavourable based on the emotional content of the consumer.

This is perhaps one of the most difficult aspects to measure from a marketing perspective (Ahmed et

al., 2002). In the affective country of origin effect, it is quite common to see consumers being

ethnocentric and patriotic to products that are manufactured domestically.

The Conation Effect

The conation effect deals with the alternate buying behaviour of the consumer based on the

natural tendency or impulse of the consumer. In other words, this simply means that when

presented with a specific country of manufacture, the consumer may be conditioned to respond to

that country in a specific way which could have become a part of the behaviour of the consumer. In

other words, it could be said that the cognitive and affective country of origin effects lead to the

conation effect of country of origin (Knight & Calantone, 2000). For example it may be a natural

tendency for a consumer to choose a domestic product when faced with a choice between foreign

product and domestic product of similar quality (Ahmed et al., 2004).

Country of origin and its impact on consumer behaviour


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One of the definitions for consumer behaviour is that, [C]onsumer behaviour describes how

consumers make purchase decisions and how they use and dispose of the purchased goods or

services (Lamb et al., 2011, p.191). It is highly essential for marketers to be able to understand

consumer buying behaviour with respect to country of origin effect which is seemingly complex

(Lamb et al., 2011; Hinner & Freiberg, 2010). In order to understand consumer behaviour, it is

essential for marketers to understand the stereotypes and the generalisations that consumers make

about countries and goods from those countries. Consumer behaviour depends on several factors

such as the marketing mix and also the country of origin effect. The importance of country of origin

effect has been increasing ever since globalisation became a major phenomenon. Consumers now

have several products to choose from and also have products of several countries to choose from.

With the choice of the consumers increased, country of origin effect has also become one of the

cues for consumers to make decisions regarding products and services from foreign countries

(Onkvisit & Shaw, 2004).

It has been said that country of origin serves as a variable to measure the quality of products. In

other words, consumers generally used the country of origin effect to determine the perceived

quality of products based on their image of the country (Onkvisit & Shaw, 2004). Additionally,

consumers may also have various images for a country with respect to various categories of

products. For example when that is made in Poland may be considered to be of good quality

whereas automobiles or electronic goods that are made from Poland may not be considered as high

quality (Remaud & Lockshin, 2009).

Country of origin in context Apple (US)

Apple is one of the largest companies in the technological industry by its market share. Although

the company sources many of its goods from developing countries, the goods sold by the company

are still associated with the country of origin United States (Demirbag et al., 2010). However, it is

noticed that if the brand is owned by a developing country, then the entire perception of consumers

towards Apple would have been different. What this means is that because the United States has a

brand image of high quality and high performance, Apple has benefited from this brand image in

order to be able to position itself as a highly innovative and high quality brand (Bluemelhuber et al.,2007). Additionally, when brand alliances formed between companies from different countries,

these alliances often have an influence on the brand image that the company processes. For

example Apple's brand image was expected to suffer when they formed an alliance with the

Japanese brand Sony which provided Apple with laptop batteries (Bluemelhuber et al., 2007). The

reason as to why the brand image was expected to suffer is because Sony's laptop batteries did not


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function as efficiently as it was desired and as a result Apple had to recall thousands of their laptops

to replace the batteries. This suggests that Japan either has a brand image that is lower than the

brand image that the United States processes or that the consumers based in the United States are

highly ethnocentric (Knight & Calantone, 2000). Either way, Apple's brand identity would have taken

a hit due to its alliance with any organisation that has a brand image that is lower than that of the

United States. It is also seen that companies such as Dell and Microsoft also possess good brand

images owing to the fact that they originate from the United States (Jin et al., 2006).

Country of Origin in Context Chinese Brands

It has been stated by Kabadayi & Lerman (2010, pp. 102) that Made in China has become the

title of many marketers worst nightmare. The reason as to why China is not favourable to many

consumers across the globe is that the country has not attained an image that is associated with

innovation and quality (Ille & Chailan, 2011). It has been seen that many of the goods that originate

from China or associated with China are less likely to be purchased by consumers in developed

countries like the United States and United Kingdom. Although the country has been growing

immensely in terms of its economy, the brand image has not been able to keep up with China in the

sense that the brand image of the country has still remained poor or cheap (Kabadayi & Lerman,

2011). Although the country may possess companies that have products that can match the quality

of their western brand counterparts, due to the nature of the country of origin effect on China,

consumers are not willing to purchase these products. For example brand such as Lenovo (laptops)

which originate from China are equal to their western counterparts such as IBM or HP. However, the

perceived quality of this brand is quite low because of the country of origin of the brand (Ille &

Chailan, 2011). Many of the developing countries and emerging countries do not actively promote

their country of origin with respect to the goods and services. An example of this is revealed in the

fact that Tata does not promote its own brand in the Western countries with respect to tea. Instead

the company promotes its acquired brand Tetley tea in the Western countries while it promotes

Tata tea in emerging and developing countries (Demirbag et al., 2010). This is due to the fact that if

consumers start associating Tetley tea with the country of origin that is India, the brand image will

have a drastic impact. Lenovo is one of the Chinese companies that promote their country of origin

and as a result the brand has not been able to gain a lot of market share in the Western markets

(Demirbag et al., 2010).

Conclusion

The country of origin effect has a great impact on the purchasing behaviour of customers. The

apparent trouble with the country of origin effect is the fact that consumers stereotype countries as


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brands and associate generalised images about these countries with the brands and products that

come from them. In some cases the stereotype may serve as an asset to marketers whereas in other

cases stereotype may be a setback to the marketers. In developed countries country of origin effect

can be used to boost the image of the goods and services that are originate from the country

whereas in developing and emerging countries, country of origin effect has to be minimised as much

as possible in order to negate the effect that it has. As such, it may be said that the country of origin

effect is one of the most important aspects in the purchasing behaviour of customers.

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Ahmed, Z.U. et al., 2004. Does country of origin matter for low involvement products?

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Bluemelhuber, C., Carter, L.L. & J, L.C., 2007. Extending the view of brand alliance effects: An

integrative examination of the role of country of origin. International Marketing Review, 24(4),

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Lamb, C.W., Hair, J.F. & McDaniel, C., 2011. Marketing. Mason: South-Western Cengage

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Dennis Global Marketing