The globalization of markets - Theodore Levitt (Lecture 1)

A new powerful force is driving the world towards a converging commonality: Technology. Technology has

proletarianized communication, transport and travel and the result is a new commercial reality:

the emergence of global markets for standardized consumer products and services

The supreme law of technology is convergence and has homogenized almost every industry from raw

materials and high-tech products, to high-touch products. Together with products, also the methods of

production and the institutions of trade and commerce have been homogenized.

High quality, reliable products at a cheap price are the driving forces of this new world demand

The new needs born under this condition make the companies that incorporate superior quality and reliability

into their cost structures, the most competitive companies.

Thus, there is a new distinction between two kind of corporations:

1. Multinational corporation = it operates in a number of countries and adjust its products and practices

in each (at relatively high costs). The FOX = it knows a lot about a great many countries and adapt

himself to them

2. Global corporation = operates with resolute constancy (at relatively low costs) as if the entire world

were a single entity; it sells the same things in the same way everywhere. The HEDGEHOG = it

knows everything about on great thing: about the need to be competitive on a worldwide basis and

seek to drive down prices by standardizing what and how it sells. It uses economies of scale to mass

produce standardized products in order drive down the prices. It knows about the one big thing that

is common to everyone: scarcity. Money is scarce and people give great importance to it; thus, if a

product is cheap (and is also high quality and reliable), consumers will buy that one even if it was

not the one they perfectly needed but is slightly different. The global corporation will adapt only

after relentlessly testing the immutability of the needs that thus are not converging.

Since the world's need and desires have been irrevocably homogenized due to the technology improvements,

the MNE is obsolete and the Global corp. is absolute.

High quality and reliability on the one hand and cheap price on the other are not contrasting, they are

compatible and the reflection of a superior practice: that adopted by the global corporation.

It doesn't matter anymore what market research or common sense tell about different national tastes --->

customers will prefer world-standardized products if the above characteristic are embedded within them

(Hoover example).

Companies that dominate small domestic markets (Italian companies) are the most endangered by this "new"

situation of globalized markets---> since everything is standardized and transportation costs are reduced at

minimum, there will always be a global corporation able to enter that market.

Arguments and barriers against globalization:

Economies of scope = the ability of plants to produce great varieties of relatively customized

products at remarkably low costs (thanks to technological improvements), so there's no need for

customers for adaptation in tastes.

Trade barriers = with persistence and appropriate means, barriers against superior technologies and

economics have always fallen. It's a matter of time and efforts.

Need for adaptation = there will always be need for a certain degree of adaptation; but the

prevailing wrong thinking is that these needs are immobile and don't change; while instead

technology drives and changes these needs.

Economic nationalism as a barrier = but the world is becoming increasingly informed about the

liberating and enhancing possibilities of modernity; thus, thing can change.

In sum:

Two vectors shape the world - technology and globalization. The first helps determine human

preferences; the second, economic realities. Regardless of how much preferences evolve and

diverge, they also gradually converge and form markets where economies of scale lead to reduction

of costs and prices;

the global company will shape the vectors of technology and globalization into its great strategic

fecundity. It will systematically push these vectors toward their own convergence, offering everyone

simultaneously high-quality, more or less standardized products at optimally low prices, thereby

achieving for itself vastly expanded markets and profits. Companies that do not adapt to the new

global realities will become victims of those that do.

Does Doing Good Always Lead to Doing Better? Consumer Reactions

to Corporate Social Responsibility - Sen, Bhattacharya (Lecture 3)

Despite the increasing emphasis on CSR in the marketplace, little is known about the effects of CSR actions

on consumers. Recent research suggests that there is a positive relationship between a company’s CSR

actions and consumers’ attitudes toward that company and its products, however it’s not known for what

products such actions work.

In this research, they try to understand when, how, and why consumers react to CSR by focusing on both

some key moderators of consumers’ CSR responses and the mechanisms underlying these responses. The

authors carried two studies in which they examine how and why the issue defining a company’s CSR actions

interacts with both consumers’ personal position on that issue and their general beliefs about the trade-offs

companies make in supporting CSR initiatives to affect consumers’ evaluations of the company and its

products.

Study 1 focuses on the CSR–company evaluation relationship, including its mediation by consumers’

perceived congruence between their own characters and that of the company and its moderation by

consumers’ support of the CSR domain. This study also examines CSR’s indirect effect on consumers’

product purchase intentions through its contribution to the evaluative context for such product judgments.

Study 2 focuses on CSR’s direct influence on consumers’ product evaluations and its dependence on three

key moderators: the domain of the company’s CSR actions, consumers’ beliefs about the relationship

between CSR and a company’s ability to make quality products and their support of the CSR domain. Prior

research suggests that “negative CSR associations can have a detrimental effect on overall product

evaluations, whereas positive CSR associations can enhance product evaluations”. The authors made 9

hypotheses which are, namely:

H1: A company’s CSR initiatives will increase consumers’ perceptions of C–C (consumers – company)

congruence.

H2: The relationship between a company’s CSR initiatives and consumers’ C–C congruence perceptions will

be moderated by the consumers’ support of the CSR domain. The CSR induced changes in C–C congruence

perceptions will be greater for consumers who are more supportive of the CSR domain.

H3: A company’s CSR initiatives will enhance consumers’ evaluations of that company.

H4: The relationship between a company’s CSR initiatives and consumers’ evaluations of that company will

be moderated by the consumers’ support of the CSR domain. The CSR induced changes in company

evaluations will be greater for consumers who are more supportive of the CSR domain.

H5: The effect of CSR on consumers’ company evaluations will be mediated by their C–C congruence

perceptions for the high–CSR support consumers but not the low–CSR support ones. In other words, the

mediational role of C–C congruence perceptions in the CSR-company evaluation relationship will be

moderated by consumers’ support for the CSR domain.

H6: The effect of a company’s CSR initiatives on consumers’ evaluations of its products will be moderated

by the consumers’ CSR support. The effect of CSR on the product evaluations of low–CSR support

consumers will parallel its effect on their company evaluations. However, a company’s CSR initiatives will

lower high–CSR support consumers’ evaluations of that company’s products.

H7: The effect of CSR on consumers’ product purchase intentions will be moderated by the CSR domain.

Corporate social responsibility initiatives in a CA (Corporate Ability)-relevant domain (but

not in a CA-irrelevant one) will increase consumers’ purchase intentions regardless of their CSR support or

of product quality.

H8: The effect of CSR on consumers’ company evaluations and product purchase intentions will be

moderated by their CSR–CA beliefs. Consumers with trade-off CSR–CA beliefs will react less positively to

a company’s CSR initiatives than will those with win–win CSR–CA beliefs.

H9: The moderating effect of CSR–CA beliefs on the CSR–product purchase intention relationship will be

greater when the product quality is low, the CSR domain is CA-irrelevant, and consumers’ support for this

domain is low.

Below, we explain how the authors organized their 2 studies.

STUDY 1: They examined the effects of a real company’s CSR and new product information on subjects’ C–

C congruence perceptions and their evaluations of this company and its products using a 3 (CSR Record) × 2

(New Product Quality) between-subjects design. The CSR Record factor had three levels (1 = positive CSR,

2 = negative CSR, and 3 = control [no CSR information]), and the New Product Quality factor had two

levels (1 = low quality, 2 = high quality). They measured subjects’ support of the CSR domain (CSR

Support) and categorized subjects into two groups around the median response (1 = low support, 2 = high

support).

Dependent variables. This study had three dependent variables: (1) C–C congruence, (2) company

evaluation, and (3) product purchase intention.

Figure 3 shows the effect of CSR record on new product

purchase intention, and it is possible to draw the following

conclusion: When New Product Quality was high, this group’s

Purchase Intentions did not vary across the different CSR Record

conditions (control = 5.04, negative CSR = 5.42, positive CSR =

5.50). However, when New Product Quality was low, this group’s

Purchase Intentions were lower after positive CSR (2.50) than

after negative CSR (3.37). The effect of CSR Record on the high-

support subjects’ Purchase Intentions appeared to depend

similarly on the new product’s quality, which provides partial

support for H6. When New Product Quality was low, consumers’

Purchase Intentions did not vary significantly with CSR Record

(negative CSR = 2.50, positive CSR = 3.14). However, when New

Product Quality was high, we obtained the predicted contrast

effect; subjects’ Purchase Intentions were lower after the positive

CSR Record (4.54) than after the negative CSR Record (5.60)

manipulation. As a result of these within-group effects, a positive

CSR record resulted overall in a nonsignificant decrease in

subjects’ Purchase Intentions (negative CSR = 4.22, positive CSR

= 3.92) rather than an increase.

Study 2: In line with its objectives, this experiment had an

additional factor: CSR Domain at two levels (1 = CA-irrelevant, 2

= CA-relevant). To simplify the design, the control condition was

dropped from the CSR Record factor, resulting in a 2 (CSR Domain) × 2 (CSR Record) × 2 (New

Product Quality) between-subject design. The dependent variables, instead, were the same as in Study 1.

They tested the key pathways that constitute our conceptual framework using a system of three regression

equations: (1) C–C Distance predicted by CSR Record, CSR Domain, CSR Support, and CSR–CA Beliefs;

(2) Company Evaluation predicted by CSR Record, CSR Domain, CSR Support, CSR–CA Beliefs, New

Product Quality and C–C Distance; and (3) Purchase Intention predicted by CSR Record, CSR Domain, CSR

Support, CSR–CA Beliefs, and New Product Quality.

Summary of Findings

Using real CSR and product information about a company (Study 1), they showed that the positive effect of

CSR initiatives on consumers’ company evaluations is mediated by their perceptions of self–company

congruence and moderated by their support of the CSR domain. However, a key theoretical contribution of

this research lies in establishing the role of a company’s non-product dimensions, such as its CSR actions, in

creating the C–C bond. They also found valence-based asymmetries in the effect of CSR information on

company evaluations.

Consumers’ company evaluations are more sensitive to negative CSR information than positive CSR

information. More specifically, all consumers react negatively to negative CSR information, whereas only

those who support CSR issues react positively to positive CSR information. Therefore, managers need to be

particularly aware of the hazards of being perceived as socially irresponsible. More generally, consumers’

personal support of a CSR domain appears to be a key determinant of their sensitivity to a company’s CSR

efforts. Therefore, if a company’s choice of CSR domains is dictated at all by market considerations rather

than just by ideology, managers may want to research a variety of CSR initiatives and select those that enjoy

the highest and most widespread support among the company’s key consumer segments.

Specifically, results suggest that a company’s CSR efforts can affect consumers’ intentions to purchase its

products both indirectly and directly. Moreover, the indirect effect was, under certain conditions, negative. In

particular, they find that high–CSR support consumers’ purchase intentions are distorted away from their

CSR-based evaluative context by a perceptual contrast effect, which results in a CSR-induced reduction in

such consumers’ intentions to purchase a high-quality product. Prior CSR research in marketing suggests that

CSR initiatives affect consumers’ purchase intentions only indirectly, by creating a corporate context for

such purchase intentions. Findings suggest that a company’s CSR actions in certain CSR domains (e.g., labor

relations, employee working conditions) and for consumers with certain CSR-related beliefs can also have a

direct effect on the attractiveness of the company’s products.

What Counts as a Choice? U.S. Americans Are More Likely Than

Indians to Construe Actions as Choices - Savani et al. (Lecture 4)

In experimental studies, researchers direct participants to engage in a particular stream of behavior (e.g.,

picking one of two music CDs) and define their behavior as a choice, but in everyday life, people have to

define for themselves whether their actions constitute a choice.

From an American observer’s perspective, people everywhere seem to be selecting among multiple

alternatives—white shirt or blue, music or news on the headphones— but do the actors themselves perceive

these actions as choices? We suggest that the categories of action that are meaningful and important to an

actor depend on the models of agency that are prevalent in the actor’s sociocultural contexts. Models of

agency are implicit frameworks of meanings and practices that define what counts as good action and what

should be the sources and consequences of good action. According to one particular model that is pervasive

in middle-class European American contexts, the disjoint model of agency, agency derives from within the

individual; normatively good actions are those that stem from one’s personal preferences, beliefs, and goals

and those that exert influence over the environment. From the perspective of the disjoint model, choice is

likely to be an important and accessible category of action because construing actions as choices serves a

number of sociocultural imperatives and it allows people to express their preferences and to influence the

environment.

According to another model, the conjoint model of agency, normatively good actions are those that are

responsive to the situation, to social roles, and to expectations of other individuals. The conjoint model is

often associated with Indian contexts and from this perspective personal choice might be a less important and

less accessible category of action because in most circumstances, choice does not serve the sociocultural

imperative of being responsive to social roles and situations. In this paper, the authors hypothesize that if the

construal of actions as choices is an element of the disjoint model of agency, then people engaging in U.S.

American contexts will be more likely than those engaging in Indian contexts to construe actions as choices.

To test such hypothesis, 5 experiments were conducted and, as a final result, the authors found out that all of

them support this hypothesis.

These results also have important policy implications. For example, policymakers cannot assume that

providing people with more options will systematically promote positive consequences in all contexts. If

people do not construe their behavior as choices, then the provision of more options (e.g., in health care,

schools, and retirement plans) may fail to lead to optimal choice.

Bilingualism and the emotional intensity of advertising language -

Puntoni, Langhe, Van Osselaer (Lecture 5)

Since English has become the global language for communication, and since an ever increasing use of the

English language in advertisement ---> an understanding of how the globalization of advertising language

influences consumer response to advertising messages is needed.

The focus, here, is on the emotional consequences of the use of a foreign language in marketing messages

More specifically, this study :

investigates the perceived emotionality of marketing messages in consumers' native language (L1)

versus second language (L2)

Theory

The study follow a psycholinguistic approach with an attention to emotional processes

Linguistic research have shown a special emotionality of one's native language

Psycholinguistic research have shown that perceived emotional intensity of highly emotional

intensity words is greatest in one's native language

Code switching research have shown that it's easier to discuss embarrassing topics in L2 than in L1

L1 stronger emotionality than L2

Why is there a systematic difference?

LANGUAGE - SPECIFIC EPISODIC TRACE THEORY OF LANGUAGE EMOTIONALITY

Episodic trace theory is founded upon the assumption that every experience leaves a separate episodic trace

in memory. Three properties of the episodic trace theory are analyzed and elaborated to get to the language-

specific trace theory of language emotionality:

1. Similarity to episodic traces: experiences are stored in memory together with their linguistic context

---> the authors propose that textual information such as slogans may function as memory probes

that lead to the activation of emotions experienced before in same-language contexts.

2. Number of episodic traces: there is a positive correlation between how often a word is encountered

in a particular language and emotionality

Together, these 2 properties should lead to the prediction that

Marketing communication should in general trigger stronger emotional responses in L1 than in L2;

L2 is perceived as more emotional in case of words that are experienced more often in L2.

The authors try to answer this question

elaborating a new theory!

3. Lexical representation: existence of independent lexical stores for L1 and L2 which encode the

lexical representation of words. Link for L2 words to their L1 translation is stronger than the

opposite direction ---> consumer may unconsciously translate L2 words in L1 and not the other way

around.

In sum, the language-specific episodic trace theory assumes that there are two routes to perceived

emotionality for marketing messages. In the direct route, L1 (L2) words trigger episodic memory traces

experienced in an L1 (L2) context. Because there are usually more L1 than L2 traces, marketing messages in

L1 tend to be perceived as more emotional than those in L2. In the indirect route, words presented in L2

partially activate the corresponding words in the L1 lexical store. Because these L1 words, in turn, function

as probes for L1 episodic traces, L2 words can benefit to some extent from the emotionality of the

experiences triggered by L1 words. This reduces the difference in the perceived emotionality of L1 and L2

words. Figure 1 presents a summary of the theory.

5 Experiments were conducted:

1. Study 1 was designed to test the prediction of the theory that advertising information in L1 tends to

be experienced as more emotional than the same information in L2.

Used a series of advertising slogans. 1/2 of participants L1 french and 1/2 L1 dutch.

L1 slogans rated as more emotional than L2 slogans

2. Study 2 was designed in order to rule out the possibility that words in L2 are rated as less emotional

because not fully understood by the consumers. The authors used target words that are perceptually

similar across language conditions and share the same meaning.

L1 words still perceived as more emotional than L2 correspondents

3. Building on the indirect root explained by the lexical representation, the authors test whether when

the L1 translation of an L2 probe is made more accessible, the emotional intensity of L2 is increased

(emotional echo).

Effect of the manipulation of L1 accessibility on emotionality rating of L2 words.

Established the emotional advantage of L1 on L2. Consistent with the idea that words in a language

are stored together with emotional content in episodic memory traces such that perceiving words in a

language activate records of emotional experiences featuring those words in that language

4. It should be possible also to reverse the effect demonstrated by experiments 1-3, since is the

language context the key determinant of emotionality; thus experiment 4 was designed to check if

words that are mainly experienced in L2 are rated as more emotional.

For concepts encountered more in L2, the corresponding words were rated as more emotional than

their L1 counterparts.

5. Opposite to experiment 3, L2 words emotionality should decrease when the accessibility to the L1

translation is inhibited.

L1 words were rated as more emotional than L2 words

Main findings:

1. Messages expressed in L1 tend to be perceived as more emotional than messages expressed in L2

2. This effect is not uniquely due to the activation of stereotypes associated to specific languages or to a

lack of comprehension

3. This effect depends on the frequency with which words have been experienced in L1 versus L2

contexts

The main contribution is to market research and is that: ceteris paribus, is preferable to communicate with

consumers using their own native language, as doing so should result in more emotional messages;

especially when emotional factors are important in decision making.

A Global Investigation into the Constellation of Consumer Attitudes

Toward Global and Local Products - Benedict, Steenkamp, de Jong

(Lecture 6)

The globalization of the marketplace is one of the pivotal developments facing companies around the world.

Developments accelerating the trend toward global market integration include worldwide investment and

production strategies, standardization of manufacturing techniques, emergence of global media and the

Internet, growing urbanization, rapid increase in education and literacy levels, and expansion of world travel

and migration.

Consistent with current trends in globalization, many international companies (e.g. P&G and Unilever) have

moved from the traditional multi-domestic approach, in which local subsidiaries market locally developed

products to the local population, to a global approach, in which firms market their products on a global basis

with only limited adaptation to local markets.

The authors postulate a common thread that underlies an individual consumer’s response to global and local

products across the broad range of product categories. Moreover, they assume that consumers vary

systematically and predictably in their attitudes toward global products (AGP) and in their attitudes toward

local products (ALP). Consumers differ systematically on AGP and ALP in that these attitudes are not just

specific to a particular product but rather are generalized attitudes across a wide variety of product

categories. Furthermore, the article proposes that consumers differ predictably on AGP and ALP in that these

attitudes are not merely stochastic entities but rather can be understood by people’s underlying motivational

structure.

In this study, the entities taken into analysis are local and global products. One main concept explained in the

article is the one about Homogenization, that implies that a large number of people substitute their LCC

(local consumer culture) products with global products. Moreover, consumers combine AGP and ALP, and

such combinations will be explained as follows.

Firstly, some consumers combine a negative AGP with a positive ALP. This combination of attitudes can be

labeled “localization”: these consumers prefer local consumption options because they prefer greater

(perceived) authenticity, which derives from their central role as carriers of LCC. Secondly, consumers

combine a positive (negative) AGP with a positive (negative) ALP. This can be explained by stating that

glocal consumers desire to creatively combine both local and global products in their consumption

repertoire. For example, Kinra (2006) finds that Indian consumers exhibit high favoritism for local brands,

though their preferences for global brands are equally positive and strong. Finally, some consumers combine

a negative AGP with a negative ALP. They have become alienated from contemporary consumer culture,

with its “shallow” emphasis on consumption of increasingly commoditized products, whether they are

globally or locally conceived, a state we refer to as “glalienation”. In summary, we posit that ALP and AGP

are conceptually independent because negative or positive AGP can coexist with negative or positive ALP.

By combining the “axial principles of localism and globalism” (Tomlinson 1999), we obtain the fully

crossed attitude structure (see Figure 1).

A Values-Based Framework of Antecedents of AGP

and ALP

Why do different consumers hold such varied

generalized attitudes toward global and local

products? To address this question, they propose a

key role for the powerful motivational concept of

values. Values are cognitive beliefs about desirable

goals and modes of conduct to promote these goals,

which vary in importance, and serve as standards to

guide attitudes and behavior. As with attitudes,

values can vary in level of abstractness, depending on

the entity being evaluated. The difference between

values and attitudes is not in terms of broadness or

content of the construct but rather in their role in the psychological functioning of individuals. In their

conceptual framework, the authors distinguish among three levels of values: national cultural, general, and

consumer domain specific. An overview is shown in the table below:

Consumer researchers have proposed the further distinction between general values and consumer domain-

specific values. General values are centrally held and enduring beliefs that guide actions and judgments

across the wide range of human domains. In contrast, consumer domain-specific values reflect the notion that

people acquire more narrowly circumscribed values through experiences in specific domains of consumer

activity and that these consumer domain-specific values are needed to fully understand and explain consumer

attitudes and behavior. In Figure 2, the authors present our conceptual framework, including the specific

values we consider for each value level.

Effects of Values on AGP and ALP

National-Cultural Values

National-cultural values are the most abstract. Inglehart identifies four clusters of national-cultural values,

which are organized in two bipolar dimensions: traditional versus secular–rational values and survival versus

self-expression values. Countries low on the traditional/secular–rational dimension (“traditional” societies)

emphasize the importance of deference to authority, along with absolute standards and traditional family

values. These societies have high levels of national pride and take protectionist and nationalist attitudes.

Secular–rational societies’ values have the opposite preferences on all these topics. Traditional societies’

nationalism and protectionism are closely aligned with a focus on the local element in the consumer culture.

Consequently, we expect that traditional countries are, on average, higher on ALP and that secular–rational

countries are higher on AGP. Figure 2 gives an overview of the Value-Based framework of Antecedents of

AGP and ALP.

General Values

General values are powerful, individually held, motivational regulators of specific consumer attitudes. The

content and structure of human values has been most thoroughly elucidated in the work of Schwartz (1992).

He derives a universal typology of the different contents of general values consisting of ten motivationally

distinct types of values. These ten value types can be arranged in a circular order around the perimeter of a

circle: universalism, benevolence, conformity, tradition, security, power, achievement, hedonism,

stimulation, and self-direction; in turn, these are organized into four higher-order value domains (for a

graphical representation of Schwartz’s circumplex model, see Figure 3). The circular structure captures the

notion that the pursuit of different value types can be compatible or in conflict, depending on how close the

value types are. Conflict increases in proportion to the distance between value types, with value types in

opposing positions from the center of the zstructure being in greatest competition (for definitions and

examples, see Table 2). According to Schwartz’s (1992) theory, associations of any external variable, such as

AGP or ALP, should decrease monotonically when going around the circular structure of value types in both

directions from the most positively associated value type to the most negatively associated value type. This

pattern of monotonically decreasing and, subsequently, monotonically increasing associations creates a

sinusoid curve of associations from most positive to most negative, and back.

Finally, Table 3 summarizes the authors’ predictions between Values and AGP/ALP:

General Discussion

In this article, they examine the constellation of AGP and ALP in a global setting. They propose a fully

crossed structure AGP and ALP, which gives rise to four types of responses to the joint forces of

globalization and localization: homogenization, glocalization, localization, and glalienation. They link AGP

and ALP to three groups of values, with socio-demographics as covariates. Moreover, they use a dedicated

data set across 28 countries, with large, demographically diverse samples of consumers. The authors find

that some antecedents exhibit directionally the same (significant) effect on AGP and ALP (materialism,

nostalgia, survival/self-expression, and the covariate sex). Other antecedents exhibit directionally opposite

effects on AGP and ALP. Stimulation has a positive effect on AGP, while its effect on ALP is negative.

Conversely, tradition, conformity, consumer ethnocentrism, traditional/secular–rational, and the covariate

age have a positive effect on ALP but a negative effect on AGP. Finally, some antecedents affect only ALP

(self-direction, security, environmentalism, and the covariate income change) or AGP (power; universalism;

innovativeness; and the covariates education, socialclass, and household size).

Table 7 summarizes the authors’ findings:

Basically, people exhibiting a homogenization response, built around the utilitarian convenience of global

products and people’s associated dreams of success and global citizenship, are younger, high on stimulation,

and low on ethnocentrism. They reject tradition and conformity. On average, this response will be evaluated

more positively in secular–rational societies. Conversely, people who favor the localization response,

preferring local products and rejecting global products, are older, ethnocentric people who value tradition

and conformity. This response is more common in traditional cultures. People who prefer the glocalization

response, desiring to creatively combine both local and global products in their consumption repertoire, tend

to be forward-looking women who value materialism. On average, this response option is evaluated more

positively in survival countries. Finally, the glalienation response, indicating alienation from the (alleged)

shallow world of consumer products in general, whether they are locally or globally conceived, is evaluated

more positively among backward-looking (nostalgic) men, who reject materialism and live in self expressive

countries.

Managerial Implications

Brand portfolios. Many international companies are altering their brand portfolios, shedding local brands

while favoring global brands—brands that consumers can find under the same name in multiple countries

with generally similar and centrally coordinated marketing strategies.

The prevalence of ALP in different countries indicates that international companies should be careful in

relying too much on global brands because this strategy may not work well with large segments of

consumers. A carefully crafted portfolio of local and global brands may be preferable to an overemphasis on

global brands. Example of company which successfully pursue such a strategy: Anheuser-Busch InBev

(beer).

A review and meta-analysis of country-of-origin research - Verlegh,

Steenkamp (Lecture 7)

Country of origin (Coo) is an aspect of product information that consumers use to make choice and as such

might have an influence on consumers' behavior. The authors' aim is to understand better the role of the

country of origin in consumer behavior.

Country of origin research have studied how the country of origin influences consumers behavior and the

results have evolved over time:

Coo as a cognitive extrinsic cue = an informational stimulus about a product that is used to infer

about attributes of the product, especially quality. ---> quality cue

Coo as expressive attribute = cognitive cue + affective cue (symbolic and emotion meanings) . The

Coo doesn't simply gives information about quality but relates also to national identity.

Coo = cognitive + affective + normative. The Coo influences the consumers behavior on three levels

and besides quality and emotions it also embed social and personal norms towards a nation. See

picture below

boundaries between these three processes are fuzzy, and cognitive, affective and normative processes are

interacting in consumer decision-making.

Cognitive aspects of the country-of-origin effect

1. Judgments about quality are inferred using cues

2. the use of cue is determined by its predictive value

3. predictive value is the perceived strength of the relationship btween cue and attribute

4. the relationship strength is determined by:

a) observed covariation btween cue and attribute

b) intuitive relationship btween cue and attribute

i. determined by product-country images (stereotypes and idiosyncratic beliefs)

The authors implement a quantitative integration of Coo research (41 empirical studies from marketing and

business literature in the period 1980-1996) , using meta-analysis which allow them to:

A. determine the robustness of empirical findings on Coo effects

B. examine the extent to which the magnitude of Coo effects is affected by study characteristics.

A) Determine the robustness of empirical findings on Coo effects

Various type of product evaluations

The authors distinguish among three different types of judgments (evaluations) used in the research on Coo,

namely: perceived quality, product attitudes, purchase intentions; and they hypothesize:

H1. The effect of country of origin is largest for perceived quality (attributes), and smallest for purchase

intentions, with attitude judgments falling in between.

Characteristics related to the products

The generalizability of Coo effects across different products deserve attention, thus the authors hypothesize:

H2. The country-of-origin effect is larger for consumer goods than for industrial goods.

Not all products are produces just in one country, MNEs have multinational productions. The authors

distinguish between Hybrid products, products designed and manufactured in different countries, and non-

hybrid products. Thus, the authors hypothesize:

H3. The magnitude of the country-of-origin effect differs between hybrid and non-hybrid products.

Consumers usually pay attention to the country of origin of the brand.

Consumer judgment might also depend on the level of development of the country of origin of the product.

Thus the authors distinguish between more developed countries (MDC) and less developed countries (LDC)

and hypothesize:

H4. The country-of-origin effect is larger in studies that compare products from MDCs to products from

LDCs, than in studies that compare products from either MDCs or LDCs.

B) Examine the extent to which the magnitude of Coo effects is affected by study

characteristics

Characteristic related to research design

H5. The country-of-origin effect is smaller in multi-cue studies than in single cue studies.

H6. Within-subjects designs yield larger effect sizes than between-subjects designs

H7. The magnitude of the country-of-origin effect does not differ between studies that use student samples

and studies that use ``representative'' consumer samples