Country of Origin Effect in International Marketing

The Country of Origin Effect is  the influence that the manufacturer country has on the positive or negative consumer judgment. Studies have shown that when a customer becomes aware of the country of origin of a product his/her image about the product is influenced either positively or negatively according to his perceptions. Consumers tend to have a stereotype about product and countries that have been formed by experience, hearsay, myth. These stereotypes are generally broad and vague according to which they judge a specific country or a specific product to be the best: French Perfumes, Italian Leather, Chinese Silk and Japanese Technology are all examples of such stereotypes. Therefore the country, the type of product, and the image of the company all its brand play a crucial rule in deciding whether the country of origin will engender a positive or a negative reaction.

Country Image: Precursors to Country of Origin Effect

Country image can be defined as the sum of information in the consumers’ mind about a nation/country.  It has been a long known fact that “Made In” label is just as powerful and just as valuable as a “Made By” label. German engineering, Japanese miniaturization, Italian flair, Swedish design, British class, Swiss precision – those are brand values which rub off onto all the products that come from those countries

Country Image is the reason why, in the early 1990s, Americans bought Toyota Corollas (which were quite expensive) rather than Geo Prizms (which were quite cheap), even though they were exactly the same car, made in the same factory. This is because the American consumers believed that Japanese cars offered greater value than American cars. Countries thus try hard to maintain their images and hence generate a positive reputation for their products in international market. Country image is propagated through channels that can be described in a Hexagonal Pattern of communication. Each of these components has a huge impact on the image that country projects :

• 1. The loudest branding effort comes from country’s tourism promotion, and people’s experience of visiting the country as tourists or business travelers.
  2. The country’s exports with a clearly marked “Made in” label are powerful ambassadors of the country’s image internationally.
  3. The policy decisions made of the country’s government. Policy makers are nowadays much closer to the international media than they ever used to be.
  4. From the way company attract the investment, foreign talent and foreign companies to work with it.
  5. The country’s cultural activities and cultural exports: a world tour by a national opera company, the works of a famous author, the national sports team.
  6. The people of the country themselves: the hospitality they provide to the visitors coming from abroad and the way they behave when abroad.

Country of Origin Concept

From a conceptual point of view it is particularly important to underline that the notion of “Country of origin” is by no means plain and univocal. Initially, the concept of  Country of Origin (COO)  was considered as the “Made in” Country, or the  Country of Manufacture (COM). This was the country which appeared on the ‘made in’ label, which would generally be the country where final assembly of the good took place.

For example designer labels from Gucci, Versace loose their sheen when they include “Made in China” label because part of the manufacturing tool place there. Also the latest “Audi TT” luxury car model was designed in Germany but is being manufactured from Hungary, but with Germany’s known reputation in engineering field the model is promoted by the name of country it is designed at.

Moreover, global companies nowadays are manipulating brand names to suggest particular origins  (country of brand (COB) effect).  Thus  Country of Origin is increasingly considered as that country which consumers typically associate with a product or brand, irrespective of where it is actually manufactured. For example, even though Nike Apparels are manufactured in low cost destinations like India, China etc. the brand recognition of Nike overcomes the country of manufacturing effect and the products are considered to be American.

Manifestations of Country 0f Origin Effect

The country of origin effect can be realized in various different forms among the consumers. The major manifestations are ;

1. Individualist/Collectivists: Where Individualist favor country of origin bases to ascertain the superior attributes of the product, the collectivists favor home country of origin products over the foreign ones.
2. On Basis of Industrialization:  Countries are categorized on the levels of industrialization they have achieved. Consumers in such cases are lesser product specific. They believe the products from industrialized nations are superior in quality and thus the products from developing nations suffer bias.
3. Ethnocentrism:  Under the feeling of national pride, consumers like to purchase the products of home country. For example, the “buy American effect”, Honda recognized it and specifically mentioned how many component were manufacture in America when launching its models there.

One might generalize that for more technical product, there is a less positive perception towards product of developing nations. Similarly, less developed nations have a tendency to favor products from developed nations.

Usage of  Country of Origin  Effect in International Marketing

In contemporary world, companies have come to realize the importance of country of origin effect and have started to give it due importance while strategizing their international marketing plans.

Nowadays, a company’s marketing strategy is dependent not only on the strength of its brand image but the country image as well. There are four possible strategies can be used. First scenario considers companies having both, a strong country and brand image. Second scenario considers companies with a weak country image but a strong brand image. Third Scenario looks at companies with a weak brand image, but a strong country image, and fourth scenario looks at companies having both a weak country and a weak brand image.

1. Strong Country – Strong Brand Image:  This is the best position for a company when both the product and the country have strong brand images. In this case, strategically, both the brand and the “made in” country should be emphasized, especially if it is a global one. Some major examples of this are: Buick (made in US),Sony (made in Japan) and Zeiss (made in Germany).
2. Weak Country – Strong Brand Image:  The scenario of a weak country image but a strong brand image generally refers to products whose production or assembly has been outsourced to developing/emerging economies. In this condition, the emphasis should be placed on the brand name, while the country of origin needs to be de-emphasizing as much as possible. BT provides an excellent case of neutralizing the country of origin. A few years ago British Telecom researched the aptness of their brand in overseas markets. The results showed that they had problems with the company’s name in Japan where “British” was synonymous “of the past”, “colonial” and not for innovation or moving forward. That is when they decided to become “BT”
3. Strong Country – Weak Brand Image:  This category contains products which are perceived to be of lower quality vis à vis the competitors from same country. Strategically, these brands should try to piggyback on strong country image by emphasizing their “made in” attribute. This strategy works very well for brands/products with bad image or without any image. Some examples include Japanese brands like Suzuki or Miranda Cameras and/or Daihatsu automobiles.
4. Weak Country – Weak Brand Image:  This category contains products that have weak country image as well as a weak brand image. In this case one potential strategy is strategic piggybacking on some strong local brand. For example, Samsung, the South Korean products manufacturer, gained entry into the US in microwave ovens segment distributing them through General Electric under the “GE” label. Similar strategy was followed by Mitsubishi in its entry into the United States using the Chrysler distribution network.