Measuring the joint effect of sony and erricson

Joint effect ofbrand and country image

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Measuring the joint effect ofbrand and country image inconsumer evaluation of globalproducts

Israel D. Nebenzahl and Eugene D. JaffeBar-Ilan University, Israel

The decision to enter a foreign market depends on the consideration of a largeset of economic, political and cultural variables. The purpose of the investmentis also an important determining factor (Root, 1987). Typical treatment of thesevariables found in the international business literature focuses on supply sideconsiderations, e.g. alternative labour and transportation costs, border taxes,etc. In this paper, we focus instead on consumer perception, and consider how itis affected by cross-border shifts of production.The purpose of this paper is to measure how perception of brand imagechanges as production is sourced multinationally. In spite of the fact thatmultinational corporations produce and assemble products bearing identicalbrand names (e.g. IBM, Pierre Cardin, General Foods, Henkel, Vicks, Black &Decker) in both developed and developing countries, little research has beencarried out to measure the effect of host country location on brand image. Thelack of research in this regard is all the more surprising because of findings thatconsumer evaluation of products is influenced by a country’s stage ofdevelopment, i.e. consumers hold more negative perceptions of products madein developing countries (Wang and Lamb, 1983) and that the sourcing country(Han and Terpstra, 1988) and country of origin (Tse and Gorn, 1992) havegreater effects on consumer evaluations of product quality than does brandname. Moreover, research of brand image and brand equity management(Aaker and Keller, 1990; Keller, 1993; Park et al., 1991) have shown that brandimage strategies should be determined before other elements of the marketingmix. Finally, there is some evidence that country of origin has been concealed inorder to prevent loss of sales. For example, many Chrysler dealers in the South-West USA were either refusing delivery of Dodge and Plymouth K cars made inMexico, or were tearing off stickers that indicated country of origin. ManyIsraeli consumers refused to buy Volkswagen cars made in Brazil when it wasknown that identical models were available from Germany, albeit at a higherprice.

The authors gratefully acknowledge the helpful comments and critique of the journal reviewers.Both authors contributed equally to the paper.International Marketing Review,

Vol. 13 No. 4, 1996, pp. 5-22.© MCBUniversity Press, 0265-1335InternationalMarketing Review13,4

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Past studies on the subject of foreign sourcing were limited to consideringchanges in brand image, without measuring the image dimensions asproduction is shifted globally. Moreover, most of these studies haveconcentrated on the automobile industry (Han and Terpstra, 1988; Johanssonand Nebenzahl, 1986; Johansson and Thorelli, 1985; Johansson et al., 1985;Stewart and Chan, 1993). Johansson and Nebenzahl (1986) found that sourcingthe production of Honda and Mazda automobiles in South Korea, Mexico or thePhilippines would detract considerably from brand attractiveness compared toproduction in Japan. A replication of this study by Stewart and Chan (1993),using tourist coaches as the product category studied, found that Mercedes-Benz buses made in Brazil and South Korea had a significantly lower imagewhen compared to production in their home country. Han and Terpstra (1988)also found that the brand image of automobiles made in the USA and Japaneroded when production was shifted to South Korea. The studies cited above provide conclusive evidence that the product valuegenerated by global brand names may not outweigh the effect of country imagewhen production is sourced to less developed countries. The conclusion is thata global manufacturer should concentrate production in developed countries oradopt countervailing strategies, such as emphasize the German origin ofautomobiles even though they are made in Brazil (Han and Terpstra, 1988), usea “neutral” brand when producing in a low-image country (Tse and Gorn, 1992),or discount the product price (Johansson and Nebenzahl, 1986). All of thesesuggested strategies apply across low-image countries. However, there may bea case for the proposition that the perceptual dimensions on which products areperceived vary by country and that marketing strategies should be country-specific. For example, a product made in Mexico and in South Korea may beperceived quite differently by US consumers when sold under the same globalbrand name. If so, the way to treat this difference may be embedded in thespecific construct of brand image of each country. Up to now, the existence ofsuch constructs has not been explored fully. Johansson and Nebenzahl (1986)and Stewart and Chan (1993) factor analysed and mapped the image ofcountries by brand. However, they did not determine the dimensions of eachbrand-country combination. We attempt to fill this gap in the literature bydemonstrating how changes in constructs of brand image as production isshifted across countries can be assessed and what are the implications of suchshifts for marketing strategy. Two shifts are the subject of this study. First, ashift from one developed country to another, i.e. from Japan to the USA and viceversa. Second, a shift from developed to developing countries, i.e. from Japanand the USA to Hungary, Poland and Russia.The use of individual brand-country factor analyses, as opposed to meanratings, enables the focusing of attention on dimensional differences (orsimilarities), rather than on individual product attributes or overall ratings.Thus, consumers’ perceptions of brand value are defined by image dimensions.Once brand values are determined, marketing strategy may be formulated. Forexample, if image dimensions show little change as products are sourced across