The COO and Brand Cues

102 Internationally, CO serves as a useful extrinsic cue (and as a surrogate for difficult to evaluate intrinsic characteristics such as quality and performance) because consumers tend to be less familiar with foreign products (Han and Terpstra 1988;

Huber and McCann 1982; Olson 1977). Han and Terpstra (1988, p. 236) claim, “It has been found that all products originating in foreign countries are subject to country-of-origin image effects”.

Fischer and Byron (1997) in their Australian study found that for consumers there, buying intentions are in fact motivated by price, quality and value for money considerations rather than COO. The country of origin of a product is an extrinsic cue (Thorelli et al., 1989), which, similar to brand name, is known to influence consumers’

perceptions and to lead consumers to cognitive elaboration (Hong & Wyer, 1989).

Country of origin is known to lead to associations in the minds of consumers (Aaker, 1991; Keller, 1993).

103 country image then serves as a halo, from which consumers infer product attributes.

Fundamentally, this implies that COO will have no significant effect when consumers became familiar with a country’s products (Han, 1989).

On the other hand, the ‘summary construct’ view suggests that consumers recode and sum up product information into ‘higher-order units’. These information units are then integrated with pre-held beliefs to form a summary construct of country image. In other words, the summary construct develops an information file about brands. This is stored in memory and provides the basis for overall evaluation of products from the country. The sequence in this construct is: beliefs, followed by country image and brand attitude. The summary construct model is applied when the consumers are familiar with a country’s products, and information is generalized.

Brand is an important cue, which has been used as an independent variable in many country product image studies (Peterson & Jolibert, 1976; Johansson &

Nebenzahl, 1986; Han & Terpstra, 1988; Nebenzahl & Jaffe, 1993; Ahmed et al., 1993). Peterson and Jolibert (1976), for instance, investigated the effect of four factors on product quality evaluations; COO, price level, brand image and consumer nationality. The study involved consumer quality evaluations which were evaluated by interchanging each brand with each COO. The quality of each brand-country combination at various price levels was then assessed and it was found that consumer nationality accounted for most of the variance in product evaluations.

There is some disagreement with the general view that the COO dominates other cues. For example, Han (1989, p 223) suggested that ‘information chunking may evolve around a brand name’. Indeed, the brand name may be an even more powerful summary construct that the COO as many brand names are imbued with a strong national appeal (eg., Swiss Air, Malaysian Airlines and British Airways), which may

104 interact with the COO effect. Similarly, other studies also revealed that brands impact significantly on product evaluations even when they are not the most salient cue in a multi-cue design (Johansson & Nebenzahl, 1986). It is also noted that that a highly regarded brand name can alleviate the negative effect of poor COO image in product evaluation (Cordell, 1993). Thus the impact of brand names should not be overuled despite studies that attest to the importance of COO as illustrated by Pecotish, Pressley and Roth (1996) who examined the banking and airline services and found that Japan was the most favoured COO compared to US, Australia and Indonesia.

As consumers are increasingly exposed to branded products, the influence of the brand itself on the overall evaluation of the branded product must be taken into account. A brand can be a signal of quality, and the dimensions of brand image affect consumer perceptions and preference (Essoussi & Merunka, 2007). That is, a consumer evaluates and chooses products designed in a specific country, manufactured in another country, and carrying a specific brand name (e.g. a car designed in Germany, made in Taiwan, and carrying the Audi brand name). In this case, consumers use the brand as a measure of quality when they do not have a specific idea about product characteristics (Leclerc & Schmitt, 1994).

Moreover, a brand can refer implicitly to the COD of the product (or “country of design” such that L’Oreal is associated with France and Coca-Cola with the USA).

The brand may also use the image of that country to build its identity, regardless of the place of manufacture (Thakor & Lavack, 2003), which helps explain country stereotypes. Shimp et al. (1993) proposed the term “country equity” to define the performance reputation the country provides to the brand. Thus it follows that COD with strong positive (or negative) associations will transfer those associations to the brand.

105 However, not all brands benefit equally from country equity. Some brands are more strongly associated with their COO than others, if at all. One important source of origin is the brand itself (Thakor & Kohli, 1996) for example brands like Sony and GE may automatically activate origin cues in consumers, even though the country is not mentioned in the brand name. Brands strongly associated with a country (whether COO or COD) benefit from their country’s positive stereotypes and suffer from their country’s negative stereotypes. Moreover, some brands take more advantage than others of their COD image, especially if the brand is perceived as typical of its COD (e.g. Chanel for France, Sony for Japan). Therefore, the typicality of the brand in the COD has a positive moderating effect on the relationship between COD and brand image.

Finally, consumers often consider COM identical to COD, unless specified otherwise. Branded products manufactured in a country other than the COD might induce a perceptual (in) coherence or (in) congruity between the brand and the COM (Haubl & Elrod, 1999; Johansson & Nebenzahl, 1986), which in turn may influence evaluations the branded product (Heimbach, 1991). When brand image and COM are congruent, this will directly impact perceived quality of the branded product (Haubl &

Elrod, 1999), but when perceived high-quality brands are produced in a COM with a less positive image, consumers might experience an incongruity between the brand and the country, which would imply a negative impact on quality perceptions.

COO image as an important covariate of products, or brand image has been extensively investigated in international marketing literature (Al-Sulaiti & Baker, 1998;

Li et al., 2000; Zhang, 1997). There seems to be general consensus that country image and brand image are inextricably linked (D’Astous & Ahmed, 1999; Batra et al., 2000;

Kim & Chung, 1997), but the exact nature, including the direction of this relationship,

106 is not well understood. The notion of COO and its relationship with brand image has received limited research attention. This reflects the status of the country image relationship to university reputation which has been overlooked in the literature.

COO image has been thoroughly discussed (Al-Sulaiti & Baker, 1998;

D’Astous & Ahmed, 1999; Kim, 1995; Kim & Chung, 1997) and a related research stream that treats countries as brands (Anholt, 2000a, b; O’Shaughnessy &

O’Shaughnessy, 2000). There seems to be a general consensus that COO is often used as a cue for evaluating new products and that favorable perceptions about a country result in favorable attributions about products from that country (e.g. Gurhan-Canli &

Maheswaran, 2000; Hong & Wyer, 1990; Leclerc et al., 1994). However, of late, studies have questioned the weight given to country in the transfer of COO image to brand image. If consumers do not know about a brand’s COO, the perceived COO image is less likely to get transferred to the brand. In summary, a consumer’s perceived COO image is likely to influence the perception of a brand from that country, only if the consumer is aware of the brand’s COO.

Thus, brand and COO may be viewed as cues in a multiple-cue consumer decision-making context (Hong et al., 2002; Liu & Johnson, 2005; Miyazaki et al., 2005; Paswan & Sharma, 2004; Speece & Nguyen, 2005; Teas & Agarwal, 2000). How consumers use these in the presence of other information has been of interest to marketing scholars and practitioners. Unfortunately, research has failed to clearly distinguish between the various conceptualizations and the interactions with other cues, particularly, the brand name as a carrier of COO connotations. The notion that the COO represents the overall image across product classes may be contrasted with the possibility of a more limited application to a particular product class. Further, the interplay between COO, branding and quality has not been fully explained and have

107 been shown to have both broad and specific effects on consumer behaviour (Agbonifoh

& Elimimian, 1999; d'Astous & Ahmed, 1999; Han, 1989; Hong et al., 2002).

Since country origin and branding are both producer-controlled strategies, the synergy of their combined inputs is of managerial interest (Zafar et al., 2002). Brand image management is a critical part of a company’s marketing program as a clearly defined brand image enables consumers to identify needs satisfied by the brand (Park et al., 1986). Furthermore, brand associations will have higher source credibility because of the maker’s implied warranty; when the product carries a famous brand, it can counteract consumers’ negative country origin perceptions of less developed countries (Cordell, 1993).