Country of origin Effects

In an increasingly connected, highly competitive global marketplace, government officials and marketers are concerned with how attitudes and beliefs about their country affect consumer and business decision making. Country of origin perceptions are the mental associations and beliefs triggered by a country. Government officials want to strengthen their country’s image to help domestic marketers who export and to attract foreign firms and investors. Marketers want to use country-of-origin perceptions in the most advantageous way possible to sell their products and services.

Governments now recognize that the images of their cities and countries affect more than tourism and have important value in commerce. Attracting foreign business can improve the local economy, provide jobs, and improve infrastructure. City officials in Kobe, Japan, were able to entice multinationals Procter & Gamble, Nestle, and Eli Lilly to locate their Japanese headquarters in the city through traditional marketing techniques, with careful targeting and positioning. Across the globe, after seeing its name being used to help sell everything from pizza to perfume to blinds, the city of Venice made it a priority to capitalize on its image. City officials developed a trademark that could be licensed to product marketers. Hong Kong officials also developed a symbol, a stylized dragon to represent their city’s core brand values.

Countries all over the world are being marketed like any other brand. In some cases, negative perceptions must be overcome. Research by the British Council in 2000 revealed that young opinion leaders in 28 countries saw Britons as weak on creativity and innovation, class ridden, racist, and cold. Emphasizing the country’s traditional values and heritage, as has typically been done, might only exacerbate the situation. One commentator’s recommendation was to concentrate on the 1700 foreign media correspondents in London who play a critical role in conveying the British image to their respective countries.

Attitudes toward country of origin can change over time. Before World War II Japan had a poor quality image. The success of Sony and its Trinitron TV sets and Japanese automakers Honda and Toyota helped to change people’s opinions. Relying partly on the global success of Nokia, Finland launched a campaign to enhance its image as a center of high tech innovation. Marketing Insight: The Ups and Downs of Brand America describes some of the issues that arose due to the anti-American sentiment after the commencement of the Iraq war in 2003.

Global marketers know that buyers hold distinct attitudes and beliefs and beliefs about brands or products from different countries. These country-of-origin perceptions can affect consumer decision making directly and indirectly. The perception may be included as an attribute in decision making or influence other attributes in the process (“If it is French, it must be stylish”). The mere fact that a brand is perceived as being successful on a global stage may lend credibility and respect. Several studies have found the following:

People are ethnocentric and favorably pre-disposed to their own country’s products. The more favorable a country’s image, the more prominently the “Made in …” label should be displayed.

The impact of country of origin varies with the type of product. Consumers want to know where a car was made but the lubricating oil.

Certain countries enjoy a reputation for certain goods: Japan for automobiles and consumer electronics; the United States for high tech innovations, soft Drinks, toys, cigarettes and jeans; France for wine, perfume and luxury goods.

Sometimes country-of-origin perception can encompass an entire country’s product. In one study, Chinese consumers in Hong Kong perceived American products as prestigious, Japanese product as innovative and Chinese products as cheap.

The favorability of country-of-origin perceptions must be considered both from a domestic and foreign perspective. In the domestic market, country-of-origin perceptions may stir consumers’ patriotic notions or remind them of their past. As international trade grows, consumers may view certain brands as symbolically important in their cultural heritage and identity. Patriotic appeals have been the basis of marketing strategies all over the world patriotic appeals, however, can lack uniqueness and even be overused. For example, during the Reagan administration in the 1980s, a number of different US brands in a diverse range of product categories (e.g. cars, beer, clothing, etc) used pro-American themes in their advertising, perhaps diluting the efforts of all as a result.

A company has several options when its products are competitively priced but their place of origins turns consumers off. The company can consider co-production with a foreign company that has a better: South Korea could make a fine leather jacket that it sends to Italy for finishing; or the company can adopt a strategy to achieve world-class quality in the local industry, as is the case with Belgian chocolates, Polish ham, and Colombian coffee.

Companies can target niches to establish a footing in new markets. China’s leading maker of refrigerators, washing machines, and air conditioners, Haier, is building a beach head in the United States with American college students who loyally buy its mini-fridges which are sold at Wal-Mart and elsewhere. Haier’s long-term plans are to introduce innovative products in other areas, such as flat-screen TV sets and wine-cooling cabinets.

As progress is made, companies can start to build local roots to increase relevance, as exemplified by Toyota.