The effect of a firm’s home nation image on
its international brand positioning strategy
University of Amsterdam Business School
Master thesis
Name: Anniek Pluijter Student number: 11411465 Date: June 22, 2018
MSc of Business Administration: International Management
STATEMENT OF ORIGINALITY
This document is written by Anniek Pluijter who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
ABSTRACT
With firms increasing the geographic scope of their activities, marketing managers have to decide how to manage brands that are present in multiple geographic regions. This includes making a decision between a global or local brand positioning. Multiple benefits are acknowledged in the literature for both these positioning strategies, which leads academics to give conflicting advice to managers whether to focus on developing local brands, global brands, or both. Some research sheds light on this issue by suggesting that the positioning decision should not made in isolation. Rather, other factors, among which the image of the home nation of a firm and the level of CET in the market, need to be considered. However, research on the global-local dichotomy has made little attempt to determine if these suggestions indeed influence manager’s decisions. This research thus took a new perspective and reviewed if the relative strength of a firm’s home nation brand (HNB) affects the decision to position a brand as either a local or global brand and if the level of consumer ethnocentrism (CET) in the market moderate this relationship.
A Tobit regression analysis was employed to test the hypotheses. In contrast to the expectations, the insignificant results indicate that if a firm has a relatively strong HNB this does not lead to a global brand positioning in developing markets and that CET does not moderate this relationship. This suggests that the firm’s HNB is not a determining factor in the decision between a global or local brand positioning. Since it can be assumed that differences in (expected) sales volume of the brand positioning choice would have influenced the decision, the results question to what extent the (non-)product related components of a firm’s home nation image and the level of CET in the market actually influence buying behaviour of consumers, or if it only affects product evaluation or buying intention.
Keywords: Nation brand, country brand, brand positioning strategy, local brand, global
TABLE OF CONTENTS 1. INTRODUCTION ... 5 2. LITERATURE REVIEW ... 8 2.1 Global brand positioning ... 9 2.2 Local brand positioning ... 10 2.3 Nation brand concept ... 12 2.4 Consumer ethnocentrism ... 17 2.5 Research gap ... 18 3. THEORETICAL FRAMEWORK ... 20 3.1 The effect of the firm’s HNB on its positioning choice ... 20 3.2 The moderating role of consumer ethnocentrism ... 22 4. METHODOLOGY ... 24 4.1 Empirical setting ... 24 4.2 Sample and data collection ... 26 4.3 Variables and measures ... 27 4.4 Empirical strategy ... 34 5. RESULTS ... 35 5.1 Descriptive statistics ... 35 5.2 Correlation ... 36 5.3 Regression analyses ... 39 6. DISCUSSION ... 44 6.1 Academic relevance ... 47 6.2 Managerial and policy implications ... 49 6.3 Limitations and suggestions for future research ... 50 7. CONCLUSION ... 51 ACKNOWLEDGEMENT ... 53 LITERATURE ... 53 APPENDICES ... 60
LIST OF FIGURES AND TABLES
Figure 1 Conceptual model Table 1 Control variables
Table 2 Descriptive statistics: means, standard deviations and correlations Table 3 Results for positioning choice determinants (Tobit regressions)
Table 4 Results for positioning choice determinants of foreign firms (Tobit regressions)
LIST OF APPENDICES
Appendix 1 Table 5: Comparison between proposed dimensions of the nation brand construct Appendix 2 Table 6: Results for positioning choice determinants (random effects OLS
regressions)
1. INTRODUCTION
The world is becoming more globalized, which makes it easier for firms to move goods, capital and services to foreign markets (Garrett, 2000). Sequentially, firms are increasing the geographic scope of their activities, also to developing markets where they see opportunities to gain from economic growth (Özsomer, 2012). International marketing managers therefore have to decide how to manage brands that are present in multiple geographic regions (Douglas, Craig, & Nijssen, 2001). This is essential, as a well-thought-out branding strategy lays the foundation of a strong brand, which can help a firm to establish a solid position in the marketplace and improve the product’s competitive position (Keller, 1993).
An important brand strategy decision that international marketing managers have to make when they move beyond national boundaries is the choice between a global or local brand positioning strategy, because consumers evaluate local and global brands differently (Douglas et al., 2001; Talay, Townsend, & Yeniyurt, 2015). Firms can choose to position their brand as global by being present in many foreign markets and as local by being present in only one geographic location (Townsend, Yeniyurt, & Talay, 2009). Multiple benefits are acknowledged in the literature for both these positioning strategies and both can result in significant competitive advantage (Heinberg, Ozkaya, & Taube, 2016; Özsomer, 2012; Steenkamp et al., 2003). This leads academics to give conflicting advice to managers whether to focus on developing local brands, global brands, or both. Managers are thus confronted with a tough, but crucial question: how to make this positioning choice?
The answer is that the choice between a local and global brand positioning strategy is not likely to be made in isolation. Existing research finds that multiple firm and market factors, among which the image of the home nation of a firm, influence consumer attitudes towards global and local brands, hence the (potential) success of the positioning choice (Halkias, Davvetas, & Diamantopoulos, 2016; Talay et al., 2015). However, prior research that examined the influence of the brand’s home nation image on consumers, mostly neglected the effect of non-product related components. The limited amount of studies that did take the non-product related component of a firm’s home nation image into account focused on its influence on consumer product evaluation (Chen, Mathur, & Maheswaran, 2014) or buying intention(Maher & Carter, 2011) and the question remains about whether it actually affects consumer buying behaviour.
More insight into the actual buying behaviour of consumers can be gathered by reviewing if managers generally consider their home nation image when they have to choose between a local or global brand positioning, because it can be assumed that differences in
(expected) sales volume of the brand positioning choice will influence the firm’s positioning strategy decision. Therefore, the present research takes a new perspective and examines to what extent the firm’s home nation image affects the firm’s decision to position a brand as either local or global. Thereby using the relatively new ‘nation’ or ‘country’ brand1 concept to examine the home nation image, since this concept does not neglect the influence of non-product related components of a firm’s home nation image on consumers. A nation brand concerns “a country’s whole image, covering political, economic, social, environmental, historical, and cultural aspects” (Fetscherin, 2010, p. 467). It includes therefore both the product-related and non-product related affective and cognitive components of a home nation image. The nation brand can be related to corporate branding and contains the positioning, image and reputation of a nation (Fan, 2010). As Anholt (2007) states: “the reputations of countries are rather like the brand images of companies and products, and equally important” (Anholt, 2000, p. 24).
However, firms do not solely rely on their home nation brand (HNB) when they review the (potential) success of either a local or global brand positioning, but also have to consider other factors (Talay et al., 2015; Townsend et al., 2009). One cultural market factor especially, consumer ethnocentrism (CET), could be important to take into account because it influences the perception of consumers towards global brands (Steenkamp et al., 2003; Swoboda, Pennemann, & Taube, 2012; Winit, Gregory, Cleveland, & Verlegh, 2014). Ethnocentric consumers see global brands as a threat to their local culture and economy and therefore prefer products from their home country to foreign products, even though global brands are cheaper or associated with better quality (Shimp & Sharma, 1987; Steenkamp et al., 2003). The expected importance of the firm’s HNB and the level of CET in the country of operation in the firm’s decision to position brands as either local or global lead to the following research questions:
To what extent does the strength of the firm’s HNB affect the decision to position a brand as either a local or global brand?
How does the level of CET in the country of operation moderate the effect of the strength of the firm’s HNB on the decision to position a brand as either a local or global brand?
1 Nation and country brand are used interchangeably in the literature and have the same meaning. In
A panel dataset that contains the positioning choice of alcoholic beverage brands in developing markets in Asia from 2006 till 2015 was used to answer the research questions. The database was mainly extracted from the global research database Passport from Euromonitor International. The final dataset yields 3319 firm-country of operation-year combinations, from 227 companies originated in 30 different countries. A random-effects two-limit Tobit regression analysis model was employed to test the causal relationship between the variables, for the reason that a Tobit model is suitable for the bounded dependent variable, which ‘piles up’ at the boundaries of 0 and 1 (Rees & Maddala, 1985). Subsequently, different models were used to test the robustness of the results, because there is no consensus in the literature on the appropriate way to model a dependent variable in the form of a percentage (Gallani & Wooldridge, 2015). The study is conducted in the context of developing countries (countries with low economic indicators), because globalisation drives firms from developed markets into developing markets and consumers from these countries are found to behave differently towards local and global positioned brands than consumers from developed countries (Özsomer, 2012; Randrianasolo, 2017).
In contrast to the expectations, the results imply that the strength of a firm’s HNB does not significantly affect a firm’s decision to position a brand in a developing market as either a local or global brand and that the level of CET in the market does not moderate this relationship. This outcome suggests that the firm’s HNB and the level of CET in the market are not determining factors in the decision between a global or local brand positioning. This is an interesting finding, since it can be assumed that differences in (expected) sales volume of the brand positioning choice would have influenced the firm’s positioning strategy decision. As the hypotheses are not supported, the obtained results raise the question to what extent the strength of the firm’s HNB and hence (non-)product related components of a firm’s home nation image and the level of CET in the market actually influence buying behaviour of consumers or if it only affects product evaluation or buying intention. This outcome provides a fruitful avenue for future research.
This study has important managerial and political contributions because of the increasing interest in the global-local dichotomy and nation branding among practitioners and policy makers. For managers, this research gives insight into the importance of their home nation image when they have to make the decision between a global and local brand positioning strategy. Managers should acknowledge that other firms are not influenced by the strength of their HNB in their choice to position a brand as either local or global. Politicians and policy
makers gain insight into the importance of their nation brand image, since the results suggest that the nation’s brand image does not affect a firm’s international brand positioning strategy.
The remainder of this research is organised as follows: first, theory is discussed to get a better understanding of the different constructs. Second, the research gap is summarized and the expected relationship between the constructs are presented in the hypotheses section. Third, the methodology that is used to test the hypotheses is explained. Fourth, the results are reported. Fifth, the results are discussed, including their implications and limitations, which lead to suggestions for further research. Finally, a conclusion is given.
2. LITERATURE REVIEW
A brand can have a significant influence on the performance of a product, because a product is mostly evaluated on extrinsic, non-product related cues by consumers like a brand name and not on product-related information cues (Madden, Fehle, & Fournier, 2006). Product-related information cues, such as texture or quality, are usually difficult to obtain prior to purchase or the consumer is simply not motivated or does not have the time to obtain the intrinsic information. Veale and Quester (2009) for example find that when a consumer evaluates wine, extrinsic cues, such as brand origin and price, are more important than taste. As a result, consumers can respond differently to marketing activities of a product with a particular brand name than to products without that brand name (Keller, 1993). This is something that Keller refers to as ‘customer based brand equity’. Specifically, he defines brand equity as “the differential effect of brand knowledge on consumer response to the marketing of the brand” (Keller, 1993, p. 2). Along these lines, academics as well as practitioners acknowledge that branding is an important marketing tool and that marketers should think carefully about how to position a brand (Magnusson, Westjohn, & Zdravkovic, 2011; Olson & Jacoby, 1972). Douglas et al. (2001) state that for every brand the brand positioning strategy can vary with regard to the product scope and the geographic scope. Townsend, Yeniyurt, & Talay (2009) build on this finding and classify brands, based on their geographic scope and marketing standardization, into four categories: domestic, regional, multi-regional and global.
A domestic brand is only present in one geographic market. This can be a brand originated in the home market, but a brand owned by a foreign firm can also be defined as local when it operates in one foreign market with a local brand name (Swoboda et al., 2012). A regional brand is present in multiple markets, but only in a particular geographic region (such as Asia, Eastern Europe or South-America). A multi-regional brand is offered in multiple
regions, but not available in all of the three major regions (Asia, Europe, North America) and does not have the same marketing approach across the markets it operates in. A pure global brand operates in many foreign markets with a standardized marketing approach (Townsend et al., 2009). Examples from global brands in the beer market are Heineken, Budweiser and Amstel. For spirits, Bacardi, Imperial Blue and Johnny Walker are well known global brands. Townsend et al. (2009) indicate that globalisation is as an incremental process where a regional brand is still in the beginning of the internationalization process and a global brand is in the final, mature phase. Özsomer & Altaras (2008) even incorporate the regional aspect into their definition of a global brand. They state that “a global brand is a brand with regional/global awareness, availability, acceptance and desirability, often found under the same name with consistent positioning, image, personality, look, and feel in major markets enabled by standardized and centrally coordinated marketing strategies and programs” (Özsomer & Altaras, 2008, p. 1). For the purpose of the above discussion, the regional positioning will be integrated with the global positioning into one variable in this research, which is referred to as ‘global positioning or global brand’ throughout the whole thesis.
For both a local and global positioning multiple benefits and drawbacks are acknowledged in the existing literature (Heinberg, Ozkaya, & Taube, 2016; Heinberg et al., 2017; Özsomer, 2012; Steenkamp et al., 2003; Xie et al., 2015). These will be discussed in the first three paragraphs of the literature review. Thereafter, the nation brand construct and CET, two important concepts that are expected to influence the international positioning strategy decision of the firm, will be discussed.
2.1 Global brand positioning
Several firms clearly believe that global brands are the future, since they limit the amount of local brands in their portfolio and instead focus on their global brands (Steenkamp et al., 2003). Unilever for example, embraced the global strategy; they reduced the number of local brands in their portfolio from 1600 to 400 in 2006 (Özsomer & Altaras, 2008). The increased focus on global brands can be linked to supply and market-related benefits.
Because of globalisation, international trade barriers have dissolved and consumer tastes have become more similar and homogeneous (Holt, Quelch, & Taylor, 2004; Levitt, 1983; Townsend et al., 2009). This leaves room for firms like Unilever to offer more standardized products and create economies of scale in logistics, research and development, production and communication areas (Schuiling & Kapferer, 2004). Reducing costs, and therefore the possibility to reduce prices, is important because of increased global competition; having lower
prices means competitive advantage. Once the global brand is established, it can create entry barriers for new competition to enter the market because of its size. Another advantage related to supply chain considerations is that because of a standardized brand strategy, the time it takes a firm to enter a market can be reduced (Schuiling & Kapferer, 2004; Steenkamp et al., 2003).
Next to the aforementioned supply-driven reasons, there are different market-related considerations noted in the literature that can lead firms to focus on global brands. The positioning of a brand as global can positively influence brand equity in different ways. A global brand can create a unique, recognisable brand image across the globe, which leads to a consistent message(Schuiling & Kapferer, 2004). Some academics argue that nowadays this globally accepted brand image is preferred over a local brand image by consumers (Alden, Steenkamp, & Batra, 2006; Holt et al., 2004; Steenkamp et al., 2003). The most important reasons academics found for this preference are that a global brand is associated with better quality and with prestige (Akram, Merunka, & Shakaib Akram, 2011; Holt et al., 2004; Steenkamp et al., 2003). Consumers might assume that the product’s worldwide demand must be a result of its high quality, which could explain the increased quality perception of global brands.
Besides the utiliterian functions of brands and products, they can serve as a way to communicate social differences (Batra, Ramaswamy, Alden, Steenkamp, & Ramachander, 2000). Developing countries generally have a greater variety in economic conditions, such as the differences in income level. As a result, consumers seek a way to express their status differences and their self-identity in these countries (Strizhakova, Coulter, & Price, 2008). Global brands are mostly more expensive than local brands and are associated with the wealthy, affluent, western lifestyle. The consumption of global brands can therefore be status-enhancing (Batra et al., 2000). Furthermore, consuming global brands can make people in developing countries feel part of the global culture. Like an Argentinean consumer said in the research from Holt et al. (2004): “Global brands make us feel like citizens of the world, and…they somehow give us an identity” (Holt et al., 2004, p. 3). A last reason Holt et al. (2004) find is that global brands are believed to pay more attention to their social and environmental responsibilities in the local market.
2.2 Local brand positioning
Contrasting the above arguments for global brands, Douglas & Craig (2011) point out an effect of globalisation which offers an argument in favour of local brands. The authors argue that the opportunities to operate in a broader geographic scope drives firms to move into more diverse
markets. As a result, firms stumble upon distinct scenarios, which makes it challenging to develop a standardised brands strategy. Instead, they state that firms should adapt their brand strategies to the local markets, in order to be able to manage diversity (Douglas & Craig, 2011). Douglas & Craig (2011) are not the only academics that argue that a local brand positioning can result in strategic advantages. Heinberg et al. (2017) mention that with a local positioning the brand can meet the needs and tastes of the local community, because it can easier adapt to the local needs. Schuiling & Kapferer (2004) further explain this argument: with local insights, a unique marketing mix for the local market can be created, including a positioning, pricing and advertising strategy. With regard to the pricing strategy, a local brand positioning cannot lead to economies of scale because of the small sales volume. A firm can, on the other hand, reduce costs by producing the brands locally, which allows for more competitive prices (Schuiling & Kapferer, 2004). This is not the only advantage Schuiling & Kapferer (2004) found when they interviewed international marketers. The authors mention that it is easier to adjust the marketing mix with a local brand when this is needed to respond to a change in competition in the market. Furthermore, a local brand is less sensitive to risk, as the negative brand image spillovers across nations are limited. Moreover, while a global brand can move quicker into markets because it does not have to adapt or create a new strategy, there is also a possibility to move directly into new markets by aggressively acquiring local brands.
A market-related reason to position a brand as local is that the brand can gain strong brand equity in terms of a high awareness level and a strong brand image. Steenkamp et al. (2003) argue that local brands can benefit from their local identity and enhance the prestige associations if they market themselves as local icons. Local iconness is “the degree to which a brand symbolizes the values, needs, and aspirations of the members of the local country”. These strong connections to the local culture and representing or being a symbol of the country builds authentic perceived value (Ger, 1999). Özsomer (2012) finds in his empirical research that this is the case in developed as well as developing markets. SABMiller supports this argument as they announce in their annual report that they successfully established local premium brands in Africa, and position it as ‘the premium beer from here’ (SABMiller, 2010). Other reasons for consumers to use brands with local iconic attributes are its associations with originality and uniqueness, associations with a high trust and reliability level because of the close relationship with the consumers (Schuiling & Kapferer, 2004), a sense of local pride because of nationalistic feelings (Kapferer, 2002; Özsomer, 2012) and the feeling of belonging to the local community (Özsomer, 2012).
To conclude, there are many benefits and drawbacks to opt for a global and local positioning strategy. However, there are other factors that need to be considered when building an international positioning strategy. These will be discussed in the last two sections of the literature review.
2.3 Nation brand concept
A brand is “a multidimensional assortment of functional, emotional, relational and strategic elements that collectively generate a unique set of associations in the public mind” (Aaker, 1996, p. 68). The ultimate goal of brands is to create favourable, strong and unique associations in the mind of the consumer. These associations together form a brand image (Keller, 1993). Because a nation has its own associative network, a nation can also be labelled a brand (Dinnie, 2008; Fan, 2010; Kotler & Gertner, 2002). If international marketers have to make brand positioning decisions, they should recognise the brand image of the home nation of the firm. Strehlau & Strehlau (2014) highlight that “A country ́s image to consumers has become increasingly important in both corporate expansion and internationalization strategy and processes. When one associates a given brand name or company with a specific country, the outcome may prove to coin competitive advantages or disadvantages” (Strehlau & Strehlau, 2014). Budweiser for example creates competitive advantage by focussing on their American background with their “The Great American Lager” campaigns (Magnusson et al., 2011). Recognising the importance of the concept, the ‘nation brand’ concept starts to get increasing attention from academics and practitioners (Dinnie, 2008; Fan, 2006; Fetscherin, 2010; Kotler, Haider, & Rein, 1993). However, reviewing the literature, it seems that there is no consensus about a common definition of a nation brand. As Dinnie (2008) points out, branding a nation is “exiting, complex and controversial” (Dinnie, 2008, p. 13). Let’s discuss the different definitions in the literature to make the nation brand concept clearer.
2.3.1 Defining the nation brand construct
Dinnie (2008) defines a nation brand as “the unique, multi-dimensional blend of elements that provide the nation with culturally grounded differentiation and relevance for all of its target audiences (Dinnie, 2008, p. 15).” Fetscherin (2010) offers a more comprehensive definition and states that “a country brand belongs to the public domain; it is complex and includes multiple levels, components, and disciplines. It entails the collective involvement of the many stakeholders it must appeal to. It concerns a country’s whole image, covering political, economic, social, environmental, historical, and cultural aspects” (Fetscherin, 2010, p. 467).
Fan (2006) provides a definition for the actual branding and states that “nation branding concerns applying branding and marketing communications techniques to promote a nation’s
image” (Fan, 2006, p. 6). Reviewing the definitions, it can be noticed that they have two
important things in common: a nation brand is concerned with managing the nation’s image; and a nation brand is not just used to promote the image towards one audience, but towards many different stakeholders operating in various disciplines. A nation image is “the sum of beliefs and impressions people hold about places. Images represent a simplification of a large number of associations and pieces of information connected with a place” (Kotler & Gertner, 2002, p. 251).
Related to the second point, this is where the main point of difference is with the extensively researched ‘country-of-origin’ concept (Fan, 2006). The country-of-origin concept is also called product-country image and is used to improve the sales directly to the consumer by explicitly mentioning the country-of-origin of a brand. A product-country image is often linked to a particular product category or product and usually does not have any meaning when it is separated from this product category (Maher & Carter, 2011). An example of the influence of a product-country image is that when consumers buy luxury products from France, they might have more positive associations with these products because they relate France to fashion and design (Chen et al., 2014). On the other hand, the nation brand encompasses an attitude towards the whole nation and its inhabitants. It is not focused or related to a specific product, but it contains the whole image of the nation. A product-country image is therefore a part of the nation brand. Someone may think higher on French fashion than French cars, but the more highly this person thinks about France in general, the more highly he or she will think on both fashion and cars (Papadopoulos & Heslop, 2000).
It seems like it is important to take the whole image of a nation into account as the effect of the image of the home nation can go beyond nation-related product associations (Chen et al., 2014). For example, when a nation has a poor image in terms of democracy this can influence the whole nation image, which in turn can have an effect on the image of products that are made in the nation (Martin & Eroglu, 1993). The study from Chen et al. (2014) underpins this argument as they find that non-product related affective information of the nation, which includes the emotional associations with the origin of a brand, can affect product evaluation. The authors explain this phenomenon in the following way: favourable nation related affective associations positively influence the product attribute information process, which will result in a more positive evaluation of the product. Next to the affective component of the nation image the non-product related cognitive component has also been found to influence product beliefs,
evaluation and buying behaviour (Chen et al., 2014; Halkias et al., 2016). The cognitive component includes “beliefs about another country’s technological advancement, economic development, and political orientation as well as competence of its people” (Maher & Carter, 2011, p. 561). These believes often influence quality perceptions of consumers as they are associated with the manufacturing and business abilities of a nation. The quality perceptions will in turn influence consumer buying intention (Chen et al., 2014). Overall, these studies found evidence that the political, economic and social images of a nation influence the affective and cognitive attitudes of consumers towards the brands coming from the nation. This underpins that a nation brand is a multidimensionality construct and that its influence can go beyond nation-related product associations.
2.3.2 Dimensions of a nation brand
That a nation brand is focused on a nation’s whole image is what most academics agree upon, however, it seems that opinions differ on what dimensions the ‘whole’ image exactly covers (Mariutti, 2015; Mariutti & Tench, 2016). Fetscherin (2010) for example states it covers “political, economic, social, environmental, historical, and cultural aspects”. While Fan (2006) notes that the attributes that are involved in forming a nation brand are natural resources, people, history, culture, language, political and economic institutions, infrastructure and famous people. Because opinions differ on what dimensions a nation brand covers, different dimensions are also used to assess the brand strength of nation brands in the world. Just like with product brands, the strength of the nation’s brand equity can namely be measured.
One way to measure brand equity is by surveying consumers on how they value a brand (Keller, 1993). Simon Anholt, one of the most well-known authors in the nation branding literature, uses this method and annually launches the Anholt Gfk Roper Nation Brands Index (Anholt, 2005). The index includes a list of countries, ranked by their average perceived nation brand strength from approximately 25,000 consumers. A nation brand is the “the sum of people’s perceptions of a country across the six areas of national competence” (Anholt, 2005, p. 296). The six areas he uses to measure the strength are exports, tourism, culture, investment, people and governance. Next to the index from Anholt, the Country Brand index (CBI) from FutureBrand consultancy (2014) is often used to address the strength of a nation (FutureBrand, 2014). While FutureBrand uses slightly different areas, their index is also based on six dimensions: tourism, culture, value system, business potential, heritage, and made in. Although the indexes from Anholt and FutureBrand consultancy are based on subjective data, Fetscherin (2010) developed an alternative measurement, which is based on objective, secondary data. He
used data on the actual performance of a nation, covering the nation’s export, tourism, FDI and immigration. The use of different dimensions to measure the nation brand strength again shows the complexity of the nation brand construct. Nonetheless, there is resemblance between the proposed dimensions and the majority of the studies that write about the nation brand construct generally include the following ones: economic, political, way of life, cultural value, product export and travel (see table 5 in appendix 1 for an overview).
The economic dimension entails the willingness to work or set up a company in the nation, taking into account the economic environment. The opinion of the people towards the competence and fairness of the national government makes up the political dimension (Fetscherin, 2010).The cognitive beliefs about a countries economic and political development are often associated with the manufacturing and business abilities of a nation (Maher & Carter, 2011), which consumers consider when they evaluate a product (Roth and Romeo, 1992). The way of life and cultural value dimensions are developed through personal experiences with a nation (Chen et al., 2014). The way of life dimension entails the view towards the countries ‘human capital’ and how attractive the nation is for people to work, live or study in. The cultural value dimension captures the perception of consumers towards the nation’s culture and history (Anholt, 2005; Fetscherin, 2010). The travel dimension encompasses the willingness of people to visit a country. It is often the most prominent dimension of a nation brand, since in many countries tourism companies extensively promote the nations tourist attractions. While these attractions are only a small part of what the nation has to offer, they are therefore likely to be the first association consumers have with a nation. As a result, the image of a country as a tourist destination can have a relative large effect on the whole nation brand (Anholt, 2005). The product export dimension covers the image that consumers have towards the products and services that are produced in the nation. Companies that are originated in a nation can make significant contributions to their HNB by transmitting the national image and culture across national boundaries (Anholt, 2005).
The above discussion shows that every one of the dimensions from a nation brand influences the overall nation brand. While opinions differ on what dimensions a nation brand exactly covers, the authors agree about one thing: nation brands are stronger if they perform relatively well on all of the dimensions that the nation brand entails (Anholt, 2005; Fetscherin, 2010; Futurebrand, 2015). This is in line with other branding research. Keller (1993) for example states that strong brands should perform well on rational as well as emotional brand dimensions in order to be able to build a strong relationship with consumers. FutureBrand (2015) therefore highlights in their last report that actually not every nation can be defined as a
brand. Instead they propose that nations can only be labelled ‘nation brands’ if they perform relatively well on all of the six dimensions. Nations with strong brands can enjoy competitive advantage, as the outcome of the survey shows that the amount of people that would buy a product associated with a ‘nation brand’ is twice as big as compared to a product associated with a nation that scores below average on all of the six dimensions. Thus, consumers prefer products associated with a ‘nation brand’. This insight supports the notion that it is important for a firm to have a relative strong HNB.
2.3.3 The impact of a strong nation brand
Because a nation brand encompasses a nation’s whole image, covering various disciplines, Fan (2010) notes that in the existing literature the impact of a nation brand has been interpreted in several different ways. The interpretations mainly differ between the areas of research the study was conducted for. Reasons noted in the literature why it is important to have a strong nation brand are that it can stimulate export (Dinnie, 2008) and enhance the competitive position of a nation (Anholt, 2006), attract foreign direct investment and tourism (Kotler & Gertner, 2002) or improve the political performance and soft power of the government (Fan, 2006, 2010). Therefore, governments start to use marketing activities to brand their nation (Dinnie, 2008). Place marketers focus on the influence of a nation brand on tourism, if a strong nation brand can attract more foreigners to visit the nation. Furthermore, place marketing is concerned with promoting a place to attract good employees and immigration (Fan, 2006).
However, as this study is focussing on the business side, it is more interesting to understand how it influences the firms that are originated in the nation. A nation brand can serve as an umbrella brand, co-brand, or ingredient brand in export (Dinnie, 2008; Fan, 2010). In that case, firms can use the nation brand as a source of secondary knowledge and its associations can be leveraged to affect existing brand knowledge, or create new brand knowledge that can be hard to obtain by means of regular product marketing programs (Keller, 2003). It is nowadays even more important for a brand to obtain secondary associations, since the marketplace is experiencing increasing (global) competition. However, not every entity is highly suitable to draw associations from. Keller (2005) states that the stronger the connection and the more similarities between the secondary entity (e.g. place) and the brand, the better the knowledge and associations transfer. Therefore, marketers often use a ‘commonality leveraging strategy’, where they choose to link entities that share commonalities with the brand (Keller, 2005). Supporting Keller’s theory, Roth & Romeo (1992) find that only when the recognized strengths of a firm’s home nation are perceived as important benefits for a specific product
category, a favourable nation-product category match exists. Only when a match occurs, the associations can easily transfer between the entities, resulting in improved evaluations of the product category. On the other hand, when the most important features of the product category are not congruent with the nation’s strengths, an unfavourable nation-product category match occurs. Then, evaluations of the product will not be improved, or will even be damaged (Roth & Romeo, 1992).
2.4 Consumer ethnocentrism
The characteristics of the market environment have been proven to impact the success of a local and global positioning strategy. Markets can have different sales potentials due to the differences in their competition and market environments (Douglas et al., 2001; Townsend et al., 2009). The cultural characteristics of the society can influence consumer behaviour, hence the success potential of a particular positioning strategy in the market (Talay et al., 2015). Academics proposed that the level of nationalism, patriotism and CET in the country of operation are the main cultural factors that influence the perception of consumers towards global brands. However, there is no consensus in the current literature weather nationalism and patriotism can explain positive or negative feelings towards local or foreign products, because it is not yet known if they influence the economic sphere of an individual (Balabanis, Diamantopoulos, Mueller, & Melewar, 2001). On the other hand, CET has been found to influence the perception of consumers towards global brands. Herche (1994) even finds that CET is a greater indicator of purchase likelihood than other marketing-mix and demographic variables. Consequently, it is likely that managers consider the level of CET in the market of operation when they predict potential success or failure of a local and global brand positioning. Therefore, CET is included as a variable of interest in this research.
Shimp & Sharma introduced the concept in 1987 and define CET as “the beliefs held by consumers about the appropriateness, indeed morality, of purchasing foreign-made products” (Shimp & Sharma, 1987, p. 280). CET is derived from the general concept of ethnocentrism, which was introduced in the sociological literature. The general concept states that people accept others that are similar to them in terms of culture (in-group) and reject people who are culturally different (out-group) (Shimp & Sharma, 1987). CET is thus closely linked to nationalism (Baughn & Yaprak, 1996; Sampson & Smith, 1957). Foreign brands can be perceived as coming from the ‘out-group’ and as a result foreign/global brands are seen as a threat to the local culture and economy. Ethnocentric consumers believe that when a foreign brand enters the local market, it can result in job losses (Shimp & Sharma, 1987). Moreover,
when ethnocentric consumers buy local products, they feel loyal to their home country (Steenkamp et al., 2003). As a result, they prefer products that are originated in their home country, even if they believe that a foreign product has a better quality (Shimp & Sharma, 1987). On the other hand, consumers low on CET validate a product on its own advantages and do not see a products’ foreignness as a reason to develop a negative brand attitude (Shimp & Sharma, 1987). Steenkamp et al. (2003) even suggest that consumers low on CET will have psychological gain when they consume global brands, although they do not find empirical support for this suggestion. Taken together, these findings suggest that consumers do not equally acknowledge the benefits of a global brand. This can result in an advantage for local brands in countries where consumers are generally high on CET.
2.5 Research gap
The literature review shows that the global-local dichotomy, the nation brand concept and CET are all recent discussed topics by academics as well as practitioners. However, there are still important unanswered questions that can be addressed. Research finds that both a local and global positioning can lead to positive consumer attitudes towards the brand and an increased purchase likelihood. This leads academics to give conflicting advice to managers whether to focus on developing strong local brands (Douglas & Craig, 2011; Kapferer, 2002; Schuiling & Kapferer, 2004), strong global brands (Holt et al., 2004; Aysegül Özsomer & Altaras, 2008), or both (Heinberg et al., 2017; Swoboda et al., 2012). Since for both positioning strategies multiple economic and psychological benefits are acknowledged, managers are confronted with a difficult question: how to make this positioning choice?
Academics shed light on this issue as they find that different firm and market factors influence consumer attitudes towards global and local brands and subsequently the (potential) success of the positioning choice. Therefore, they suggest managers to take these factors into account in the decision-making process. However, little evidence is available on which factors actually influence the brand positioning choice of managers. To address this gap, the present research focuses on two factors specifically: the image of the home nation and its interaction with CET.
The image of the firm’s home nation is likely to be a determining factor in the decision between a global or local brand positioning for three reasons. First, a nation is a source of secondary knowledge and increasing (global) competition gives pressure to create stronger brands, for which leveraging secondary associations is an inexpensive and quick tool (Keller, 2005). Therefore, a firm’s home nation image is expected to play an important role in the
decision-making process of managers in today’s environment. Second, it is difficult to find global brands that do not come from strongly branded countries (Anholt, 2000). Third, a nation brand image is mostly based on stereotype images (Kotler et al., 1993) and Halkias et al. (2016) find that the impact of a global brand on brand preference is affected by the stereotype image of the home nation of a firm. Previous research typically concentrated on the influence of a product-country image on consumer quality beliefs about a particular product category or product coming from that nation (Maher & Carter, 2011). This research neglected the non-product related, direct effects of the home nation image of a firm on consumer brand attitudes or purchase intentions. The nation brand concerns a nation’s whole image and includes both the product-related and non-product related affective and cognitive components. Therefore, instead of using the extensively researched country-of-origin concept (e.g. Kim, Chun, & Ko, 2017; Pappu, Quester, & Cooksey, 2006), the nation brand concept will be used to investigate if the image of the firm’s home nation affects the international brand positioning choice.
The limited amount of studies that did take the non-quality related component into account focused on its influence on product evaluation (Chen et al., 2014) or buying intention (Maher & Carter, 2011) and not on the actual buying behaviour of consumers. By focusing on the positioning choice of firms, more insight into the actual buying behaviour of consumers can be gathered, since it can be assumed that differences in (expected) sales volume of the brand positioning choice will affect the firm’s positioning strategy. Moreover, the use of the nation brand concept answers calls in the literature to shed more light on the concept (Fan, 2010; Anholt, 2002).
Firms, however, do not solely rely on their HNB when they predict potential success or failure of a global brand positioning, but also have to consider other factors (Talay et al., 2015). One cultural market factor especially, CET, could be important to take into account because it influences the perception of consumers towards global brands. Because of ethnocentric tendencies, consumers have a preference for local brands, even when the global brands are cheaper or associated with better quality (Shimp & Sharma, 1987). Steenkamp at al. (2003) found that the level of CET in a country reduces the perceived quality benefits of global brands and Balabanis & Diamantopoulos (2004) state that the level of CET predicts purchase behaviour. Nonetheless, it is unclear, to the author’s knowledge, whether CET actually influences purchase behaviour and if it is thus a valuable segmentation tool for international managers. Since here too it can be assumed that differences in (expected) sales volume of the brand positioning choice will affect the firm’s brand positioning decision, this research focuses
on the influence of CET on the positioning choice of firms. This approach will give more insight into the actual buying behaviour of consumers with different levels of CET.
To conclude, little evidence is available on whether firm and country factors in general, and the home nation image and level of CET specifically, affect the decision of managers to position their brand as either local or global. More insight on these aspects could, however, be useful for academics, managers, and politics. Especially in the context of developing markets where global firms are increasing their activities to be able to gain from economic growth (Özsomer, 2012). However, the amount of studies focussing on developing countries is still low compared to the many studies focussing on developed markets (Randrianasolo, 2017). Therefore, the following research questions are developed:
To what extent does the strength of the firm’s HNB affect the decision to position a brand as either a local or global brand?
How does the level of CET in the country of operation moderate the effect of the strength of the firm’s HNB on the decision to position a brand as either a local or global brand?
3. THEORETICAL FRAMEWORK
Based on the literature review, a conceptual model is built in this section, starting with the expected effect of the relative strength of the firm’s HNB of the choice to position a brand as either global or local. Thereafter, the hypothesized influence of the level of CET in the country of operation on the main effect will be discussed.
3.1 The effect of the firm’s HNB on its positioning choice
Essentially, a global brand can be recognised as a particular product category with its own benefits. The ‘commonality leveraging strategy’ from Keller (2005) then suggests that the HNB of a firm needs to generate associations that correspond with the important perceived benefits of global brands to create a ‘HNB – global brand match’. Only if this match occurs, associations can transfer from the firm’s HNB to the product brand and can strengthen the quality, status and prestige benefits that global brands enjoy (Keller, Sternthal, & Tybout, 2002). Moreover, it is not only important that the overall ‘HNB – global brand match’ occurs. Every dimension (economic, political, way of life, cultural value, travel and product export) of the nation brand can influence the overall nation brand and can therefore enable a ‘HNB – global brand match’.
The economic and political dimensions can be perceived as the cognitive dimensions of a nation brand. Chen et al. (2014) suggest that a positive opinion about the economic and political situation in a nation can create a favourable attitude towards its manufacturing and business abilities, which in turn positively influence the perceived quality from products coming from that nation. When a nation scores relatively high on the political and economic dimensions, this therefore means that its associations match with one of the most important perceived benefits of global brands: quality. The way of life and cultural value dimensions are the more affective dimensions of the nation brand (Chen et al., 2014). Global brands are associated with prestige and a wealthy and affluent lifestyle, which makes it possible for consumers to enhance their status by consuming products with a recognised global brand name. Especially if a firm’s HNB affective associations correspond to the perceived benefits of global brands, such as exlusivity and status for prestige, the non-localness can be very favourable (Roth & Romeo, 1992). With regard to the travel dimension, both the cognitive and affective components of the image that consumers have of a nation as a tourist destination can affect their attitude towards products coming from that nation (Lim & Weaver, 2014). When tourist companies for example promote idyllic beaches and luxury hotels, this can strengthen the nation brand and enhance its associations with a wealthy and affluent lifestyle. Associations with an affluent lifestyle in turn strengthens the perceived status image of the global brand. The strength of the product export dimension influences the perceived benefits of global brands, since firms transmit the national image and culture across national boundaries when they operate abroad (Anholt, 2005). When many brands originated in the same home nation are associated with high quality, prestige and status, the associations are likely to transfer back to the overall nation brand.
The above discussion shows that if a firm’s HNB associations positively correlate with the quality, status and prestige benefits from global brands on all of the dimensions, the firm’s HNB can strengthen or even create these benefits. However, a mismatch between one of the dimensions and the perceived benefits of global brands means that the firm’s HNB does not enhance these benefits, or can even damage the image of the brand (Roth & Romeo, 1992). As a consequence, a mismatch will make it less likely that a global brand succeeds in the market. In the case of a mismatch, a foreign company can preclude associations with its origin when it decides to enter a market with a local brand, thereby leveraging the associations of the local nation brand. Firms that operate in their home country with a local brand and want to extend their operations to foreign markets can decide to enter a foreign market with a different local brand, to ensure that the brand does not receive a global appeal in the home market.
Furthermore, since quality, prestige and status are known to be features of strong brands (Keller, 1993), countries that sufficiently correspond with these perceived benefits of global brands are essentially also ‘stronger’ nation brands. A nation brand is recognised as strong when consumers from all over the world perceive the nation brand more favourably on all of the dimensions as compared to other countries in the world (Anholt, 2005). When the firm’s HNB is strong and can therefore strengthen the perceived benefits of global brands, it is desirable to put more emphasis on the home nation as origin of the product, which is possible with a global brand positioning.
Following the above reasoning, it is expected that the firm’s HNB plays an important role when managers have to decide between a local and global brand positioning. A firm with a relatively strong HNB can gain more from a global brand strategy, while a firm can better choose for a local positioning when the firm’s HNB is relatively weak. Specifically, it is expected that firms with a relatively strong HNB choose to position their brand relatively more often as a global brand, while firms with a relatively weak HNB choose to position their brand more often as a local brand. This leads to the following hypothesis:
H1: Firms with a relatively strong HNB more often position their brands as a global brand than as a local brand.
3.2 The moderating role of consumer ethnocentrism
The previous section concluded that it is expected that firms with a relatively strong HNB will choose more often for a global positioning strategy. Firms, however, do not solely rely on their HNB when they predict potential success or failure of a global brand positioning, but also have to take into account other factors (Talay et al., 2015). One cultural market factor especially, CET, could be important to take into account because it affects the perception of consumers towards global brands (e.g. Alden et al., 2006; Nijssen & Douglas, 2011a; Steenkamp et al., 2003; Swoboda et al., 2012; Winit et al., 2014). Higher levels of CET namely means that people have strong nationalistic feelings, accept people from the in-group and reject people from the out-group (Shimp & Sharma, 1987). Ethnocentric consumers feel like they harm the local culture and economy when they buy foreign products (the out-group), resulting in a preference for local brands. Winit et al. (2014) even find that when local products have a higher price than their global competitors, ethnocentric consumers will still prefer the local brand. The level of CET in a country of operation can therefore explain why some consumers have a preference for local brands, even when the global brands are cheaper or associated with
better quality (Shimp & Sharma, 1987). Moreover, previous research found that the level of CET of consumers can influence the attitude they have towards global brands (Steenkamp et al., 2003; Swoboda et al., 2012; Winit et al., 2014) and as a result their purchase intentions (Steenkamp et al., 2003). Since ethnocentric consumers are expected to refuse to buy global products, high levels of CET in a country will result in a disadvantage for global brands and an advantage for local brands. As a result, positioning a brand as global will not benefit the brand when the level of CET is high in a country.
The reason why a strong HNB is likely to lead to a global positioning strategy is that a strong HNB can strengthen the perceived benefits of global brands. However, ethnocentric consumers will not recognise these benefits from global brands in the first place. Therefore, when the level of CET in a country of operation is high, the effect of the strength of the firm’s HNB will be weakened and firms are expected to choose a local positioning strategy to be part of the ‘in-group’. On the other hand, consumers low on CET do not recognise a products’ foreignness as a reason to develop a negative brand attitude towards global brands and evaluate the product on its own advantages. There is little support in the literature that these consumers have as a result an expressed preference for global brands (Nijssen & Douglas, 2011). Therefore, it is not expected that the main relationship will be influenced when the level of CET in the country of operation is low.
The present discussion leads to the conclusion that a negative interaction between a firm’s HNB strength and the level of CET in the country of operation can be expected, such that if the level of CET increases in the country, the impact of the firm’s HNB on the brand positioning will be weakened. Specifically, it is hypothesized that all other things being equal:
H2: The effect of the strength of the firm’s HNB on the decision to position a brand as global is weakened if the level of CET in the country of operation is high.
To conclude, it is expected that the firm’s HNB and the level of CET in the market of operation are determining factors in the decision between a global or local brand positioning. Specifically, it is hypothesized that firms with a relatively strong HNB more often position their brands as a global brand than as a local brand in a developing market and that the level of CET in the market of operation weakens the effect of the firm’s HNB strength on the positioning choice. Figure 1 visualises the expected relationship between the variables.
Figure 1: conceptual model
4. METHODOLOGY
This paper uses secondary database research to determine to what extent the strength of a firm’s HNB affects the decision to position a brand in a developing market as a global brand and if the level of CET in the market moderate this main effect.
4.1 Empirical setting
The positioning choice of firms from 2006 till 2015 in the alcoholic beverage industry in developing countries in Asia was reviewed to test the hypotheses. Specifically, the focus was set on the effect of the strength of the HNB on the positioning choice of firm i in year t in country c. Therefore, the level of analysis is firm-country of operation-year and panel data was used.
4.1.1 Industry selection
The alcoholic beverage industry, which includes the beer, wine and liquor categories, is an appropriate product category to use for this study for two main reasons.
First, the identity-signalling capacity and the visibility of a product category influence consumer behaviour in developed and developing markets (Davvetas & Diamantopoulos, 2016). Differences in consumer behaviour have in turn been found to affect the positioning decision of a firm. Especially cconsumers in developing economies use brands to express their self-identity. In order to be able to communicate their desired identity, the consumption of the product needs to be visible to others. This is almost always the case with the consumption of alcohol beverages, as these drinks are usually consumed with other people.
Second, in many cases the origin of the product is named on the label of alcoholic beverages, which makes it more likely that consumers will associate the product with a certain
nation. Consequently, it will be likely that the HNB of a firm will be an important driver of positioning strategies in the alcoholic beverage market. As a brand strategist from Denmark stated: “when it comes to identifying with a country, after flags, national anthems and national airlines comes beer [. . .] the advantages are very clear. It is what you would call free branding-leveraging a country’s brand rather than building your own” (Madichie, 2011, p. 1616).
4.1.2 Country selection
The Asian region is specifically suitable for this research because there is a growing interest among global firms to enter the Asian market and the market is fragmented.
Global alcoholic beverage firms see growth opportunities in Asia because of the steady-growing alcoholic beverages market and favourable demographic characteristics. In 2014, the Asian market was responsible for 30% of the global sales in the alcoholic beverage industry and this growth is expected to continue (Jiang, Xiang, Waleewong, & Room, 2017). The growth in the alcoholic beverage market is caused by economic and cultural changes in the region. In the wine market specifically, the growth is mainly driven by a raise in discretionary income, which allows more consumers to buy higher priced products such as wine (MarketLine, 2017b). In the spirits market, consumers also move to more expensive segments, while another trend is an increased interest in foreign brands (MarketLine, 2017a). Moreover, Asia is a region with multiple developing countries, which generally consist of a relatively large, young age group. As alcohol is most widely consumed among people under the age of 30, these developing countries are attractive for global players. Because of these two rationales, global firms see opportunities and have entered, or will enter the Asian market (MarketLine, 2015).
Furthermore, the alcohol beverage market is fragmented. The four most prominent players only control 35,2 percent of the whole Asian market (MarketLine, 2015). Fragmentation is a result of the existence of popular region-specific specialities. Jinro is for example a big player in South Korea, while Sang Som dominates in Thailand and San Miguel in the Philippines (Icap, 2006). For the wine market specifically, it is noted in the 2016 industry report from MarketLine that various local and international players operate in the market (MarketLine, 2017b).
The increasing interest of global firms in the fragmented Asian alcoholic beverage market, with both global and local players, implies that consumers are able to choose from many brands, both foreign and local, and that there will be enough observations in the sample.
4.2 Sample and data collection
The initial dataset that was used in this research contained panel data about the positioning choice of firms that operated from 2006 till 2015 alcoholic beverage industry in Asia. The database was mainly extracted from the global research database Passport from Euromonitor International (www.euromonitor.com). Euromonitor provides worldwide information on markets, individuals and industries. Databases from Euromonitor have been used previously in international marketing studies (Kumar, Sunder, & Ramaseshan, 2011; Strizhakova & Coulter, 2015), which is not remarkable as Euromonitor claims to be the leader in the provision of independent, strategic (international) marketing research.
However, to be able to test the hypotheses, the initial dataset needed to be developed. Missing information and control variables were added and new variables (such as the percentage of global brands) were subtracted. Moreover, brands operating in the countries Japan, Uzbekistan and Kazakhstan were deleted from the database, because these countries are not classified as developing countries (United Nations, 2014). Only developing countries are included in the sample because, as discussed in the literature review, consumers from these markets behave differently towards local and global positioned brands than consumers from developed markets (Özsomer, 2012; Randrianasolo, 2017). While in general consumers from both developing as well as developed countries believe global brands have a higher quality, consumers in developing markets also prefer global brands for status-enhancing reasons. Only including developing countries will therefore make sure that the firms in the sample are operating in the same context. Developing countries in Asia that will be included in our sample are China, Honk Kong, India, Indonesia, Republic of Korea, Singapore, Malaysia, Pakistan, the Philippines, Taiwan province of China, Thailand and Vietnam (United Nations, 2014).
The initial number of observations in these countries is 5781. However, observations needed to be removed from the dataset due to the fact that Bermuda, Honk Kong, Kazakhstan, Philippines, Uzbekistan and Latvia are not included in the CBI of FutureBrand and information is missing on different control variables. The final dataset yields 3319 firm- country of operation-year combinations, from 227 companies, originated in 30 different countries.
4.3 Variables and measures
4.3.1 Dependent variable
Positioning choice was measured as a percentage of regional/global brands of the total number of brands in the firm’s portfolio in country i in year t. Based on the classification of Townsend et al. (2009), a brand is classified as local when it is sold in one country only, as regional when it is sold in multiple Asian countries and as global when it also operates in one of more regions outside of Asia. While previous research (Talay et al., 2015; Townsend et al., 2009) made the distinction between the number of regional and global brands in a portfolio of a firm, the percentage of regional and global brands in a firm’s portfolio have been converted into one variable for the purpose of this research. Internationalisation can be perceived as an incremental process; therefore, a regional brand is essentially in the beginning of the globalization process (Townsend et al., 2009). This means that the reasons to choose for a regional or global brand, among which the influence of a firm’s HNB, is not expected to differ substantially for a regional or global brand. For the purpose of this expectation, it makes more sense to combine the two variables into one total percentage.
4.3.2 Independent variable
Home nation brand strength was measured with the ranking of the nation brand on the CBI, developed by FutureBrand consultancy (2014). The index consists of 60 countries, where the strongest nation brand is given number 1 and the weakest number 60. Since 2006 FutureBrand (www.futurebrand.com) annually measures the relative strength of 74 nation brands across six dimensions: tourism, culture, value system, business potential, heritage, and made in. Nation brands are stronger if consumers from all over the world perceive the nation brand more favourably on the six dimensions as compared to other countries in the world. As written in the 2012-2013 report: “ the rankings show us what qualities people associate with different places and their strength of perception, giving us a good indication of the decisions they will make in relation to those places today” (FutureBrand, 2012).
The last report from 2015 is used in this research, which is based on quantitative and qualitative data from 2,530 frequent travellers and opinion formers, from 17 countries (USA, Canada, Brazil, Argentina, Mexico, UK, Germany, France, Russia, Turkey, South Africa, UAE, India, China, Thailand, Japan) (FutureBrand, 2015). FutureBrand developed their own Hierarchical Decision Model, which they used to create their survey. Next to FutureBrand, there
are other practitioners and scientists that measure the strength of nation brands. The Anholt Gfk Roper Nation Brands Index (www.nation-brands.gfk.com) is probably the most well-known index. However, it is not possible to gain access to this database because of economic reasons. Furthermore, the alternative measurement by Fetscherin (2010), which is based on objective, secondary data instead of qualitative data does not contain information about the home countries that are present in the sample of this research. Nonetheless, the CBI from FutureBrand seems like a credible database to use for multiple reasons. First, they use QRi Consulting as their independent research partner. Second, they use a mixed method design, because they use quantitative as well as qualitative research, which improves the integrity of their findings. Third, the published reports from FurtureBrand have been cited in multiple academic journals (Balabanis & Diamantopoulos, 2016; Fetscherin, 2010; Mariutti & Tench, 2016). While the index has not been used to answer empirical research questions, these reasons imply that it is the right index to use for this study.
4.3.3 Moderator variable
Consumer ethnocentrism was measured using data from the World Values Survey (www.worldvalueservey.org) and the collectivism-individualism scale from Hofstede. No accessible online database exists that measures the average level of CET of the inhabitants of the countries of the world. However, CET has been found to be highly correlated with consumer nationalism (Baughn & Yaprak, 1996; Conner, Reardon, Miller, Salciuviene, & Auruskeviciene, 2017a; Sampson & Smith, 1957) and collectivism (Conner et al., 2017; Hofstede, Hofstede, & Minkov, 2010). These three constructs all address the relationship between oneself and a group. Therefore, a question from the World Value Survey (WVS) questionnaire that underlines nationalism and the collectivism-individualism scale from Hofstede have been used to address the level of CET in a country.
Nationalism concerns the view that “one’s country is superior and should be dominant” (Balabanis et al., 2001, p. 160). This definition implies in-group associations and a deprecation of other nations. Therefore, it is not surprising that nationalism has a positive effect on CET (Conner et al., 2017). Welzel (2012) suggests that the item “How proud are you to be [Nationality]?” from the WVS underlines nationalism. The WVS collects data from 400.000 respondents from 100 countries, through which they cover almost 90 percent of the population from the world with their research. Because of its broad range, many authors have preceded this research and used data from the World Bank to test their hypotheses (Inglehart & Baker,
