Groningen University
Newcastle University Business School
The Country of Ownership Effect
Lorenzo Ferrari 150688112 – S3005151
Program: Advanced International Business Management & Marketing Supervisors: Elefterios Alamanos & H.A. (Henk) Ritsema
Abstract
The study aims to analyze the influence of a new corporate ownership on brand image. In particular the research investigates the context of a cross border acquisition in the automotive industry where the parent company originates from an emerging country.
Cross border acquisitions have become increasingly popular over the last decades. However, since little attention was directed to country of origin’s negative effects, this study’s value is to analyze potential unfavorable effects triggered by the acquisition process.
In order to test the hypothesis, the study uses the case of the cross border acquisition that involved Jaguar Cars in 2008 when the brand was acquired by the Indian Tata Motors.
Value perception and brand attitudes were recognized as the elements of brand image and were used to assess consumer’s evaluation.
The project developed and empirically analyzed a between – subjects experiment. The survey distributed gathered the observations of 224 respondents. Each participant was randomly assigned to the treatment group, where the cross border acquisition information was provided, or to the control group, where it was not provided.
The differences between the different condition groups were investigated through a Mann Whitney U test. In addition, in order to determine the role of brand familiarity in the influence, MANOVA tests were performed.
The findings pointed out that the information about the Indian ownership has a significant influence on all the components of brand image. Moreover, brand familiarity resulted to plays a relevant role in how the consumers elaborate the stimulus provided in the experiment.
Therefore, companies that are considering to engage a cross border acquisition should carefully assess the potential consequences of their own country image.
Acknowledgements
This project marks the conclusion of my Master study at the University of Groningen and at Newcastle University Business School. I would like to express my gratitude to my supervisors dr. H.A. (Henk) Ritsema from the University of Groningen and dr. Elefterios Alamanos from the Newcastle University Business School for the support and the constructive criticisms throughout the project.
List of abbreviations
FDI Foreign Direct Investment CBA Cross Border Acquisition M&A Mergers and Acquisitions COO Country of Origin
PCA Principal Components Analysis MANOVA Multivariate Analysis of Variance
Abstract 1
Acknowledgements 2
List of abbreviations 3
Introduction 6
1.
Research purpose and research question 7
1.1 Research contribution 8 1.2 Research disposition 9 1.3 Literature Review 10 2. 2.1 Part I 10
2.1.1 Associations and brand image 10
2.1.2 The measurement of brand image and perceived value 11
2.1.3 A new measurement conception of brand image 13
2.2 Part II 20
2.2.1 Country of origin effect 21
2.2.2 Country image 22
2.2.3 Consumer’s elaboration of origin cue 23
2.2.4 The impact of country image on the components of brand image 27
2.3 Part III 29
2.3.1 Cross border acquisitions and actual trend 29
2.3.2 CBAs and country of ownership 30
2.3.3 The role of brand familiarity 32
2.4 Conceptual framework 35
2.5 Overview of the relevant literature 36
Methodology 41
3.
3.1 Research design 41
3.2 Experimental design 42
3.3 Data collection and analysis 43
3.4 Brand insights and selection 45
3.5 Questionnaire design 47 3.6 Manipulation 50 3.7 Construct measurement 51 3.8 Ethical Considerations 56 Findings 57 4. 4.1 Data overview 57
4.2 Demographics sample characteristics 58
4.3 Descriptive Statistics 59
4.4 Internal consistency reliability 60
4.5 Principal components analysis 61
4.6 Hypothesis Testing 62
4.6.1 The effect of the country of ownership information on the components of brand image 63
4.6.2 Respondents already informed 65
4.6.3 The influence of brand familiarity on the country of ownership information effect 67
4.7 Post hoc test 75
4.8 Overview of the Findings 76
Discussion 77
5.
Conclusion 83 6.
6.1 Contributions 83
6.2 Managerial implications 84
6.3 Limitations and further researches 85
References 87
Websites 114
Appendices 116
Appendix A: Questionnaire 116
Appendix B: Post hoc survey 124
Appendix C: Respondents ‘nationalities 128
Appendix D: Descriptive statistics 129
Appendix E: Distribution of the dependent variables 131
Appendix F: Principal components analysis 132
Appendix G: Distribution of the dependent variables per condition 134
Appendix H: MANOVA output tables (treatment group) 138
Appendix I: MANOVA output tables (control group) 142
Introduction
1.
The flow of foreign direct investments grew considerably in the last decades. The
globalization encouraged the movement of capital and consequently entailed a new wave of mergers and acquisitions all over the world (Bertrand and Zuniga, 2006).
On the one hand, foreign direct investments (from here referred as FDI) help to boost and relaunch businesses injecting capital in return for the opportunity to control and manage the acquired assets; on the other hand, they are channels to access established brands, developed technologies and to connect with prepared human capital (Borensztein et al. 1998).
Not only emerging countries try to captivate investments from abroad. FDI process implies several benefits such as knowledge exchange, increment in income and increased productivity that attract advanced economies too (Carbonara and Caiazza, 2010).
The most common direction of capital flow is from a developed to a less developed economy (Moran, 1998).
As corporations from more industrialized nations generally have superior capital, technology and management skills (Li et al., 2016), they usually leverage their resources and unique competences in order to access new markets (Child, 2002).
However, in the last years, in particular after the financial crisis, the trend is reversing. Nowadays, firms from emerging countries are not only increasing their FDIs but they are progressively acquiring established western brands (Ataullah, 2014).
Some well-known examples are IBM ThinkPad division acquired by Lenovo in 2005, U.S. cinema chain AMC Theatres purchased in 2012 by the Chinese multinational Wanda Group and Pirelli controlled by ChemChina since 2015.
Jaguar Cars brand is examined in the study; the well-known British automaker is Indian owned since 2008, when Tata Motors acquired the control of the company.
Despite the effects of CBAs of firms from emerging countries on western consumers have not been extensively analyzed yet (Chung et al., 2014), several authors confirmed the relevance of country of origin image on customer’s evaluation (Nebenzahl et al., 1997; Magnusson et al., 2011; Thakor and Lavack, 2003; Mohd Yasin et al. 2007); their studies confirmed the fact that consumer’s perception toward a brand is moderated by the degree of economic development of its country of origin.
Therefore, the study intends to investigate the consequences of a cross-border acquisition (from here referred as CBA) in the automotive sector. In particular the focus narrows on a new corporate ownership from a an emerging country.
In order to avoid misunderstandings, the study adopts the classification of markets
(developing/emerging and developed) by Morgan Stanley Capital International annual market classification review (2016) and therefore its criteria.
Research purpose and research question
1.1
The study intends to investigate whether the country cue transmitted by a new corporate ownership from an emerging country influences target company’s brand image.
The purpose is to understand if the country of ownership information implies a significant impact on consumers’ perceived value and brand attitudes (components of brand image), and in case it does, to study the role played by brand familiarity in the elaboration of the
information.
For this reason, all the aspects of the construct result significant in determining then the perceptions that drive consumers ‘ behaviors and buyers’ reactions to advertising and promotion (Keller, 1993).
Different authors such as Cordell (1991, 1992) and Manrai et al. (1998) pointed out the origin cue as a significant factor in influencing brand image. For this reason is assumed that the CBA that changes the nationality of the company owning the brand can be a potential strong element in affecting consumer perception.
Considered the purpose, the thesis is built around the research question: “How does a
cross-border acquisition influence target firm’s brand image?“.
In order to investigate this particular issue, a top down deductive approach (Knecht, 2013) is chosen. By starting from the general theory the hypothesis are formulated through logical deductions. Jaguar case is then used as tool to test the hypothesis built in the literature review.
Research contribution
1.2
Firstly, the study identifies from the literature issues related to the existing measurement approach of brand image. Considering that important elements of the evaluation were overlooked in the current design, in order to provide a more exhaustive picture of the construct a reviewed conception of brand image is proposed.
Secondly, literature about country of origin's negative effects on acquisitions is almost inexistent (Li and Lee., 2011), the reason is because in most of mergers and acquisitions (from here referred as M&A), or the western firm acquires the company from the emerging country or the M&A occurs between firms from developed countries.
relevant elements in consumer’s perception (Bilkey and Nes, 1982; Erickson et al., 1984; Johansson et al., 1995; Papadopoulos et al., 1990), the research has been conceived as timely and appropriate.
The results of this study can clarify whether and to what extent consumers reflect the takeover of a western brand by a corporation from a developing country on their perceptions and what is the role played by brand familiarity in the process.
In the past, a lot of researches focused on the study of consumer’s associations between a certain product or brand and a country. This study intends to move the focus on the impact of new brand - country associations on prior knowledge in the context of CBAs, topic that received little consideration until today.
The final outcomes can be useful to evaluate if the parent company should take into account counteractions in order to manage potential repercussions of the CBA on brand image.
Research disposition
1.3
The research begins with the literature review that discusses the construct of brand image and its measurement approach. After the elaboration of the origin cues by consumers the
hypothesis formulation is presented to the reader.
In Chapter 3 is then outlined the research design. In the section, the research approach, the data collection process and the measurement tools are described. In Chapter 4 the statistical analysis is performed while in Chapter 5 the findings are discussed and compared with the expectations.
Literature Review
2.
In this chapter, the significant literature is discussed in order to elaborate the hypothesis. The section is composed by three parts, at the end of which the research hypothesis and the conceptual framework are presented.
2.1 Part I
In the first part of this chapter the concept of brand image is introduced and the current approach to its measurement is described. The investigation throughout the literature permitted to identify and explain lacks in the current evaluation of brand image.
Subsequently, a reviewed conception of brand image is proposed in order to provide a more comprehensive assessment of the construct.
2.1.1 Associations and brand image
Associative learning theory is a widespread approach in marketing to describe memory mechanisms (Beshart, 2010; Spry et al., 2011; Washburn et al., 2000). Human memory consists as a multitude of pieces of information, called nodes, connected by associative links. Memory process expands as the first node triggers other linked nodes that in turn activate other nodes (Spry et al., 2011).
Thus, in marketing, a single association is conceived as the informational node linked to the brand node in memory that contains the meaning of the brand for consumers (Keller, 2013). Associations involve perceptions of values and attitudes toward the brand and are simply defined by Aaker (1996) as “anything linked in memory to a brand”.
For example Keller (1993, p. 2) defines brand image as “the set of associations linked to the brand that consumers hold in memory”.
The relevance of brand image is thus related to its power to summarize customer’s thoughts and feelings to brand related information, and therefore transmit value.
Associations play a significant role for companies’ marketers and for customers both; they are the linking points to retrieve brand related information in memory and therefore are triggered in purchase decisions (Aaker, 1991).
For companies, are compelling tools to differentiate from competitors and create positive attitudes and feelings towards firm’s products.
From consumer’s perspective they permit to identify the producer, cut down the search cost and support the purchase decision (Aaker, 1991).
According to Knox and Freeman (2006) consumer’s brand image is moderated by two sets of variables: internal and external associations. Internal concern individual’s associations developed through the direct and indirect experiences with the brand while external associations regards brand traits and peculiarities such as its origin.
The impacts of the internal association of brand familiarity and the external association of brand origin on the elements that constitute brand image will be analyzed in the research.
2.1.2 The measurement of brand image and
perceived value
Between these dimensions, the construct of perceived value, in particular, arouse remarkable attention among scholars. Despite the widespread interest around the concept, the literature doesn’t agree upon a common view of perceived value. The point of disagreement between researchers deals with the uni-dimensional or multi-dimensional nature of the construct. As a consequence of the lack of agreement, Khalifa (2004) states that perceived value is one of the most misused notion in business literature.
Uni-dimensional research streams of perceived value
Multi-dimensional research streams of perceived value
-Dodds et al. (1991) -Dodds and Monroe (1985) -Kirmani and Zeithaml (1993) -Lapierre et al. (1999)
-McDougall and Levesque (2000) -Monroe (1990)
-Spreng et al. (1993) -Teas and Agarwal (2000) -Zeithaml (1988)
-de Ruyter et al. (1997) -Holbrook (1994) -Lemmink et al. (1998) -Mathwick et al. (2001) -Parasuraman (1997) -Sheth et al. (1991) -Sweeney et al. (1996) -Sweeney and Soutar (2001)
Table 2.1 Uni-dimensional and multi-dimensional streams of research
Uni-dimensional approaches to the study of perceived value deal with it through the utilitarian perspective, considering economic and cognitive inputs in order to evaluate the relative trade-off between benefits and costs (Sanchez-Fernandez and Iniesta-Bonillo, 2007). From this perspective, “value” is conceived as a function of quality and price.
Despite the relative ease and clarity are advantages of the method, uni-dimensional studies lack to capture the superior complexity of value perception.
Several authors complained about the fact that trade-off approaches were too superficial models that overlook the multi-dimensional nature of consumer perceived value (de Ruyter et al., 1997; Mathwick et al., 2001; Sweeney and Soutar, 2001).
Indeed, evidences of new communication strategies such as emotional marketing (Havlena and Holak, 1998) and campaigns that targeted consumer’s social status (Eastman et al., 1999) seemed to confirm a lack in the existing conception of perceived value.
Consequently, multi-dimensional studies were developed. Researchers, in addition to utilitarian factors, took into account hedonic aspects in order to be able to capture the inner emotional and social elements (Lemmink et al., 1998).
The conceptual framework of the multi-dimensional approach is based on prior research that identified symbolic and esthetic factors as relevant circumstances in influencing consumption mechanisms (Holbrook and Hirschman, 1982). In fact, several authors proved that hedonic factors impact consumer’s perception and purchasing behaviors as well (Holbrook, 1986; Sheth et al., 1991; Sweeney et al., 1996).
Multi-dimensional constructs, thus, enable scholars to link more predictors with more sources and therefore, offer a holistic representation of complicated phenomenon. By consisting of several interrelated attributes, they permit a more comprehensive picture than uni-dimensional approaches (Sweeney and Soutar, 2001).
2.1.3 A new measurement conception of brand
image
Even though value for money remains a fundamental concept within perceived value, it seems that hedonic components as well play a role in a dimension usually considered as only
functional oriented.
The framework of brand image developed by Kirmani and Zeithaml (1993) (see figure 2.1) overlooks extrinsic advantages of non-product-related attributes that consumers evidenced to consider for their needs for personal pleasure and social approval (Keller, 1993).
This is the reason why the adoption of a uni-dimensional interpretation of perceived value, simply composed by utilitarian factors, would be a limitation of the overall picture of brand image.
Brand image components are therefore reconsidered and the new input dimensions of emotional value and social value are introduced. The constructs of perceived quality and brand attitudes are maintained from the previous design while what was earlier defined perceived value keeps the same functional meaning but changes name into value for money. As stated before, in order to draw a more comprehensive conclusion from the study, the model of brand image proposed in the dissertation approaches perceived value as a multi-dimensional construct.
Figure 2.1 Conception of brand image by Kirmani and Zeithaml (1993)
Figure 2.2 New conception of Brand Image
Perceived Quality
Functional value concerns the perceived utility of an alternative resulting from its physical and consumption related purposes (Sheth, Newman, and Gross, 1991).
In particular, the functional value identified in the dimension of perceived quality expresses the utility derived from the perceived quality and expected performance of the product. Quality can be defined as superiority or excellence (Hjorth-Andersen, 1984). Therefore, “the concept of perceived quality can be defined, by extension, as the consumer’s evaluation about a product’s overall excellence or superiority” (Zeithaml, 1988, p. 3)
Holbrook and Corfman (1985) distinguish between mechanistic and humanistic quality. Mechanistic quality is related to an objective characteristic of the product while humanistic relies on a highly relativistic phenomenon that differs between judges.
Humanistic quality is different from objective one even because is arguable that objective quality may not exist considering the fact that all quality is perceived by someone (Zeithaml, 1988). Thus, the notion of perceived quality, is subject to individual’s interpretation
depending on the perception process that may vary for different people, products, places and alternatives available (Oude Ophuis & Van Trijp, 1995).
According to Aaker and Joachimsthaler (2000), perceived quality is “a special kind of
dimension”. Firstly, because it impacts on brand associations in several contexts and secondly because it has been empirically proven that influences profitability.
It is a challenge for researchers to generalize about quality perception. The characteristics that consumers use to evaluate quality widely change depending on products.
Value for Money
Uni-dimensional studies about perceived value usually conceive value as the cognitive trade-off between quality and price (e.g., Cravens et al., 1988; Monroe, 1990); this corresponds to value for money dimension.
Zeithaml (1988, p. 14) describes it as “the consumer’s overall assessment of the utility of a product based on perceptions of what is received relative to what is given”. In other words, it is the personal assessment of the product’s “get” and “give” components.
This approach embraces the “theory of utility”, according to which consumers obtain value as difference between the utility provided by the service or good and the “disutility” reflected in what they pay.
Therefore, price and quality, as the elements of the trade-off, have distinct and opposite effects on perceived value (Dodds et al., 1991).
A tricky aspect regards the fact that price is at the same time a perceptual indicator of quality as well.
We usually expect a balance within the price-quality trade-off, thus a paradox affects our reasoning when a cheap good is simultaneously recognized as attractive thanks to its low price but not attractive because of the perception of scarce quality (Scitovszky, 1944). However, considered the subjective nature of perception, the cognitive trade-off may vary from one consumer to another (Holbrook, 1994). Some consumers can consider as valuable low price products while other can perceive value when quality and cost are balanced (Zeithmal, 1988).
Emotional value
Emotional and social dimensions are part of the hedonic and non-instrumental value. The relevance of hedonic value resides in the creation and delivery of customer value that can help firms to build close emotional links with consumers (Butz and Goodstein, 1996).
Emotional value reflects the affective worth and the extent to which this is related to positive (e.g., pleasure or excitement) or negative states (e.g., concern or scare) (Sanchez-Fernandez and Iniesta-Bonillo, 2007).
Sheth et al. (1991, p. 162) defines emotional value as “the perceived utility acquired from an alternative’s capacity to arouse feelings or affective states. An alternative acquires emotional value when associated with specific feelings or when precipitating or perpetuating those feelings”.
By studying shopping trips, Holbrook (1986) found that they are not merely motivated by the goods that are bought, rather there are various intangible and emotional trade-off that must be taken into account in order to understand consumption activity.
Similarly, emotions can be evoked by products; for instance a specific food can remind childhood experiences or a sport car can spawn feelings of success and self-confidence (Sweeney et al., 1996).
Sheth et al. (1991) in their study explain that while functional and social value play a major role in the choice between the use of filtered or unfiltered cigarettes, emotional one is the dominating value in the decision to smoke.
Therefore, emotional value, is identified as something enabled by inner affective reactions.
Social Value
Marketing research separated the tendency to conform to other’s expectations into value expressive and utilitarian influences (Price et al., 1987).
Value expressiveness concerns customer’s ambition to foster self-image by conforming with a reference group. This happens through the process of identification, when someone else’s opinion is supported because related to satisfy a self-defining relationship (Brinberg and Plimpton 1986; Prince et al., 1987).
Utilitarian influence operates through the mechanism of compliance (Burnkrant and
Cousineau 1975). It reflects the personal attempt to be coherent with expectations of others in order to be rewarded and avoid punishments (Bearden et al., 1989).
James (1890) was one of the first to argue that individuals are identified as the sum of their own possessions. Since then on, several scholars investigated the relationship between identity and material possessions (Belk, 1988; Landon, 1974; Solomon, 1983).
According to the rationale of impression management, individuals are affected by an internal drive to cultivate a specific social image from their purchases (Mandrik, 1996; Sallot, 2002). Therefore, social value concerns the image that is compliant with the standards of consumer’s friends or associates and with the social image the consumer desires to express (Sanchez-Fernandez and Iniesta-Bonillo, 2007).
Brand Attitudes
Brand attitudes are the highest level of brand association, thus the most abstract (Keller, 1993). They are composed by both cognitive and affective elements (Kirmani and Zeithaml, 1993).
Brand attitudes are the product of an intimate appraisal of the brand with personal
preferences, for this reason they are usually measured in terms of like/ dislike, good/bad etc. (Kirmani and Zeithaml, 1993).
Brand attitudes differ from the previous constructs since less specific and reasoned; they simply reflect the inner judgement that a consumer holds in memory (Keller, 1991). The combination of these elements moderates customer personal proclivity to react to product’s stimuli such as advertisements (Evans et al., 2010).
Eagly and Chaiken (1973, p.7) add the idea that attitudes are enduring states “that presumably energize and direct behavior”.
Consequently, brand attitudes ‘relevance is related to their nature to be reliable predictors of consumer behavior towards a brand (Shimp, 2010). For instance, Baldinger (1996) found out a close relationship between positive brand attitudes and increased brand market share while Starr and Rubinson (1978) identified a positive relationship between brand attitudes and loyalty.
Despite for someone the concepts of brand attitude and brand image can blend, the difference is explained by analyzing their structures; brand image is a consumer construct shaped in the associative memory network that results from several associations. Brand attitude is only one element of the memory network that explains brand image.
Despite brand attitude is basically a broad judgement of the brand, it is only a part of a higher level of abstraction that reflects the overall brand perception, namely brand image (Faircloth et al., 2001).
2.2 Part II
origin cue and what are the implications that country image entails on the elements of brand image.
2.2.1 Country of origin effect
Nowadays, consumers can rely on a large amount of product information (Ozretic-Dosen et al., 2007). Consumers judge products taking into account both intrinsic and extrinsic cues (Kirmani & Zeithaml, 1993) that are the starting points to organize information at various levels of abstraction (Zeithaml, 1988).
Intrinsic cues concern physical features of the product that cannot be changed without altering its nature; examples are color, texture and shape. Extrinsic cues refer to parts not related to the physical product that could be changed without distorting the nature of the object; examples are price, brand name, warranty and the country of origin (Olson, 1978).
Several studies demonstrated that preconceptions and stereotypes about certain countries impact consumer’s judgement of goods coming from those nations (Gurhan-Canli and Maheswaran, 2000; Wang and Yang, 2008).
As an evidence of the extensive research published on the topic, marketers and scholars generally agree on the relevance of country of origin (from here referred as COO) on consumer behavior (Piron, 2000).
Nagashima (1970, p.68) defines country of origin as “the picture, the reputation, the stereotype that businessmen and consumers attach to products of a specific country. This image is created by such variable as representative products, national characteristics, economic and political background, history and traditions”.
Therefore, consumer perceptions of brands and products decline when COO moves from a country with a positive image to another that suffers liabilities from negative associations (Jo, 2005; Pappu et al., 2006).
COO is widely used by firms to build and strengthen competitive advantage in international marketing (Parameswaran, 1994) thanks to its power to enhance positioning and reduce risk perception from product usage (Thakor & Lavack, 2003).
Consequences of its effect are identified in consumer perceptions (Solomon et al., 2010) and in consumer purchase intentions (Papadopoulous and Heslop, 2002; Knight et al., 2007).
2.2.2 Country image
Consumer’s perception and knowledge of COO is reflected in the idea of country image. While researchers in conventional COO analyze if individuals prefer goods or brands from one nation rather than from another one, the study of country images permits to investigate why this happens (Roth and Diamantopoulos, 2008).
Country image is “the overall perception consumers form of products from a particular country, based on their prior perceptions of the country’s production and marketing strengths and weaknesses” (Roth and Romeo, 1992, p. 480).
Scholars identified that the perceptions of country images are influenced by the national economic development, technological advancement and standard of life, that generally have a similar pace (Manrai et al., 1998).
Consumers model their preconceptions towards a country or directly or indirectly. The assumptions are shaped directly through former experience with people and goods from that country or indirectly by relying on someone else’s information.
By analyzing the image of emerging countries, Usunier (1996) tested that their unfavorable influence is reflected in consumers’ perceptions of inferior products in terms of quality and safety.
The impact resulted particularly strong towards premium products and when the financial and usage risks were substantial (Cordell, 1991, 1992). Similar conclusions are drawn by Manrai et al. (1998), who proved that consumers, in order to minimize the risk, strongly prefer to buy premium products related to developed backgrounds.
These studies, carried out mainly in western countries, confirm the idea that consumers from developed countries tend to prefer domestic goods or at least products with similar origin backgrounds. The trend, though, is reversed in emerging countries, where consumers favor imported goods from developed nations (Pappu et al., 2007).
2.2.3 Consumer’s elaboration of origin cue
Brand origin and the related country image are considered influential elements for consumers in the categorization process (Gregan-Paxton et al, 1997).
The process of categorization plays an influential role in consumer perceptions and behaviors (Ratneshwar et al. 2001); its role is to explain how individuals elaborate signals and pieces of information.
Categorization process has two objectives: coding of experience and licensing of inferences (Smith 1995).
Hence, through the categorization of brands by origins, consumers can minimize the demand of cognitive resources.
Licensing of inferences concerns the evaluation of the characteristics of a product, or a brand, from its category (i.e. the national origin).
Marketing literature confirmed the relevance of the inferences linked to the categorization of brands, and in particular those related to origin – brand relationship (Agarwal and Sikri 1996; Lee and Ganesh 1999; Maheswaran 1994).
Consumers rely on their knowledge of brand origin in order to make inferences about brand’s attributes (e.g. workmanship or safety). Therefore, a category label such as the origin country image notices to all those belonging to the category (i.e. various brands) that are likely to have similar characteristics.
Obermiller and Spangenberg (1989) argues that the categorization process of origin cue does not only affect cognitive dimension but it can imply emotional effects that can even override cognitive judgements. Balabanis and Diamantopoulos (2011) theorized that consumers involve affective and normative processes too in relying on origin cue.
The affection (or the lack of affection) towards a specific nation is explained in the notions of consumer affinity (Oberecker et al, 2008) and animosity (Klein, et al., 1998).
Oberecker and Diamantopoulos (2001) formulated country affinity as the result of sympathy and attachment toward a particular nation while the opposite concept is reflected in national animosity (Jung et al., 2002).
Jaffe and Nebenzahl (2001) argues that the feelings of affinity and animosity towards a specific country substantially influence consumers perceptions and behaviors towards
Affinity towards domestic products may be linked to the so called “home – country bias” (Balabanis and Diamantopoulos, 2011;Peterson and Jolibert, 1995).
Customers that evidence a particularly strong home – country bias are defined ethnocentric; they not only favor national products but they also conceive a wrong and immoral nuance in buying foreign products (Hinner, 2010; Verlegh & Steenkamp, 1999).
To sum up, the categorization process of origin cue impact cognitive, affective and normative mechanisms. The following scheme presents the different mechanisms and the results of the major studies related.
Mechanism Description Findings
Cognitive Origin is a cue of product quality Firms and consumers use origin cue to emphasize functional characteristics (Li and Wyer, (1994); Steenkamp, 1989)
Affective Origin cue has symbolic and emotional value
Origin cue connects product origin to consumer’s inner intangible emotional benefits (Askegaard and Ger, 1998; Batra et al., 1998)
Normative Individuals have social and personal
norms related to origin cue
People may refrain to buy goods from foreign countries or from countries with objectionable activities or administrations (Shimp and Sharma, 1987; Klein et al., 1998).
Table 2.2 Cognitive, affective and normative mechanisms of origin cue
According to the existing literature, the process of mental categorization, namely the idea that individuals organize their knowledge of goods in classes (Gutman 1982), is more pronounced on consumers that are less knowledgeable and familiar with the product brand.
The rationale is that “brand perceptions are formed and shaped through the integration of new information with existing attitudes, beliefs or perceptions” (Dall’Olmo Riley et al., 2016, p. 129).
Therefore, in the perceptions ‘elaboration process, when the consumer already holds a certain level of knowledge of the brand, the new information comes into contact with the existing attitudes and judgements. New signals confirm and strengthen existing idea when concordant with the previous perceptions while they can undermine and question former beliefs when discordant.
However, once the individual reach a sufficient amount of information, a blocking effect occurs in the associative learning (Van Osselaer and Janiszweski, 2001). In other words, when consumers attains a certain level of information, they process differently the additional
signals. Considering that they hold a more advanced knowledge structure, they consequently have more appropriate tools to assess the weight of new messages and critically evaluate them (Johnson and Russo, 1984; and Johansson, 1989).
On the contrary, the signalling theory (Spence, 1973) supports the idea that when the level of brand familiarity is low, consumers rely more on specific extrinsic brand cues in order to overcome the remarkable information asymmetry.
Spence (1973) shows that, when for a consumer the information is not directly observable, the individual will be induced to lean on the available signals as base for his assumptions.
2.2.4 The impact of country image on the
components of brand image
The previous section has demonstrated that the categorization process of origin cue impacts cognitive, affective and normative mechanisms; considering that according to Verlegh and Steenkamp (1999) the (un)favorability of country of origin image affects consumer’s value perceptions and brand attitudes both, in the following section the impact of country image on the components of brand image is analyzed.
Functional value (perceived quality and value for money)
In terms of functional value, Manrai et al. (1998) explained that consumers associate brands from developed countries with higher rates in quality as originate from places where the production technology is advanced and the labor force is trained, knowledgeable and expensive.
According to Hsieh (2004), country image implies a significant impact on quality evaluation that, however, depends on image’s degree of favorability. The same trend is confirmed also by Fetscherin & Toncar (2010) and Thakor and Katsanis (1997).
Origin cue is considered particularly important in automobile industry, where before the purchase decision product quality is difficult to evaluate (Baltas and Saridakis, 2013) and in premium segment, where Wall et al. (1991) found that tends to influence product quality evaluation even stronger than price.
Clues that country image cue impacts price perceptions too are evidenced by Thanasuta et al. (2009). Their study identified consumer´s acceptance of price premiums as a market´s measure of brand value.
Hedonic value (emotional value and social value)
Concerning hedonic values, it is widely known that all societies have mechanisms of status and prestige negotiation (Batra et al., 1999). Products and brands chosen by individuals convey symbolic values and communicate social distinction (Douglas & Isherwood, 1979) thanks to associations with their origins too.
Askegaard & Ger (1998) and Batra et al. (2000) posit that the origin cue is an image attribute that transmits symbolic social and emotional features both.
Country image can associate a product with status and authenticity (Bartra et al., 1999). In addition, it connects product-country imagery with sensory, affective and ritual meanings (Askegaard & Ger, 1998) that result in strong attachment with specific products or brands (Fournier, 1998).
Brand attitudes
AccordingtoGaedeke(1973), origincuesimpactbrand attitude bothpositively and negatively. Considering that origin information has the tendency to be stereotypical in nature, it gives, especially to brand novices, a logical heuristic for the evaluation which impacts the formation of brand attitudes (Bluemelhuber et al., 2007). In fact, Han (1989) confirms the fact that, in particular when consumers are not familiar with a brand, the summary construct model induces to infer product information from brand’s origin which then impacts brand attitudes. Moreover, Batra et al. (1999) found that, for brand attitudes too, the economic development and the overall country image has an influential impact. For example western product origins have favorable influences on brand attitudes due to consumer’s identification and admiration for western lifestyle.
2.3 Part III
In the third and last part of the chapter the reviewed concepts are combined and the
hypothesis are formulated. Since suitable for the measurement and not widely investigated, the context of a cross border acquisition engaged by a firm located in an emerging country is adopted in order to assess the effects of country image on the components of brand image. After that, considered the potential different impact that country image can have on knowledgeable consumers, the role of brand familiarity is investigated.
Lastly the conceptual framework of the study is presented and five tables that sum the findings of the most relevant articles to research are provided.
2.3.1 Cross border acquisitions and actual trend
A CBA is a common strategy for corporate strategic expansion (Shimizu et al., 2004). It consists in an acquisition where the headquarters of the acquirer company and those of the target company are located in different countries.
“The 1990s saw a liberalization of international trade and closer regional integration” (Bjorvatn, 2004) that set the conditions for more CBAs and a more intense competition. While in the past, the volume of the CBAs was firmly dominated by the triad economies (United States, Europe and Japan), in the last decade it is dispersing as emerging nations are reshaping the global economic geography (Caiazza, 2016).
The World Bank calculated that in the period from 1997 to 2003 corporations from emerging economies undertook cross-border M&A deals valued $189 billion. The amount reached $1.1 trillion between 2004 and 2010 (Dailami et al., 2012).
acquire firms from western countries (generally favorable country image) (Lee and Lee., 2011).
However, CBAs engaged by corporations from emerging nations directed to western brands usually have different objectives than the other way around.
The purchase of a prominent western brand by a firm from an emerging country “is usually planned as a shortcut in the development of brand recognition and consumer base” (Luo & Tung, 2007, p. 485). In fact, an existing relevant heritage saves to the acquirer the difficulties related to the creation and establishment of a new brand, which might imply years of work.
2.3.2 CBAs and country of ownership
In the context of CBAs, the country images and the brand images of two companies come into contact.
CBAs have consequences on country - brand associations because when a brand is acquired by a foreign firm a new tie between the brand and the nation of the parent company is created. Thus, the new country image associated to the acquirer will impact on the home country image of the target company (Ching et al., 2014);
As stated before, when a brand is tied to a developed home country, the favorable perceived strengths of the western country are transmitted directly to consumer's value perception (Roth and Romeo, 1992). This appeared particularly true for premium brands, for which the
association with the home country is a relevant source of competitive advantage (Aiello, 2009).
Therefore, for those firms which country image could be a liability, it is important to realize how the image carried by their country of ownership cue will influence individual’s
The dissertation will refer to country of ownership as the origin, culture and location of the parent company. Thus, the definition reflects aspects concerning corporate control and management.
The relevance of the construct is recognized by Thakor and Lavack (2003) and Chung et al., (2014) by showing results where country of ownership influences both product and brand perceptions. The authors posit that ownership clue is highly considered in consumer’s personal information hierarchy, even more than other traditional COO functional sub-components.
Even though the background is different, studies about cross-border alliances help the
comprehension of CBAs on consumer brand perception. The reason is because both alliances and CBAs deal with variations in country-brand associations.
In this context, Bluemelhuber et al., (2007) conceive COO fit as customer's personal
perception of the compatibility of two nations involved in the strategic brand alliance. Their study demonstrates that a positive COO fit has a favorable influence on consumer's attitudes towards the alliance; similarly, Lee at al., (2013) proved that when both country images are positive a favorable synergistic effect is formed.
Hence, from these results is possible to infer that the image of acquirer's nation of origin can impact consumer brand perception. By extension, it will be assumed that when in a CBA the country image of the acquirer is less favorable, it will influence negatively consumer's brand perception.
Hypothesis 1a: CBA information has a negative impact on brand’s perceived value when the acquiring company originates from a country with a lower image than that of the target company.
Hypothesis 1b: CBA information has a negative impact on brand attitudes when the acquirer company originates from a country with a lower image than that of the target company.
2.3.3 The role of brand familiarity
Brand familiarity is conceived as the amount of brand-related experiences accumulated by the consumer (Alba and Hutchinson, 1987). Brand related experiences can be both direct and indirect: examples are media advertisement exposure, word of mouth, interactions with salespersons, trial and consumption, etc.
Brand familiarity can be reinforced thanks to exposure to the brand (Park and Stoel, 2006). As evidence, Kent and Allen (1993) proved that when products are advertised through national media consumers’ brand familiarity strongly increases. However, despite media and public relations play a significant role, the most influential source of brand familiarity remains direct experience (Tam, 2008).
brands (MacInnis et al., 1991); thus is assumed that people like stimuli more as familiarity increases (Heath, 1990).
The literature suggests that familiarity, experience and knowledge are closely related (Tam, 2008). Johnson and Russo (1984) states that familiarity, conceived as the construct that includes the sum and interactions between brand experiences (Laroche et al., 1996), can be defined as a synonymous of knowledge.
The capability to retrieve knowledge from prior experiences implies the creation of brand and product knowledge (Brucks, 1985).
Brand knowledge is, in turn, an antecedent of confidence in brand evaluation (Laroche et al., 1996), therefore, knowledgeable consumers are assumed to be more confident on their evaluation tools. According to Howard (1989), confidence is the consumer’s personal certainty in his/her ability to make a judgment on a specific brand.
Laroche at al., (1996) studied the impact of brand familiarity on confidence in brand judgements; the results evidenced that when consumers have developed relatively weak associations with the brand, they experience a higher degree of uncertainty and risk related to their limited ability to evaluate (Park and Stoel, 2005).
Rao and Monroe (1988, p. 255), in line with the signalling theory (Spence, 1973), argues that unfamiliar or low familiar consumers will be more likely to use extrinsic cues in product assessments (such as COO). The reason is because they have “relatively little intrinsic product information in memory and a less developed scheme that makes processing intrinsic
information more difficult”.
According to Liu and Johnson (2005) consumers with extensive knowledge are less inclined to rely on external cues. Cordell (1991) confirms the fact that individuals highly familiar with a brand will rely less on origin cue in their brand evaluations.
By extension, is assumed that brand familiarity has a similar influence on country of corporate ownership information, earlier recognized as a relevant element of origin cue.
Considering that Hp1a and Hp1b predict that, in a CBA, an unfavorable country of ownership implies negative consequences on perceived value and brand attitudes, it is assumed that the level of brand familiarity will moderate these relationships.
Hypothesis 2a: Consumers that have a low level of familiarity with the brand will experience a stronger country of ownership information effect on perceived value than those with a higher level of familiarity and vice versa.
2.4 Conceptual framework
The conceptual models of this study is presented in figure 2.3.
Figure 2.3 Conceptual model for Hp1a and Hp1b
The scheme reports the assumption that the country of ownership information provided is negatively associated to brand attitudes and perceived value (composed by four sub-dimensions).
Moreover, when the level of brand familiarity is considered, it is argued that consumer’s previous direct and indirect experiences with the brand moderate the negative effect entailed by the country of ownership information.
2.5 Overview of the relevant literature
Uni-dimensional studies of perceived value
Author(s) Key findings
Dodds et al. (1991) Value is a cognitive trade-off between the perceptions of
quality and price
Dodds and Monroe (1985) Value is the outcome of price-quality relationships
Kirmani and Zeithaml (1993) Perceived value is the consumer's overall assessment of what
is get and what is given
Lapierre et al. (1999) Perceived quality is an antecedent that positively influences
perceived value
McDougall and Levesque (2000) Satisfaction plays a moderator role on value perception
Monroe (1990) Quality-price perceptions are the key determinants of
perceived value
Spreng et al. (1993) Performance perception and expectations influence perceived
value
Teas and Agarwal (2000) External cues (such as price, brand name, and store name)
influence the perception of product quality and value
Zeithaml (1988)
Value is (1) a low price, (2) whatever consumers want in product, (3) the quality obtained for the price paid, (4) what consumer gets.
Multi-dimensional studies of perceived value
Author(s) Key findings
de Ruyter et al. (1997) The trade-off models result too semplicistic to explain
perceived value
Holbrook (1994) Perceived quality is a sub-component of perceived value
Lemmink et al. (1998) Value is a combination of utilitarian and hedonic responses
Mathwick et al. (2001) Perceived value is linked with the self-oriented dimensions of
experiential value
Parasuraman (1997) Perceived value has a dynamic nature that is situational and
context-dependent
Sheth et al. (1991)
The consumption - value theory states that (1) the market choice is a function of multiple values, (2) these forms of value make differential contributions in any choice situation and (3) the forms of value are independent
Sweeney et al. (1996)
Perceived risk is a relevant mediator in the relationship between quality and value. Perceived value is conceived as composed by three dimensions.
Sweeney and Soutar (2001) Perceived value is a multidimensional construct in which
several notions are embedded
Country of origin literature
Author(s) Key findings
Gregan-Paxton (1997)
Consumers use stereotyped opinions about different countries as base for inferences towards products in order to simplify complex circumstances
Lee and Ganesh (1999)
Consumer ethnocentrism is more evident in industrialized countries. Consumers from developing countries tend to prefer products imported from industrialized nations
Manrai et al. (1998) A developed origin background reduces the consumer's
perceived risk
Pappu et al., (2006) Through stereotyping, consumers associate different countries
with product attributes (e.g. reliability and durability)
Pappu et al., (2007)
Consumers from developed countries tend to prefer domestic products while consumers from emerging countries favor imported goods from western nations
Thakor and Lavack (2003) A positive origin cue transmits increased product reliability and
decreases consumer's perceived risk
Thakor and Kohli (1996) Brand origin is defined as the place, region, or country where
the product or the brand is perceived to have originated from
Usunier and Cestre (2008)
Products from developed nations generally enjoy
positive country image while products from the developing market economies suffer liabilities of negative country image
Verlegh and Steenkamp (1999) Origin cue's influence affect normative, affective and cognitive
aspects
Country of origin research in automobile industry
Author(s) Key findings
Fetscherin and Toncar (2010) Both country of manufacturing and country of brand influence
brand perceptions
Johannson et al., (1985) Origin cue is a relevant information when subjects have limited
knowledge about the car
Nagashima (1970) Product evaluations are closely related to the "made in"
product-country image.
Peterson and Jolibert (1995) The country of origin effect depends on the context.
Home-country bias is evidenced in the results.
Thanasuta et al., (2009) Brands linked with developed countries obtain higher price
premiums
Table 2.6 Country of origin research in automobile industry
CBAs and country of ownership
Author(s) Key findings
Cheah and Phau (2015)
When the socio-economic backgrounds of two nations involved in a CBA diverge substantially, the country of ownership cue becomes more relevant for consumers
Ching et al., (2014)
A new country image associated to the new parent company will influence on the home country image of the target company brand
Chung et al (2014) The country of ownership impact consumer's perceptions
Lee at al., (2013) When both the country images of the firms involved in a cross
border acquisition are positive a synergistic effect is created
Brand familiarity
Author(s) Key findings
Alba and Hutchinson (1987) Brand familiarity corresponds to the amount of brand related
experiences accumulated by the consumer
Anderson (1981) Consumers evaluation are shaped on the accumulation of
different pieces of information
Cordell (1991) More knowledgeable consumers are less inclined to rely on
origin cue
Liu and Johnson (2005)
More knowledgeable consumers are inclined to rely on intrinsic cues while less knowledgeable tend to be more susceptible to extrinsic signals
Spence (1973) When consumers don't hold sufficient product/brand
knowledge they are more inclined to rely on extrinsic cues.
Van Osselaer and Janiszweski, (2001)
When consumers are relatively knowledgeable about a product/brand the new information received are filtered with the preexisting one
Methodology
3.
The previous chapter of the dissertation dealt with the relevant existent literature and used it to formulate the research hypothesis.
In order to test them and provide an answer to the research question, a convenient research design is proposed.
This section of the dissertation concerns the empirical measurements of the analysis. The first section of methodology chapter consists of the research and the experimental design. Then, the data collection and the brand selection are clarified. Subsequently the questionnaire development and the construct measurements are explained.
3.1 Research design
According to Bryman and Bell (2003), research can be divided into three categories, dependent on the purpose of the study.
Exploratory research (1) is chosen in order to gain background information and establish problems and hypothesis; descriptive research (2) is conducted to describe a phenomenon and its characteristics while causal research (3) is used to identify and analyze connections and relationships between causes and consequences.
In the former case, the hypothesis formulated are supported or rejected by observing the variation in the elements assumed to affect the dependent variables.
The main aim of the thesis is to analyze the relationship between country of ownership information and consumer’s brand perception, thus this study adopts a causal research approach.
Considering the time limit, data were collected only once. Therefore the objective of this cross sectional study, will be to provide a sort of “snapshot” of the population at a certain point in time (Levin 2006).
3.2 Experimental design
Experiment is defined by The American Heritage Dictionary of the English Language as "A test under controlled conditions that is made to demonstrate a known truth, to examine the validity of a hypothesis, or to determine the efficacy of something previously untried." Experimental research is a widespread method for studies about consumer perceptions and behaviors (Peighambari, et al., 2016); in particular Field & Hole (2003) discern two different approaches: (1) within-subjects and (2) between-subject design.
In within-subject design the researcher submits all the conditions of the experiment to the sample of the study, differently, in between-subject studies each respondent is exposed to only one condition.
This study applies a between-subject approach to two groups, namely a control group and a treatment group. The reasons of the choice concern mainly the superior validity of the design (Zikmund et al. 2013).
Between-subject approach, if compared to within-subjects, can avoid the boredom entailed from long series of tests and carryover effects that can plague the respondents. Consequently, the major advantages of the design are related to the little contamination by extraneous factors (Greenwald, 1976). On the other hand, between-subject approach requires a larger amount of respondents to develop useful and analyzable data.
Manipulation concerns a controlled change introduced by the researcher such as a variation of the environment. It usually deals with the manipulation of the independent variable in order to test whether it has an impact on the dependent variables. Random assignment is the process adopted to assign conditions to the respondents.
In this dissertation, the independent variable, namely country of ownership information, is manipulated in order isolate its impact on the dependent variables, namely perceived value and brand attitudes.
The sample selected is randomly assigned to one experimental condition. Two are the possible scenarios, the control and the treatment group.
In the control group is showed the situation when the independent variable is not applied, thus its relevance is to create a tangible starting point. The treatment group receives the stimulus and thus permits to measure the ownership information's effects on the dependent variables (Zikmund et al. 2013).
3.3 Data collection and analysis
This study adopts a quantitative online survey approach. Internet use permitted electronical delivery and submission (Reynolds, 2007) that were influential pros considering the
constraints in terms of time.
In fact, the most influential circumstances regarding the approach choice have been the speed of data collection and the overall low cost, both strong points of the online survey method (Kannan et al., 1998; Evans and Mathur, 2005). Since an important part of the respondents lived outside the Netherlands, electronic surveys resulted a practical and flexible option to reach them (Hogg, 2003) .
The following scheme presents online survey method's major strengths and weaknesses identified by Evans and Mathur (2005)
Figure 3.1 Strengths and weaknesses of online surveys (Evans and Mathur, 2005)
Although people from different countries participated in the study, participants from specific nationalities have not been taken into account during the distribution of the survey. This policy was applied in order to avoid observations biased by home country bias/ethnocentrism (British and Indian respondents) or potential animosity (Argentinian and Pakistani).
The data gathered with the online survey were analyzed with the software SPSS 23.0. Firstly, the observation were checked and cleaned in order to produce a valid data set; then descriptive statistics were controlled. In order to test the hypothesis Mann-Whitney U and MANOVA tests were identified as the convenient statistical tools, thus they are performed. A more detailed overview of the analysis is provided in Chapter 4 Findings.
3.4 Brand insights and selection
As mentioned earlier, Jaguar Cars is the brand investigated in this research. The following section will provide some insights about the company and will justify the brand choice.
Jaguar’s history
The first car branded Jaguar appeared in September 1935 in Coventry, England. The original conception was to combine aesthetics and performance to make it a forefront premium automobile (jaguar.com, 2016).
Jaguar’s achievements in international motorsport made the brand known worldwide and created the basis for a sporty, classy and successful corporate image. Jaguar became the UK’s largest premium automotive manufacturer and tied its prestige and engineering integrity with the British origin.
The takeover by Tata Motors
After the financial crisis in 2008, Ford Motor Company, the group that was controlling Jaguar Cars, experienced financial problems and decided to divest the British brand.
After ten months of negotiations, Ford sold Jaguar Cars and Land Rover both to the Indian automaker Tata Motors for USD 2.3 billion (Globalcarsbrands.com, 2016).
Tata Motors is the automobile division of Tata Group, the largest Indian conglomerate (Tata, 2016). The multinational holding, in addition to cars, has interests in several economic sectors (tea, coffee, steel, chemicals, healthcare etc.) and a much diversified portfolio (Timmons, 2008).
Tata Motors was known for cars even before 2008, in fact the company operates on the international market since 1961 (Profit.ndtv.com, 2016). In the same year of the Jaguar acquisition, Tata Motors' introduction on the market of "the world cheapest car" Tata Nano (only $1500) had worldwide resonance. At that moment Nano was seen as the best prospect while Jaguar’s acquisition seemed a sort of an expensive distraction (Bloomberg, 2016). Eight years after, Tata Nano did not meet the sales expectations whereas Jaguar’s sales have more than doubled, achieving the sixth year in a row of growth. Jaguar can now boast a successful enlarged product portfolio and important results in UK, Europe and US
(Bloomberg, 2016). In 2015, Jaguar just delivered the strongest full year performance in a decade retailing 83,986 vehicles (Jaguarlandrover.com, 2016).
Brand choice
Jaguar Cars brand has been chosen for the study because of its peculiarities related to the corporate ownership.
Considered the distance between the economies of India (part of BRIC countries) and UK (part of G7 countries), it is identified a potential inconsistency in the associations transmitted by the two country images. As stated in Chapter 2 Literature Review, CBAs convey the origin cues of the firms interested in the process, therefore it is assumable that consumers perceive a change due to the new brand – country association.
The brand selection, thus, reflected the will to investigate a case were the new ownership carries remarkably different origin associations to the acquired brand ( in this case particularly tied to its origin country).
The circumstances described probably induced the new management to minimize the exposure of the acquisition information and focus the communication strategy on Jaguar’s historic identity.
This is the reason why the study predicts that most of the respondents will not be aware of the CBA, despite the it occurred eight years ago.
3.5 Questionnaire design
The survey consists of 32 questions (the complete questionnaire is available in Appendix A). The first selection regards consumer’s level of familiarity with Jaguar brand. Afterwards, the participant is randomly assigned to one of the two conditions corresponding to the control or experimental group. Therefore two independent samples are split.
At that point both conditions display the same description of Jaguar´s history; the treatment group receives a further information about the fact that the company is Indian owned.
From then on, the questions assigned to the respondents are exactly the same for both control and treatment group.
In the next section appears the description of a Jaguar´s car model; there some specifications and pictures of the car are displayed.
The respondent is then asked to answer 19 questions about perceived value. The items correspond to Sweeney and Soutar's PERVAL scale (2001) and are grouped into 4 dimensions: performance/quality, emotional value, price value and social value. After
completing this segment, the respondent is asked if he/she was aware of the fact that Jaguar is currently owned by the Indian company Tata Motors, and in case, how he/she got that
information.
The last questions concern participant's demographics, namely gender, age, home country, education and employment status in order to provide an idea of the sample profile.
Figure 3.2 Questionnaire structure
The survey, before the distribution, was pre tested on 15 respondents that confirmed a good understanding of the questions.
According to Cheah and Phau (2015), the relevance of country of ownership information depends on the extent to which two economic systems differ. Based on this theory, the purpose of the post hoc test is to empirically support the assumption that India holds a lower country image in respect to United Kingdom, while those of United States and UK are comparable.
The post hoc survey was a suitable tool for the purpose because distributed to the respondents after the experiment has concluded. A pre-test could have potentially biased participants ’observation by heightening respondents ‘sensitivity (Kennedy, 2003).
3.6 Manipulation
The stimulus for the experiment is presented in a description of the history of Jaguar Cars and its ties with the United Kingdom that every respondent had to read. The text is the same for both the control and the treatment condition.
Only for the treatment group, it is further explained that the Indian company Tata Motors acquired the British automaker in 2008. Then, information about Tata Motors are provided. Pictures of Jaguar Cars brand and models are displayed in the control condition; in the treatment group, the same images are displayed and some additional figures that remind to Tata Motors are shown.
Then, in order to assess the country image effect, a Jaguar XF is presented. The XF consistently drives Jaguar volumes and in 2014 has registered Jaguar’s strongest full year performance in nearly a decade (Jaguarlandrover.com, 2016). For these reasons it is chosen as representative model.
provided some technical specifications (model, engine, max speed, fuel consumption environmental certification and price) and three pictures of the car.
3.7 Construct measurement
The online questionnaire was developed with proven measurement scales that safeguarded the validity and reliability of the constructs. The study uses 7 main variables that are categorized in table 3.1. At last, the post hoc test that measured country image is discussed and a table that sums the constructs studied is presented.
Type of variable Variable Type
Independent Country of ownership Information Categorical Independent
Dependent
Brand familiarity (Biswas, 1992)
Brand attitudes (Surendra and Sight, 2004)
Scale Scale Dependent Perceived value (Sweeney and Soutar, 2001) Scale - (Dependent) -(Performance/quality) -(Scale)
- (Dependent) -(Emotional value) -(Scale)
- (Dependent) -(Value for money) -(Scale)
- (Dependent) -(Social value) -(Scale)
Figure 3.1 Overview of variables
Country of Ownership Information:
Country of ownership information is a categorical dichotomous variable. Each respondent is assigned to one condition that can correspond or to the control or to the treatment group. The conditions are evenly randomized by the system, therefore the number of participants in the two groups will be balanced.
