Country of Origin (COO) Effect on Consumer-Based Brand Equity

Country of Origin (COO) Effect on Consumer-Based

Brand Equity

— An Analysis of Country of Brand (COB) and Country of

Manufacture (COM) as Different Facets of Country of Origin

Country of Origin (COO) Effect on Consumer-Based

Brand Equity

— An Analysis of Country of Brand (COB) and Country of

manufacture (COM) as Different Facets of Country of Origin

Author: Junfeng Liang

Department: Department of Marketing, Faculty of Economics and Business Qualification: Master Thesis

Completion date: 2008.08.12

Author’s address: B07, Blekerslaan 4, 9724 EJ, Groningen Phone number: 0648531197

E-mail: j.liang@student.rug.nl

Student number: 1739859

Preface:

Country of origin has always drawn a lot attention in the field of international marketing. As a source of brand associations, country of origin is widely believed to have an effect on brand equity. Besides effort devoted to it in academic research, there are also many examples of attempts by multinational companies to leverage country of origin in business practice.

In the research and practice relevant with country of origin, what grabbed my interest at the very beginning were outsourcing decisions. The most interesting specific scenario was the manufacturing outsourcing of companies from developing countries – when they outsource manufacturing to developed countries in an attempt to promote the brand with a better country of origin (country of manufacturing), how much does it work? From this initial question, I carried out this study in hope of getting more general findings about country of origin effect on consumer based brand equity.

Table of Content

Abstract

1. Introduction

1.1.

Decomposition of COO

1.2.

COO effect on Brand Equity

1.3.

Structure of This Study

2. Literature Review

2.1.

COO Effect

2.1.1. Consumer Ethnocentrism 2.1.2. National Animosity 2.1.3. Stereotyped Attitudes

2.1.4 The Importance of COO Effects

2.2.

Managing COO Effect

2.2.1. National Branding

2.2.2. Counteraction against Negative COO Effect

2.3.

COO Effect on Consumer-Based Brand Equity

2.3.1. Moderators of COO Effect on Consumer Perception of Products and Brands

4.2.

COB and COM Effects

4.3.

Difference in Stereotyped Attitudes

4.4.

Moderators’ Influence

4.4.1. Product Familiarity’s Influence 4.4.2. Country Familiarity’s Influence

4.4.3 Demographic Characteristics Influence

4.5.

Summary of Results

5.

Implications and Conclusions

5.1.

Theoretical Implications

5.2.

Managerial Implications

5.3.

Limitations and Directions for Future Research

5.4.

Conclusions

Country of Origin (COO) Effect on Consumer-Based

Brand Equity

— An Analysis of Country of Brand (COB) and Country of

Manufacture (COM) as Different Facets of Country of Origin

Key words

Consumer-based brand equity Country of origin (COO) Country of brand (COB) Country of manufacture (COM)

Abstract

This study examines country of origin (COO) effect on consumer based brand equity (CBBE). The COO effect is studied on two facets – country of brand (COB) and country of manufacturing (COM). Using a 2×2 experimental design, with COB and COM as the two dimensions, the CBBE results of computer brand concepts are compared. It is found that although countries’ images as computer producers are different, neither COB nor COM information has considerable influence on CBBE. The findings suggest that COO effect has been exaggerated by a majority of previous research. COO effect, including both COB effect and COM effect, should play a limited role in companies’ decision making in international marketing, especially regarding outsourcing.

1. Introduction

In this age of globalization, country of origin (COO) of brands/products is receiving increasing attention in international marketing. On one hand, the flourish of multinational companies is blurring the boundary of countries in business, with global marketing campaigns, business outsourcing, mergers and acquisitions (e.g. Chao, 1998; Phau & Prendergast, 2000). On the other hand, as consumers are confronted with more and more information about products, brands and companies from all over the world, COO may play a more important role in consumers’ perceptions (e.g. Eroglu & Machleit, 1989; Tse & Gorn, 1993).

(COO) is widely believed to act as an important brand association (Keller, 2007) or extrinsic cue for products (including services) (Samiee, 1994; Javalgi et al, 2001). It is part of the product information that is constantly confronted by consumers, through packaging, branding, advertising and other channels. This information is used by consumers as well as organizational buyers to form preferences and purchase decisions (Ahmed & d’Astous, 1995; Dzever & Quester, 1999), while it also elicits emotions, feelings, imagery, and fantasies (Verlegh & Steenkamp, 1999). The actual place that the brand originates from is almost irrelevant, even if it were possible in an era where corporations have dispersed their functions across national boundaries to identify such a place. In the era of globalization, origin information may has often become confusing, thus consumers use culture-of-brand-origin, the cultural origin of heritage of a brand, to provide information they traditionally extract from COO (Kenny Lim & Aron O’Cass, 2001).

Based on previous literatures about COO, COO effect is herewith defined as:

The influence of a brand or product’s COO information on consumers’ beliefs and attitudes about this brand or product

How to harness COO to help marketing products and brands is a major issue that companies are confronted with, especially the international companies. A positive COO image becomes a kind of asset that can be used by certain industries within a whole country or even beyond (e.g. Tse & Gorn, 1993; Agarwal and Sikri, 1996; O'Shaughnessy & O'Shaughnessy, 2000; Ying, 2006). For example, Germany’s reputation of workmanship is a warranty of quality and reliability of its car industry as well as other mechanical products. Japan’s well known advancement in electronic technology promotes all the electronic consumer products from the country. Beside association between COO and product quality, COO is also used as a cultural identification in branding, acting as a notable part of brand asset, such as the American spirit embodied in Harley Davidson, Scandinavian life style expressed by IKEA and the classiness and romance of Paris conveyed through Dior. While a positive COO image is an asset to be leveraged in international marketing, a negative one often becomes a liability and companies try every way to play down the effect (e.g. Bilkey & Nes, 1982; Schooler et al, 1987; Cordell, 1991; Tse & Gorn, 1993).

1.1.

Decomposition of COO

&Terpstra, 1988; Witt & Rao, 1992; Chao, 1993; Thakor & Kohli,1996; Dzever & Quester, 1999 ; Lee & Bae, 1999; Li et al, 2000; Pappu, Quester and Cooksey, 2006;

Hamzaoui & Merunka, 2006). These studies covered the effects of these different facets and

a large part focused on the possible negative effect of unfavorable COM, yet without consistent outcome in those studies.

A major issue regarding the decomposition of COO effect is in the manufacture outsourcing of global brands. In the attempt of reducing cost by outsourcing, specifically outsourcing of manufacture to relatively undeveloped countries, global companies risk impairing the reputation of their products and brands by having an unfavorable country of manufacture (COM). Although the influence of COM is debatable in previous studies, generally it is advisable for global companies to take COO effect into consideration when outsourcing manufacture and try to play down the salience of unfavorable COO facets.

Another aspect of COO effect in outsourcing is the scenario when international companies from relatively undeveloped countries outsource to developed countries. These companies are ahead of their peers in their countries, often having the technology and resource to compete with other international players on product and service quality; however, unfavorable COO image associated with them set an inherent barrier on their way of international marketing (e.g. Bilkey & Nes, 1982; Cordell, 1991; Tse & Gorn, 1993). Among many ways to encounter unfavorable COO effect, manufacture outsourcing is also often adopted. Besides the purpose of localization and other management needs, these companies from developing countries outsource manufacture to developed countries in the hope to mitigate unfavorable COO image’s influence and leverage favorable COO image by changing COM. A case in point is Haier, a Chinese household appliance producer. As one of the most recognized brands in China’s domestic market and industry leader in household appliance, Haier’s expansion to the USA strategically centered on localization, with a keen emphasis on the American identity. All products have been marketed as “American-made”, in order to play down its Chinese identity and leverage the USA as a more favorable COO. In addition, it also fits into the consumer-ethnocentrism in American market.

1.2.

COO effect on Brand Equity

favorable country to a less favorable one. However, what would be the effect on CBBE if the change happens in the opposite direction, namely the scenario when COM changes from a less favorable one to a favorable one? There has been barely any study specifically covering this issue before. Research on this topic would reveal how much enhancement of COO effect would result from companies’ effort of outsourcing manufacture from an unfavorable COO to a favorable COO, and what will be their competitive position against other companies from developed countries and their home country regarding COO effect.

1.3.

Structure of This Study

This study first reviews previous literatures about aspects of COO effect, strategies of managing COO effect and COO’s influence on Consumer-Based Brand Equity, including decomposition of COO and influence of each facet. Then taking the USA and India as the relatively favorable and unfavorable COOs and personal computer as the product category, it measures CBBE of a virtual brand in four scenarios which have different combination of favorable and unfavorable country of brand (COB) and country of manufacture (COM). The different CBBE results of each scenario are analyzed in the hope to contribute the literature of COO study and provide insights for newly flourishing companies from developing countries.

2. Literature Review

2.1.

COO Effect

COO Effect

Inward Effect

Outward Effect

Consumer Ethnocentrism

Stereotyped Attitudes Towards Certain Countries/Cultures

National Animosity

Figure 1. Aspects of COO effect 2.1.1. Consumer Ethnocentrism

Consumer ethnocentrism specifically refers to ethnocentric views held by consumers in one country, the in-group, towards products from another country, the out-group (Shimp & Sharma, 1987). This specific aspect of COO effects has been found in various studies. COO effect was found to be positively related with preferences for domestic products and negatively related with preferences for foreign products (eg. Elliott & Cameron, 1994), and this often allows domestic products a price premium for people with greater consumer ethnocentrism (Lantz & Loeb, 1996). The effect also varies among different cultures – larger in societies of collectivism than individualism (Gürhan-Canli & Maheswaran, 2000). The practical ramifications of consumer ethnocentrism consist of overestimation of domestic products and underestimation of imports, a moral obligation to buy domestic products and preference for domestic products (Shimp, 1984; Sharma, Shimp and Shin 1995). Consumer ethnocentrism’s effect can even go to a further extent of preference for products from countries in the same geographic region (Ming, 2004).

their purchase behavior (Hester & Yuen, 1987). The general application of consumer ethnocentrism has also been doubted. Hulland et al (1996) suggest that most studies which have found strong preferences for domestic products, were conducted in high-income countries where domestic production capabilities were at least equal to, and often higher than, those of the countries from which imports came. In contrast, they found that imported products can command strong price premiums in less industrialized countries such as the Philippines, even for products from other less industrialized countries. Lack of consumer ethnocentrism effect in developing countries is because the impact of ethnocentrism is negated by negative quality

perception of domestic products and high conspicuous consumption value of imported products, as they play a status enhancing role (Batra et al, 2000; Wang & Chen, 2004).

2.1.2. National Animosity

Sometimes strong negative COO effects appear to be largely independent of the product itself, relating instead to nationally based animosity towards the COO (Fong & Burton, 2008). Consumers may rationally think that a certain country is expert at some product categories, but overall negative feelings associated with the country may lead to negative behavioral consequences (Sangpil et al, 2005). This may also be explain by the finding that COO effects occurred automatically and contributed to product evaluations without participants' intention or control (Liu & Johnson, 2005). However, some scholars pointed out that national animosity has only limited negative COO effects. The negative feelings may have little impact on product judgments unless these activities are thought about at the time the judgments are made. Furthermore, animosity toward a country may only influence reactions to products not typically associated with it and, therefore, do not provide a basis for its reputation. When the product is one for which the country is well known, the impact of the country’s reputation may override whatever effect animosity might otherwise have (Hong & Kyoon, 2006).

The limited influence of national animosity is confirmed by other researchers as well. In another study by Balabanis & Diamantopoulos (2004), it was found that COO effect was found to be positively related with preferences for domestic (here, British) products and negatively related with preferences for foreign products. However, COO effect was a much more consistent predictor of the former than of the latter; in other words, the COO effect construct appears to be more capable of explaining consumers’ (positive) bias toward home products (i.e., DCB) rather than (negative) bias against foreign products from specific countries.

2.1.3. Stereotyped Attitudes

hard to understand that the workmanship and technology required for manufacturing products are closely related to a country’s level of development. Consequently, the mere fact that a product is made in a less-developed country suggests to (western) consumers that it is of poorer quality, and associated with an increased risk of bad performance and dissatisfaction (Cordell, 1991). Hence, products from Less Developed Countries (LDCs) are generally evaluated less positively than products from More Developed Countries (MDCs) (Bilkey & Nes, 1982).

Besides COO stereotypes linked with all products in a country, COO stereotypes are also associated with product categories, hence dividing the concept into macro country image (the general image of a country) and micro country image (the product specific image of a country) (eg. Roth & Romeo, 1992; Ahmed et al, 2004; Pappu, Quester & Cooksey, 2006). For example, consumers may prefer digital cameras from Japan, however, when it comes to furniture, they normally have many other better choices. COO image can vary considerably depending on the product group under consideration and it would be misleading to identify overall stereotypes applicable to all product groups (Hooley et al, 1988). When favorable matches of COO and product category exist, consumers' willingness to buy products can be enhanced by promoting COO; while mismatch/unfavorable match can be detrimental (Roth & Romeo, 1992). Although COO image is generally product category specific, it is mentionable here that both COO image in a specific product category and COO overall image matter, and the former plays as a mediator of the latter, as found in Lee and Bae’s (1999) study. At the same time, COO does work with a halo effect. Country of origin effects in one product category are known to transfer to new product categories from the same country (Agarwal and Sikri, 1996). This “Transference of beliefs” was once more confirmed by Pappu, Quester and Cooksey (2006), which also lend credence to the notion of country loyalty. This is consistent with Ahmed and d’Astous’s (1996) view that consumers may develop loyalty towards countries and, consequently, may continue to prefer cars from Japan or shoes from Italy (Pappu, Quester and Cooksey, 2006).

COO effect is also found to be product dimension-specific. The degrees to which individual dimensions are subject to the country-of-origin effects are not equal across product dimensions. For example, German products were found to be high on prestige value, but low on economy. This dimension-specific COO image can be generalizable reasonably across product categories. In other words, countries score high or low on the same dimension for many product categories (Han & Terpstra, 1988). Halo effect also works regarding product dimensions, which means the overall perception influences every product dimension (Johansson et al, 1985).

2.1.4 The Importance of COO Effects

studies revealed significant and everlasting effect of COO, which may be even more salient and enduring than brand names or even price (Tse & Gorn, 1993; Okechuku, 1994). Some other scholars and practitioners lay doubt over these results and believe COO’s importance has been exaggerated in many studies and is actually limited in consumers’ purchasing consideration (eg. Hugstad & Durr, 1986; Hester & Yuen, 1987; Lim & Darley, 1997; Agrawal & Kamakura, 1999; Liefeld, 2004).

It has been widely recognized that extrinsic cues such as country of origin is of low importance compared with intrinsic cues in product or brand evaluation. Consumers will resort to COO only when it is hard to distinguish products on intrinsic cues (Elliott & Cameron, 1994). Even when comparing among extrinsic cues, COO effect is also believed to be relatively limited compared with brand and price (Lee & Bae, 1999; Gurhan-Canli & Maheswaran, 2000). In addition, while COO influences consumers’ beliefs about products, its effect on attitude is often limited and indirect (Erickson et al, 1984), hence limited influence on purchase intension. In Ahmed et al’s (2004) study, which focused on low involvement products, while COO is also found to play a role in consumers’ evaluation of low-involvement products, its effect is weak, which can be attributed to the characteristics of the products. In a study among Australian consumers by Phau & Suntornnond (2006), it was found that while COO does have an influence, there are only weak associations between product dimensions and country of origin cues particularly for evaluations of unfamiliar brands.

While in many studies consumers are provided with COO information, most of them can’t correctly identify the COO of brands in real life. Balabanis and Diamantopoulos’s (2008) study revealed that consumers’ ability to identify a brand’s COO is limited, with correct brand identification rate of only 22%. This rate was 49% in Samiee et al’s (2005) study, which also challenged the significance of COO effect. Just as noted by Liefeld (1993) very long ago, “for many products one has to be an amateur detective to find country-of-origin information”.

Liefeld (2004) interpreted the result as this: In previous COO research respondents probably ‘obediently’ filled in the attitude ratings even though they probably do not make such judgments when shopping. Respondents circling numbers on scales to indicate their beliefs, attitudes and intentions, when they have not thought about such things or do not do such things in real life, is a prime example of ‘self-generated validity’ (Feldman and Lynch, 1988).

Also it is tautological to use scaled ratings/evaluations of quality, value, etc to predict scaled overall ratings, purchase intentions or willingness to buy because of demand effects, halo effects and common method variance (Podsakoff and Organ, 1986; Summers, 2001). It is not evident that the attribute ratings are predictive of actual behavior.

2.2.

Managing COO Effect

2.2.1. National Branding

Acting with stereotyping and a halo effect, COO influences almost all brands and products from a country to various extents (Tse & Gorn, 1993; O'Shaughnessy & O'Shaughnessy, 2000). The country itself can actually become a brand as it can be viewed as a compound of contemporary and historical associations that have relevance for marketing (O'Shaughnessy & O'Shaughnessy, 2000; Kotler & Gertner, 2002). The concept of nation brand or country equity refers to the nation as a whole; it describes the country’s intangible assets without any explicit links with a product, and it acts as a national umbrella brand seeking to differentiate the country’s products from international competitors (Ying, 2006). The nation brand may have substantial influence on a country’s national image, tourism, foreign trade, etc, hence often brought up as a national strategic issue (Kotler & Gertner, 2002; Jaworski & Fosher, 2003). A nation brand has too many stake holder and too little management control (Kubacki & Skinner, 2006). It is not owned by the nation, but by any organization that wishes to exploit the nation’s image, or fragments of the image, and create a nation brand for commercial advantage, and the organization can be either within the same country or even from another country (O'Shaughnessy & O'Shaughnessy, 2000; Ying, 2006).

However, a nation brand is hard to be developed and promoted.

Second, a nation brand, with a very long life cycle, can not to be promoted within a short period time with marketing campaigns (Jaworski & Fosher, 2003; Ying, 2006). What is determinate is the country’s economic development as the essential underlying factor of COO effect, and a change in this usually takes hard effort and a long time (Elliott & Cameron, 1994; Verlegh & Steenkamp, 1999). Beside the economic development, the national image or “nation brand personalities”, commonly linked with stereotyping, often has concrete roots in history (kahn, 2006); this is even more difficult to change.

When it comes to building nation brands, Jaworski and Fosher’s (2003) National Brand Effect (NBE) Cycle explains the mechanism and nation brands’ inherency. In essence, a nation’s people, beliefs and history give rise to a nation’s brand identity (core values), which gives rise to a nation’s brand effect, which in turn sustains and reinforces both – a literal full cycle of brand building. With a collaborated effort, a nation brand can be influenced and changed, since what is perceived about a nation brand is linked to how this perception is formed, and that these perceptions are often made from personal contact with individuals from that nation (Kubacki & Skinner, 2006). However, a nationwide collaboration including individuals and organizations is hard to form.

2.2.2. Counteraction against Negative COO Effect

While positive COO perception is an asset for some brands to leverage, countering negative COO effect deserves no less attention, if not even more, as negative evaluations by consumers on the basis of country images constitute significant market barriers for firms from less developed countries (Schooler et al, 1987). The search for strategies of managing negative COO effects has become exceedingly important to various stake holders including business practitioners, country policy makers, and academic researchers (Lotz & Hu, 2001).

COO effect is enduring and it is consumers’ perception that counts (Lawrence et al, 1992), firms from developing countries may have to wait until consumers' general perceptions of the products of certain category from their country become more positive before their particular brands become as highly regarded as those from favorable COO, even though they may already produce the same high quality products (Tse & Gorn, 1993). However, it is very understandable that every emerging brand from developing countries won’t just wait. Instead they all seek proactive methods to counter negative COO effect.

higher probability of being subtyped and to be perceived as unrepresentative examples of the stereotype category. The other model is conversion model, suggesting that a change in stereotype beliefs is only feasible when one or more members display attributes which are extremely different from those perceived to be commonly held by the stereotype (Rothbart 1981). The result of Lotz & Hu’s (2001) study suggests that conversion theory is an effective COO stereotype change agent.

Besides effort of changing consumers’ COO perception, the most common way of fighting negative COO effect would be offering a more tempting price, which is already used by many brands from less developed countries. However, it normally simply attracts people who are highly price oriented, and are willing to sacrifice product quality to get lower prices, while it does little to contribute to brand image. Changing negative image will require other tactics. For example, a key component of Acer’s brand building strategy has been to avoid competing on price (Speece & Duc Phung).

In product categories where existing brands have already established origin-based superiority claims, new entrants may choose to "mimic" the origin of the established brands. However, this approach can be risky because of legal issues and the situation that their claims are shown to be false (Thakor & Kohli, 1996). Actually in practice, the claims of origin may not need to be very direct and detailed, as most consumers are influenced by simple COO cues instead of putting much effort in finding out the COO. In this case simply a well designed brand name actually usually does the job. For example, Giordano, a Hong Kong fashion retailer, benefits greatly from its Italian name without having any connection with the country (Samiee et al, 2005; Ying, 2006).

Given the fact that COO image is hardly changeable by a single company within a short period of time, strategies that reduce COO effect can be adopted. Distinctive (diagnostic) quality-signaling cues such as impressive product warranties or after-service, or highly distinct (diagnostic) product attributes can be useful to attenuate unfavorable country-of-origin effects (i.e., to divert attention away from the information about country-of-origin) (Jo et al, 2003). In presence of unfavorable COO, consumers are more likely to use attribute-based evaluation, hence increasing the depth and width of attribute information instead of only using cues in communication can be helpful to reduce consumers’ perceived risk associated with unfavorable COO. (Alden & Hoyer, 1993). When communicating a brand or product, it is advisable for a company to give more emphasis on consumer education and use unambiguous information, as COO doesn’t have much effect on knowledgeable consumers when they process unambiguous information (Maheswaran, 1994; Ueltschy, 1998; Chiou, 2003). It is also advisable to locate product design function in other favorable countries (Li et al, 2000) or create partnership with other well established brands from a favorable country (Roth & Romeo, 1992; Supphellen & Rittenburg, 2001). For example,

However, while most brands try to crowd toward the position associated with an established favorable origin, some brands may actually leverage this situation to gain consumers’ “share of mind” by position themselves elsewhere (Thakor & Kohli, 1996), even though the place may not be the most favorable origin in traditional sense of most consumers.

2.3.

COO Effect on Consumer-Based Brand Equity

Brand equity, as defined by Aaker (1991), is "a set of brand assets and liabilities linked to a brand, such as its name and symbol, which add to or subtract from the value provided by a product or service to a firm and/or to that firm's customers". Keller (2007) brought forward the notion of customer-based brand equity, which is defined as “the differential effect that brand knowledge has on consumer response to the marketing of that brand”. Two focuses of this definition are “consumer response” and “differential effect”. The basic premise of the CBBE is that the power of brand lies in what resides in the minds of customers (Keller, 2007).

Brand equity’s importance to a company’s performance is widely recognized. It is not only about customers’ goodwill and various marketing advantages (Keller, 2007), but also results in a company’s financial performance, though brand assets are normally not included on a company’s accounting sheets (Mizik & Jacobson, 2008). CBBE occurs when the consumer has a high level of awareness and familiarity with the brand and holds some strong, favorable, and unique brand associations in memory (Keller, 2007). In other words, CBBE occurs when customer first know about the brand and then have favorable associations. There are plenty of sources generating brand association. COO is one of those sources, thus has an effect on CBBE (Keller, 2007).

Previous research of COO effect has mainly only examined the linkages between country of origin and certain components of brand equity, with a massive focus on perceived product quality specifically. At the same time, it was found that COO indeed has a larger effect on perceived quality than other variables, such as attitude toward the product or purchase intention (Verlegh & Steenkamp, 1999).

One of the first studies examining the relationships between country of origin and the multi-dimensional consumer-based brand equity (CBBE) was carries out by Pappu, Quester and Cooksey (2006), and they found that for the product categories of televisions and cars in the Australian market, the consumer-based equity of a brand varied significantly according to its country of origin. However, in line with previous studies which suggested COO as a surrogate of product quality (eg. Elliott & Cameron, 1994), they also found that the differences by country of origin were the largest for perceived quality, when measuring consumer-based brand equity.

three factors namely brand distinctiveness, brand loyalty, and brand awareness/associations. Results show that brand’s country-of-origin image positively and significantly influences dimensions of brand equity. The results also show that brand’s country-of-origin image influences brand equity, either directly or indirectly, through the mediating effects of brand distinctiveness, brand loyalty and brand awareness/associations.

2.3.1. Moderators of COO Effect on Consumer Perception of Products and Brands

It is not possible to generalize COO effect into a universally applicable axiom, since it interacts with many other factors.

Product Familiarity

Product familiarity/product knowledge affects the way they use COO to form their perception of product (e.g. Maheswaran, 1994; Schaefer, 1997; Ueltschy, 1998; Batra et al, 2000; Chiou, 2003). For example, among computer consumers, novices normally use COO as a halo and based their product evaluations of quality and price on the country hierarchy, experts were also found to use a country hierarchy but placed a greater importance on brand name (Pecotich & Ward, 2007). This further confirmed previous studies’ claim that consumers not familiar with a country's products are more likely to use country image as a cue from which they infer a brand's product attributes (eg. Chao,1989; Hong & Toner, 1989). However, different results did exist in other studies. Heimbach et al (1989) revealed positive correlation between consumers’ product familiarity and use of COO as a cue, because consumers with higher product familiarity have bigger confidence in using the cue in product evaluation – namely the “confidence value” of the cue. Schaefer (1997) divided consumer knowledge into objective product knowledge and brand familiarity, and suggested that COO effect depends on the interaction between these two dimensions of consumer knowledge. It was found that objective product knowledge appears to lead to an increased reliance on country of origin in product evaluations if the brand name is unfamiliar, but not if the brand name is familiar. The contrary against other studies was explained as: it may well be that, if both intrinsic and extrinsic product cues are available, more knowledgeable consumers will rely on intrinsic attribute information whereas less knowledgeable consumers lack the expertise to do so, but that in situations where only extrinsic attributes are available as product information, more knowledgeable consumers are better able and thus more likely to use country of origin as a cue. Some other studies also found product category familiarity to have no direct effect on COO (Srinivasan et al, 2004). Product complexity is also in line with consumers’ product familiarity, since normally the more complex the product is the less consumers know about it. When encountering a complex product, consumers tend to rely more on COO as an indicator for product quality (Eroglu & Machleit, 1989).

Product involvement also plays as an important moderator in consumers’ usage of COO as a cue. COO cue is generally believed to be more relied on when dealing with low-involvement products. When processing COO information, for example, in advertisement, consumers rely more on country of origin when they are less involved with the ad (Verlegh, et al, 2005). This supports the notion that consumers use country of origin as a cognitive shortcut or a surrogate information cue, a strategy that is relied upon when consumers seek to minimize cognitive efforts and consequently engage in heuristic decision making and stereotyping (Verlegh, et al, 2005; Zhang, 1997; Han, 1989; Maheswaran, 1994, Tse & Gorn, 1993; Lawrence, Marr, and Prendergast, 1992). On the other hand, for high-involvement goods or high motivation consumers, the influence of COO is less pronounced in the presence of other extrinsic cues such as brand and price (Gurhan-Canli & Maheswaran, 2000). However, O'Shaughnessy & O'Shaughnessy (2000) gave a different opinion on this, arguing that COO is most likely to become more of a factor in high-involvement product decisions in which the product is key for the function for which it is to be bought and there is risk attached to buying.

Other Moderators

Besides the influential factors mentioned above, differences have also been found in consumer COO effects regarding many other moderators. Consumers with low country familiarity rely more on COO information than those with high country familiarity (Lee & Ganesh, 1999). The COO effect is larger for luxury than necessity products, for public consumed than private consumed products (Piron, 2000; Hamzaoui & Merunka, 2006), style-related than purely functional products, and a prosperous, wealthy society than a relatively low-income, emerging market (Insch and McBride, 2004). Whether it is household consumer or organizational buyer (Ahmed and d’Astous, 1995), demographic characteristics, such as gender, age, income level, level of education, can also make a difference (Johansson et al, 1985; Hong & Toner, 1989; Neese & Hult, 1996; Ueltschy, 1998).

2.3.2. The Effects of Different Facets of COO on CBBE

In this age of globalization, activities such as outsourcing, acquisitions and mergers make COO a multidimensional concept. Concepts of various COO facets have been brought up by academic researchers and practitioners. Among these concepts are country of design (COD), country of assembly (COA), country of corporation (COC), country of brand (COB), country of manufacture (COM), and etc (e.g. Han &Terpstra, 1988; Witt & Rao, 1992; Chao, 1993; Thakor & Kohli,1996; Dzever & Quester, 1999 ; Lee & Bae, 1999; Li et al, 2000; Pappu, Quester and Cooksey, 2006; Hamzaoui & Merunka, 2006).

their products (Ahmed & Astous, 2008). In a number of studies, the multidimensional nature of product/country concept has been addressed by taking into account two specific aspect of COO: country of design and country of assembly (eg. Chao, 1993; Dzever & Quester, 1999). COO/country of manufacture and brand origin countries have also been distinguished as two different notions in many studies (e.g. Han &Terpstra, 1988; Thakor & Kohli,1996; Lee & Bae, 1999). While the country-of-origin is primarily about the effects of consumers' perceptions of countries on their ratings of products' quality and their choice processes. Brand origin, on the other hand, refers to the integration of origin cues within the brand image. It is not subject to change with a change in manufacture location. It also refers to signifiers of origin beyond those that merely indicate a country. Besides associating COO with consumer-based brand equity, Pappu, Quester and Cooksey (2006) also made more discussion about different cues under the umbrella concept of COO, including “country of manufacture”, “country of design”, “country of brand” and “country of assembly”. Li et al (2000) also analyzed multiple COO facets in their study, which included country of corporation (COC) in addition to country of design and country of assembly.

Previous research provided conflicting results on the relative importance of these cues. While both branding country and manufacturing country have an effect on consumer product evaluations, many researchers found the manufacturing country having greater effect than the branding country on product evaluations (e.g. Han &Terpstra, 1988; Tse & Gorn, 1993; Srinivasan et al, 2004). These results echoed with the study by Insch and McBride (2004) as well as Chao (1998), both of which tested a further decomposition of the COO construction (country of product design (COD), assembly (COA) and parts (COP) manufacture). While COO effect varies between product types and countries, COP appeared to be the most consistently significant COO construct (Insch & McBride, 2004); a poorly perceived product quality associated with a poorly perceived assembly COA location stereotype can not be compensated by a positive COD location stereotype or a COP location stereotype (Chao, 1998). The inconsistency in the results of previous studies may be partly due to the fact that the effect of different COO facets depends on the product category considered (Ahmed & d’Astous, 1995; Hamzaoui & Merunka, 2006).

category to a country with strong association with the product category – what would be the effect on the consumer-based equity of a brand? Jo et al’s (2003) study shed some light on this question – they suggested that high quality country of origin (country of manufacture) should have significant effect on weak brands. However, instead of being tested directly, the result is inferred indirectly by information integration framework, which is confirmed by finding that low quality COO (country of manufacture) has more effect on weak brands than strong brands. Due to the needs for further study, specifically regarding the scenario of a company with an unfavorable COB outsourcing manufacture to a favorable COM, and based on previous studies, the following hypotheses are formed:

H1: With a developed country as COB, a brand with a developed country as COM will have higher CBBE than a brand with a relatively undeveloped country as COM.

H2: With a relatively undeveloped country as COB, a brand with a developed country as COM will have higher CBBE than a brand with a relatively undeveloped country as COM.

However, many other researchers have found that country of brand was more important for consumers (e.g. Ulgado & Lee, 1993, Phau & Prendergast, 2000). Country of design (COD) is found to be the most important piece of COO information in Li et al’s (2000) study, because COD conveys more information about the design and cultural heritage of a product as well as its technological sophistication. Some other studies find both country of brand and country of manufacture equally important (e.g. Chao, 1993). In Phau and Prendergast’s (2000) study, they provided rationales for their conclusion. The product quality and brand image are not affected by the location of manufacture (countries with different levels of economic development) as consumers perceive the brand through its brand personality, origin cues, country ethnicity and brand names. Consumers associate themselves with brands which match their self-concepts (status symbol being one of these concepts); thus, the ingrained characteristics of the brand will not change with a change in manufacturing location. The negative effects of COM in developing or underdeveloped countries would have changed with the advent of the international sourcing of assembly and manufacture. However, their choice of luxury brands for the study impaired the general applicability of the results. Based on these results from previous studies, given fixed COM scenarios, hypotheses about COB effect are stated as follows:

H3: With a developed country as COM, a brand with a developed country as COB will have higher CBBE than a brand with a relatively undeveloped country as COB.

Country of Manufacturing

Country of Brand Country of Origin

Consumer-Based Brand Equity H1 H2 H3 H4 Product Familiarity Country Familiarity Moderators Demographic Characteristics

Figure 2. Conceptual model of COM and COB’s influence on CBBE

Another piece of COO information is the place where the corporation which owns the brand is registered, namely country of corporation (COC). In many cases this is consistent with country of brand. However, with the active purchases and mergers of companies and brands on current international market, as well as many companies’ purpose branding with a foreign heritage, COC is not always consistent with COB. In this case, COC is normally barely relevant in real-life situations (Li et al, 2000), since most consumers are not aware or concerned about this information. For example, the Dutch owned IKEA is always believed to be a Swedish brand, because of its origin and branding strategy. Few consumers know that Jaguar and Land Rover are currently owned by the Indian company Tata Motor. However, if COC information is provided purposely, it may rank high in consumers’ information hierarchy, even toping country of manufacture (COM) information (Thakor & Lavack, 2003).

Amonini et al (1999) concluded that “the relative influence of the ‘country of brand’ and the ‘country of manufacture’ may be product or situation specific”, so an overall generalizable theory for all products and all countries may not be feasible (Insch & McBride, 2004). This may partly explain the inconsistence in results of different studies.

3.

Methodology

information. Four brand concepts are created to include different combinations of the USA and India as COB and COM. These concepts are tested on four groups of respondents separately. Measurement of CBBE, product familiarity, country familiarity and stereotyped attitudes are explained. As for the sampling, 200 subjects are recruited among students (non-marketing major) in Groningen, with a wide coverage of nationalities and cultural backgrounds.

3.1.

Procedure

One contribution of this study to the literature of COO effect lies in its survey procedure applied. Many previous studies used the same sample for repeated evaluations of brands from different countries. This approach has considerable potential to cause bias in research results. First, consumers are very likely to realize the purpose of the study so their answers may be influenced. Second, demand characteristics are very possible to be generated by this procedure. The respondents’ attention would be drawn to factors which otherwise may or may not have been important in their choice. For example, a questionnaire asking for perceptions per country would reinforce the notion that country is a factor in assessing quality (Dzever & Quester, 1999). Third, the effect of comparison among different countries would be enhanced, but this may not be so prominent in real situations when forming brand perception, making purchase decisions and consuming products (e.g. Astous and Ahmed,1999; Liefeld, 2004).

In this study, subjects are divided into four groups, and each group is provided (face to face survey or via email) with only one brand concept followed by the measurement of CBBE. After the measurement of CBBE, product familiarity and country familiarity are measured. The measurement of stereotyped attitudes is put at the end of the survey. This procedure eliminates the possible biases mentioned above, closely representing the process that consumers take into brand information in real scenarios, hence obtain the most objective result of CBBE.

3.2.

Stimulus Material

To eliminate the influence from marketing of well-known brands, an artificial brand concept is designed and tested instead of using existing brands, which is the way most previous studies were conducted.

format condition (Lim & Darley, 1997). In this study, a multiple-cue brand concept introduction is to be used. It incorporates COO information, including COB and COM, into the context, giving it equivalent presence as other cues, which is very similar with multi-cue ad format stimulus material.

Four brand concepts are designed to adequately address the purposes of this study. In each brand concept, all the other brand attributes are set the same, only COO information (COB & COM) is different. The USA and India are chosen as the “developed country of origin” and “relatively undeveloped country of origin” separately. So the COO settings of the four brand concepts are:

COB COM

Brand Concept 1 the USA the USA

Brand Concept 2 the USA India

Brand Concept 3 India the USA

Brand Concept 4 India India

Table 1. COB and COM settings of brand concepts

The four hypotheses are integrated into this experimental research, illustrated as follows:

Brand Concept 1:

the USA as both COB and COM

Brand Concept 4: India as both COB and COM Brand Concept 2:

the USA as COB India as COM

Brand Concept 3: India as COB the USA as COM H1

H2 H3

H4

Figure 3. Test of hypotheses via comparison of brand concepts

Personal computer is chosen as the product category. It is a relatively strong industry in India, yet not well known by most foreign consumers. Therefore the choice of this potential industry in India provides this study much practical value. The brand concept is as follow:

India/the USA. HINS is dedicated to technology, performance and customer service. As a relatively new player on the market, HINS is dynamic and follow the latest trend of technology and customer needs. HINS provides international customers various models of personal desktop computers and notebook computers of reliable performance. The 1 year global warranty and professional after-sale service also add to HINS’s value for the customers. The price is currently set at market average level – providing good value at a very affordable price.

3.3.

Measurement

CBBE

Existing measures of brand equity have been divided into three categories: customer mindset measures, product-market level outcomes and financial measures (Abela, 2003). When it comes to the measurement of CBBE, obviously customer mindset measures would be the most appropriate category to be applied.

When measuring the customer mindset, the measures can also be divided into two main streams – the additive approaches and the inclusive approaches. An additive approach would fits into the view of Keller’s (1993) customer-based brand equity, which says that brand equity represents the value (to a consumer) of a product, above that which would result for an otherwise identical product without the brand's name. An additive approach to measuring brand equity outcomes attempts to isolate the value contributed by the brand name alone, separate from any value contributed by product attributes. An inclusive approach to measuring brand equity, by contrast, focuses on measuring the total value of the equity created by the branded product or service, and does not attempt to subtract anything (Abela, 2003).

In order to abstract the influence of COO, the nature of the measure in this study is additive, and this measure is in line with both Aaker’s (1996) and Keller’s (1993) frameworks. Based on these frameworks, as well as others’, Netemeyer et al (2004) developed a framework with CBBE facets most predictive of key brand-related response variables. Their study retains an eight-item ‘‘PQ (perceived quality)/PVC (perceived value for the cost)’’ measure, a four-item ‘‘uniqueness’’ measure, and a four-item ‘‘willingness to pay a price premium’’ for the brand measure. This set of CBBE scales is to be applied in this study, generating a questionnaire which has 16 questions covering the three major facets of CBBE (Table 3).

The following statements are about the brand and your possible perception. To which degree do you agree with each of these statements? You can answer on a 7-point scale, from 1 meaning STRONGLY DISAGREE to 7 meaning STRONGLY AGREE (with the exception of Item 3 of Willingness to Pay a Price Premium).

1. Compared to other brands of personal computer, HINS is of very high quality. PQ/PVC PQ

3. HINS consistently performs better than all other brands of personal computer. 4. I can always count on HINS for consistent high quality.

5. What I get from HINS is worth the cost.

6. All things considered (price, time, and effort), HINS is a good buy.

7. Compared to other brands of personal computer, HINS is a good value for the money.

PVC

8. When I use a HINS computer, I feel I am getting my money’s worth. 1. HINS is ‘‘distinct’’ from other brands of personal computer.

2. HINS really ‘‘stands out’’ from other brands of personal computer. 3. HINS is very different from other brands of personal computer. Uniqueness

4. HINS is ‘‘unique’’ from other brands of personal computer.

1. The price of HINS would have to go up quite a bit before I would switch to another brand of personal computer.

2. I am willing to pay a higher price for HINS than for other brands of personal computer.

3. I am willing to pay ___% more for HINS over other brands of personal computer: 0% 5% 10% 15% 20% 25% 30%, or more.

Willingness to pay a price premium

4. I am willing to pay a lot more for HINS than other brands of personal computer.

Table 2. Scale of CBBE

Product and Country Familiarity

When measuring product and country familiarity, it is unpractical to measure objective familiarity in this case, as it is very unreliable to use a few questions to accurately elicit a respondent’s familiarity with a product category or a country. As a result, subjective familiarity measurement is applied in this study. Two question is used to measure product familiarity as follows:

1. I think I am very knowledgeable on computers

Strongly disagree 1 2 3 4 5 6 7 Strongly Agree

2. I know what kind of product information decides whether a computer is good or not.

Strongly disagree 1 2 3 4 5 6 7 Strongly Agree

Four questions are used to elicit country familiarity, which including both overall country familiarity and country familiarity regarding computer industry of India and the USA. The questions are as follows:

Very unfamiliar 1 2 3 4 5 6 7 Very familiar 2. About India’s computer industry, I feel

Very unfamiliar 1 2 3 4 5 6 7 Very familiar 3. About the USA as a country, I feel

Very unfamiliar 1 2 3 4 5 6 7 Very familiar 4. About the USA’s computer industry, I feel

Very unfamiliar 1 2 3 4 5 6 7 Very familiar

The questions about India and its computer industry, namely question 1 and 2 above, don’t apply to the test of brand concept 1 which has the USA as both COB and COM. The questions about the USA and its computer industry, namely question 3 and 4 above, don’t apply to the test of brand concept 4 which has India as both COB and COM.

Stereotyped Attitudes

Two questions are used to test stereotyped attitudes, one testing the attitude toward each country’s capability as a computer producer. The questions are:

1. How do you think about India as a computer producer? Very bad 1 2 3 4 5 6 7 Very good

2. How do you think about the USA as a computer producer? Very bad 1 2 3 4 5 6 7 Very good

The question about attitude toward India, namely question 1 above, doesn’t apply to the test of brand concept 1 which has the USA as both COB and COM. The question about attitude toward the USA, namely question 2 above, doesn’t apply to the test of brand concept 1 which has India as both COB and COM.

3.4.

Sample

potential subjects for each brand concept is adjusted continuously according to the responsive rate of each brand concept. In this way, it is ensured that the numbers of subjects for the 4 brand concepts are balanced.

The sample has advantages in both business application and research design. Young people, especially university students, are a major target group of any personal computer brand therefore the subjects have high representative practical value. The international characteristic of the sample minimized the possibility of bias caused by subjects specific cultural back ground. For example, animosity or biased attitude toward another country may exist in a specific country or culture, but this effect can be minimized by using a multinational and multicultural sample. The international background of the sample is also congruent with the purpose of this study, which is to contribute to the theoretical foundation for emerging brands/companies from newly industrialized/developing countries in their international marketing. In addition, considering that India and the USA are used as COO cues in the stimulus material, consumers from these two countries are excluded from the sample to eliminate the influence caused by consumer ethnocentrism. Since the sampling is going to be random, subjects for each brand concept are supposed to have the same product familiarity, country familiaty, age distribution and gender ratio.

158 subjects are eventually recruited. They are almost evenly distributed in the 4 groups tested with different brand concepts, as shown in table 3. Most respondents are university students of age between twenty to thirty years old (95% of all respondents), with an even gender distribution (79 males and 79 females) and a wide coverage of nationalities and cultural backgrounds (28 different countries). The subjects for each brand concept have no significant different in product familiarity, country familiarity with India, and age. There is a significant difference in country familiarity with the USA among the groups and an almost significant gender difference. Therefore, the sample can’t be described as completely random in these aspects.

Frequency Percent Cumulative Percent COB-USA;COM-USA 44 27.8 27.8 COB-USA;COM-India 36 22.8 50.6 COB-India;COM-USA 39 24.7 75.3 COB-India;COM-India 39 24.7 100.0 Total 158 100.0

Table 3. Distribution of respondents in groups

4.

Results

the data is presented. The COB and COM effect are examined, including the test of hypotheses. Stereotyped attitudes are also examined whereafter. The influence of potential moderators is the last to be examined. At the end, a summary of data analysis results is given.

4.1.

Data Processing

In the questionnaires, item 3 of “willingness to pay a price premium” is measured in a different way with other items. To make the whole scale consistent, this variable is recoded into a variable represented by a 7-point scale, from 1 meaning 0% to 7 meaning 30% or more.

There are eight items in the “PQ (perceived quality)/PVC (perceived value for the cost)” measure. In scale reliability analysis, it’s shown that the eight-item measure is highly consistent (Alpha=.9279). Therefore, a new variable – Perceived quality/Perceived value for the cost average – is generated to represent “PQ (perceived quality)/PVC (perceived value for the cost)”, which is mean value of the eight items. There are four items in the “uniqueness” measure. In scale reliability analysis, it’s shown that the four-item measure is highly consistent (Alpha=.8874). Therefore, a new variable – Uniqueness average – is generated to represent “uniqueness”, which is mean value of the four items. There are four items in the “willingness to pay a price premium” measure. In scale reliability analysis, it’s shown that the four-item measure is highly consistent (Alpha=.8377). Therefore, a new variable – Price premium average – is generated to represent “willingness to pay a price premium”, which is mean value of the four items. The reliability of the new three variables is also proved (Alpha=.8482).

Two items are used to measure product familiarity and they showed high consistency (0.8538), hence the mean value of these two items is used to represent product familiarity, generating a new variable – “product familiarity”. To compare subject with different levels of product familiarity hence examine the influence of this potential moderator, “product familiarity” is recoded into a different new variable – “product familiarity sort”, whose value is 1 if “product familiarity” is higher than its mean value and 2 if “product familiarity” is lower than its mean value.

influence of this potential moderator, “familiarity with India” is recoded into a new variable – “familiarity with India sort”, whose value is 1 if “familiarity with India” is higher than its mean value and 2 if “familiarity with India” is lower than its mean value. Based on the same approach, “familiarity with India’s computer industry” is recoded into “familiarity with India’s computer industry sort”, “familiarity the USA” is recoded into “familiarity with the USA sort”, “familiarity with the USA’s computer industry” is recoded into “familiarity with the USA’s computer industry sort”.

“Age” is recoded into a new variable as “age sort”, whose value is 1 if “age” is higher than its mean value and 2 if “age” is lower than its mean value.

4.2.

COB and COM Effects

The CBBE results of all four brand concepts are shown in table 4. For every brand concept, PQ/PVC result is higher than those of the other two CBBE dimensions, while price premium result is the lowest among the three. Brand concept 3, which has India as COB and the USA as COM has the highest value on all three CBBE dimensions among the four brand concepts, but whether the difference is significant is to be tested later.

PQ/PVC uniqueness average price premium average Brand concept Mean Std. Deviation Mean Std. Deviation Mean Std. Deviation COB-USA, COM-USA 3.8920 1.06496 3.4489 1.23135 2.6818 1.19271 COB-USA, COM-India 3.7257 1.06101 3.2222 1.22442 2.2639 1.11154 COB-India, COM-USA 4.0321 .95659 3.4808 1.10974 2.9103 1.28182 COB-India, COM-India 3.7212 1.17382 3.4038 1.22959 2.6795 1.17113 Total 3.8465 1.06440 3.3940 1.19290 2.6424 1.20256

Table 4. CBBE results of brand concepts

4.2.1 Test of H1 – With a developed country as COB, a brand with a developed country as COM will have higher CBBE than a brand with a relatively undeveloped country as COM.

4.2.2 Test of H2 – With a relatively undeveloped country as COB, a brand with a developed country as COM will have higher CBBE than a brand with a relatively undeveloped country as COM.

H2 is tested by comparing the CBBEs of brand concept 3 (India as COB and the USA as COM) and brand concept 4 (India as both COB and COM). Brand concept 3 achieves higher CBBE results than brand concept 4 on all of “PQ/PVC”, “uniqueness” and “willingness to pay a price premium” (table 4), which is consistent with the hypothesis. However, the difference doesn’t reach a significant level on any of the three dimensions of CBBE (Appendix 2). Therefore, the data also rejects H2.

4.2.3 Test of H3 – With a developed country as COM, a brand with a developed country as COB will have higher CBBE than a brand with a relatively undeveloped country as COB.

H2 is tested by comparing the CBBEs of brand concept 1 (the USA as both COB and COM) and brand concept 3 (India as COB and the USA as COM). Out of expectation, brand concept 1’s CBBE results are lower than brand concept 3’s results on all of “PQ/PVC”, “uniqueness” and “willingness to pay a price premium” (table 4), yet the difference doesn’t reach a significant level on any of the three dimensions of CBBE (Appendix 3). H3 is rejected as well.

4.2.4 Test of H4 – With a relatively undeveloped country as COM, a brand with a developed country as COB will have higher CBBE than a brand with a relatively undeveloped country as COB.

H4 is tested by comparing the CBBEs of brand concept 2 (the USA as COB and India as COM) and brand concept 4 (India as both COB and COM). Brand concept 2’s “PQ/PVC” result is at par with brand concept 4’s, while it’s results on “uniqueness” and “willingness to pay a price premium” are even lower than brand concept 4’s (table 4). However, the difference doesn’t reach a significant level on any of the three dimensions of CBBE once again, while it is close to significant on “willingness to pay a price premium” (p=.12) (Appendix 4). Therefore, H4 is rejected too.

4.2.5 Further Test

To get further insights into COB and COM effects, after testing the four hypotheses, two further comparisons are made. First, the CBBE result of brand concept 1 and brand concept 2, which both have the USA as COB, is compared with the CBBE result of brand concept 3 and brand concept 4, which both have India as COB. Second, the CBBE result of brand concept 1 and brand concept 3, with both have the USA as COM, is compared with the CBBE result of brand concept 2 and brand concept 4, which both have India as COM.

when the USA is COB, which is not as expected since the USA is generally believed to be a more favorable COB. However, the difference on none of the three dimensions achieves a significant level, while it is closer to significant level on “willingness to pay a price premium” (p=.12) (Appendix 5). CBBE is higher when the USA is COM than when India is COM. The difference doesn’t achieve significant level on any dimension neither, while it is also closer to significant level on “willingness to pay a price premium” (p=.11) (Appendix 6).

PQ/PVC uniqueness average price premium average Brand concept Mean Std. Deviation Mean Std. Deviation Mean Std. Deviation The USA as COB 3.8172 1.05972 3.3469 1.22571 2.4938 1.16853 India as COB 3.8766 1.07520 3.4423 1.16421 2.7949 1.22524 The USA as COM 3.9578 1.01180 3.4639 1.16878 2.7892 1.23311 India as COM 3.7233 1.11355 3.3167 1.22221 2.4800 1.15428 Total 3.8465 1.06440 3.3940 1.19290 2.6424 1.20256

Table 5. CBBE results of different countries as COB or COM

4.3.

Difference in Stereotyped Attitudes

The results of stereotyped attitudes are shown in table 5. Although no significant difference in CBBEs of the four brand concepts is found, the stereotyped attitude towards the USA is indeed significantly higher than the stereotyped attitude towards India regarding their capabilities as computer producers (p<.01).

N Mean Std. Deviation

stereotyped attitude - India

114 4.0877 1.27994 stereotyped attitude - the USA

119 5.2437 1.32106

Table 6. Stereotyped attitudes

4.4.

Moderators’ Influence

in gender (p=.051) (appendix 7).

product familiarity familiarity with India familiarity with India's computer industry Brand concept Mean Std. Deviation Mean Std. Deviation Mean Std. Deviation Brand concept 1 3.9773 1.61733 . . . . Brand concept 2 4.2917 1.26138 3.8056 1.72079 3.2222 1.62324 Brand concept 3 4.5000 1.34751 3.2051 1.17383 2.8718 1.50752 Brand concept 4 4.1795 1.22199 3.7436 1.72776 2.8462 1.51377 General 4.2278 1.38186 3.5789 1.56790 2.9737 1.54267

Table 7. Potential moderator results of brand concepts

familiarity with the USA familiarity with the USA's

computer industry Age Gender

Mean Std. Deviation Mean Std. Deviation Mean Std. Deviation Mean Std. Deviation 4.3636 1.55655 3.9773 1.67733 24.9773 2.78274 .3636 .48661 5.1667 1.38358 5.0556 1.35107 23.8333 2.85357 .6667 .47809 4.9231 .92863 4.8205 1.35475 24.1538 6.12819 .4615 .50504 . . . . 24.1538 5.14290 .5385 .50504 4.7899 1.35843 4.5798 1.54314 24.3101 4.42906 .5000 .50159 Table 7 continued

4.4.1. Product Familiarity’s Influence

Defined by the recoded variable “product familiarity sort”, all respondents are divided into two groups – a low group of lower familiarity and a group of higher familiarity. The Hypotheses are retested within the two groups separately, yet no significant difference of CBBE is found. This means product familiarity doesn’t moderate COM and COB effect on CBBE.

It is found there is a significant positive correlation between “product familiarity” and “stereotyped attitude – the USA” (.241, p<.01). This result is logical as consumers who know computer well may be more aware and certain about the USA’s advantage in this industry. The correlation between product familiarity and stereotyped attitude towards India regarding its capability as a computer producer is not significant (Appendix 8).

4.4.2. Country Familiarity’s Influence