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College of Technology London

GLOBAL MARKETING ASSIGNMENT

STUDENT NAME: DENNIS MATHEW STUDENT ID: 105178-88 UNIVERSITY ID: 1003050 LECTURER: WILSON OZEUM

Table of Contents
Introduction ................................ ................................ ................................ ................................ 2 Definition of Country of Origin................................ ................................ ................................ ..... 2 Types of country of origin effect ................................ ................................ ................................ .. 4 Cognitive Effects ................................ ................................ ................................ ...................... 4 Affective Country of Origin Effect ................................ ................................ ............................ 5 The Conation Effect ................................ ................................ ................................ ................. 5 Country of origin and its impact on consumer behaviour................................ ............................. 5 Country of origin in context Apple (US) ................................ ................................ ..................... 6 Country of Origin in Context Chinese Brands................................ ................................ ............. 7 Conclusion................................ ................................ ................................ ................................ ... 7 Bibliography ................................ ................................ ................................ ................................ 8

Introduction
Country of origin, in general, refers to the country where the product or service comes from. This term is becoming increasingly more and more important in marketing due to internationalisation of organisations. Due to internationalisation of businesses, consumers are exposed to several goods from various countries and as a result the country of origin effect has also become a cue for consumers to make decisions about brands and goods. In many ways country of origin is similar to stereotyping where consumers make assumptions based on their bias towards a specific country. This assignment analyses the meaning and the effect of country of origin from a marketing perspective. The examples used in this assignment are Apple (US) and Chinese brands in general.

Definition of Country of Origin


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Country of origin is one of the evaluative criteria that are considered by most consumers while making decisions about goods or brands. Additionally it is one of the elements that help consumers identify brands and goods (Kurtz, 2008). Country of origin impacts or influences marketing strategies to a great extent due to the fact that consumers buying behaviour is influenced by the place of manufacture and also creates barriers to entry in several cases (Chattalas et al., 2008). This is due to the fact that consumer buying behaviour and perceptions of consumer are among the primary factors that influenced by the country of origin effect. The country of origin effect can be defined as a ... consumer s general perceptions about the quality of products made in a particular country and the nature of people from that country (Knight & Calantone, 2000, p.127). For example, Chinese products are generally looked upon as cheap counterparts of their We stern brands (Ille & Chailan, 2011). On the other hand, the goods that are made in the United States are considered to be high in quality and brands that emerge from the United States may benefit from this generalisation (Demirbag et al., 2010). Country of origin, being a type of stereotype, has a great impact on the consumer perception. Because of the generalisations that accompany country of origin effect, if the generalisation or the stereotype is negative, it poses a barrier to entry in a new market or it can also pose barriers for positioning the product in the existing market. On the other hand if the generalisation is positive or favourable to a particular brand or country, then it becomes easy for marketers to take advantage of this aspect in order to position the brand effectively (Knight & Calantone, 2000; Hinner & Freiberg, 2010). For instance with respect to Chinese goods, even though the goods may be of high quality and advanced technology (with respect to electronics), as the country suffers from a low brand image, it is difficult for Chinese marketers to be able to position themselves as high quality brands in international markets (Kabadayi & Lerman, 2011). It is also seen that marketers are often faced with several challenges when they tried to position Chinese brands in the international market due to the low brand image that the country has. This is especially true with respect to the Western markets such as the United States market and European market where customers are hesitant to purchase anything that originates from China (Kabadayi & Lerman, 2011; Ille & Chailan, 2011). On the other hand, when it comes to goods which are manufactured in the United States, United Kingdom, or Germany there are automatically seen as goods that are of high quality and technologically advanced. This is due to the fact that consumers associate high quality with any brand or good that comes from these countries (Knight & Calantone, 2000). There has been much research in the area of country of origin effect in marketing. One of the empirical studies that have been identified by several authors is the study conducted by Schooler in 1965. According to several authors, country of origin effect has more to do with the perceive d 3

quality of the product or service than the actual quality of the product. This means that consumers will usually ignore or undermine the actual quality of the product based on the value of the inmates at the have about the country of manufacture of that product (Onkvisit & Shaw, 2004). It can be said that the country of origin effect may be used as a guide by several consumers to judge the quality of the product based on its origin. This is due to the fact that consumers often form images and opinions about countries which form the basic attitude of the consumers towards that country. As such the attitudes and beliefs act as the queue for consumers to make decisions about products or brands that come from those countries (Onkvisit & Shaw, 2004). The value of the brand can also be affected by the country where the product is manufactured (Pappu et al., 2006). What this means is that even if a brand has a good value, if the production facility of the brand is shifted to another country that is perceived to be a low value brand or has a low quality image (as a country), the image of the brand also takes a beating in the sense that consumers will perceived that the quality of the brand has reduced (Pappu et al., 2006; Onkvisit & Shaw, 2004). Hence it can be said that with country of origin, generalisation affects the perceived value of the goods that come from specific countries. However, cognitive processing is also linked with country of origin effect where consumers make decisions about goods coming from specific countries due to the general idea of the country or the general idea that they have about the products coming from that country (Knight & Calantone, 2000).

Types of country of origin effect


The primary types of country of origin that have been identified by various authors can be classified into - cognitive, affective, and conative (Knight & Calantone, 2000).

Cognitive Effects
Cognitive effects of country of origin refer to the behavioural process that takes place when a consumer makes a decision about a foreign brand. According to the cognitive approach to country of origin effect, it is seen that consumers respond differently with different levels of knowledge about the goods of country and the general image that consumers hold about any country (Knight & Calantone, 2000). One of the cognitive effects is that when consumers have very less information about the goods of a country, they tend to associate the quality of the products with the perceived quality of the country that they have (Ahmed et al., 2004). When consumers perceive that a country possesses a low image, the risk associated with the products of this country will be high. Consequently, goods that originate from this country will be perceived as low quality goods due to the risk that is associated with them. Also, when consumers perceive that the image of count y is r

good, then they would seek to purchase products from this country in order to enhance their self image (Ahmed et al., 2002). If however, consumers are familiar with products of a certain country; in that case they may develop a brand image for the country of origin, depending on the goods and their quality (Ahmed et al., 2004). In this case cognitive process takes place in a more informed way; in the sense that consumers are aware of the quality of the products that originate from this country. For example, if a consumer is well aware of brands such as Apple and Microsoft in the technology sector, and does not know the origin of the brands, then, when the consumer gains knowledge about the origin of these brands, he or she will automatically rate the country depending on the products and their quality. As such, this cognitive behaviour is called a summary construct country of origin effect by Ahmed et. al. (2004).

Affective Country of Origin Effect


In the affective approach, the country of origin effect is related to the emotional benefits and symbols that are associated with countries by consumers. In this approach, country of origin is mainly influenced by consumers attitudes and opinions (Knight & Calantone, 2000). For example, the mere mention of country could trigger emotions, attitudes are opinions in a consumer based on past experience or based on what the consumer has learned at a young age. In this case, products may be deemed to be favourable or unfavourable based on the emotional content of the consumer. This is perhaps one of the most difficult aspects to measure from a marketing perspective (Ahmed et al., 2002). In the affective country of origin effect, it is quite common to see consumers being ethnocentric and patriotic to products that are manufactured domestically.

The Conation Effect


The conation effect deals with the alternate buying behaviour of the consumer based on the natural tendency or impulse of the consumer. In other words, this simply means that when presented with a specific country of manufacture, the consumer may be conditioned to respond to that country in a specific way which could have become a part of the behaviour of the consumer. In other words, it could be said that the cognitive and affective country of origin effects lead to the conation effect of country of origin (Knight & Calantone, 2000). For example it may be a natural tendency for a consumer to choose a domestic product when faced with a choice between foreign product and domestic product of similar quality (Ahmed et al., 2004).

Country of origin and its impact on consumer behaviour

One of the definitions for consumer behaviour is that, [C]onsumer behaviour describes how consumers make purchase decisions and how they use and d ispose of the purchased goods or services (Lamb et al., 2011, p.191). It is highly essential for marketers to be able to understand consumer buying behaviour with respect to country of origin effect which is seemingly complex (Lamb et al., 2011; Hinner & Freiberg, 2010). In order to understand consumer behaviour, it is essential for marketers to understand the stereotypes and the generalisations that consumers make about countries and goods from those countries. Consumer behaviour depends on several factors such as the marketing mix and also the country of origin effect. The importance of country of origin effect has been increasing ever since globalisation became a major phenomenon. Consumers now have several products to choose from and also have products of several countries to choose fr m. o With the choice of the consumers increased, country of origin effect has also become one of the cues for consumers to make decisions regarding products and services from foreign countries (Onkvisit & Shaw, 2004). It has been said that country of origin serves as a variable to measure the quality of products. In other words, consumers generally used the country of origin effect to determine the perceived quality of products based on their image of the country (Onkvisit & Shaw, 2004). Additionally, consumers may also have various images for a country with respect to various categories of products. For example when that is made in Poland may be considered to be of good quality whereas automobiles or electronic goods that are made from Poland may not be considered as high quality (Remaud & Lockshin, 2009).

Country of origin in context Apple (US)


Apple is one of the largest companies in the technological industry by its market share. Although the company sources many of its goods from developing countries, the goods sold by the company are still associated with the country of origin United States (Demirbag et al., 2010). However, it is noticed that if the brand is owned by a developing country, then the entire perception of consumers towards Apple would have been different. What this means is that because the United States has a brand image of high quality and high performance, Apple has benefited from this brand image in order to be able to position itself as a highly innovative and high quality brand (Bluemelhuber et al., 2007). Additionally, when brand alliances formed between companies from different countries, these alliances often have an influence on the brand image that the company processes. For example Apple's brand image was expected to suffer when they formed an alliance with the Japanese brand Sony which provided Apple with laptop batteries (Bluemelhuber et al., 2007). The reason as to why the brand image was expected to suffer is because Sony's laptop batteries did not

function as efficiently as it was desired and as a result Apple had to recall thousands of their laptops to replace the batteries. This suggests that Japan either has a brand image that is lower than the brand image that the United States processes or that the consumers based in the United States are highly ethnocentric (Knight & Calantone, 2000). Either way, Apple's brand identity would have taken a hit due to its alliance with any organisation that has a brand image that is lower than that of the United States. It is also seen that companies such as Dell and Microsoft also possess good brand images owing to the fact that they originate from the United States (Jin et al., 2006).

Country of Origin in Context Chinese Brands


It has been stated by Kabadayi & Lerman (2010, pp. 102) that Made in China has become the title of many marketers worst nightmare. The reason as to why China is not favourable to many consumers across the globe is that the country has not attained an image that is associated with innovation and quality (Ille & Chailan, 2011). It has been seen that many of the goods that originate from China or associated with China are less likely to be purchased by consumers in developed countries like the United States and United Kingdom. Although the country has been growing immensely in terms of its economy, the brand image has not been able to keep up with China in the sense that the brand image of the country has still remained poor or cheap (Kabadayi & Lerman, 2011). Although the country may possess companies that have products that can match the quality of their western brand counterparts, due to the nature of the country of origin effect on China, consumers are not willing to purchase these products. For example brand such as Lenovo (laptops) which originate from China are equal to their western counterparts such as IBM or HP. However, the perceived quality of this brand is quite low because of the country of origin of the brand (Ille & Chailan, 2011). Many of the developing countries and emerging countries do not actively promote their country of origin with respect to the goods and services. An example of this is revealed in the fact that Tata does not promote its own brand in the Western countries with respect to tea. Instead the company promotes its acquired brand Tetley tea in the Western countries while it promotes Tata tea in emerging and developing countries (Demirbag et al., 2010). This is due to the fact that if consumers start associating Tetley tea with the country of origin that is India, the brand image will have a drastic impact. Lenovo is one of the Chinese companies that promote their country of origin and as a result the brand has not been able to gain a lot of market share in the Western markets (Demirbag et al., 2010).

Conclusion
The country of origin effect has a great impact on the purchasing behaviour of customers. The apparent trouble with the country of origin effect is the fact that consumers stereotype countries as 7

brands and associate generalised images about these countries with the brands and pro ducts that come from them. In some cases the stereotype may serve as an asset to marketers whereas in other cases stereotype may be a setback to the marketers. In developed countries country of origin effect can be used to boost the image of the goods and services that are originate from the country whereas in developing and emerging countries, country of origin effect has to be minimised as much as possible in order to negate the effect that it has. As such, it may be said that the country of origin effect is one of the most important aspects in the purchasing behaviour of customers.

Bibliography
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