Country-of-Origin and its effects on International Marketing

Aug 14

posted by Ivy Velasquez in STUDENT MARKETING POSTS | 6 Comments

Global marketing studies have proven time and time again that knowledge of where a product is made influences purchasing decisions. The attitudes and perceptions people have in their minds about a particular country are transferred to products and brands originating from that country. If you don’t believe me, think to yourself: would you rather buy electronics made in Japan or in China? According to research from Futurebrand, a brand’s home country ranks higher than traditional purchasing choice drivers like price, availability, and style (Roll, 2014). This bias is what marketing literature calls the country-of-origin-effect, and it is common in product categories such as automotive, electronics, fashion, beer, and certain food products (Keegan 2016).

The country-of-origin effect presents both challenges and opportunities for global marketers. Marketers need to carefully study the markets where they do business and decide where and if they want to prominently associate their brands and products with their home countries through integrated marketing communications strategies.  On the one hand, positive country associations can generate interest, acceptance, preference, and brand equity; facilitate foreign market entrance; and allow marketers to capitalize by charging premium prices. Germany is a case in point. This country has long been associated with innovative engineering and performance. Luxury car brands like BMW, Audi, and Mercedes-Benz have used these associations to their advantage, developing an image of prestige and quality. These brands make sure that customers around the world know their cars are made in Germany. Country of origin can reduce perceived risks by acting as a guarantee of quality (Adina, Gabriela, & Roxana-Denisa, 2014).

On the other hand, negative country associations can be detrimental to a brand. These perceptions can negatively affect demand and make market entrance difficult. Animosity towards the country of origin can lead to product avoidance and sometimes even hatred (Adina et. al, 2014). Negative feelings and associations can come from a history of questionable product quality or nationalistic sentiments. For example, in March 2017, political disputes between China and South Korea over missile defense produced a spur of violence and restrictions for South Korean brands (Doland, 2017). In a video that went viral on Chinese social media, a man smashed an LG washing machine and a TV set with a sledgehammer in front of a banner that read: “We would rather damage these than sell them.” Coincidentally, Chinese authorities also banned imports of South Korean beauty products citing issues of quality and closed dozes of stores owned by a South Korean supermarket chain citing safety code issues (Doland, 2017).

            Country associations are fluid and can change overtime. There are strategies that both countries and marketers can implement to overcome country-of-origin challenges. Countries can build the nation’s brand by emphasizing and diversifying their sources of competitive advantage, being conscious of foreign policy’s impact on popular global brands, publically recognizing their best brands, and improving health and safety regulations as well as intellectual property rights (Roll, 2014). In turn, marketers can focus on making branding and innovation the center or corporate strategy. Brands must pay attention to the smallest details, ensuring that the customer experience is outstanding and well differentiated. Ensuring a positive response to the brand can minimize the country of origin effects.  

What are some of your personal bias for or against products or brands from certain countries? What has a larger influence on your purchasing decisions, where the product is made or where the brand is from?

Sources:

Adina, C., Gabriela, C., & Roxana-Denisa, S. (2014). Country-of-origin effect on perceived brand

positioning. Procedia Economics and Finance, 23(2015), 422-427. Retrieved from http://www.sciencedirect.com/science/article/pii/S2212567115003834

Doland, A. (2017, March 17). China Is Lashing Out at South Korean Brands; Here’s What Marketers Should Know. AdvertisingAge. Retrieved from http://adage.com/article/cmo-strategy/china-lashing-south-korean-brands/308309/

Keegan, W.J. & Green, M.C. (2017). Chapter 10: Brand and product decisions in global marketing. In Global Marketing (9th Ed., section 10.4). Retrieved from

https://etext.pearson.com/#/book/5MFEDOLN4UQ?deeplink=true&platforms_id=xl&id=afa61c765255d6d20213af6ba83fd9d4b7dc22612&referrer=nav&bookId=5MFEDOLN4UQ

Roll, M. (March 2014). How nations and brands overcome country of origin challenges. Retrieved

from http://martinroll.com/resources/articles/marketing/how-nations-and-brands-overcome-country-of-origin-challenges/

Ivy Velasquez is an MBA Marketing student at the Huizenga College of Business and Entrepreneurship, Nova Southeastern University. She can be reached at iv98@mynsu.nova.edu

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• #1 by Alex Artaza on 9/27/17 - 2:05 PM

  

  I related to this article very well. When it comes to purchasing certain products such as cars, electronics, and appliances the country of origin plays a big role. I know from personal experience with german cars that sometimes the computers in the car can have glitches and be difficult to repair, I tend to stay away from german cars. I do find myself also not liking other car brands from Germany due to my poor experience with Volkswagen

• #2 by Parker Sheppard on 9/29/17 - 4:28 PM

  

  Hi! This post is very interesting and easy to relate to. I often find myself more willing to spend money on a product when the tag or product says made in the USA. There are, however, many different kinds of products and each product has its place of origin that directly impacts the way that people think of how well it work for them. Using the car example from another response, my family often will purchase Japanese cars like Toyota or Honda, because they last forever. If people want a show car or something that's going to look good or race well, they may look to France or Italy. Often, Truck owners want their truck made right in the USA so they know its reliable and made the way people like them want their trucks.

• #3 by Steven J Mandel on 9/29/17 - 9:25 PM

  

  Country of origin plays a key role in consumer purchasing behaviors, especially here in the United States where there has been calls to buy American when and if possible. An obstacle that corporations or organization may face is legislation, which can decide whether or not they can incorporate their country of origin into the marketing strategy.
  
  An incident that comes to mind is meat labeling, according to the Associated Press in 2016 Congress repealed a labeling law that required retailers to include the animal’s country of origin on packages of red meat. This bode well for meat imported from Mexico and Canada, but detrimental to the U.S. producers. Beforehand, the labels informed consumers where the animal was born, raised, and slaughtered; without it consumers are clueless to where their meat originates and are unable to make an informed decision. Cattle ranching is an American tradition; therefore, American consumers and many abroad associate the U.S. with having the safest and highest quality of red meat. However, do to legislation U.S. producers are unable to embrace and incorporates this into their marketing strategy.

• #4 by Ka Lok Wong on 11/3/17 - 10:22 PM

  

  I found this article very interesting and easy to relay to. In my personal opinions, I don't have bias for products from certain countries, but let me be honest, I do have bias for certain products from certain countries. Whenever I decide to buy something important and maybe expensive (Ex. TV, smartphone, Cars, food etc.) I will rather look into both where it was made and the country of origin, and I consider them equally important. Frankly, I do have different preferences for different products.

• #5 by Kathleen Taylor on 2/15/18 - 7:13 PM

  

  This is a great article that is very relevant in today's marketing strategies. Typically, consumers believe that products made domestically offer the highest value and quality. This is one of the reasons that American companies can use their product country of origin for marketing purposes. In addition to higher perceived value, many Americans would rather support a company that produces in their home country. Although higher value and quality is not guaranteed, they are able to charge higher prices than competing products from different countries because of this trend. Personally, I think that purchasing products made in the USA is great. However, I also think that outsourcing to other countries is a legitimate way for companies to maintain quality while decreasing production costs, which can reduce prices and create more value for customers.

• #6 by fastmeata on 5/10/18 - 4:18 PM

  

  Excellent, Thank you.