Does Country of Origin Transfer Between Brands?

ABSTRACT - Using theories of categorization and anchoring and adjustment, this article examines the effect of country of origin of one brand on another brand between contiguously presented brands. Results show moderate support for the effect of country of origin of a contiguously presented brand (reference brand) as an information cue about the target brand. In addition, the interaction between familiarity and country of origin was significant in predicting likelihood to buy the product.

Citation:

Vikas Mittal and Michael Tsiros (1995) ,"Does Country of Origin Transfer Between Brands?", in NA - Advances in Consumer Research Volume 22, eds. Frank R. Kardes and Mita Sujan, Provo, UT : Association for Consumer Research, Pages: 292-296.

Advances in Consumer Research Volume 22, 1995      Pages 292-296

DOES COUNTRY OF ORIGIN TRANSFER BETWEEN BRANDS?

Vikas Mittal, Temple University

Michael Tsiros, Temple University

[We would like to thank Kristine Gupta and Lena Tsiros for their invaluable support. We also acknowledge the help of Michael R. Gerhart in photographing the stimuli.]

ABSTRACT -

Using theories of categorization and anchoring and adjustment, this article examines the effect of country of origin of one brand on another brand between contiguously presented brands. Results show moderate support for the effect of country of origin of a contiguously presented brand (reference brand) as an information cue about the target brand. In addition, the interaction between familiarity and country of origin was significant in predicting likelihood to buy the product.

INTRODUCTION

Technological advancement and diffusion has brought about numerous changes in the production and marketing of consumer and industrial goods. These changes have made possible the reduction of manufacturing and transaction costs. As a consequence global sourcing networks have attracted sufficient attention from both practitioners and academicians. The importance of country of origin (COO) as an information cue has rekindled the interest of marketing and international business researchers (Shimp, Samiee, and Madden 1993).

While COO has been extensively studied by researchers (see Baughn and Yaprak 1991 for an extensive review), few have taken a cognitive approach to studying its effect on consumer attitude formation and purchase intentions (see Hong and Wyer 1989; Han 1989 for notable exceptions). Generally, researchers have examined COO effects as they pertain to a single brand. Most consumer decisions, on the other hand, involve multiple brands. In such a situation, it is possible that the COO effects from one brand may "transfer" to another brand within the same choice set. The purpose of this paper is to examine the transfer of COO effects among contiguously displayed brands.

Using categorization theory and literature on anchoring and adjustment, propositions regarding COO effects in brand evaluation and purchasing are derived and tested. Results from an experiment show that while COO of a contiguously displayed brand (reference brand) does not influence attitudes toward the target brand, it may influence subject's likelihood to buy the brand. Furthermore, the influence of COO of the contiguously displayed brand on purchase likelihood of the target brand was moderated by the subject's familiarity with the product.

COUNTRY OF ORIGIN: LITERATURE REVIEW

Two works provide a comprehensive literature review of COO effects in a marketing context (Bilkey and Nes 1982; Baughn and Yaprak 1991); therefore, only a brief review is offered here.

Earlier studies investigating the role of demographic variables in explaining COO effects found that foreign products were more favorably evaluated by respondents who were female, older, and more educated (cf. Schooler 1971). Another group of researchers have investigated the effect of the level of economic development of a product's COO on consumer evaluations. The main finding from these studies has been that consumers not only perceive products manufactured in economically developed countries as having better quality but are also more likely to purchase them (cf. Krishnakumar 1974; Hampton 1977; Yaprak 1978).

Based on the notion of consumers' patriotic emotions and their effects on attitudes and purchase intentions, researchers have developed related constructs such as "consumer ethnocentrism" (eg. Shimp and Sharma 1987) and investigated their effect on consumer attitudes. Thus, studies have identified some degree of domestic product preference among French, West German, US, Japanese, Finnish, and Dutch consumers (see review by Hooley, Shipley, and Krieger 1988). Studies have also shown that US consumers, in the 1980's showed a significant preference for Japanese automobiles than domestic makes (cf. Johansson and Nebenzahl 1986).

More recently, researchers have examined COO from an information-processing perspective. Hong and Wyer (1989) suggested that COO activated thoughts about other product attitudes. The COO cue, therefore, may be related not only to specific beliefs about product attributes, but also to overall attitude toward the purchase. Han (1989) tested two alternative models: (1) the halo model, which posits that country image serves as halo on product evaluation and (2) the summary construct model which posits that country image functions as a summary construct. The halo construct model suggests that COO directly affects consumers' beliefs about product attributes and indirectly affects overall evaluation of products through those beliefs. The summary construct model suggests that COO directly affects consumers' attitude toward a brand rather than affecting it indirectly through product attribute ratings. Empirical results favored the halo construct model for products such as automobiles and the summary construct for products such as television sets. Han (1989) explained this finding based on the fact that automobiles are more complicated products with more product attributes than television sets.

COO TRANSFER BETWEEN CONTIGUOUS BRANDS

Starting from the literature on brand extensions, there has been considerable interest in exploring how perceptions of one brand (product) transfer to an associated brand (product). Using categorization theory (Rosch and Mervis 1975), Aaker and Keller (1990) demonstrated that brand image can transfer along several product dimensions. Similarly, Bickart, Buchanan, and Simmons (1993) showed that brand images do transfer between two brands that are displayed together in a retail catalog. The brand image transfer was particularly strong from an unfamiliar brand to a familiar brand. In particular, they found that the image of the familiar brand (Liz Claiborne) was negatively affected when it was displayed along with an unfamiliar brand. However, the reciprocal affect of the familiar brand on the unfamiliar brand was weak.

Following the definition of brand image transfer (Bickart, Buchanan, and Simmons 1993), we propose that COO transfer occurs between two brands in a choice set when the COO associations held in memory about one brand (say, Brand A) affect consumer judgments about another brand (say, Brand B). COO may transfer not only on an attribute level, but also on an overall basis. Furthermore, the "strength" of such a transfer is likely to vary based on contextual factors, such as consumer familiarity with the product, the degree of incongruity between the countries of origin and so forth.

Empirical evidence shows that contextual information is required to interpret ambiguous stimuli (Neisser 1976). In a consumer decision-making setting, this information may come from sources such as other brands in the choice set or the physical setting of the decision task. One such source of contextual information is the COO of other brands in the choice set. Categorization theory and literature on adjustment and anchoring suggest that such contextual information is important as it influences consumer judgments and choices (Cohen and Basu 1987; Northcraft and Neale 1987).

Categorization

Categorization, considered a fundamental cognitive activity, has been extensively used to study consumer decision making (cf. Cohen and Basu 1987). The most frequently advanced models of categorization are the classical, the prototype, and the exemplar (Cohen and Basu 1987).

In the classical model, any object possessing the set of salient attributes is a member of the category, while any object lacking even one is not a member (Cohen and Basu 1987). In the prototype model, an object belongs to a category if there is a good fit between the object and the prototype, or the best example of the category (Rosch and Mervis 1975; Smith and Medin 1981). In the exemplar model, the object is compared with a specific example in the category. The exemplar, therefore must be accessible during the categorization process (Cohen and Basu 1987). Much empirical evidence suggests that when faced with an ambiguous stimuli, people try to classify it in existing categories in their memory (Ozanne, Brucks, and Grewal 1992).

Applied in this setting it may be argued that consumers, when faced with a brand for which they know little about, will try to classify it within an existing category. The cue for this categorization process may be provided by the COO of another brand in the choice set. This is particularly likely to occur when other brand attributes (eg. price) are non-diagnostic. Thus, when displayed along with a brand from Paris, a dress may be categorized as being more fashionable than if it were displayed alongside with another dress made in another country less known for its fashion industry.

Anchoring and adjustment

Norm theory suggests that in the absence of data people fill the missing links with "normal" values/events (Kahneman and Miller 1986). Thus, absent the information about reliability of a Japanese brand car, the customer will imbue it with the normal value of say "highly reliable." Related to norm theory, Kahneman (1992) defines anchoring effects as "cases in which a stimulus or a message that is clearly designated as irrelevant and uninformative nevertheless increases the normality of a possible outcome." (pp. 309) Stated differently, anchoring effects can drastically influence what will be considered as normal. For instance, Northcraft and Neale (1987) showed that the asking price of a house acted as a powerful anchor on people's estimates of the value of a house. Furthermore, they demonstrated that assessments of not only novices, but also of professionals were strongly influenced by an asking price that was considered completely uninformative by them. In another study, Urbany, Bearden, and Weilbaker (1988) showed that both plausible as well as exaggerated reference prices influenced consumers' perceptions of perceived offer value. Although believability of the ad significantly dropped for the case of the exaggerated reference price, a significant increase in perceived offer value was witnessed. Furthermore, evidence of estimates being assimilated to randomly produced anchors (eg., by spinning a fortune wheel) has also been documented. For instance, subjects were asked if the percentage of African countries in the UN was higher or lower than a given number; the median estimates were 25 and 45 for groups that received 10 and 65 as the random number respectively (Slovic and Lichtenstein 1971). In the context of COO contiguously displayed brands can serve as powerful anchors for each other. For instance, an unknown brand of portable stereo displayed vis a vis a Sony (made in Japan) may be judged better, than if it were displayed along with an Weston (made in India).

Following the above arguments, it is expected that for contiguously displayed brands, the target brand evaluations will be biased toward the reference brand. According to categorization literature this may occur if consumers categorize the target brand in the same category as the reference brand. Predictions based on the anchoring and adjustment literature would be similar: the target brand would be anchored to the reference brand and the target brand's evaluation adjusted accordingly. Thus, for contiguously displayed brands the following hypotheses are proposed:

HYP 1: Evaluations of the target brand will be influenced by the presence of a reference brand with a different COO. When the COO of the reference brand is evaluated positively, evaluations will be higher. When the COO of the reference brand is evaluated negatively, evaluations will be lower.

HYP 2: Consumers' likelihood to buy the target brand will be influenced by the reference brand with a different COO. When the COO of the reference brand is evaluated positively, the likelihood to buy the target brand will be higher. When the COO of the reference brand is evaluated negatively, the likelihood to buy the target brand will be lower.

In addition, consumer experience with the product is expected to moderate the above effects. Prior work has shown that consumer familiarity with the product (Alba and Hutchinson 1987) influences their decision making. The diagnosticity of COO as a cue was expected to vary with a subject's experience with the product. However, no a priori predictions were made regarding this moderating effect.

METHOD

An experimental design using desk lamps as the product and students from a major university in the Northeast as subjects was conducted. Desk lamps were deemed appropriate because they enabled us to construct multi-cue stimuli and constitute an appropriate product for the student population.

Measures

Attitudes were measured via 14 semantic differential scales. These were constructed to tap 3 underlying dimensions of styling, quality and value. Likelihood to buy was measured via subject's response to the question "How likely would you be to buy the target brand of lamp?" on a 7-point scale anchored as "extremely likely to buy" and "not at all likely to buy." Product familiarity was measured via response to the question "Do you have a desk lamp that you use on a regular basis?" Subjects using the lamp in such a capacity then indicated the number of hours they used the lamp in an average week. In an average week, subjects reported using the lamp for 18 hours (std. dev.=14 hours). In addition, the usual demographic data were also collected.

Based on informal pretesting and a review of the past literature, the reference brands were manipulated as being made in Italy and Malaysia. These were chosen due to two reasons. First, several office products catalogs contain lamps manufactured in these countries. Second, students indicated that Italian lamps were, generally thought of being as better than Malaysian lamps. For the purpose of our study, the target brand was depicted as being made in Poland. This country was chosen as it had no brand connotation in reference to desk lamps.

TABLE 1

DESCRIPTIVE STATISTICS

Experiment

Subjects were 42 undergraduate students who were randomly assigned to the two reference brand conditions (Italy versus Malaysia). Due to missing values, data from two subjects were discarded. Thus, the final analysis is based on data from 40 respondents. Subjects were told that the study sought to gather their opinions regarding different desk lamps described on a pamphlet. The pamphlet described 2 lamps: the reference brand and the target brand. For each lamp, the pamphlet contained a picture of the lamp, wattage of the bulb, height, description of the lamp shade, material, country of origin, and the price. These dimensions were same for both reference brands. However, they varied slightly between the target and reference brand to avoid any salience bias that would have occurred had only the COO been different.

Subjects looked at the pamphlet and answered a series of questions regarding the different measures. Subjects took about 10 minutes to complete the questionnaire.

RESULTS

A factor analysis was conducted to see if the three attitudinal dimensions were being tapped. After discarding 3 ambiguous items, a 3-factor solution tapped the underlying dimensions of quality, value, and style. The descriptive statistics of the items comprising these factors are shown in Table 1. The rotated factors with their corresponding loadings are shown in Table 2. Additive scales were formed for subsequent analysis. The reliability alpha's for the scales are as follows: quality (alpha=.90), style (alpha=.78), and value (alpha=.74). These were used as dependent measures in the following analysis. The descriptive statistics for these scales are reported in Table 2.

An analysis of variance was conducted to ascertain the hypotheses. The effect of COO of the reference brand was not significant for quality, value, and style (p>.05). Thus, hypothesis 1 was not supported. Support, although marginal, for the second hypothesis was provided (p=.10) by the data. These results are shown in Table 3. Thus, a subject's likelihood to purchase the target brand is influenced by the presence of a reference brand with a different COO. In addition, consumers' likelihood to buy the target brand will be influenced by a reference brand with a different COO.

Although the main effect of familiarity was not significant (p>.1), the familiarity and COO interaction was significant (p<.05) for likelihood to buy (see Figure 1). For subjects who are more familiar with the product category, the likelihood to buy the target brand (made in Poland) increases when it is displayed along with the Italian reference brand. Familiarity has no influence when the COO of the reference brand is Malaysia. Thus, familiarity may moderate the buying decision when the COO is favorable.

DISCUSSION

The above pattern of results suggest that COO of reference brands in the choice set can indeed influence a consumer's likelihood to buy the target brand. COO of the reference brand has no influence on customer attitudes regarding quality, style or value of the target brand. Thus, while COO of reference brand does not influence attitudes, it appears to influence a consumer's likelihood to buy the product. This favors the findings of Han (1989) that COO may operate as a summary construct rather than a halo construct for less complicated products. That COO affects purchase likelihood and not perceptions of quality, style, and value may indicate that consumers in this setting may have used other product dimensions to arrive at their purchase decision. Further research is indicated to clarify this issue. These results also show that the COO of a reference brand can serve as a powerful anchor along which purchase likelihood of the target brand is adjusted. More interesting, data show that this anchoring and adjusting is mediated by consumer familiarity with the product category. Additionally, the familiarity effect is much stronger for the "positive" reference COO (i.e. Italy) than for the "negative" reference COO (Malaysia). Perhaps this is indicative of the "positive valence bias" that Meyer (1987) found in his studies. These findings have several implications for researchers and managers.

As researchers we first need to investigate the contextual effects on consumer judgment and choice that emanate from the diversity of the choice-set. COO differences are merely one of many such effects that should be investigated. Second, we need to better understand the cognitive mechanisms that underlie this effect. In particular, we need to establish conclusively whether COO affects attitudes for different products. Third, more conclusive and comprehensive evidence regarding the hypotheses suggested should be generated. More specifically, alternative hypotheses based on theories such as assimilation-contrast theory can be generated and evaluated against the hypotheses generated based on categorization and anchoring theory.

TABLE 2

ROTATE FACTOR PATTERN

TABLE 3

ANALYSIS OF VARIANCE FOR LIKELIHOOD TO BUY

FIGURE 1

COO x FAMILIARITY INTERACTION

Managers need to be aware of the contextual effects introduced by COO of different brands in the choice set. This has implications for merchandise displays, catalog layouts, and so forth. For instance, in catalogs for office products COO of contiguously displayed brands may have a strong influence on the purchase intent of either brand. Managers may be able to significantly influence the sale of one brand by using the other brand as the cue. For example, are COO effects more salient than brand name effects of reference brands? Is there a COO by brand name interaction and what is the nature of the interaction?

These and other issues await further investigation. The need to attend to them becomes only more imperative as consumers are increasingly faced with global products.

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