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Country of Origin Effects and Consumer Based

Brand Equity
Conference Paper July 2000

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Ravi Pappu

Pascale Genevieve Quester

University of Queensland

University of Adelaide

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Country of Origin Effects and Consumer Based Brand Equity

Working Paper

Ravi Pappu, The University of New England, Australia

Associate Professor Pascale Quester, The University of Adelaide, Australia

Please address all correspondence to

Ravi Pappu
Associate Lecturer
School of Marketing and Management
Faculty of Economics, Business and Law
University of New England
Armidale, 2351 NSW
Australia
Phone: +61 2 6773 2965
Fax: +61 2 6773 3914
Email: rpappu@metz.une.edu.au

Country of Origin Effects and Consumer Based Brand Equity

Working Paper
Abstract
Globalization and the rapidly increasing international business are making brands from
one country increasingly available to consumers in other countries. Brand equity is argued to be a
key indicator of the state of the health of a brand. Marketing managers are exhorted to build and
track brand equity with a view to creating a sustainable competitive advantage for a firm (Aaker
1991). Brand equity has acquired prominence in the marketing literature since 1980s
(Chernatony, Halliburton & Bernath 1995). But, the concept of brand equity is not well
understood, particularly in the international context (Onkvisit & Shaw 1989). Research on
building and measuring brand equity is one of the current priorities for marketing researchers
(e.g. Marketing Science Institute 2000). Thus, it becomes important for marketers to understand
the complexity of brand equity in the international context.
The main objective of this research is to understand the relationships between country of
origin (COO) effects and consumer based brand equity, for a selected product category and in a
given market. The literature offers a multitude of definitions for brand equity (e.g. Farquhar 1989;
Park & Srinivasan 1994; Simon & Sullivan 1993; Srivastava & Shocker 1993). This research
conceptualizes brand equity from a marketing perspective, consistent with definitions offered by
Aaker (1991) and Keller (1993), based on consumer perceptions. The principal contribution of this
research is a theoretical framework explaining the influence of COO effects on a brands equity.
This research integrates and extends theory in two important areas of marketing, brand equity and
COO effects.
The COO of a product/brand is found to influence consumers product evaluations and
purchase decisions (Erickson, Johansson & Chao 1984; Han 1989; Johansson, Douglas &
Nonaka 1985). Study of the above area is generally called country of origin effects (Samiee
1994). Researchers (e.g. Shocker, Srivastava & Ruekert 1994) have suggested that COO effects
may be part of the brand equity of certain brand names. The COO could affect a brands equity
by generating secondary associations for the brand (Keller 1993). Even brands with foreign
sounding names, are known to affect brand equity (Leclerc, Schimidt & Dube 1994).
Despite prolific research in the area of COO effects (Peterson & Jolibert 1995), there
appear to be no studies explaining how the COO effects affect consumer based brand equity. The
influence of COO effects on brand equity is yet to be empirically tested for. From a consumers
perspective, how does a brands COO affect the equity of the brand in a selected product
category? Does consumers notion of country image affect various components of a brands
equity? Does the affect of country of origin differ from one product category to another? These
remain unanswered questions in the marketing literature. In order to address some of the issues,
the present research integrates literature from both the areas to provide a theoretical framework
explaining the impact of country image on consumer based brand equity.
This research is based on the premise that the COO generates COO associations in
consumers minds and consequently the notion of a country image. We conceptualize country
image as a combination of consumers product level (Nagashima 1970; 1977) as well as country
level (Martin & Eroglu 1993) images. Brand equity is treated as a combination of brand
awareness, brand associations, perceived quality and brand loyalty, which are the perceptual
components of brand equity as conceptualized by Aaker (1991). COO associations are known to

influence consumers product evaluations. Consumers COO associations could affect consumer
based brand equity by influencing the dimensions/components of brand equity.
Televisions and cars are the two product categories in which the model will be tested.
Previous research (e.g. Lawrence, Marr & Pendergast 1995) demonstrated COO effects for these
product categories. Major trading partners of Australia (e.g. Japan, Germany, USA) are the
countries included in the study. Three brands from each country are included in the study. A
nested design based conjoint methodology coupled with a Hierarchical Linear Bayes Model is
used to estimate parameters. This is to minimize the problem of unrealistic product profiles
respondents often experience in conjoint studies. Parameters are estimated at individual level.
HBCA methods have the ability to infer part worth utilities at the individual level even when
ordinary least squares method fails due to insufficient data (Lenk, DeSarbo, Green & Young
1996). HLM 5 (Raudenbush, Bryk, Cheong & Congdon 2000) is used to estimate the model. The
impact of COO effects on each of the sub-components of brand equity will be estimated.
A convenience sample of undergraduate business students will be drawn at an Australian
university for this exploratory study. This study will be followed by a larger study including a
mail survey drawing a national sample. The self-completion questionnaire used as the data
collection instrument includes five sections and will be administered to the respondents during
the lectures. Section one of the questionnaire includes questions about respondents prior
knowledge, usage and ownership of a selected product category. Section two includes questions
about country image, treated as a multi-dimensional construct as a combination of consumers
product level as well as country level images. Measures of country image are adopted from
Nagashima (1970; 1977) and Martin and Eroglu (1993).
Section three includes questions measuring various components of brand equity namely,
brand awareness, brand associations, perceived quality and brand loyalty, for each of the brands
included in the study. Indirect measures of brand equity are used in this study, which are
provided by Aaker (1991) and Keller (1993), which are empirically tested (Agarwaal & Rao
1996) and are used in a number of studies. Scales for these measures have been provided in
Aaker (1996a). Aided and unaided recall, are used as measures of brand awareness.
Organizational associations and brand personality provide measures of brand associations. Based
on Aaker (1997), five questions are used to measure brand personality. Each of these five
questions test the five dimensions of brand personality developed by Aaker (1997), namely
sincerity, excitement, competence, sophistication and ruggedness. Pride and trust are used to
measure organizational associations, while the last five questions measure perceived quality.
Section four of the questionnaire includes conjoint questions. Brand name, country of
origin, price and relevant physical attributes are included in the conjoint design for each product
category. For example, brand name, price, screen size and country of origin are the attributes
selected for the televisions. Brand name is varied at three levels. Respondents will be asked to
rate various product profiles. Respondents will rate all the three brands under each product
profile. Consumer purchase intent is used as the dependent variable. A scale of 1-11, with
anchors, 'extremely unlikely to buy' and 'extremely likely to buy', is used to measure the purchase
intent of respondents for the different product profiles provided in the conjoint study. Section five
includes questions on demographics.
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