Consumer-based brand equityand country-of-origin

relationshipsSome empirical evidence

Ravi PappuUniversity of Queensland, Brisbane, Australia

Pascale G. QuesterUniversity of Adelaide, Adelaide, Australia, and

Ray W. CookseyUniversity of New England, Armidale, Australia

Abstract

Purpose – The objective of the present research is to examine the impact of the country of origin of abrand on its consumer-based equity.

Design/methodology/approach – Brand equity was conceptualized in this paper as a combinationof brand awareness, brand associations, perceived quality and attitudinal brand loyalty. A doublymultivariate design was incorporated in a structured questionnaire to collect data via mall interceptsin an Australian capital city.

Findings – Multivariate analysis of variance of the data indicated that consumer-based brand equityvaried according to the country of origin of the brand and product category. This impact of country oforigin on brand equity occurred where consumers perceived substantive differences between thecountries in terms of their product category-country associations.

Research limitations/implications – An important direction for future research would be toexamine how the consumer-based equity of a brand would be affected, if the country of origin werechanged from a country with weaker association with the product category to a country with strongassociation with the product category. The results would be useful to MNCs contemplatinginternational manufacturing.

Practical implications – Marketing managers operating in the international context must identifythe sources of brand equity, and understand the importance of incorporating country of origin intotheir brand equity measurement. Further, the results suggest that, when a brand offers a variety ofproduct categories, brand managers should monitor and track the brand’s consumer-based equity foreach product category.

Originality/value – The present study is one of the first to empirically examine and confirm theimpact of country of origin on the consumer-based equity of a brand.

Keywords Brand awareness, Brand equity, Brand loyalty, Quality, Country of origin, Australia

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0309-0566.htm

The authors gratefully acknowledge the financial support of the Faculty of Economics, Businessand Law, University of New England, provided in the form of a Faculty Internal Research Grantawarded to the first author, which provided the necessary funding for this research. The authorswould also like to thank the two anonymous reviewers for their detailed and insightfulcomments on an earlier draft of this article.

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Received February 2005Revised August 2005

European Journal of MarketingVol. 40 No. 5/6, 2006pp. 696-717q Emerald Group Publishing Limited0309-0566DOI 10.1108/03090560610657903

IntroductionBrand equity is considered a key indicator of the state of health of a brand, and itsmonitoring is believed to be an essential step in effective brand management (Aaker,1991, 1992). Both researchers (e.g. Shocker et al., 1994) and practitioners (e.g. Biel, 1992)have argued for the importance of understanding the concept of brand equity. Countryof origin is another important variable influencing consumer perceptions of brands(Hulland, 1999) and brand images (Ahmed et al., 2002). In the present study, consistentwith the definition offered by Thakor and Katsanis (1997, pp. 79-80), country of originis defined as “the country in which the product is made”[1]. The impact of country oforigin on consumer perceptions or evaluations of products is called the “country oforigin effect” (Samiee, 1994). Researchers have suggested that country of origin effectsmay impact the equity of certain brands (e.g. Thakor and Katsanis, 1997). For example,Aaker (1991) and Keller (1993) both argued that country of origin could affect a brand’sequity by generating secondary associations for the brand. Indeed, even aforeign-sounding name is known to affect a brand’s equity (Leclerc et al., 1994).

Increasingly, and for a variety of reasons, brands from one country are being madeavailable to consumers in other countries (Shocker et al., 1994). In such instances,international marketers need to understand the sources of the equity of their brands.Some researchers have realized this and advocate extending the internationalconsumer research scope to include brand equity (Wang, 1996). For example,measurement of brand equity across international boundaries is essential if brandmanagers are “to manage and control brand equity effectively” (Shocker et al., 1994,p. 156).

There is prolific research in both the areas of country of origin effects and brandequity. However, brand equity remains a complex phenomenon in the internationalcontext (Onkvisit and Shaw, 1989). Brand equity has been conceptualized as amultidimensional construct (e.g. Aaker, 1991), and the impact of country of origin onsome of its components (e.g. perceived quality) has been widely researched in themarketing literature (see Chao, 1998). However, no empirical research to date hasevaluated how country of origin may affect brand equity. This paper aims to fill thisgap in the international context. More specifically, this research aims to develop abetter understanding of the effect of country of origin on brand equity.

Background and justification for the present researchA better understanding of the linkages between brand equity and country of origin isimportant for a number of reasons. For example, researchers have advocated thatmanagers need to maintain the “core essence of a brand” in their internationalbranding decisions (de Chernatony et al., 1995). “The ‘essence’ of the brand is a singlesimple value, easily understood and valued by consumer” (Arnold, 1992, p. 17). Whenbrands are competing in the international arena, marketing managers shouldunderstand how to maintain the core essence of their brand across internationalboundaries. Examining how country of origin impacts brand equity and its associateddimensions (e.g. perceived quality, brand associations) should reveal the means toprotect or enhance the core essence of a brand.

The country of origin of a product is an important marketing element known toinfluence consumer perceptions as well as behavior. An improved understanding ofhow country of origin information influences brand equity is also valuable to

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marketing practitioners, for whom “quantification of brand equity” and “identificationof elements that are likely to impact changes in consumer behavior and lead to changesin brand equity” are two important issues (Biel, 1993, p. 77).

The literature does not provide a satisfactory explanation for the factors influencingbrand equity in the international context. Despite exhaustive research on brand equityover the past few decades, the marketing literature does not fully explain how a changein the country of origin of a brand would affect its consumer-based equity. Neither is itclear whether the impact of country of origin on the consumer-based equity of a brandwould be product-category specific. The goal of this paper, therefore, is to examine andelucidate the potential relationships between country of origin and consumer-basedbrand equity. More specifically, the main objective of the present study is to identifyempirically possible differences in consumer-based brand equity, according to thecountry where the product is made.

Key variables and constructsConsumer-based brand equityIn this paper, we conceptualize brand equity in accordance with Aaker (1991) andKeller (1993), using a consumer (or marketing) perspective (as opposed to a financialone). Brand equity is therefore referred to as consumer-based brand equity and definedas “the value consumers associate with a brand, as reflected in the dimensions of brandawareness, brand associations, perceived quality and brand loyalty”. This definitionwas adapted from Aaker (1991, p. 15). Aaker defined brand equity as a set of assets (orliabilities), and found brand awareness, brand associations, perceived quality andbrand loyalty to be its four most important dimensions from a consumer perspective.Some empirical evidence supports the notion that these four are distinct dimensions ofconsumer-based brand equity. As per Aaker, we define brand awareness as “the abilityof a potential buyer to recognize or recall that a brand is a member of a certain productcategory. A link between product class and brand is involved” (p. 61). We define abrand association as “anything linked to the memory of a brand” (Aaker, 1991, p. 109).Perceived quality is defined as the “customer’s perception of the overall quality orsuperiority of a product or service with respect to its intended purpose relative toalternatives” in this study, as per Aaker (1991, p. 85). According to Aaker, perceivedquality is not just another brand association but an association that is elevated to thestatus of a separate dimension of brand equity. However, whereas Aaker treated brandloyalty as a behavioral dimension, we conceptualize it as an attitudinal dimension anddefine it as “the tendency to be loyal to a focal brand, which is demonstrated by theintention to buy the brand as a primary choice” (Yoo and Donthu, 2001, p. 3).

“Product category-country” associationsConsumers have associations toward entities such as products, places, brands andcountries of origin. These associations can have direction and strength. For example,Farquhar and Herr (1993) argued that product category-brand associations can bebi-directional. That is, consumers may recall a product category when they think of abrand name and they may recall a brand name when they think of a product category.Product category-country associations, which refer to consumers’ ability to evoke acountry when the product category is mentioned, are of interest when examining therelationships between country of origin and consumer-based brand equity. Since

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consumers are known to associate countries with certain product categories and viceversa (Terpstra and Sarathy, 2000), consumers’ “product category-country”associations appear to be bi-directional.

Conceptual development and hypothesesIn this study, country of origin and product category are the independent variables ofinterest. Consumer-based brand equity is hypothesized as a four-dimensionalconstruct, as shown in the large rectangle in Figure 1. Each of the consumer-basedbrand equity dimensions is a dependent variable in the framework expected to beaffected by country of origin. Since the proposed model is being tested for two productcategories, product category is also included as an independent variable in the designso that the effect of the country of origin variable could be teased out. Moreover,consumers’ product category-country associations are believed to moderate the effectof the country of origin on consumer-based brand equity dimensions, as indicated bythe dotted line in Figure 1.

Country of origin and consumer-based brand equityThe associative network memory model (Anderson, 1993) provides a good basis forexplaining the relationships between country-of-origin and consumer-based brandequity. Both Aaker (1991) and Keller (1993) used the associative network memorymodel to explain consumers’ brand associations and the notion of brand equity.

The country of origin of a product is an extrinsic cue (Thorelli et al., 1989), which,similar to brand name, is known to influence consumers’ perceptions and to leadconsumers to cognitive elaboration (Hong and Wyer, 1989). Country of origin is knownto lead to associations in the minds of consumers (Aaker, 1991; Keller, 1993). Forexample, consumers might associate the countries France and Spain with theintangible attributes “reliability” and “durability”, to a different degree. These countryof origin associations of consumers could therefore influence the consumer-basedequity dimensions of a brand from a specific country.

Researchers have argued that country of origin effects may be part of the brandequity of certain names (Shocker et al., 1994, p. 150). For brands offered in theinternational arena, such as Japanese brands available to consumers in Australia,consumer-based equity should be influenced by the very fact that the brand’s countryof origin is Japan. Consumer perceptions of Japanese brands have improved over theyears (Kamins and Nagashima, 1995). Furthermore, brand names such as Sony orToyota clearly signal their country of origin to consumers. Such origin cues aresimilarly entrenched within many well-known brand names (Phau and Prendergast,1999).

Conversely, an inferior country of origin could tarnish a brand name (Thakor andKatsanis, 1997). That is, if the country of origin of a brand were to change from acountry towards which consumers have favorable associations (e.g. the USA), to acountry towards which consumers have less favorable associations (e.g. Mexico), thebrand names in question could be tarnished and the consumer-based equity of thesebrands erodes. For example, Johansson and Nebenzahl (1986) found that Japanesebrands of automobiles (Honda/Mazda) made in Korea/Mexico/The Philippines losttheir attractiveness compared to when they were made in Japan. Similarly, Nebenzahland Jaffe (1996) found that Sony (in the product category VCRs) suffered erosion in its

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brand image when made in countries such as the former USSR/Poland/Hungary. Thisdiscussion leads to the following general hypothesis:

H1. In a given product category, the consumer-based equity of a brand variessignificantly according to the country of origin of the brand.

Given that consumer-based brand equity is conceptualized as a four-dimensionalconstruct, this general hypothesis can be subdivided into more micro-relatedpredictions. However, no hypothesis was made in the present study regarding theimpact of the country of origin on the brand awareness component of consumer-based

Figure 1.A model ofcountry-of-origin effectson consumer-based brandequity

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brand equity, since it would be difficult to manipulate experimentally consumers’mindset with respect to brand awareness. For example, asking consumers if they wereaware of the brand Honda (without providing the country of origin), to test for theirbrand awareness level and then to respond to the hypothetical case of a productcarrying the brand Honda but made in the USA (or some other country) would createdemand artefacts. In addition, consumers are known to associate a brand with its homecountry even when the country of origin information is not made available to them.

On the other hand, a brand could generate and leverage secondary associationsfrom an array of entities. For example, people, places and events could be linked to abrand (Keller, 1993) and generate secondary associations. According to Aaker (1991),country of origin associations are one such type of consumers’ brand associations.Similarly, Keller (1993) argued that consumers’ country of origin associations serve assecondary associations to their brand associations. Brand associations are supposed tocontribute to brand equity when consumers are aware of the brand and hold “strong,favorable and unique brand associations” in their minds (Keller, 1999, p. 2). Rossiterand Percy (1987) suggested that secondary associations should be emphasized inmarketing communications based upon consumers’ awareness, beliefs and attitudes ofthe concerned people, places or events. The inference is that favorable secondaryassociations are beneficial to the brands. Keller (1993) also argued that favorableassociations contribute to the equity of a brand. If consumers’ country of originassociations serve as secondary associations, they should influence brand associations,and therefore brand equity, leading to the following hypothesis:

H1a. In a given product category, brand associations vary significantly accordingto the country of origin of the brand.

A number of researchers have established that country of origin influences perceptionof quality of products (e.g. Heslop et al., 1987; Kaynak and Cavusgil, 1983). Perceivedquality (Zeithaml, 1988) is a key dimension of brand equity (Aaker, 1991), believed toenhance the value of the brand by providing consumers with a reason to buy. Wehypothesize that country of origin information affects the perceived quality ofproducts. That is, consumers are likely to hold favorable perceptions of the quality of abrand when the brand is known to originate from countries with a strong associationwith the product category compared to when the brand is known to originate fromcountries with weaker association with the product category. We expect that theperceived quality levels of a brand will vary by the country of origin of the brand. Thatis, the perceived quality level of Ericsson made in Sweden is likely to be higher than theperceived quality level of Ericsson made in Mexico or Hungary, for the productcategory “mobile phones”. Furthermore, consumers’ perception of the quality ofproducts is known to be product-category specific (Kaynak and Cavusgil, 1983). Hence,our third hypothesis can be stated as follows:

H1b. In a given product category, perceived quality varies significantly accordingto the country of origin of the brand.

The extant literature does not provide much insight into the relationship betweencountry of origin and brand loyalty. However, we argue that country of origin couldaffect the brand loyalty component of a brand’s equity. Brand loyalty in the presentstudy is defined as consumers’ intention to buy a brand as a primary choice.

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Consumers may prefer a brand based partly on its country of origin. This might bebecause consumers have experienced, or are convinced about, either the features orattributes or benefits offered by the brand (e.g. Nike) originating from the particularcountry (USA). Therefore, it can be argued that, similar to brand loyalty, consumersmay exhibit country loyalty. Moreover, country of origin effects in one product categoryare known to transfer to new product categories offered from the same country(Agarwal and Sikri, 1996). It is hypothesized, therefore, that country of origin affectsconsumers’ loyalty towards a brand.

H1c. In a given product category, brand loyalty varies significantly according tothe country of origin of the brand.

Furthermore, consumers’ product category-country associations are believed tomoderate the effect of the country of origin on consumer-based brand equitydimensions. For example, the consumer-based equity of a brand made in a countrywith strong product category-country associations (e.g. car/Germany) is likely to besubstantially higher than that for the same brand made in a country with weakerproduct category-country associations (e.g. car/Mexico), in cases where consumersperceive substantive differences between the two countries in terms of their productcategory-country associations. The empirical study designed to examine the proposedmodel is described in the next section of this paper.

MethodResearch design and proceduresA cross-sectional mall intercept survey was used to collect the data. A total of 672responses was collected through systematic sampling from a busy shopping mall in anAustralian state capital city. The questionnaire used as the data collection instrumentincluded an experimental design. A doubly multivariate design was employed forexamining the differences in consumer-based brand equity across three differentcountries of origin. The model was tested using two product categories: cars andtelevisions. That is, country of origin (three levels) and product category (two levels)were the two between-subjects factors and brand name (three levels) was thewithin-subjects factor: the three levels were nested within each product category (i.e.Toyota, Mitsubishi and Suzuki were nested within cars; Sony, Toshiba and Hitachiwere nested within televisions). The unit of analysis was the individual consumer.

Since country-of-origin perceptions are known to vary by consumers’ home country,we needed respondents who were born in Australia or who had lived in Australia for aconsiderable period of time. The population was defined as “people in the age group of18 to 70 who were born in Australia or who have stayed in Australia for more than oneyear and have used products in the relevant category (televisions or cars)”. Allrespondents had used products in the category they were exposed to (televisions orcars). The majority of the sample (92.5 percent) had lived in Australia for five or moreyears and met this condition, with more than 82 percent of the sample living inAustralia for 15 or more years.

Of the 672 completed questionnaires obtained, 75 were found to be incomplete andconsequently discarded. Of the remaining 597 questionnaires, a further 58 were fromrespondents not born in Australia or who had not lived in Australia for at least one

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year. These respondents were also eliminated from the analysis, yielding a final sampleof 539.

Data collection instrument and measuresThe survey questionnaire included three sections. Section one of the questionnairecomprised two questions, aimed at capturing respondents’ product category-countryassociations. Respondents were asked to list the names of (a maximum of six) countriesthat came to their mind when they thought of a given product category (cars ortelevisions). Respondents had the option to say that no countries came to their mindwhen thinking of the given product category. The order in which the respondents listedthe countries was used as the basis for computing a product category-countryassociation (PCCA) rating for each of the countries mentioned by the respondents. Thecountries were then ranked, based on their PCCA rating.

Section two of the questionnaire included items measuring various dimensions ofconsumer-based brand equity, namely brand awareness, brand associations, perceivedquality and brand loyalty (see the Appendix). Measures for brand equity used in thepresent study were compiled from the literature (e.g. Aaker, 1991, 1996, 1997; Yoo et al.,2000; Yoo and Donthu, 2001). For example, aided recall and unaided recall were used asmeasures for brand awareness. Brand personality (e.g. sincerity and excitement) andorganizational associations (e.g. liking and trust) were used as the measures for brandassociations. That is, one of the questions required respondents to rate the statement “Itrust brand X”, on a scale of 1 to 11. Measures for perceived quality were adapted fromAaker (1991). For example, respondents were asked to rate the statement “Brand X isreliable”, on a scale of 1 to 11. Measures for attitudinal brand loyalty were also adaptedfrom the literature. For example, respondents were asked to rate the statement “BrandX would be my first choice” on a scale of 1 to 11. These measures had been empiricallytested and employed in earlier studies (e.g. Cobb-Walgren et al., 1995; Yoo and Donthu,2001). Each item had the verbal anchors “strongly disagree” and “strongly agree” forthe 1 and 11 scale points.

Demographic questions (e.g. respondent age, gender, country of birth and length ofstay in Australia) were included in section three of the questionnaire. To improvereadability and understanding, the questionnaire was pre-tested using a judgmentsample of actual consumers, and was subsequently revised. Three different versions ofthe questionnaire (one for each of the three countries) were designed for each of theproduct categories included in the study. For a given product category, questions in allsections were identical in each of the three versions of the questionnaire, except for thesection on brand equity. Each respondent completed only one version of thequestionnaire.

Dependent variablesThe four consumer-based brand equity dimensions served as the dependent variables.Confirmatory factor analysis (CFA), used to establish the dimensionality ofconsumer-based brand equity, supported the hypothesized four-dimensionalmodel[2]. The multi-dimensional consumer-based brand equity construct exhibitedconvergent, discriminant and construct validity. The parameter estimates of themeasurement model showed that all indicator variables loaded their hypothesizedfactors (e.g. consumer-based brand equity dimensions) in a statistically significant

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manner (p , 0:05), indicating convergent validity. Furthermore, each of the constructsexceeded the suggested level of 0.70 for reliability for both cars and televisions. All theconstructs also exceeded the suggested level of 0.50 for variance extracted in theselected product categories of cars and televisions.

Discriminant validity of each pair of constructs was tested for all the six brands.First, each pair of constructs were analyzed by standard confirmatory factor analyticprocedures. The standard model was then compared to a second model in which thecorrelation between the two factors was fixed at 1.0 and their relationship with othervariables was constrained to be equal. The results indicated that the four constructsexhibited discriminant validity.

We then compared consumers’ purchase intention towards a brand and the equityconsumers associated with the same brand to examine construct validity. Previousresearchers (e.g. Cobb-Walgren et al., 1995; Yoo and Donthu, 2001) observed thatconsumer purchase intention and brand equity are positively associated. Thecorrelation between consumer-based brand equity and consumer purchase intentionwas moderate (Toyota 0.37; Mitsubishi 0.48; Suzuki 0.46; Sony 0.39; Toshiba 0.43; andHitachi 0.51) but significant (p , 0:001) for all the six brands included in the study,demonstrating construct validity.

Analysis proceduresIt was important to understand the extent to which respondents associated the selectedcountries and the selected brands with the car and television product categories. Theassociative strength of respondents’ product category-country associations wasmeasured using the “naming method” suggested by Fazio (1987, 1990). The “namingmethod” involved presenting subjects with the name of the product category label (e.g.cars/televisions) and asking them to recall the names of countries.

The principal objective of the present research was to examine consumer-basedequity differences of brands made in different countries. Differences inconsumer-based brand equity were analyzed by country of origin of the brand andproduct category using a doubly multivariate repeated-measures multivariate analysisof variance (MANOVA). The MANOVA used the four consumer-based equityvariables (brand awareness, brand associations, perceived quality and brand loyalty),which were computed by averaging the scores of the items loading onto them, as thedependent variables. Country of origin and product category were the independentvariables used in the MANOVA.

The data were checked, and all the assumptions (e.g. equality ofvariance-covariance matrices, normality, linearity and absence of multicollinearity)of MANOVA were met and in all cases, the cell sizes (see Table I) were well above theminimum recommended size[3]. A requirement for MANOVA is that the dependentvariables be correlated. Bartlett’s test of sphericity (Hair et al., 1998) indicated that

Country of originProduct category Japan China Malaysia Total

Television 77 91 86 254Car 96 85 104 285Total 173 176 190 539

Table I.MANOVA results:between-subjects factorscell sizes

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MANOVA was appropriate for analyzing the data (Bartlett’s x 2(9) ¼ 2,078.23;p , 0:001) and that the assumption of equality of variance-covariance matrices wassatisfied. The Box’s test was not significant at the 0.001 level. A lower level ofsignificance was used as per advice from Hair et al. (1998).

Results and discussionRespondents’ associationsJapan, Germany, USA, Australia and Italy were the top five countries respondentsassociated with the product category of cars. Respondents most strongly associatedJapan (ranked 1) with cars, compared to the other two countries included in our study,China (ranked 10) and Malaysia (ranked 12). Japan, the USA, Australia, the UK andGermany were the top five countries associated with the product category televisionsby respondents. Compared to China (ranked 6) and Malaysia (ranked 9), respondentsassociated Japan (ranked 1) most strongly with televisions. Thus, a clear hierarchy wasobserved among the three countries included in the study, in terms of respondents’product category-country associations.

Results of MANOVAThe results of all multivariate hypothesis tests associated with the experimental designare summarized in Table II. Several statistically significant results were obtained.

The two-way multivariate interaction between country of origin and productcategory was not significant at p , 0:05 indicating that differences in consumer-basedbrand equity of brands based on their country-of-origin were not significant across thetwo product categories. However, Table II shows that the multivariate main effect forcountry of origin was significant, indicating differences in the set of consumer-basedbrand equity dimensions among the three different countries (the mean vectors for thebrand equity dimensions for each of the three countries of origin are shown inTable III). Hypothesis H1 was therefore supported. The results show that thedependent variables, the set of four consumer-based brand equity variables, varyaccording to the country of origin of the brand. However, the multivariate main effectfor the country of origin accounted for just a small (3 percent) percentage of thevariance in the dependent variables.

Univariate F-tests (see Table III), conducted as a consequence of the significantmultivariate country of origin main effect, showed that each of the consumer-basedbrand equity dimensions (brand associations, perceived quality and brand loyalty)varied significantly with the country-of-origin of the brand, supporting hypothesesH1a, H1b and H1c.

Between-subjects effect Wilks’ l Exact FHypothesis

df Error df p MVh 2 a

Country of origin £ productcategory 0.975 1.720 8 1,060 0.090 0.013Country of origin 0.940 4.166 8 1,060 ,0.001 * 0.030Product category 0.956 6.111 4 530 ,0.001 * 0.044

Note: aMV indicates multivariate; *deemed significant at the 0.01 level

Table II.MANOVA results:

significance ofmultivariate tests

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As previously mentioned, no hypotheses were made regarding the differences amongstthe groups in terms of their brand awareness, and brand awareness measures were notsystematically varied among the three groups of respondents. Despite this, significantcountry of origin differences were observed. The possible reasons for this are exploredin the conclusions and implications section.

Post hoc multiple comparison tests were conducted to investigate significantunivariate group differences among means (see Table IV), using Tukey’s (1953)honestly significant differences (HSD) method. Respondents’ awareness of brandsmade in Japan was significantly higher than that of brands made in Malaysia, but wasnot significantly different from that of brands made in China (see Table IV).

Mean (SD)Source measure F(df, dferror) p-value h 2 Japan China Malaysia

Country of originBrand awareness 3.96 (2, 533) 0.020 * * 0.015 1.64 (0.80) 1.55 (0.80) 1.50 (0.80)Brand associations 8.66 (2, 533) 0.001 * 0.031 6.54 (2.28) 5.89 (2.22) 5.77 (2.28)Perceived quality 12.02 (2, 533) ,0.001 * 0.043 7.19 (2.18) 6.33 (2.30) 6.32 (2.24)Brand loyalty 4.60 (2, 533) 0.010 * * 0.017 5.87 (2.87) 5.02 (2.67) 4.98 (2.77)

Mean (SD)Cars TVs

Product categoryBrand awareness 7.70 (1, 533) 0.006 * 0.014 1.62 (0.76) 1.50 (0.77)Brand associations 10.83 (1, 533) 0.001 * 0.020 5.81 (2.35) 6.33 (2.14)Perceived quality 9.79 (1, 533) 0.002 * 0.018 6.38 (2.36) 6.86 (2.12)Brand loyalty 10.19 (1, 533) 0.001 * 0.019 5.05 (2.84) 5.53 (2.63)

Note: Figures in parentheses are standard deviations; *deemed significant at the 0.01 level; * *deemedsignificant at the 0.05 level

Table III.MANOVA results:univariate tests –between-subjects effects

Consumer-based brand equity dimension Country 1 Country 2 Mean difference p

Brand awareness Japan China 0.09 0.24Japan Malaysia 0.14 * * 0.02China Malaysia 0.05 0.52

Brand associations Japan China 0.65 * ,0.01Japan Malaysia 0.77 * ,0.01China Malaysia 0.12 0.80

Perceived quality Japan China 0.86 * ,0.01Japan Malaysia 0.87 * ,0.01China Malaysia 0.01 0.99

Brand loyalty Japan China 0.85 * ,0.01Japan Malaysia 0.89 * ,0.01China Malaysia 0.04 0.23

Note: *Deemed significant at the 0.01 level; * *deemed significant at the 0.05 level

Table IV.MANOVA results: posthoc tests for country oforigin

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Respondents’ awareness of brands made in Malaysia was also not significantlydifferent from that of brands made in China. Respondents’ brand associations forbrands made in Japan were significantly higher than those for brands made either inChina or Malaysia (see Table IV) but respondents’ brand associations for brands madein Malaysia did not differ significantly from those for Chinese brands.

In a similar fashion, respondents’ perceived quality of brands made in Japan wasdeemed significantly higher than that of Chinese and Malaysian brands (see Table IV),whereas respondents’ perceived quality of brands made in China was not significantlydifferent from that of brands made in Malaysia. The same pattern was observed forloyalty, with respondents’ brand loyalty for Japanese brands significantly higher thanthat for brands made in China or Malaysia (see Table IV) but not varying significantlybetween Chinese and Malaysian brands.

Linking the outcomes of this MANOVA with the results of respondents’ associationoutcomes provides additional insights: everything else being equal, consumer-basedequity of brands made in a country (e.g. Japan) with strong associations with the productcategory was significantly higher than that for the same brands made in the countries(e.g. China and Malaysia) with weaker association with the product category, whererespondents perceived substantive differences between the countries in terms of theirassociation with the product category. Post hoc multiple comparison tests indicated thatthe consumer-based brand equity dimensions of brands were significantly differentwhen the country of origin was changed from Japan to China or from Japan to Malaysia,but not when it was changed from China to Malaysia. As previously mentioned,respondents perceived larger rank differences between Japan and the other two countries(China and Malaysia) in terms of their association with the selected product categories.

Table II shows that the multivariate main effect for the product category wassignificant at p , 0:01, indicating that consumer-based equity measures variedsignificantly between cars and televisions (see Table III). However, the multivariatemain effect for the product category accounted for a small (4.4 percent) percentage ofthe variance in the dependent variables.

The follow-up univariate F-tests of each of the four consumer-based brand equitydimensions of brand awareness, brand associations, perceived quality and brandloyalty indicated significant differences by product category (see Table III) andindicated that the consumer-based brand equity dimensions were product categoryspecific. The individual means for brand equity dimensions for televisions and for carsare shown in Table III. Cars showed significantly lower ratings for brand associations,perceived quality and brand loyalty, but significantly higher brand awareness ratings,compared to televisions.

Conclusions and implicationsHypothesis H1 stated that the consumer-based equity of a brand varied according toits country of origin. The major substantive finding from the testing of the model isthat, for the product categories of televisions and cars in the Australian market, theconsumer-based equity of a brand varied significantly according to its country oforigin. This finding confirms the predictions of previous researchers that country oforigin impacts brand equity (e.g. Shocker et al., 1994; Thakor and Katsanis, 1997). Thisfinding also lends support to Ahmed and d’Astous’s (1996) argument that the equity ofa brand may be “enhanced or detracted by the brand’s associations with new anddifferent countries of origin” (p. 94).

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Further, our results suggested that this impact occurred where consumers perceivedsubstantive differences between the countries in terms of their productcategory-country associations. That is, the consumer-based equity of a brand madein a country with stronger product category-country associations (e.g. Japan), wassignificantly higher than that of the same brand made in a country with weakerproduct category-country associations (e.g. China/Malaysia).

While previous research has only examined the linkages between country of originand certain components of brand equity, the present study is one of the first to examinethe relationships between country of origin and the multi-dimensional consumer-basedbrand equity. Although a large body of previous research has demonstrated the impactof country of origin on consumers’ product evaluations and purchase intentions (e.g.Hong and Wyer, 1990; Johansson et al., 1985) and examined the relative importance ofbrand and country of origin cues (e.g. d’Astous and Ahmed, 1992; Okechuku, 1994;Wall et al., 1991), the present study contributes to the literature by confirmingempirically the impact of country of origin on the consumer-based equity of a brand.

Country of origin has been partitioned into cues such as “country of manufacture”,“country of design”, and “country of brand” and “country of assembly”. Extantresearch on the relative importance of these cues (on consumers’ product evaluations)provides conflicting results. Some researchers have found that country of brand wasmore important for consumers (e.g. Ulgado and Lee, 1993), whereas others found thanthe country of manufacture was more important (e.g. Ahmed and d’Astous, 1995) orboth cues were equally important (e.g. Chao, 1993). In the present study, theconsumer-based equity of a brand made in a country other than its home country wasfound to be significantly lower. This finding lends support to Amonini et al.’s (1999)conclusion that “the relative influence of the ‘country of brand’ and the ‘country ofmanufacture’ may be product or situation specific” (p. 20).

Hypotheses H1a, H1b and H1c predicted the relationship between country of originof a brand and three of the dimensions of its consumer-based equity. Each of thesethree consumer-based equity dimensions of a brand (i.e. brand associations, perceivedquality and brand loyalty) was expected to vary significantly by the country of origin.Our empirical results confirmed this and provided further support for Aaker’s (1991)and Keller’s (1993) notion that country of origin associations are secondaryassociations to brand associations. Respondents’ associations for a brand variedsignificantly by the country of origin. While the impact of country of originassociations on brand associations was not directly measured in the study, ourfindings from MANOVA related to country of origin associations suggest thatconsumers’ country of origin associations do influence their brand associations.

Previous research has demonstrated that the country of origin of a productinfluenced consumers’ perception of its quality (e.g. Chao, 1998; Heslop et al., 1987) andthe present study further confirmed this. Furthermore, researchers have observed thatthe impact of country of origin was the largest in relation to perceived quality (e.g. Limet al., 1994; Verlegh and Steenkamp, 1999). The present study also found that thedifferences by country of origin were the largest for perceived quality. For example, themagnitude of difference for perceived quality across countries of origin wereapproximately twice that observed for brand loyalty, and one and half times thatmeasured for brand associations (see Table IV).

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Country of origin effects in one product category are known to transfer to newproduct categories from the same country (Agarwal and Sikri, 1996). The results of thepresent study lend credence to this notion of “transference of beliefs”. For example,respondents in the present study were found to be more loyal towards a brand made ina country with strong association with the product category compared to the samebrand made in a country with a weaker association with the product category. Thissuggests that respondent beliefs about a country/products from a country (e.g.China/Malaysia) transferred to foreign brands (e.g. Sony/Toyota) made in that country.Support for hypothesis H1c also lends credence to the notion of country loyalty. This isconsistent with Ahmed and d’Astous’s (1996, p. 199) view that consumers may develoployalty towards countries and, consequently, may continue to prefer cars from Japan orshoes from Italy.

As previously discussed, the relationship between country of origin and brandawareness was not predicted as it was not possible to manipulate consumer mindsetregarding brand awareness. However, brand awareness varied significantly accordingto the country of origin of the brand. One plausible explanation for this is that theresults might have occurred because of demand artefacts. For example, the questionrelated to brand recall required the respondents to list the names of up to six brandsfrom a given product category. Since brand awareness measures were notsystematically varied among the three groups of respondents, each respondent wasasked to evaluate the brand equity measures from only one of the three countries: Japan,China or Malaysia. However, respondents might have answered the question on brandawareness towards the end, by which time they might have (incorrectly) presumed thattheir awareness of brands made in a particular country was questioned. Lim and Darley(1997) demonstrated that country of origin studies are susceptible to demand artefacts.

Our results also indicated that consumer-based equity of brands significantlyvaried by product category. The consumer-based equity of brands for cars wassignificantly different from that of televisions. Each of the four consumer-based equitydimensions for a brand varied by product category. To the authors’ knowledge, theissue of whether brand equity or its dimensions are product category specific has neverpreviously been examined in the literature. While previous studies (e.g. Kaynak andCavusgil, 1983) have demonstrated that country of origin effects wereproduct-category specific, our research has established that brand equity may alsobe product category specific. Overall, MANOVA results indicated that both country oforigin (3.4 percent) and product category (4.4 percent) accounted for small butsignificant proportions of the variance in consumer-based brand equity (see Table II).

Managerial implicationsThe results indicate that country of origin is an important variable which can affect theequity of a brand. Marketing managers operating in the international context mustidentify the sources of brand equity, and understand the importance of incorporatingcountry of origin into their brand equity measurement. In addition, they will have toestimate the influence of the country of origin of the brand, while tracking orestimating brand equity in the host country. The present research addressed the abovetwo issues in the international context. First, brand equity was measured for aparticular product category. Second, the impact of country of origin on the dimensionsof brand equity was investigated. Overall, in the face of the increased significance

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attached to branding and measurement of brand equity, it is important for marketers tounderstand the influence of country of origin on the equity of their brand. To the bestof the authors’ knowledge, this research is one of the first studies integrating andtesting empirically two important areas of marketing, namely brand equity andcountry of origin effects. Notably, the present study used a sample of actual consumers,and therefore its findings are more open to generalization than most previous researchoften based on student samples (e.g. Johansson et al., 1985; Ettenson et al., 1988).

The results of the study have implications for multinational production, marketingcommunications, global branding, brand equity measurement and positioningdecisions. Traditionally, the availability of cheap labor has driven multinationals tomove their production to other countries, without much consideration for issues suchas the extent to which consumers associate the product category with the country inquestion. For example, Nike had shifted shoe manufacturing to China, a country notvery strongly associated with the product category (athletic shoes). Companies basetheir sourcing decisions on “comparative advantage or cost differentials” oftenignoring the effect of such decision in terms of country image (Jaffe and Nebenzahl,2001, p. 21). A particularly important implication of the present study is that suchmoves could adversely influence the consumer-based equity of brands in some productcategories. Our results suggest that marketing managers considering offshoremanufacturing/sourcing options should carefully weigh cost considerations with therisk of the possible erosion of brand equity. Marketing managers will also need toexamine consumers’ “product-category” associations in target countries.

Further, our results suggest that when making overseas manufacturing decisions,Japanese automobile/television manufacturers would be better off selecting Chinacompared to Malaysia as a manufacturing location. The results have implications forAustralian importers of the brands Sony, Toshiba and Hitachi (televisions) andToyota, Mitsubishi and Suzuki (cars). Our findings suggest that Australian importers(in the product categories of cars and televisions) would be better off importing thesebrands from Japan, rather than from China or Malaysia, and selecting brands made inChina compared to Malaysian ones.

In addition, our results have implications for marketing communications. For thecountry of origin of the brand to contribute to its consumer-based equity, consumersneed to strongly associate the country of origin with the product category in question.Marketing managers will have to consider this when designing their marketingcommunication strategy. Managers will not only need to focus on developing a favorableimage for the country of origin of the brand but must also work toward developingstrong “country-product category” associations in the target consumers’ minds.

Furthermore, our results indicated that country of origin affects all four dimensionsof consumer-based brand equity. Brand managers will have to take country of origininto consideration in their global branding decisions and to manage the dimensions ofconsumer-based brand equity more effectively. For example, “brand associations”must be managed in such a way that the brand’s country-of-origin effects contribute tothe overall equity of the brand. Leveraging secondary associations is an important wayof building a brand’s equity (Aaker, 1989; Keller, 1998) and the results of the presentstudy could help brand managers by suggesting the countries of origin from whichthey could leverage secondary associations for a brand.

Finally, our results confirmed our hypothesis that consumer-based brand equity isproduct-category specific. When a brand (e.g. Sony) offers a variety of product

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categories (e.g. video tapes, televisions), brand managers should monitor and track thebrand’s consumer-based equity for each product category. That is, higher brand equityin one product category does not necessarily mean similarly high brand equity levels inother product categories.

Limitations and future research directionsThe nature of the experimental design constrained the number of countries (three),brands (six) and product categories (two) included in the study. In order to generalizethe results, researchers should test our model using other brands and productcategories. Given that country of origin effects were found to be product categoryspecific, the inclusion of other product categories would be required in future researchof this kind. Furthermore, the two product categories included in the present studyenjoyed varying degrees of consumer product involvement. Researchers may thereforewant to examine whether differences in consumer-based brand equity of brands existbetween brands of high-involvement product categories. This may help marketersunderstand whether the degree of involvement with a product category also moderatesthe consumer-based equity of a brand.

The present study compared products from “more developed countries” to thosefrom “less developed countries”, and may therefore have revealed larger than typicalcountry-of-origin effects. Future research should include only more developedcountries or only less developed countries as countries of origin, since country-of-origineffects were larger in studies that used a mixture of types of countries together as thestimuli (Verlegh and Steenkamp, 1999).

Country-of-origin effects were also found to be larger for studies usingbetween-subjects designs compared to studies that used within-subjects designs(Verlegh and Steenkamp, 1999). Since country of origin was used as a between-subjectsfactor in the doubly multivariate design in the present study, this may have producedlarger country-of-origin effects. A further limitation of the present study was thereliance on indirect inference based on patterns between two different analyses. Futurestudies may include more elaborate designs supporting statistical tests to examineformally the influence of the moderating role of product category-country associationson consumer-based equity of a brand.

Our study focused on measuring changes in consumer-based brand equity when thecountry of origin changed from a country with strong association with the productcategory to a country with a weaker association with the product category. Animportant direction for future research would be to examine how the consumer-basedequity of a brand would be affected, if the country of origin were changed in theopposite direction. That is, if the country of origin were changed from a country withweaker association with the product category to a country with strong association withthe product category – what would be the effect on the consumer-based equity of abrand? The results would be useful to MNCs contemplating internationalmanufacturing. For example, it would be beneficial to the Korean automobile makerHyundai to know whether shifting the production of its high-priced vehicles tocountries such as Australia would result in increased equity for the brand. It would behard to predict the results. Some researchers found that Japanese brands when made inthe USA suffered an erosion of brand image (a developed economy with a favorablecountry image) (Johansson and Nebenzahl, 1986). The results of the present studysuggest that the consumer-based equity of a brand from a country with a weaker

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association with the product category would be significantly lower than that of thesame brand made in a country with strong association with the product category.

Since country-of-origin effects are known to vary by consumer nationality(Johansson et al., 1985) and culture (Balabanis et al., 2002; Sharma et al., 1995; Watsonand Wright, 2000), our results might also have been biased as our sample included asmall percentage (7.5 percent) of people who had lived in Australia for less than fiveyears. However, Australia has a multi-cultural society with more than one in five (23percent) persons resident in Australia born overseas as at 2003 (Australian Bureau ofStatistics, 2004). Hence, it would be logical to expect any sample of Australianconsumers to include some people born outside the country.

Our results indicated that the consumer-based equity of a brand wasproduct-category specific. Future researchers should explore the reasons behind suchdifferences. The brand names included in the study were different for car (e.g. Toyota)and television (e.g. Sony) product categories. Future research could examine whether abrand name would have different levels of consumer-based equity in different productcategories. That is, would the consumer-based equity of Sony in the product categoryDVDs be significantly different from its equity levels for televisions? It would clearly behelpful to marketing managers considering brand extensions or product range tounderstand how the equity of a brand changes from one product category to another.

Finally, the effect of country of origin on consumer-based brand equity may bemoderated by variables other than consumers’ product category-country associations.For example, the degree of economic development of the country of origin of the brandmay influence the effects of country of origin on consumer-based brand equity,providing rich and exciting avenues for further research in this area.

Notes

1. The authors were aware that different terms were used in the literature to refer to thecountry where a product is produced, such as country of production (e.g. Nebenzahl andJaffe, 1996), country of manufacture (e.g. Amonini et al., 1999; Samiee, 1994) and country oforigin (e.g. Maheswaran, 1994; Thakor and Katsanis, 1997).

2. Details of confirmatory factor analysis used to measure consumer-based brand equity andresults of brand name within product category effects were not included in this paperbecause of space constraints, but can be provided upon request from the first author.

3. MANOVA requires a minimum cell size of 20 (Hair et al., 1998).

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Appendix

About the authorsRavi Pappu is a Senior Lecturer in the UQ Business School at the University of Queensland,Australia. His research interests encompass the areas of brand management, internationalmarketing and marketing education. His work has been published in the Journal of MarketingEducation, the Journal of Product and Brand Management, and the Journal of Retailing andConsumer Services. He teaches in the areas of international marketing, marketing management,marketing research and e-marketing. Ravi Pappu is the corresponding author and can becontacted at: R.Pappu@business.uq.edu.au

Pascale G. Quester is Professor in Marketing at the School of Commerce of the University ofAdelaide. Her work has been published in leading journals, including Psychology and Marketing,Industrial Marketing Management, Journal of Advertising Research, European Journal ofMarketing and many more. She is also a member of the editorial board or an ad hoc reviewer forseveral international titles. French-born, she is also a founding director of FACIREM, theFranco-Australian Centre for International Research In Marketing, and was Visiting Professor atLa Sorbonne in 1999 and again in 2003. She recently won, with I. Lim, the 2004 Most OutstandingPaper Award of the Journal of Product and Brand Management.

Dimension measureBrand awareness (Aaker, 1991)

Unaided recallX1. Asked for the name of the brand (product category is mentioned)

Aided recallX2. Which of the brands are you aware of? (names of the brands provided)X3. Which of the following brands have you used before? (brand recognition, based on aided

recall, names of the brands were provided)

Brand associationsBrand personality (Aaker, 1997)

X4. It is appropriate to describe the products offered by brand X as “up-market”X5. It is appropriate to describe the products offered by brand X as “tough”

Organizational associations (Aaker, 1991, 1996)X6. I like the company which makes brand XX7. I would feel proud to own products from the company which makes brand XX8. I trust the company which makes brand X

Perceived quality (Aaker, 1991, 1996; Yoo et al., 2000)X9. Brand X offers products of very good qualityX10. Brand X offers products of consistent qualityX11. Brand X offers very durable productsX12. Brand X offers very reliable productsX13. Brand X offers products with excellent features.

Brand loyalty (Yoo et al., 2000; Yoo and Donthu, 2001)X14. I consider myself loyal to brand XX15. Brand X would be my first choice

Note: “X” is replaced by the brand name in the questionnaire

Table AI.Measures used in themain empirical study

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Ray W. Cooksey is a Professor of Organizational Behaviour and Human ResourceManagement in the New England Business School at the University of New England. He teachesin the areas of managerial decision-making, organizational behaviour, communicationmanagement, management of change, research methodology and quantitative and qualitativedata analysis. Much of his research has focused on decision-making in managerial andeducational contexts and on non-linear complexity perspectives in human resource managementand organizational behavior. He is the author of Judgment Analysis: Theory, Methods, andApplications and numerous articles.

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