Does image of country-of-origin matter to brand equity?

An executive summary for managers and executive readers can be found at the end of the article.

Introduction

Building strong brands has become a marketing priority for many organizations today because it yields a number of advantages. Strong brands help the firm establish an identity in the market place ([2] Aaker, 1996), less vulnerability to competitive actions, larger margins, greater intermediary co-operation and support and brand extension opportunities ([11] Delgado-Ballester and Munuera-Aleman, 2005). In measuring the overall value of a brand, marketing researchers and practitioners have begun to examine the concept of "brand equity" ([1] Aaker, 1991; [4] Baldinger, 1990; [21] Keller, 1993) which has been referred to the tremendous value that the brand name brings to the producers, retailers and consumers of the brand.

The equity of a brand is the result of consumers' perception of it which is influenced by many factors. Brand equity cannot be fully understood without carefully examining its sources, that is, the contributing factors to the formation of brand equity in the consumers' mind. Most of the brand equity research focuses on the marketing mix variables such as advertising, distribution, price and product quality as the contributing factors ([9] Cobb-Walgren et al. , 1995; [36] Yoo et al. , 2000). However, not much attention is given to the non-marketing mix factors. In the process of buying, consumers are not only concern about the quality and price of a product but also other factors such as the brand's country-of-origin. Many consumers use country-of-origin stereotypes to evaluate products for example, "Japanese electronics are reliable", "German cars are excellent", "Italian pizza are superb". Many consumers believe that a "Made in ..." label means a product is "superior" or "inferior" depending on their perception of the country. Brands from countries that have a favorable image generally find that their brands are readily accepted than those from countries with less favorable image. Since country of origin could be one of the influencing factors in determining consumers' choice, the purpose of this study is to explore the effects of brand's country-of-origin image on the formation of brand equity. To accomplish this goal, the brand equity of household electrical appliances particularly television, refrigerator and air-conditioner, in the Malaysian market is examined.

To address this objective, this...