Abstract and Key Results
* This study applies the construct of brand equity in a country context, and measures the value-added with which the name of a country endows a product or a brand as perceived by the individual consumer.
* Specifically, based on Yoo and Donthu's (2001) brand equity scale, a country brand equity (CBE) scale is developed and empirically tested for its psychometric properties; subsequently a model linking (home) country image (COI) and product preferences with country brand equity as an intervening variable is estimated.
* Results indicate (a) that country brand equity is influenced by country image perceptions, (b) that country brand equity positively impacts on product preferences, and (c) that the latter are not directly influenced by country image perceptions.
Keywords Brand Equity. Country Equity- Country Brand Equity. Country Image. Product Preferences
Differentiation is a key priority of today's companies due to the ease of imitation (d'Astous/Gargouri 2001) and the difficulty of achieving a sustainable competitive advantage (Porter 1990, Baker/Ballington 2002). In general, companies can differentiate their product offerings from those of the competition by focusing on any physical (e.g., taste, design, fit) or nonphysical (e.g., price, brand name, country-of-origin) characteristic of a product (Dickson/Ginter 1987). Ultimately, all differentiation efforts undertaken by a firm should result in an increase in customers' perceived value of a product (Keller 1993). In this context, an important driver of consumers' evaluation of a product is its national origin. It has been generally found that a product's country-of-origin (COO) acts as a signal of product quality and also affects perceived risk as well as likelihood of purchase (Papadopoulos/Heslop 2003, Elango/Sethi 2007). (1) Branding, on the other hand, is a key tool in a firm's differentiation strategy since it enables consumers to distinguish between offerings and, therefore, increases the value of products and/or services (for a review of the literature, see Hoeffler/Keller 2003). More specifically, the construct of brand equity has been suggested in the literature to capture the economic value of brands (Aaker 1991, Keller 1993). Brand equity is now commonly viewed as a key indicator of the state of health of a brand and its monitoring is considered an essential activity of brand management (Aaker 1991, Pappu/Quester/Cooksey 2006).
While there is a large body of research on COO and brand equity respectively, literature combining these two streams of research is very limited. This is despite the fact that researchers and practitioners alike obviously need to understand the sources of the equity of their brands in an international context so that they can manage them effectively (Pappu/Quester/Cooksey 2006). In this context, several authors suggest that the COO cue may be part of the brand equity of certain brands (Shimp/Samiee/Madden 1993, Shocker/ Srivastava/Ruekert 1994, Pappu/Quester/Cooksey 2006). Indeed, Pappu, Quester, and Cooskey (2007) recently show that the (micro and macro) image of a particular country significantly influences the consumer-based brand equity of specific products or brands from that country. However, "[b]rands originating from a particular country can create intangible assets or liabilities in consumers' minds, shared by other brands originating from the same country" (Pappu/Quester/Cooksey 2007, p. 728) and it is this aggregate (brand) value which captures the economic consequences of positive or negative associations with a particular country. In this context, practically all existing measures of country image (COI) discussed in the literature are based on rating scales that elicit consumers' attitudes towards countries rather than assess the economic consequences of such attitudes (Jaffe/Nebenzahl 2006). …