As declared in the previous paragraphs the concept of Country of Origin has been object to some attention, and it has obtained growing importance in the field of branding. The following sections will provide a clarification of why Country of Origin has once attained considerable focus, and why it is worth reflecting upon.
6.4.1 Home-Bias Dilemma
When our research takes place in Denmark, and analyzes the Danish consumer, Denmark is declared the home country, since it inhabits the Danish respondents. Any foreign country would consequently become the host country. This terminology can give way to prejudice and discrimination, because the Danes posses a local bias favoring their own country and
domestic brands, which may imply unfair preconceptions, when evaluating home relative to host countries. However there is considerable evidence that the preference for domestic products may be an issue of consumer patriotism or merely emerged for practical reasons (Phau and Prendergast 2000: 2003). We will return to the issue of whether or not the Danes possess home-bias or a skewed preference for national goods in the empirical part.
6.4.2 Ethnocentrism
Several studies have denoted that consumers tend to have a relative preference towards products from their home country, as proven by Shimp and Sharma in Consumer Ethnocentrism (Shimp and Sharma 1987). This concept of consumer ethnocentrism can improve the understanding of how consumers compare domestic with foreign brands and why their judgments may be subject to various forms of bias and error. Shimp and Sharma
discovered that highly ethnocentric consumers are most prone to biased judgments by being more inclined to accentuate the positive aspects of domestic products and to discount the virtues of foreign brands. Then, consumers may favor a national brand, even though they know that there exist superior alternatives in other countries. Thus, if brands are sold domestically in a market, where the target group is highly ethnocentric, then it appears beneficial to highlight the Country of Origin (Shimp and Sharma 1987).
On the other hand, consumers may have a relative preference for or aversion against brands that originate from certain countries. These have been labeled as affinity (Oberecker et al.
2008) and animosity countries (Klein et al. 1998). From this point of view, the consumers do
not only prefer home brands relative to foreign, but they may acquire a hostile attitude towards brands from a certain country. Klein demonstrated that animosity toward a foreign nation is related to choices between foreign goods, while consumer ethnocentrism is related to choices between foreign and domestic goods (Klein 2002). Klein discovered that animosity towards a country directly influences consumers‟ willingness to buy the brands from that country irrespective of the product judgments (Jaffe and Nebenzahl 2006: 97). Moreover, consumer ethnocentrism is positively correlated with nationalism and patriotism, but negatively correlated with internationalism. However, the results showed that neither nationalism nor patriotism had a consistent level of effect on consumer ethnocentrism, since their effects vary from one country to another; hence nationalism and patriotism do not automatically translate into aversion for foreign brands (Balabanis et al. 2001: 164). In this way, the paper actually advices managers to de-emphasize the COO, when branding the product outside the home country, because this will diminish the impact that ethnocentric consumers can obtain. At the same time, there are situations where emphasizing the COO of a brand is advantageous which we will return to in the discussion of the empirical findings.
What is discovered in this section is that consumers‟ national cultures are dissimilar, thus when consumers‟ actions are rooted in their cultural norms, they must behave differently across cultures (Hofstede 2001). Furthermore, consumers‟ cognitive customs are founded in their culture; hence they must perceive and evaluate brands differently, because they observe the brands through their cultural standpoint and perspective (Hofstede 2010). Since the Customer Based Brand Equity framework is founded in the cognitive stream of literature, we assume that the analysis of the Danish consumers‟ perceptions towards the brand alliance will be influenced by their cultural heritage (Heding et al. 2009). Cognitive psychology focuses on how external stimuli are used by the consumers in a decision-making process. Cognitive psychology analyses how stored knowledge and memory is used in choosing brands (Heding et al. 2009: 88). We will return to the analysis of the framework in the empirical analysis.
Hofstede made an extensive survey on cultural differences based on company cultures, where he classified culture along different dimensions. When comparing countries, the study
revealed immense discrepancy, and he established a unique pattern complying with each nation. Denmark scored 74 on Individualism,18 on Power Distance, 16 on Masculinity, and 23 on Uncertainty Avoidance (out of 100) (Hofstede 2010). It has later been found that
consumers from countries characterized as individualistic tend to favor domestic products, but
only when they are superior to competitors. Countries characterized as collectivistic, the opposite pole, tend to favor the domestic products despite of competitors quality (Gürhan and Maheswaran 2000). Hence, the characteristic of ethnocentrism depends on the consumers culture (Hofstede 2001).
As the concepts and authors pinpoint that there may arise cultural clashes, when brands from distinct countries join an alliance. Moreover, the effects on the home country consumers will be detected, because favoritism may surface when e.g. Danish consumers are confronted with a brand alliance that also consists of a Danish brand as opposed to a brand alliance solely consisting of foreign brands. We will return to this discussion in the empirical analysis.
6.4.3 National Identity
Branding is very much related to identity, and many different identities coincide when uniting the brand and the consumer. When the consumer projects an understanding of the brand it will be founded in the consumer‟s national and personal identity (Keller 2008). Country of Origin is in many ways interrelated with national identity. The explanation is that many determinants of country image perceptions derive from cultural, social, and political contexts that constitute national identity (Dinnie 2008: 136). Accordingly, national identity is reflected in brand origin, therefore the integration of Country of Origin to a brand must be considered. Hence, when the consumer and the brand coincide, brand origin perceptions on behalf of the
consumer will materialize. Finally, national identity and Country of Origin comprise similar constructs, as they are objects of ethnocentrism, cultural expression, stereotyping, and challenged by the blurring of boundaries (Dinnie 2008: 137).
6.4.4 Country of Origin Sub-Conclusion
As touched upon in this section, 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;
Watson and Wright 2000). Therefore, not only product fit and brand fit must be considered, but also COO fit, when wanting to enter a brand alliance that extends across national
boundaries. Even though the product fit and the brand fit are perfect matches, the COO can still be a drawback. Previously, literature on brand alliances have stated that product and brand fit have been decisive to succeed; but nowhere in the literature has the cross-border alliances been analyzed in relation to COO complementarities.
In the previous research on Country of Origin effects, consumer motivation and involvement have been core elements in the analysis, which has evolved around how the consumers incorporate Country of Origin in their judgment and product evaluation. We will take the discussion to a strategic level in order to extent our analysis to comprehend the issues of what effects Country of Origin has, when brands enter an alliance, and how this will impact the brand equity. Thus we will discover, how the Country of Origin effects impact the brands‟
equity, and thereby we can conclude how the companies should approach such a strategic brand alliance in the future.
Even though the changes and trends of globalization are apparent, it remains yet to be determined how vast the consequences thereof are. The exact outcome is still dubious and unclear, and therefore, we will progress this thesis in the belief that Country of Origin entail decisive impact on brands, as shown by previous studies.