Single brand with multiple country images: the effect of discrepancies between country images on brand credibility and prestige

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Hongjoo Woo (Creator)
The University of North Carolina at Greensboro (UNCG )
Web Site:
Byoungho Jin

Abstract: Country image refers to the holistic image that consumers harbor toward a particular country. Traditionally, one brand was thought to possess a single country image; an Italian brand would theoretically be owned by an Italian company and manufacture its products in Italy. However, due to increasingly common practices of cross-border merger and acquisition (M&A) and offshoring practices, most brands today can have multiple country images for a single branded item, which include the decomposed labels of country-of-brand origin (COB), country-of-company (COC), and country-of-manufacturing (COM). Due to cross-border M&A and offshoring, the COC or COM can shift from its home country to another country in two different directions: downward (a high fashion image country ? a low fashion image country) and upward (a low fashion image country ? a high fashion image country). When consumers are exposed to the information that the COC or COM of a brand actually differs from its COB, what reactions will appear in consumers’ minds? How do such reactions affect consumers’ brand evaluations? Do such effects differ between luxury brands and mass market brands or between the downward and upward shifts of country images? To address these questions, this study examined the effects of discrepancies in country image on consumers’ perceived brand credibility and prestige in the fashion industry context, examining both luxury and mass market brands and both downward and upward scenarios of M&A/offshoring. The moderating role of consumers’ clothing product involvement was also tested. Using research gained from literature review, a total of twenty hypotheses (H1a-H9h) were developed based upon two specific theories. Festinger’s (1957) cognitive dissonance theory suggests that when consumers encounter discrepancies in country image, they will modify their brand evaluations to liberate themselves from the resulting cognitive dissonance. Homans’s (1958) social exchange theory suggests that the impact of discrepant country images, however, would be significant for luxury brands but not for mass market brands, due to consumers’ differing levels of input with regard to each brand purchase. For hypotheses testing, 426 college students were randomly assigned to one of the four experimental studies (Study 1 – Study 4), which collectively manipulated eight scenarios: luxury/mass market brand (2) x downward/upward (2) x M&A/offshoring cases (2). Italy and China were selected to represent high and low fashion image countries respectively, and the images of four fictitious brands (Italian/Chinese luxury/mass market brands) were developed through pre-tests and used in the experiments. In the experiments, changes in the participants’ perceived brand credibility and prestige before and after the manipulation of the scenarios were examined using repeated-measure ANOVA. The results of the data analyses provided support for six of the twenty hypotheses. The downward shifts in the COC/COM manipulated by M&A and offshoring scenarios significantly decreased the brand credibility and prestige of luxury brands (H1a, H1b, H5a, H5b supported). However, the downward shifts in the COC/COM also decreased mass market brands’ credibility, thus refuting H3 and H7. The upward shifts of the COC/COM through M&A and offshoring did not significantly increase brand credibility and prestige, neither for luxury brands (H2a, H2b, H6a, H6b not supported) nor for mass market brands (H4 and H8 supported). Consumers’ clothing product involvement did not exhibit a significant moderating effect in the experiments (H9a-H9h not supported). These findings suggest that consumers generally act in negative ways toward downward shifts in country image, regardless of brand tiers. Moreover, upward shifts in country image—for instance, the acquisition by a foreign company from a high fashion image country or the manufacturing of products in a high fashion image country—cannot by themselves improve the original image of brands from a low fashion image country, regardless of brand tiers. These patterns were common to all consumers, with no significant difference based on their individual involvement with clothes. These findings provide empirical evidence regarding whether cognitive dissonance theory or social exchange theory can explain the phenomena of country image effects. In addition, these findings fill gaps in the country image literature by examining the impact of country image shifts in both downward and upward directions, while also comparing the impact across brand tiers by focusing on brand-level outcomes (i.e., brand credibility and prestige). It also suggests managerial implications, such as the development of communication strategies for fashion brands that minimize downward shifts in country image. Limitations for the study and suggestions for future studies are also discussed.

Additional Information

Language: English
Date: 2016
Branding, Consumer, Country image, M&A, Offshoring
National characteristics $x Economic aspects
Offshore outsourcing
Cross-border shopping
Consumers $x Attitudes
Brand choice

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