BUSI 607 Week 4 DB Forum 4 Example

Discussion Board Forum 4: Key Concept Report and Replies

BUSI 607 Developing Global Markets, Discussion Board Forum 4 (key concept thread and 3 replies)

Thread by [Student Name]

The key concept and the three classmates' reports are composites written for this sample; the research cited is real, page numbers for the textbook depend on the edition a student uses and are left to the student, and the requirements follow Liberty's public course guide for BUSI 607.

Key Concept Report

The country-of-origin effect is the influence that the country associated with a product, where it is made, designed or branded, has on how buyers evaluate it. Geringer et al. (2016) discuss country of origin as one of the considerations in international product and promotion decisions, since a "Made in" label can add to or subtract from a product's appeal. German engineering, Italian design and Japanese electronics are familiar examples of positive country images, while products from countries with weaker reputations may face skepticism regardless of their actual quality.

Two meta-analyses show how large and how consistent the effect is. Pooling the published evidence, Peterson and Jolibert (1995) found that country of origin had a substantial effect on buyers' perceptions of quality and reliability, but a noticeably smaller effect on purchase intentions. Buyers may believe a product from a reputable country is better without necessarily buying it, because price, availability and other attributes also matter. Verlegh and Steenkamp (1999), in a later meta-analysis, confirmed that the effect was stronger for perceived quality than for purchase intention and found that it was larger for products from more economically developed countries. They also noted that the effect was weaker when buyers had other information about the product, which suggests that country image matters most when buyers know little else.

The effect has a domestic counterpart. Shimp and Sharma (1987) developed the CETSCALE to measure consumer ethnocentrism, the belief that buying foreign products is inappropriate or harmful to the domestic economy. Highly ethnocentric consumers prefer domestic products even when foreign ones are better or cheaper. For an exporter, ethnocentrism in the target market can offset a favorable country image, because the issue is not whether the product is good but whether it is foreign.

The practical question is not whether origin matters, but how much it matters to these buyers for this product. Consider a composite U.S. maker of outdoor apparel deciding how prominently to display "Made in USA" when entering Japan and Germany. In Japan, American outdoor and workwear brands have a strong following among some consumers, who associate them with authenticity and rugged quality, so emphasizing American origin might support premium pricing. In Germany, where domestic outdoor brands are well established and consumers may favor local products, the same label might matter less, and the firm might instead emphasize technical performance and sustainability certifications. The meta-analytic finding that origin matters most when other information is scarce suggests that the label is especially useful at launch, before the brand has built a reputation in the market. As customers gain experience with the product, the firm should expect the origin label to carry less weight and should invest in the product attributes and service that will sustain its reputation on their own. Testing both versions of the label in a small market trial would be a simple way to learn which approach works in each country. The firm could also track whether Japanese and German reviewers mention the brand's origin at all, a quick indicator of how much the label matters to buyers there.

Reply to Rebecca

Rebecca, your report on consumer animosity added an important qualification to my report on country of origin. Klein et al. (1998) introduced the animosity model, studying consumers in a Chinese city that had suffered during the Japanese occupation. They found that animosity toward Japan reduced willingness to buy Japanese products, and that this effect was independent of consumers' judgments of the products' quality. In other words, consumers could believe Japanese products were excellent and still refuse to buy them.

This distinguishes animosity from both the country-of-origin effect and ethnocentrism. A country-of-origin effect works through perceived quality; ethnocentrism rejects foreign products generally; animosity targets products from a specific country because of historical, political or economic grievances. For a marketer, the implication is that improving quality perceptions will not overcome animosity, and that a firm from a country viewed with hostility might downplay its origin, emphasize local production or enter through a local brand. Have you found examples of companies that successfully managed animosity, perhaps by acquiring a local brand rather than selling under their own name? Animosity can also flare suddenly after a diplomatic dispute, so firms exposed to it may need a plan for responding quickly, such as shifting promotion toward local employees and suppliers.

Reply to Kyle

Kyle, your report on global brands argued that consumers worldwide prefer brands seen as global. That view connects with my report, since a global brand partly replaces a national origin with an image of international reach. In surveys of American and Korean shoppers, Steenkamp et al. (2003) saw that the more widely a brand seemed to be sold around the world, the more people credited it with quality and status, and the readier they were to buy it, though the effect was weaker among more ethnocentric consumers, the group Shimp and Sharma's scale identifies.

So the two ideas may compete. A brand that emphasizes its American origin and one that emphasizes its global presence send different signals, and which works better probably depends on the country image of the origin and on how ethnocentric local consumers are. Your example of a coffee chain that presents itself as global rather than American is a good case. Do you think that strategy is deliberate, perhaps to avoid any animosity toward the United States in some markets, or simply a reflection of the brand's growth? Either way, the brand seems to gain from being seen as belonging everywhere, which may matter more to young urban customers than any single national image.

Reply to Lauren

Lauren, your report on international pricing raised the problem of gray markets, where products sold at lower prices in one country are bought by intermediaries and resold in higher-priced markets outside the manufacturer's authorized channels. Antia et al. (2006) studied how manufacturers try to deter gray market activity and found that enforcement worked best when it combined severity, certainty and speed; severe penalties alone, applied rarely or slowly, did little to reduce gray market incidence.

Gray markets connect to pricing strategy in a direct way, and they also damage relationships with authorized dealers who lose sales: the larger the price differences a firm maintains across countries, the stronger the incentive for unauthorized resale. A firm can narrow price gaps, differentiate products by country so they cannot easily be resold, limit warranty coverage to authorized purchases or enforce its distribution agreements consistently. Your example of a camera maker whose U.S. dealers complained about cheaper imports fits this pattern. Would you recommend that the camera maker reduce its price differences across countries, or invest in enforcement against unauthorized resellers? A mix may work best: smaller price gaps for the models most often resold, and visible, consistent enforcement so that dealers trust the firm to protect their territories.

References

Antia, K. D., Bergen, M. E., Dutta, S., & Fisher, R. J. (2006). How does enforcement deter gray market incidence? Journal of Marketing, 70(1), 92-106. https://doi.org/10.1509/jmkg.70.1.092.qxd

Geringer, J. M., McNett, J. M., & Ball, D. A. (2016). International business. McGraw-Hill Education.

Klein, J. G., Ettenson, R., & Morris, M. D. (1998). The animosity model of foreign product purchase: An empirical test in the People's Republic of China. Journal of Marketing, 62(1), 89-100. https://doi.org/10.1177/002224299806200108

Peterson, R. A., & Jolibert, A. J. P. (1995). A meta-analysis of country-of-origin effects. Journal of International Business Studies, 26(4), 883-900. https://doi.org/10.1057/palgrave.jibs.8490824

Shimp, T. A., & Sharma, S. (1987). Consumer ethnocentrism: Construction and validation of the CETSCALE. Journal of Marketing Research, 24(3), 280-289. https://doi.org/10.1177/002224378702400304

Steenkamp, J.-B. E. M., Batra, R., & Alden, D. L. (2003). How perceived brand globalness creates brand value. Journal of International Business Studies, 34(1), 53-65. https://doi.org/10.1057/palgrave.jibs.8400002

Verlegh, P. W. J., & Steenkamp, J.-B. E. M. (1999). A review and meta-analysis of country-of-origin research. Journal of Economic Psychology, 20(5), 521-546. https://doi.org/10.1016/S0167-4870(99)00023-9