JOURNAL OF EUROMARKETING

EDITOR-IN-CHIEF ERDENER KAYNAK Pennsylvania State University at Harrisburg

ASSOCIATE TECHNOLOGY AND BOOK REVIEW PRODUCTION EDITOR E-COMMERCE EDITOR EDITOR EDITOR

SVETLA MARINOVA KIP BECKER SHAUKAT ALI TALHA DOGAN HARCAR Aalborg University Boston University University of Wolverhampton Pennsylvania State University at Beaver

EDITORIAL REVIEW BOARD MEMBERS J. SCOTT ARMSTRONG FREDERIC JALLAT University of Pennsylvania Paris Graduate School of Business SØREN ASKEGAARD (ESCP-EAP), France The University of Southern Denmark, Denmark MILAN JURSE GEORGE BALABANIS University of Maribor, Slovenia City University, United Kingdom JORMA LARIMO J. ENRIQUE BIGNE ALCANIZ University of Vaasa, Finland University of Valencia, Spain TOMMI LAUKKANEN DAVID J. CARSON University of Eastern Finland, Finland University of Ulster at Jordanstown, Northern STEVEN LYSONSKI Ireland Marquette University F. JAVIER RONDAN CATALUNA MARIN MARINOV University of Seville, Spain University of Gloucestershire, United Kingdom CHISLAINE CESTRE RITA MARTENSON University of Lausanne, Switzerland University of Gothenburg, Sweden LEO PAUL DANA LUIZ MOUTINHO University of Canterbury, New Zealand University of Glasgow, United Kingdom SRINIVAS DURVASULA DAVID MCHARDY REID Marquette University Seattle University YVONNE VAN EVERDINGEN DOMINIQUE ROUZIES RSM Erasmus University, Netherlands Groupe HEC, France PERVEZ N. GHAURI ARNOLD SCHUH King’s College, United Kingdom Vienna University of Economics and KJELL GRONHAUG Business Administration, Austria Norwegian School of Economics and Business Administration, Norway BRUNO SERGI KLAUS GRUNERT University of Messina, Italy Aarhus University, Denmark D. DEO SHARMA NEIL HERNDON Stockholm School of Economics, Sweden South China University of Technology, China KENNETH SIMMONDS KARIN HOLSTIUS London Business School, United Kingdom Turku School of Economics and Business Administration, Finland NITISH SINGH HARTMUT H. HOLZMUELLER Saint Louis University University of Dortmund, Germany GREGORY SULLIVAN Advanced Marketing Systems

Indexed and/or Abstracted in: EBSCOhost Products; Emerald Management Reviews; Gale Cengage; Business ASAP, Cabell’s Directory, The Standard Periodicals Directory, ASOS Journal of Euromarketing (ISSN:1049-6483) is published quarterly by IMDA Press, 1201 Stonegate Road, Hummelstown, PA 17036, USA. US Postmaster: Please send address changes to Journal of Euromarketing, c/o IMDA Press, 1201 Stonegate Road, Hummelstown, PA 17036, USA. Annual Subscription, Volume 23, 2014 Print ISSN: 1049-6483, Online ISSN: 1528-6967 Institutional subscribers: $600, Personal subscribers: $125. Institutional and individual subscriptions include access to the online version of the journal. Production and Advertising Office: 1201 Stonegate Road, Hummelstown, PA 17036, USA. Tel: 717-566-3054, Fax: 717-566-1191. Subscription Office: IMDA Press, 1201 Stonegate Road, Hummelstown, PA 17036, USA. Tel: 717-566-3054, Fax: 717-566-1191. For a complete guide to IMDA Press’ journal and book publishing programs, visit our Web site: http://www.imda.cc Copyright © 2014 IMDA Press. All rights reserved. No part of this publication may be reproduced, stored, transmitted, or disseminated in any form or by any means without prior permission from IMDA Press. IMDA Press grants authorization for individuals to photocopy copyright material for private research use on the sole basis that requests for such use are referred directly to the requester’s local Reproduction Rights Organization (RRO), such as the Copyright Clearance Center (www.copyright.com) in the USA or the Copyright Licensing Agency (www.cla.co.uk) in the United Kingdom This authorization does not extend to any other kind of copying by any means, in any form, and for any purpose other than private research use. The publisher assumes no responsibility for any statements of fact or opinion expressed in the published papers. The appearance of advertising in this journal does not constitute an endorsement or approval by the publisher, the editor-in-chief, or the editorial board of the quality or value of the product/service advertised or of the claims made for it by its manufacturer. Permissions: For further information, please visit http://journals.sfu.ca/je/index.php/euromarketing/index June 2014

JOURNAL OF EUROMARKETING

Volume 23, Numbers 1&2, 2014

CONTENTS

GUEST EDITORIAL 1 Svetla T. Marinova

ARTICLES

International Branding: A Framework for Classification and Analysis 5 Carl-Arthur Solberg

When Does It Pay off to Link a Brand Name to a Country? 22 Erik B. Nes and Geir Gripsrud

Developing Brand Awareness via Social Networks as a New Sprout of Global Firms’ 37 Strategy on the Russian Market Andrei Panibratov

“Made In Italy” Brands in the U.S. and China: Does Country of Origin Matter? 57 Donata Vianelli and Giovanna Pegan

Climbing the Brand Ladder: From Fashion Accessory to Distinctive 74 Country-of-Origin Brand Đurđana Ozretić Došen

Relationships between Brand Perception, Ideology and Consumer Ethnocentrism 85 in Post-Communist Romania Andreea Iacob, John Kuada and Lartey G. Lawson

Do National Identity and Religiosity Antecede Customer Based Brand Equity in 111 a Developing Multinational Country? Selma Kadić-Maglajlić, Maja Arslanagić and Muris Čičič

Retailer Brand Image Building: Evidence from Two European Retailers 124 Boryana V. Dimitrova and Bert Rosenbloom

JOURNAL OF EUROMARKETING

Volume 23, Numbers 1&2, 2014

CONTENTS

GUEST EDITORIAL 1 Svetla T. Marinova

ARTICLES

International Branding: A Framework for Classification and Analysis 5 Carl-Arthur Solberg

When Does It Pay off to Link a Brand Name to a Country? 22 Erik B. Nes and Geir Gripsrud

Developing Brand Awareness via Social Networks as a New Sprout of Global Firms’ 37 Strategy on the Russian Market Andrei Panibratov

“Made In Italy” Brands in the U.S. and China: Does Country of Origin Matter? 57 Donata Vianelli and Giovanna Pegan

Climbing the Brand Ladder: From Fashion Accessory to Distinctive 74 Country-of-Origin Brand Đurđana Ozretić Došen

Relationships between Brand Perception, Ideology and Consumer Ethnocentrism 85 in Post-Communist Romania Andreea Iacob, John Kuada and Lartey G. Lawson

Do National Identity and Religiosity Antecede Customer Based Brand Equity in 111 a Developing Multinational Country? Selma Kadić-Maglajlić, Maja Arslanagić and Muris Čičič

Retailer Brand Image Building: Evidence from Two European Retailers 124 Boryana V. Dimitrova and Bert Rosenbloom

Journal of Euromarketing, 23: 1 - 4, 2014 Copyright © IMDA Press ISSN: 1049-6483 print / 1528-6967 online

EDITORIAL

The understanding of the role and im- marketplace, which can affect even powerful portance of brands and branding as an organi- companies that have become complacent with sational process has evolved in academic liter- market position, innovation, and brand en- ature and management practice over time. hancement. On the other hand, consumer There have been continuous analyses, criti- choice reflects a lot more their inner value cisms, and redefinitions of the significance of system, their identity, rather than being a mere branding as a platform used by firms for value satisfaction of needs. creation based on product/service functional Branding as a means of communication and emotional attributes and on the customer value and creating a perception in the con- perception of these. Their initial meaning has sumer mind is both material and ideational. A gone through a substantial move away from perception of superior value may be associat- traditionalism when brands were viewed as ed with quality and product/service perfor- part of marketing, facilitating only the vending mance, but also with image, allure, aspiration, of products. Brands have become one of the and sometimes, illusion and delusion. Brands most important assets of firms. They are fed are often creating a virtual world of imagery by the market-based perception of firms and full of feelings and experience, expectations their products/services that affect company and associations. reputation and consequently their sales and Brands and branding are not a prerogative profitability. Brands have been interconnect- of big companies only. They are a core ele- ed with a company’s R&D strategy, innova- ment of strategic business decision making tion, and organisational market position. They that is underpinned by fungible and context- have been associated with constant enhance- specific resources and capabilities of any ment of market engagement capabilities business that aims to create differentiated val- whereby value is co-created by suppliers, cus- ue-added offers to target customers. tomers, and end users. The current economic downturn has chal- Presently, positive brand creation and lenged the market position of well established brand building provides for the establishing brands originating from the developed econo- and sustaining of relationships with consum- mies of Europe. ers, forming of long-run sustainable competi- Some of them have refocused on their core tive advantage, and shielding businesses from business, others on their key customers and market turmoil and unpredictability. These target market definition, while some have cho- developments are no longer the prerogative of sen to look for alternative branding solutions changes in economically advanced countries, via innovation. but also in emerging, transition, and less- In the context of Central and Eastern Eu- developed economies worldwide. rope (CEE), throughout the transition period, On the one hand, firms’ products have a well known national brands lost ground and shorter life cycle, and the competitive position many of them disappeared while new brands of a company can be easily undermined by have been slow to sprout. Local brands have constantly improving, new, competing offers been sluggish to gain ground as the more pouring from all ends of the world into the competitive Western and Asian brands, as

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well as cheaper products from big emerging context of international markets need to be economies, have flooded local markets. This, considered from more than the “traditional” coupled with a lack of company strategic fo- culture-and-scale economies trade off perspec- cus on brand building in CEE, has indeed af- tive. Carl Arthur Solberg’ study presents a fected the competitiveness of local firms as typology of four dissimilar branding catego- many of them have become stuck either in the ries based on the firm’s international market- middle or the low end of the market. Yet, nu- ing capabilities and the understanding of the merous companies, such as Podravka, global features in their industry. He identifies Kolektor, Gorenje, and Refan, having under- them as local brander, multi-domestic brander, stood the necessity and importance of brand- export brander, and global brander. The paper ing strategy have consequently invested in refers to four case studies of Norwegian firms, brand building to induce positive prod- representing each of the above categories. uct/service image in order to counteract nega- The categories are defined by taking into ac- tive country-of-origin (COO) effects and count what concerns the decision-making pro- compete on value added rather than price and cess involving the headquarters; the subsidiar- commoditization. Such firms have used ies, or the local distributors and the advertis- branding for creating a differentiated product, ing agencies; the information behaviour; and yet keeping overheads low to attract a wide the end result. This process is defined as de- client base, which has probed the use of gree of standardization of different elements branding as a philosophy of supreme value for of branding and market communication strate- the affluent consumers only. Some new firms gy. The applicability of the suggested frame- have developed a strong position within a work is discussed and analysed. niche luxury market catering to quite specific The significance of country reputation and customer needs and wants, using metaphorical brand name relationship takes different di- brand names that allow firms to project their mensions. These have been investigated and personality to potential users. Contextualisa- evaluated in the paper by Erik B. Ness and tion of branded products and services has been Geir Gripsrud. It develops around a discus- utilised to cater to local users or a global sliver sion of whether it pays off to link a brand of the market via locally embedded material name to a country. The authors specify that and ideational values. Such brands have been some brands are associated with a country, inspired by context-specific natural and man- while others are not. Taking a managerial made features with a meaning that transcends point of view, the main management decision national boundaries, with inscriptions and is related to figuring out when country-of- logos inspired by mythology, traditions, and origin should be used explicitly and when landscapes. Other brands started with focused companies have to refrain from doing so. R&D that has led to unique product/service Ness and Gripsrud’s study suggests that using offerings which limit imitability, thus improv- COO in brand strategy augments selected ing long-term firm competitiveness. brand equity indicators whenever there is con- When operating across borders, businesses gruence between core brand image attributes need to pay special attention to their interna- and country image specificity. The authors tional branding. Carl Arthur Solberg’ paper put forward that general country image and focuses on international branding with a pur- brand image constructs are often insufficient pose to create a framework allowing interna- to expose the potential leveraging effects tional branding classification and analysis. when applied on the individual brand level. The principal argument of his paper is that Ness and Gripsrud illustrate their arguments branding and market communication in the using an apparel brand case. The understand- EDITORIAL 3

ings extracted from the case indicate that focus of the research is made up of a sample brand equity is enhanced by the stated coun- of 14 Italian small and medium-sized enter- try-brand image congruence conditions even prises (SMEs) operating with a foreign direct when the country has no special reputation in investment mode of market entry and market the manufacturing of a particular product cat- serving in the U.S. and China. The analysis of egory.The paper gives new insights into the data from in-depth interviews pointed out role of COO in brand strategy formulation and how, particularly in recent years, a positive implementation. COO did not represent anymore an adequate Having more resources and capabilities, base for growth in foreign markets. Making large global firms have to use those creatively investments in a brand has turned out to be a in complex social networks in order to devel- necessity despite the limited financial re- op corporate brand awareness. In his paper, sources possessed by Italian SMEs. Without a Andrei Panibratov investigates how global strong brand image that has the ability to cre- companies develop their brand awareness on ate positive associations between a product the Russian market using social networks. He and its country of origin in the consumer’s has identified key factors that influence the mind, the COO loses its capacity to develop a implementation of the marketing strategies of distinctive product image in foreign countries. international firms in social networks and has Taking prominent elements from the his- developed a method to be used by other firms toric development of a country can help to up- for building their brands in Russia. The paper grade this country’s image and standing. The reveals the factors that influence the market- paper by Đurđana Ozretić Došen investigates ing strategy of global companies operating in a fashion accessory brand and its potential to social networks, emphasizing particular char- become a distinctive brand, which would pos- acteristics of users and companies having sibly convey a positive country-of-origin im- strong influences on the overall formation of age. The author explores whether specific brand awareness. Based on the evidence from brand features and attributes linked to the his- three global firms operating in Russia, the au- toric perception of the COO implemented in thor has outlined the transformation of the product development and subsequent market- theoretically grounded framework into practi- ing activities can help achieve powerful brand cally proven model of brand development via differentiation, successful positioning, and participation in social networks. desirable brand personality, and thus lead to Firms often benefit from the image and the creation of positive associations related to perception of a country overseas. Donata the COO of a brand. The paper applies quali- Vianelli and Giovanna Pegan have written tative methodology, i.e., its findings are based their paper taking the perspective of the “made on a case study. The research findings support in Italy” brand impact on consumers in the the assumption that branding should follow an U.S. and China. The purpose of their paper is emotional approach in order to achieve images to examine the relationship between brand and and stories about a particular brand which can country-of-origin from the perspective of a subsequently lead to desirable results with re- company. More specifically, this analysis in- gard to brand attractiveness, brand loyalty and vestigates the role of the brand in relation to convey a positive COO image. country of manufacture and country of brand Historic embedded ideological legacies when the relationship between a given country can impact brand perception and brand image image and a certain product category is per- in a country. Andreea Iacob, John Kuada, and ceived as strong and positive. Employing a Lartey G. Lawson have written a paper that qualitative method of analysis, the empirical investigates the relationships between brand

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perceptions, ideology, and consumer ethno- tionality and religion. The main purpose of centrism in post-communist Romania. Their the investigation is to examine the relation- study attempts to test empirically the relation- ships between these concepts, and to compare ship between ideological orientation, consum- models in terms of local and global brand eq- er ethnocentrism, brand perception, and de- uity. The results support the proposed con- mographic factors in present-day Romania. ceptual model showing that national identity Since previous studies have not examined em- and religiosity play important roles in brand pirically these relationships, the present inves- equity of local brands but not so in brand equi- tigation contributes to filling in the existing ty of global brands. In those circumstances, research gap. The research results show a religiosity and national identity do not signifi- strong link between communist ideology and cantly influence brand equity. The implica- consumer ethnocentrism as well as between tions of the results are discussed and recom- the ethnocentric tendency of Romanian con- mendations for future research are presented. sumers and their brand perception. Demo- Building of a retail brand image consists graphic characteristics, like gender, age, and of a number of issues that need careful con- education, seem to moderate the ideological sideration. In their paper, Boriana Dimitrova orientations, the degree of ethnocentrism, and and Bert Rosenbloom show that the concept of brand perception. The decomposition of the retailer store image as a collection of func- ethnocentric statements in the CETSCALE tional attributes needs to be augmented by so- into 3 component factors adds value to the ex- cial and economic characteristics in order to isting research knowledge in the field, since reflect the broader construct of retailer brand previous studies have been based on uni- image. To illustrate their point, the authors dimensional or two factor evaluations. provide an overview of the brand image build- Multicultural country fabrics involve is- ing efforts of the two largest European retail- sues associated with customer based brand ers, the French retailer Carrefour SA and the equity. These issues may be aggravated in the British retailer Tesco, in terms of the product context of a newly formed developing multi- life cycle. national state. Attempting provision of an- The collection of papers contributes to our swers to the question “Do national identity understanding and appreciation of branding as and religiosity antecede customer-based brand a manifestation of company and country phi- equity in a developing multinational country?” losophy and their strategic market-value think- is the purpose of the paper by Selma Kadić- ing. Maglajlić, Maja Arslanagić, and Muris Čičič. Their study tests the influence of national Svetla T. Marinova identity and religiosity on brand equity in the Guest Editor context of a country from South-Eastern Eu- rope, which is heterogeneous in terms of na- Journal of Euromarketing, 23: 5 - 21, 2014 Copyright © IMDA Press ISSN: 1049-6483 print / 1528-6967 online

ARTICLES

International Branding: A Framework for Classification and Analysis

Carl-Arthur Solberg

ABSTRACT. The main contention of this paper is that branding and market communication in inter- national markets need to be considered from more than the “traditional” culture-and-scale economies trade off perspective. This study presents a typology of four different branding categories based on the firm’s international marketing capabilities and the globality of the industry: local brander, multi- domestic brander, export brander, and global brander. Four case studies from Norway, representing each of the above categories of firms, are defined in what concerns the decision-making process in- volving the headquarters, the subsidiary or the local distributor, and the advertising agency; the in- formation behaviour and the end result shows the degree of standardization of different elements of the branding and the market communication strategy.

KEYWORDS. International advertising, international branding, standardization, typology of brand- ing categories,

Solberg, 2000 and 2002). Roth (1995) in par- INTRODUCTION ticular analysed the moderating effects of cul- Over the years, numerous contributions on tural dimensions (such as power, distance, and international advertising and branding have individualism) and socioeconomics on market appeared, both in scientific journals as well as share of different brand images (functional, in international marketing textbooks. The ap- sensory, and social), suggesting that brand im- proach has generally been to discuss whether age should be adapted accordingly. or not marketers should standardize their ad- Also, the level in the communication mix vertising across markets. Factors such as seems to play a role. Van Raiij (1997) sug- market specific conditions, culture, economies gested four levels: mission, proposi- of scale, organizational contingencies, and tion/campaign theme, creative concept, and transferability of competitive advantages are execution/style, each lending itself to different suggested to have an impact on the decision to degrees of standardization contingent on fac- standardize or not (Levitt, 1983; Roth, 1995; tors such as demand homogeneity, message Carl-Arthur Solberg, Ph.D. is a Professor of International Marketing and Associate Dean,, Depart- ment of Markating, BI Norwegian Business School, Oslo, Norway, Address correspondance to Dr. Carl-Arthur Solberg, Department of Marketing, Norwegian Business School, Nydalsweien 37, 0484, Oslo, Norway. E-mail: [email protected]

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transferability, competition, etc. Walliser and a critical element concerning the external en- Usunier (1998) gave an account of how fac- vironment, namely, the extent to which com- tors such as language, social taboos, religion, petition is global. This factor is distinct from humour, aesthetics, roles, and characters rep- the factor defining homogeneity across mar- resent clear limitations to standardization at kets in that it takes into account the competi- the executional level. Most researchers at pre- tive structure as well. We adopt the definition sent convene that a contingency approach is suggested by Solberg (1997) that global indus- the most appropriate one, implying that some tries are characterised by few players that ben- parts of the marketing mix should be adapted efit from structural barriers to entry (such as while other parts more standardized (Schilke, economies of scale in research and develop- Reimann & Thomas, 2009; Schmid & Kotulla, ment, production, and marketing) and that op- 2011). In most of the discussion on interna- erate in markets with few international barri- tional branding and subsequent advertising, ers (such as customs, quotas, standards, de- the premise seems to be that a standardised mand patterns, channel control, etc.). Multi- approach is primarily undertaken by large local industries (Porter, 1986), on the other multinationals, with great resources both in hand, are characterised by mostly national terms of finance and management, operating players, with only a few foreign competitors, in global markets that are more or less homo- if any. These two dimensions have impacted geneous. Thus, Schilke, Reimann and Thom- the international firm strategy in general (Sol- as (2009) found out that firm size matters in berg 1997), its international pricing strategy explaining performance of standardized mar- (Solberg, Stöttinger & Yaprak, 2008), repre- keting strategies. However, it can be argued senting the mainstay of the model to be devel- that this is a misleading premise because it oped. This model will help the reader address simplistically and inevitably turns our atten- a number of issues: How should the branding tion away from other and conceivably more and the subsequent communication package pertinent factors. be sewn together? Who should be responsible In this paper, we depart from the above de- for the development of the communication fined stream of literature to discuss two fac- package, thereby indirectly controlling the tors that have received merely limited atten- branding issues? tion in the existing literature. The first is an The paper is structured as follows: first a internal factor, namely, the ability of the inter- literature review will concisely examine the national marketer to carry out the decisions on existing contributions relevant to the studied branding in international markets. Solberg issue, followed by a description of the model (2000, 2002) has discussed the impact of mar- including the above indicated two dimensions. ket insight at headquarters on these decisions. Next, four cases drawn from the Norwegian His findings suggest that market insight ena- export industry are analysed, and finally, im- bles firms to adopt a standardized approach to plications for research and management are international markets even in the cases of het- discussed. erogeneous markets where the local partners may have decision powers on marketing is- LITERATURE REVIEW AND MODEL sues. This paper carries the discussion further DEVELOPMENT and introduces the firm’s relations with both the local partner and the advertising agency For an extensive literature review on the and their consequences on the ability to freely research issues please refer to (Vardar 1993; adopt a standardized branding strategy with an Michell, Lynch, & Alabdal, 1998; Shoham, emphasis on advertising. The second factor is 2002; Theodosiou & Leonidou, 2003; Schilke, Solberg 7

Reimann, & Thomas, 2009; Schmid & lor advertising to each cluster of countries, but Kotulla, 2011) among others. This review as- may keep the same standardized approach sesses briefly the main streams of the litera- within each cluster. ture in order to create the foundation for the The performance effects of the standardi- suggested model. zation approach have been studied by only a Michell, Lynch, and Alabdal (1998) divide few. Schilke, Reimann, and Thomas (2009) the literature on standardization into four have uncovered that the standardization- parts. The first one is literature that advocates performance link is significantly stronger in standardization, where the main argument is larger firms with a homogenous product offer- better marketing processes, more efficient ing, higher market penetration, and firms pos- planning and control, and a more uniform sessing cost leadership and coordination ad- global image (Elinder, 1961; Levitt, 1983). vantages. Xu, Cavusgil, and White (2006) The rival school of thought promotes the idea have found out that fit, among strategy, organ- of the necessity of local adaptation emphasis- izational structure, and process, is positively ing the role of national (or ethnic) culture, dif- associated with performance, emphasizing the ferent patterns of consumer behavior, the mar- importance of implementation as a source of keting infrastructure, etc. For example, Evans competitive advantage. Solberg and Durrieu and Bridson’s (2005) research pointed out that (2011) have found positive correlations be- retailers tend to favor adaptation strategies tween standardization and market position. with the increase of psychic distance between However, these authors have uncovered the the home and host countries. This line of negative correlations with financial perfor- thought has a long range of advocates (see for mance indicators. instance Vardar, 1993; Walliser & Usunier, In an attempt to clarify the conundrum of 1998). The third category argues that some different factors affecting the standardization- elements of advertising should be localized, adaptation dilemma, Solberg (2009) has sug- whereas others should be standardized across gested a framework with two dimensions: the markets, flexibility being the key argument impact of a certain factor on firm’s strategy (Peebles et al., 1978; Quelch & Hoff, 1986; (in terms of degree of standardization) and the van Raiij, 1997). Keegan and Schlegelmilch firm’s ability to influence that factor. For in- (2001) quote Leo Burnett’s Nick Brien who stance, among the important impacting factors sees this as follows: is the role of the local representative and the As the potency of traditional media de- advertising agency. On the other hand, the clines on a daily basis, brand building locally international marketer has a great deal of lev- becomes more costly and international brand erage on decisions pertaining to these two fac- building becomes more cost effective. The tors, since he can freely choose partners in the challenge for the advertisers and agencies is local market. Other factors such as homoge- finding ads which work in different countries neity among markets or competitive structure and cultures. At the same time as this global are external to the firm. These have, depend- tendency, there is a growing local tendency. ing on industry type, varying impact on firm It’s becoming increasingly important to under- strategy, and they can hardly be influenced by stand the requirements of both. (p. 458) the firm. Economies of scale (Levitt, 1983) The fourth approach to this issue is based on and competitive position (Shoham, 1999) may clusters of transnational regions (Boddewy, in this framework be located somewhere in the Soehl, & Picard, 1986; Whitelock & Kala- middle, as the firm may to a certain extent paxoglou, 1993; Kassem, Ludwig, & Beeman, have specific bearing on these two factors 1993; Kale, 1995). The marketer needs to tai- through its strategic choices, but at the same

8 JOURNAL OF EUROMARKETING time be constrained by various external forces ceived as extremely high. These firms do not (for instance technology and competition). have the experience and insight required to According to the incremental internationalisa- understand critical issues in the local market, tion school of thought (Johanson & Vahlne, and are therefore ill-equipped to acquire the 1977, 1990), it is claimed that the ability of necessary level of knowledge enabling them the firm to make rational decisions on these to devise a meaningful advertising strategy matters varies greatly with its experience in specifically and, more generally, a branding international markets. Newcomers to interna- strategy. They are therefore much more vul- tional markets will normally depend greatly nerable to the whims or even opportunism of on the marketing insight of their local repre- their foreign and more knowledgeable part- sentatives. They will neither have the ners, who in turn do not necessarily fully un- knowledge nor the managerial resources nec- derstand the needs of the exporter. Firms not essary to devise any strategy of their own ad- addressing these issues, because it requires dressing the requirements of the local market. managerial resources they do not possess, risk Depending totally on the local network of evolving into a situation in which each market their partner, they will also normally use a lo- is approached in a customized way without cal advertising agency (Solberg, 1989). Not- regards to potential for standardization, the withstanding the potential for standardization, end result being an onerous patchwork of dif- the expected outcome of this kind of exercise ferent marketing positions and brand images is thought to be customised marketing. The in international markets. In a multi-domestic leverage of the duo local partner-local adver- market setting (Porter, 1986), this may not tising agency is thought to be ruling out any represent a serious problem to the exporter scale economies to be made on homogeneous because it will only affect its position in each demand patterns, and thus the potential for individual market, and the competitive situa- standardization across markets (Solberg tion in each of these markets will normally not 1989). In a survey of Norwegian exporters of warrant any large-scale global marketing consumer products, Jenson and Lintho (1994) campaign. found out that in between 25% and 53% of the However in a globalizing market, competi- cases the local representative was the main tive forces compel the exporting firm to influencer on decisions such as media strategy change its strategy in order to seek benefits (53%), selection of advertising agency (44%), from economies of scale and from a homoge- budget (32%), and the creative platform of the neous global brand image through a standard- advertising campaign and local marketing ized advertising approach. It is at this point strategy (25%). In 20% to 40% of the cases, that the exporting firms risk meeting opposi- Norwegian exporters of consumer products tion from local partners (Quelch & Hoff, cooperated, the influence being mainly shared 1986; Lipman, 1988; Solberg, 2000, 2002). proposition/campaign theme, whereas the ex- The suggested model consists of the porter was the main influencer in the remain- above-mentioned dimensions: international ing cases (20-40%)—particularly regarding marketing capabilities and the globality of the marketing strategy (56%). These figures indi- industry (see Figure 1), and suggests four cat- cate that the local representative has a major egories of international branders: local brand- influence in key marketing decision areas, in er, multi-domestic brander, export brander, many cases leaving the exporter to a signifi- and global brander. cant extent to “obey orders” by the agent. The main suggestion expressed is that One of the key problems for this category of firms will take different approaches to interna- firms is that the cost of information is per- tional market communication depending on Solberg 9 their position in this model. More specifical- communication strategies. The following sec- ly, we anticipate that firms in the four cells tions give a brief outline of the archetypal fea- will adopt different control and monitoring tures expected in each cell of the model. structures, information behaviour, and market

Figure 1: Typology of International Branders

High

Multilocal brander Global brander

Local brander Export brander

Low

International marketing capabilities marketing International Multilocal Global

Industry globality

The local brander typically epitomises a markets. Therefore, the local advertising firm with limited resources and experience, agencies would prefer to do things in their possessing limited marketing insight, with lo- own way together with the local representa- cal representatives making most of the mar- tive, rather than complying with the suggested keting decisions on their behalf, these latter guidelines, the result being local adaptations working closely with the local advertising (De Moiij, 1994). agencies they know well. The local brander The multi-domestic branders generally with limited capability to gather control in- have a higher market share in their main ex- formation simply has to trust that of its repre- port markets. Firms in this position have more sentatives (distributors, agents, sales subsidi- experience in international markets, and there aries, etc.) to make the best out of each indi- fore tend to acquire more detailed market in- vidual marketing situation. The more experi- formation (Benito, Solberg, and Welch, 1993). enced among firms in this category may ad- Therefore they are better equipped to evaluate dress the situation by developing common local requirements in each market and sugges- guidelines that place some restrictions on the tions made by their local marketing partners, local representatives and their advertising be it their own sales subsidiary or an inde- agencies. However, since the guidelines nor- pendent representative, and their advertising mally are developed by the exporter, most agencies. On the other hand, they also likely with help from an advertising agency in acknowledge that local market conditions war- the exporter’s home country, and the exporter rant local solutions, and will therefore tend to operates in a multi-domestic market setting, accept that the brand image and the communi- the concept may not easily transfer to other cation mix may differ from one country to the

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other, possibly with different degrees of adap- cal branding carried out through their more tation at different levels in the communication powerful trading partners. mix, that is mission, proposition, creative idea, Finally, global branders are market lead- execution (van Raiij, 1997). Prototype adver- ers in global markets spending considerable tising (De Moiij, 1994, p. 234) may be one resources to sew together a branding strategy solution for firms in this position where defi- and a communication package that address nite directives are provided, typically referring both the need for customized solutions and the frequent features of the execution. Further- advantages of scale economies and of a global more, prototype advertising delivers better brand image. Most firms in this cell have control than guideline advertising. their own subsidiaries in local markets and Export branders are firms that rate low on would therefore be more prone to decree the the ability axis, but operate in a global indus- content and the execution of the marketing try setting. Chances are that demand patterns, communication. However, examples abound consumer perceptions, and the competitive of firms that (supposedly) in this position en- situation are more homogeneous across coun- force centralized solutions on their local part- tries in this setting, creating the foundation for ners and subsidiaries, and that later experience standardized solutions. With limited re- the harsh realities of internal conflicts and op- sources, firms in this position are expected to position (Quelch & Hoff, 1986), be it multina- develop standardized solutions that transfer tionals such as Parker Pen (Lipman, 1988), or more or less easily to other regions. However, smaller firms such as the Norwegian leisure even in global markets, the execution needs to and sport gear supplier Helly Hansen (Sol- be localized (De Moiij, 1994; Walliser & berg, 2000). Quelch and Hoff (1986) describe Usunier, 1998). As they do not have suffi- a process in five steps whereby global firms cient resources to adapt to the local flavor, may avoid the main pitfalls of centralized they are nevertheless expected to run the same global advertising campaigns, consisting of campaign across all markets, with the same information exchange, persuasion, coordina- mission, campaign theme, creative idea, and tion, local accept, and supervision. The main often also the same execution (except perhaps idea of this process is to involve the local for media selection). “Export advertising is managers. imposed on the world unadapted, or simply with the copy translated. This is the ultimate CASE STUDIES form of centralization” (De Moiij, 1994, p. 234). In order to examine the model, we carried Export branders have limited market out in-depth studies of four Norwegian ex- shares, and we anticipate that they, therefore, porters in the consumer goods sector. Case will spend comparatively less time and money studies were chosen so as to be able to explore on advertising than on other marketing tasks, details of each situation. The case firms such as, for example, product development or should a priori be located in different positions securing appropriate distribution partners in of the framework. Figure 2 shows the location international markets. On the other hand, the of each firm in the model. Appendix 1 gives a strategy may as well be, if not “dictated”, at brief explanation of how we arrived at this least heavily influenced by these latter given location. Ideally, we should have been able to their information leverage in their respective identify firms that are located in each of the markets. Therefore, even though the external four corners of the model. This has proven conditions for standardization are present, ex- difficult for practical reasons. First, we do not port branders may be compelled to accept lo- know a priori the placement of the firms in the Solberg 11 matrix as it is necessary to carry out detailed requirements. As can be seen from Figure 2, analysis of the two dimensions to find the fi- the firms are located toward the middle of the nal locus. Second, the number of exporting model rather than at the extremes, thus poten- firms in the consumer goods sector in Norway tially blurring our findings. is relatively limited, so it is not straightfor- ward to find firms nicely fitting our research

Figure 2: Case Firms in the Model

Global brander High Multilocal brander

Jordan Swix

Local brander Export brander

Tine Telenor Low Mobil

International marketing capabilities marketing International

Multilocal Global

Industry globality

The cases seem sufficiently clear-cut, al- 1) What role does the local representative lowing us to draw some preliminary conclu- play in the advertising/branding decisions as sions.The interviews were based on an inter- well as in who controls and monitors the local view guide capturing the elements discussed marketing activities? in the previous section. They were conducted 2) How do the marketing partners ex- with the managing director or market- change information, and how is this infor- ing/export managers of the responding firms mation used in the decision-making process? and lasted typically around 2 hours. In two of 3) Finally, to what extent are the branding the firms, two export area managers (firms and marketing communications standardized? Tine and Jordan) were interviewed. Further- more, a summary of the interviews was sent to DATA ANALYSIS the respondents for possible corrections, thus enhancing significantly the reliability of the This section is organized as follows. First data. we give brief answers to the three questions To explore the propositions built in the above, substantiating our points with state- model, answers have been sought to the fol- ments from the interviews. Then we pull the lowing questions: cases together into the model with the purpose

12 JOURNAL OF EUROMARKETING of relating the results to the archetypes dis- ternational markets, the extent to which the cussed above. decision making process is centralised or ra- ther localised in each local market, and the Role Distribution between the Local Rep- role of the advertising agencies. resentative and headquarters – HQ control Tine’s export manager has stated that the local distributors operate independently of The author wanted to assert the leverage headquarters: We have, in fact, not intervened and the control that HQ in each of the case so much in the local marketing. companies has on advertising decisions in in-

Table 1. Summary of the Case Firms

Tine Tine is a dairy cooperative firm that has dominated the Norwegian home market for more than half a century. Annual sales are in the region of 13 bil- lion NOK (1.6 million Euros), international sales only representing less than 5%, mainly concentrated on their branded cheese (Jarlsberg). They have a fair market presence in the U.S.A. operating their through a sales subsidiary. In other extort markets they operate generally through distributors. Jordan The firm Jordan prides itself of being number one in Europe in the tooth- brush market and one of the leading toothbrush manufacturers in the world. Their annual sales reach 450 million NOK (56 million Euros), exports con- stituting almost 90% of the total. They are represented in more than 38 countries world- wide, mostly through local distributors. Telenor Mobil Telenor Mobil is an offspring of the former public Norwegian telephone company (now with a limited private ownership). They have operations in 12 countries, in six of which with wholly owned subsidiaries. Their opera- tions are concentrated in Northern and Central Europe and some Asian coun- tries. Swix Swix is the world market leader in ski wax. In addition they manufacture and sell ski poles. Out of total sales of 275 million NOK (34 million Euros) some 2/3 are generated in foreign markets. They are represented in what can be termed relevant markets (where there is snow) mainly through distribu- tors. In U.S.A. the firm has wholly owned subsidiaries, and in Japan -joint ventures representing sales branches.

These people know the markets much bet- we don’t want this or that, but don’t really do ter than we do…Concerning advertising agen- it, never have. We work more in teams now, cies we always use local ones, except for the in order to bring in the local marketing people. centralised campaign (which was a failure – These statements demonstrate the lack of see later)…We feel that we have a clear role resources put into the decision making at Tine distribution between us and them. We depend concerning international marketing (commu- very much on each other, and this is team- nication), leaving most of the decisions to work. As mentioned, they [the local repre- their local partners. In Jordan’s case this is sentatives] are responsible for the marketing quite different. The distributors in primary decisions as long as they follow our direc- markets have limited impact on the marketing tions. We may reject their plans and say that decisions, somewhat more freedom of action Solberg 13

being granted to distributors in secondary, the CEO at Swix, the ski wax market leader, overseas markets. claims that Actually the distributors have limited im- Everything is monitored from our head- pact on strategic decisions. I guess we feel quarters, but we use, for example, an Ameri- that we have enough competence to take the can advertising agency in much of the design final decisions. And there are several people work. The globalization has given a great op- involved in this. Both my boss [the VP- portunity to communicate across continents. marketing] and the president are heavily in- We just send over pictures, suggest solutions, volved. They have their contact persons with etc., and we then can send the final result to the distributors at a higher level… For us to Japan…In that way we communicate on a dai- build Jordan as a brand, and with the compe- ly basis. We have in house production of the tence that we possess in house, well we just material, but we let advertising agencies play don’t draw upon our distributors in these dis- a role in the creative part…Our experience is cussions. that our distributors have too little resources to I feel that we have well defined roles be- do this work themselves, so we have to “push tween us and our distributors, but it is evident them here and there”. Our subsidiaries man- that if you give some independence to some, age these things themselves within our strict then others will challenge that—and that is guidelines, and they do not produce their own rather tiresome, because they need to check pictures. Rather, they get them in our data- with us, particularly concerning the great ad- base. The distributors use their own advertis- vertising campaigns. They need to get it ac- ing agencies in the execution of the cam- cepted. It would be easy to deny everything, paigns, but they need to get our approval. keep it simple, but then on the other hand we …[We] have realized that if we don’t keep would not get their commitment. a tight rein [on our distributors], a whole range Summing up, Jordan has centralized most of creative solutions will pop up…We invite of their marketing communication. However, them to participate in the process, but it’s we in order to keep the distributors involved, they that hold the helm. allow some freedom of action. Telenor Mobil has grown internationally mainly via acquisi- Information Capture tion. In this way, they are somewhat atypical as compared with the three other companies. How is market information being captured Firstly, they have limited local marketing ex- by HQ? How is it used by HQ when develop- perience and expertise at headquarters; sec- ing advertisements in international markets? ondly, most of their focus has been on finan- These questions are important in that they in- cial monitoring rather than on marketing. In dicate the assertiveness of HQ managers in the words of the Vice President on project de- their interaction with local distributors or velopment. Today the local players have per- managers. haps too much impact on what might be seen Starting again with Tine, this company re- as an effective operation in the longer term. ceives most of their market information from What we want to do is to take the best from their local marketing partners. Many of these each market and then distribute that further. have been in the “family” for more than 40 .This statement indicates clearly that Telenor years, and they have developed a trusting rela- Mobil aims at achieving a higher degree of tionship. Given the fact that most of the mar- centralization over the marketing decisions of keting decisions are being made locally, addi- their local operations, but that they still have tional market information seems unnecessary. some way to go to reach that goal. Finally, They receive marketing plans from their part-

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ners, they approve them, and they follow up On the other hand, this company neverthe- the sales—but not the execution of the cam- less struggles quite a bit to get the information paigns—on a regular basis. They are also in they feel they need from their local partners: close informal contact with key personnel in “We often have to ask for the information the distributor organization. that we need… In fact, it often happens that Jordan maintains that they are always in they [Telenor Mobil’s local partners] withhold close contact with their distributors, constantly some information, that they do “anything” to being updated on market and sales develop- get away. Well, no one really likes to be mon- ments. itored, and this industry is young, the compa- I speak more often with them than I do nies and their cultures are young, but still very with the people one floor up (at the headquar- strong cultures. The end result is that there is ters). It is mainly informal communication, or a “king” that “rules” over another one who a combination maybe. You call, you speak was used to be “king”, and you discuss…We are after all colleagues ”, and then another “king” over him again, in a way. I believe that is one of our strengths, so it gets easily fussy. that we have such good relations with our dis- Finally, Swix claims that they have exten- tributors. We have spent a lot of resources on sive market knowledge and an in depth insight socialisation so to speak. into the operations of their local partners. We have marketing meetings a couple of Their sales and marketing people carry out times per year, where everyone is gathered. In revisions and visits several times a year. In addition we invite them here on kick offs and addition, through their network, with col- the like, and in this way they are inspired to do leagues in the industry, they discover that the the same back home. We try to achieve an information they get from their partners does atmosphere of colleagues; they are after all not always match that of the network. In this our colleagues in the different countries out way, they are able to double-check and to ad- there. And that is important for them to pri- just the information received. As stated by the oritise Jordan in a world where they are re- managing director, sponsible for other products as well…I believe It is all about the distributors’ resources that network and relations with our distribu- and they often struggle with priorities, as they tors are alpha and omega, it has to do with have other products to handle. We have in trust and commitment. general great trust in what we get from our In addition, they actively use Nielsen data, partners, but we check the quality of the in- so they are regularly being informed on com- formation from other sources, and we often petitor standing and on that of the leading re- find deviations here. They probably feel they tail chains. have a stronger position than they in fact have. Telenor Mobil is priding itself on its ex- tensive market research investments before it Standardisation or Customisation of Market- enters new markets. They also subscribe to ing Communication? market intelligence reports. There are lots of research agencies that All four firms try to the extent of their ca- work with telecom. That is quite a “hot” sub- pabilities and to that of the external environ- ject right now, mobile phones in particular. ment to standardise their marketing communi- So we are being followed up with lots of ma- cation effort, arguing to different degrees the teriel. We are quite a transparent industry, so role of economies of scale and the importance there is really no “hokus pokus”. of a similar brand image across countries. Solberg 15

However, they succeed to various extents in mercials are developed at headquarters. Man- this endeavour. Let us review each firm: uals are zealously used and closely followed- Tine has some time ago carried out a up in primary markets, whereas in secondary standardized campaign aimed at most of their markets, they spend fewer resources to check export markets. They contracted a Norwegian on the use of these directives, the result being, advertising agency, and they developed three for instance, that after they introduced a new similar campaigns, focusing on Norwegian logo, the old one is still being used in some nature, namely, midnight sun, mountains, secondary markets. They have a set of photos fiords, and purity, playing on the country of where the distributors can pick and choose. origin effect (Bilkey & Nes, 1981; Verlegh & Depending on the importance of the cam- Steenkamp, 1999). Their foreign partners paign, they give more or less firm instructions where also involved particularly in the very as to what elements should be used. Still, they beginning: “The result was disappointing: allow for differences. For example, when we Our different distributors wanted to emphasise launched a new dental floss, the Finns had al- different attributes—some using the term ready started their market communication Scandinavia in stead of Norway, others invok- based on another creative idea than the one we ing the nature, and others really did not care.” wanted to push. They had on their own devel- Since this experience, they have realised oped an idea they wanted to build on because that it is particularly difficult to carry out they had a special deal with one of the leading standardised marketing programs across mar- TV channels. Because they already had spent kets. They have indeed developed a manual time and money on this and it showed some (on how to use the logo, the brand names, use good effects, we eventually, after some dis- of colours, etc.) but even these directions are cussion, said yes. being challenged by their distributors. They Also differences in market environments want to build in core values in each product; warrant different approaches. For instance, in for instance, their flagship product Jarlsberg the Netherlands, the market is crowded with has a taste which is deemed to be too strong to more brands than in Scandinavia, and con- be given to children, and yet, their Australian sumers are much more price conscious, so partner markets this particular cheese as a Jordan needs to focus to a larger extent on family cheese. coupons, price offs, rebates, and so on. Jordan is in quite a different position. Telenor Mobil is perhaps the company Their market knowledge coupled with the with the most pronounced ambition to stand- close cooperation with their local distributors ardize its marketing communication across confers on them the capability to capitalise on markets. However, they seem to be a long similarities that exist across markets (Solberg, haul from being there. The intentions are 2002). Most of their marketing budget is giv- clearly spelled out by our interlocutor: en to in-store activities, mainly because the If we hand out the same uniform to every- purchase of a toothbrush is basically done on one, then the probability is much greater that an impulse when you are out shopping; it is they will march at the same speed, than if the seldom on a shopping list. The creative idea uniform were different… It is all about us op- and the development of materials are the re- erating in 12 different countries around the sponsibility of headquarters. At the execu- world, and if we then try to see things in per- tional level they need to leave most of the spective we should be able to exploit cost ad- work to their distributors, due to differences in vantages. And if we then have the same brand measures, store outfits, and, not the least, reg- in all markets, then there is a theory that says ulations. However, advertisements and com- that we will more rapidly achieve those cost

16 JOURNAL OF EUROMARKETING advantages…And furthermore, it makes us Finally, Swix is the company that seems to feel like in a family…. We can extract syner- carry out the most standardised marketing gies, and we are compelled to do that as the communication program. At the outset, they industry is getting more and more globalised. are too small to carry out heavy international And it has happened really fast, and you get advertising campaigns. Rather, they use the the kind of global player that can exploit these retailers as their medium and cooperate with scale advantages. major retail chains in co-branding; they esti- Another aspect is that of the market. Take mate that as much as 80% of their marketing the Nordic market for example; there you have communication budget is oriented toward the Nordic media, and Nordic sponsor objects etc. retail level. They are also quite deeply into If you then have the same name, you may af- sponsoring both events and ski idols, an ac- ford to buy yourself in. Telenor Mobil tries to tivity that, of course, reaches both retailers and develop a differentiated approach, depending end users. Even though most of their market- on the level of their marketing activity. As ing communication is standardised, they stated by the interviewee: acknowledge that “all business is local busi- Our marketing activities can be divided in- ness”, that “people indeed are different inside to four: Trade marketing where we work with their heads”. The managing director states different retail chains requiring adaptation. that Then you have brand building, mostly on tele- Layout and message are standard in all vision, but also in print media. We may also markets, and more and more of the marketing call internet marketing mass communication. communication is going to be the same. We And then you have CRM, where we can be may say that if we want to be a professional much more target oriented, for example via brand, everything needs to be the same: logo SMS. Telenor Mobil is more and more now etc, so-called corporate identity. We have to working to develop concepts for their local monitor quite strictly, but there may be a need partners, and consequently, they have devel- for some local adjustments, such as for exam- oped the Djuice concept, aimed at particular ple in Japan. But in the main we have the segments where the mobility life style is the same catalogue all over the world…. foundation. In this concept, consumers get a Except for Japan where we make a special more tailor made product for those who use catalogue based on our own material. the mobile phone rather than the ordinary one. On a (standardization) scale from 1 to 5, I This concept will be marketed in four coun- believe that we are somewhere between 1 and tries, Norway, Sweden, Hungary, and Den- 2, but significantly closer to 1. Local adapta- mark. tion is, however, sometimes necessary, for ex- Most of the marketing communication is ample how we present the products. The Jap- still done locally. One major reason for this is anese are more technically oriented, so the their acquisition strategy, whereby they have products need a more technical look. Ameri- over the years acquired controlling stakes in cans are very concerned with pricing. In the various national telecommunication operators. U.S.A., we have a slightly different product The question is whether they have the lever- range…Even Norwegians and Swedes there age, in terms of local market knowledge, of are different! We need to take care of our uni- international experience, and of ownership form image in different markets, and maybe authority to smoothly carry out a more stand- soften up somehow in different regions, Cen- ardised approach in international markets, tral Europe being one such region, for exam- thereby achieving a more uniform brand im- ple. age. Solberg 17

Summary of the Analysis what we find in our four cases. Figure 3 sums up most of this discussion. The main contention put forward in this Tine, operating in the lower left cell, the paper is that firms’ managerial resources and “local brander”, competes in a multi local their relationship to their marketing partners in market environment, not warranting any glob- their export markets fashion, together with the al marketing approach. Also, in spite of a rela- competitive structure (global or multi-local), tively long international experience, their lev- their international branding strategy. In the erage toward local distributors is quite limited. main, with some important nuances, this is

Figure 3: Summary of Findings

Jordan Swix Jordan closely monitors the market communication of Swix has centralized most of their market com- High their local partners. They have extensive market intelli- munication. They have a good understanding of gence and information and have close relationships with local market requirements, and a good working their partners. The creative idea and the development of relationship with their partners. Most of their material/photos are the responsibility of HQ, the execu- catalogues and ad material is standardized mak- tion is carried out at the local level. Exceptionally they ing allowance for local adaptation in some mar- let their local partners run local campaigns. kets, depending on local requirements.

Tine Telenor Mobil Tine leaves most of their market communication to their Telenor Mobil still has a way to go to centralize local partners. They base their own decisions almost their marketing processes. They have an exten- Low entirely on info from these partners. All their marketing sive information base, but are still confronted communication is locally adapted. They once tried to with “local barons”. They have different brand standardize a marketing campaign, but failed. images in each country, but they have an ex- pressed objective to standardize their branding.

International marketing capabilities marketing International Multilocal Local Industry globality

They once tried to run a standardised many elements of globality in their market global campaign, but it failed, we believe, for environment—in particular the industry struc- these two major reasons: market heterogenei- ture with only a few, large key competitors ty and lack of resources/market insight. Jor- operating globally. However, the local dis- dan operates in the “multi-domestic brander” tributors do have some influence on the devel- cell but close to the neighbouring category opment of the marketing communication strat- “global brander”. They have extensive expe- egy. rience in international markets; they are mar- Telenor Mobil is trying to develop a ket leader in some key markets, and they have standardized global marketing program, pos- established a professional and colleague-type sibly the most standardised of the four firms of relationship with their local distributors. reviewed here. However, they have expanded This gives them extensive power to, if not dic- as a result of local acquisitions, buying into tate, at least inspire these latter to do it their local brand names and local organisations. way. They standardise more than the cell lo- They intend to develop standardised programs cation suggests. However, we believe that the for their local marketing partners, but will al- influence of the neighbouring global cell most certainly meet resistance from the locals makes itself felt in the findings: there are in this endeavour, partly because of the “not

18 JOURNAL OF EUROMARKETING invented here” syndrome, and partly because shown that some of the two factors, interna- they do not yet possess the necessary legiti- tional marketing capabilities and industry macy (market insight) vis-à-vis their partners globality, have an impact on firm behavior. to enforce such uniformity. Finally Swix, Indeed, the “classical” factors such as market with more than forty years of experience in similarities and economies of scale have an international markets, have built a market po- important impact on the firm’s ability to sition in international markets that, in spite of standardize, but we need also to take into ac- their relatively limited size, makes them an count other factors internal to the firm (re- international market leader in their very spe- sources, market knowledge, market power, cial niche. The nature of competition and that relations with their marketing partners, etc.). of the consumer needs addressed suggest that We have seen that carefully drafted standard- they operate in a global market setting. This ized campaigns could fail, partly because this clearly calls for a standardised global ap- factor has not been adequately accounted for. proach to branding and marketing communi- We also sense the challenges that one of the cation, only allowing for modifications when firms is confronted with, trying to sway their it is strictly needed. We believe that our ob- partners into a standardized global approach, servations are quite in accordance with this but failing partly because of limited leverage description. However, it would be mistaken to toward their partners, and partly because of term the firm a real global brander, given the the fact that the advertising theme did not find fact that they do struggle with some of the dis- resonance among their partners. tributors not always complying with their di- Another conclusion is that global branding rectives. This, we believe, may be explained as epitomised by the popular “think global, act by the limited size of the company, lacking local” axiom is not the exclusive domain of resources to follow up on markets deemed to large multinational firms. Also, small and be secondary. medium sized firms, targeting niches in inter- national markets, may embody features of Study Limitations global market leaders, in markets featured by global oligopolies. Swix and partly also Jor- One limitation of this analysis lies in the dan are examples of such firms, and their fact that three of the four firms rely mostly on market communication strategies are in prin- distributors in international markets, whereas ciple akin to those of their larger counterparts the fourth case firm (Telenor Mobil) has ac- in global markets although their advertising quired their marketing partners abroad. In budget is less directed toward mass media and principle, this should give the latter more or- the end user. ganisational clout, and it may in the long-term The standardization and adaptation issue is end up that way. However, in that case, they prevalent in international branding. Even need to climb on the Y-axis of the model, though decision-making processes have been thereby entering into the global brander cell. studied (Walters, 1986; Quelch & Hoff 1986; At the present time, however, they operate in Özsomer, Bodur, & Cavusgil, 1991), few, if the lower right part of the model. any, have to the author’s knowledge attempted to establish a comprehensive framework to CONCLUSIONS classify different types of international brand- ers. The model should be tested both on a This article presents, analyses, and dis- larger scale and in other contextual settings. cusses a model of international marketing There are many unresolved issues to work communication. In this endeavour, we have with in that case. Although some of the varia- Solberg 19

bles concerning the two axes of the model marketing: is Ted Levitt in fact right? have been developed by others (Solberg & Business Horizons, 29(1), 9-75. Durrieu, 2011), a main effort remains to de- De Moiij, M. (1998), Global Marketing and velop constructs regarding the content in each Advertising: Understanding Cultural cell (relations with the marketing partner and Paradoxes. Thousand Oaks, CA: Sage. the advertising agents, the distribution of roles Elinder, E. (1961). International advertisers between them, the information behaviour, the must devise universal ads, Advertising different communication strategies, etc.). Age, 27, 91. International branding is relevant for an Evans, J. and Bridson, K. (2005) Explaining increasing number of firms. We believe that retail offer adaptation through psychic the role of exporters’ trading partners has not distance, International Journal of Re been given adequate attention in the debate tail and Distribution Management, until this date. The power balance between 33(1), 69 – 78. the international brander and its representa- Jenson, M., and Lintho, T-B. (1994). Norske tives, or even its own sales subsidiaries in dif- Bedrifters Internasjonale Marked ferent local markets, makes a difference and skommunikasjon. Thesis, Sandvika: should be better understood in the decision Norwegian School of Management. making and execution process of the branding Johanson J. and Vahlne, J.-E. (1977). The in strategy (Quelch & Hoff, 1986; Lipman, ternationalization process of the firm A 1988). The framework presented this paper model of knowledge development and in aims at filling this gap in the literature and creasing foreign commitments, Journal of helping classify different firms so as to en- International Business Studies, 8(1), 23- hance the understanding of major challenges 32. confronting them in their endeavour to posi- Johanson, J. and Vahlne, J.-E. (1990). The tion themselves in international markets.. mechanisms of internationalization, Inter national Marketing Review, 7(4), 11-24. The author thanks Therese Gundersen Kale, S. (1995). Grouping Euroconsumers: A and Ragnhild Sørlie for their participation in culture based clustering approach. Journal data collection as well as the managers of the of International Marketing, 3(3), 35-48. participating companies for their willingness Kassem, S.M., Ludwig, D. and Beeman, D. to share their experience with us (1993). Segmenting the Arab world: the Gulf Cooperation Council as a target mar ket, Journal of International Consumer REFERENCES Marketing. 55(2), 105-125. Keegan, W.J. and Schlegelmilch, B. (2001). Benito, G.R.G., Solberg, C.A. and Welch, L.S. Global Marketing Management: A Euro (1993). An exploration of information pean Perspective. New York, N.Y.: Pear behaviour of Norwegian exporters, In son Education Limited. ternational Journal of Information Levitt, T. (1983). The globalization of mar Management, 13(4), 274-286. kets, Harvard Business Review, 61(3), 92- Bilkey, W. and Nes, E. (1982). Country-of - 102. Origin effects on product evaluations, Lipman, J. (1988). Marketers turn sour on Journal of International Business Stud global sales pitch guru makes, Wall Street ies, 13(1), 89-99. Journal, May 12, 1. Boddewyn, J.J., Soehl, R. and Picard, J. Michell, P., Lynch, J. and Alabdal, O. (1998), (1986). Standardization in international New perspectives on marketing mix pro

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gramme standardisation, International ary/representative, Journal of International Business Review. 7(6), 617-634. Marketing. 8(1), 78-98. Özsomer A., Bodur, M. and Cavusgil, S.T. Solberg, C.A. (2002). The perennial issue (1991). Market standardization by multi of adaptation or standardization in interna nationals in an emerging market. European tional marketing communication: Organi Journal of Marketing, 25(12), 50-61. zational contingencies and performance, Quelch, J.A. and Hoff, E.J. (1986). Customiz Journal of International Marketing. 10(3), ing Global Marketing, Harvard Business 1-21. Review. 64 (May – June), 59-67. Solberg, C.A., Stöttinger, B. and Yaprak, A. Porter, M.E. (Ed.) (1986). Competition in (2002). Pricing in international markets. Global Industries. Boston, MA: Harvard Proceedings of the EMAC Conference, Business School Press. Braga, Portugal May 2002. Roth, M.S. (1995). The effects of culture and Solberg, C.A. (2009). Internasjonal socioeconomics on the performance of Markedsföring, 9th edition, Oslo: Univer global brand image strategies, Journal of sitetsforlaget. Marketing Research, XXXII(V), 163-175. Solberg. C.A. and Durrieu, F. (2011). Impact Schilke, O., Reimann, M. and Thomas, J.S. of globalisation drivers on the strategy- (2009). When does international marketing performance relationship in international standardization matter to firm perfor markets, paper presented at the AMA Spe mance? Journal of International Market cial Interest Group Seminar, Cancun, Jan ing, 17(4), 24-46. uary. Schmid, S. and Kotulla, T. (2011): The Acqui Theodosiou, M., and Leonidou, L.C. (2003). sition of Reebok by Adidas. In J. Zentes et Standardization versus adaptation of inter al. (Eds.): Fallstudien zum Internationalen national marketing strategy: An integrative Management. Grundlagen – Prax assessment of the empirical research. In iserfahrungen – Perspektiven. 4th Edition, ternational Business Review, 12(3), 141- Gabler, Wiesbaden, 713-731. 171. Shoham, A. (2002). Standardization of inter Van Raiij,W.F. (1997). Globalization of mar national strategy and export performance: keting communication? Journal of Eco A meta-analysis. Strategic Global Market nomic Psychology, 18(2), 259-270. ing: Issues and Trends, 16(2), 97-120. Vardar, N. (1993). Global Advertising - Solberg, C.A. (1989). Adaptation and stand Rhyme or Reason? London: Paul Chap ardisation in international marketing; man Publishing. More than just economies of scale and Verlegh, P.W.J. and Steenkamp, J. B. E.M. market nomogeneity, In Reijo Luostarinen (1999). A review and meta analysis of (Ed.). Dynamics of International Business. country-of-origin research. Journal of EIBA Conference Proceedings. Helsinki, Economic Psychology, 20, 521-546. 829-849. Walters, P.G.P. (1986). International market Solberg, C.A. (1997). A framework for analy ing policy: A discussion of the standardi sis of strategy development in globalizing zation construct and its relevance for cor markets, Journal of International Market porate policy. Journal of International ing. 5(1), 9-30. Business Studies, 17(2), 55-69. Solberg, C.A. (2000). Standardization or adap Walliser, B. and Usunier, J.-C. (1998). The tation of the international marketing mix: standardization of advertising execution: The role of the local subsidi A review of the empirical literature, Pro ceedings of the 27th Annual European Solberg 21

Marketing Academy (EMAC) Conference, uafresh, etc) their competitive environment is Per Andersson (ed.), Vol. 2, International featured by important local players as well, Marketing, Stockholm, Sweden, May 19- both in terms of private brands and other. 23, 517-536. Whitelock, J. and S. Kalapaxoglou (1993). Telenor Mobil is quite a young organisa- Standardized advertising for the single Eu tion, emanating from the former state owned ropean market, European Business Re telecommunication agency in Norway. They view, 91, 4-8. have set out on an aggressive path to interna- Xu, S., Cavusgil, S.T. and J. and White, C. tionalise through acquisitions, now fully own- (2006). The Impact of strategic fit among ing 12 local mobile telecom companies both in strategy, structure, and processes on mul Europe and in South East Asia. Operating in a tinational corporation performance: A global market setting with some very large multimethod assessment, Journal of Inter players ruling the ground in key Triad mar- national Marketing, 14(2), 1-31. kets, Telenor Mobil has concentrated on more marginal countries (Scandinavia and Eastern APPENDIX I Europe and South East Asia) in the fringes of the mainstream markets (Continental Europe Placement of the Firms in the Model. and the U.S.A.). Both their relatively limited market position and their lack of substantial Tine is owned by Norwegian milk produc- international experience, and the global indus- ers, and its main purpose is to “get rid of their try setting in which they operate, earn them a milk”. Exporting has long been a residual part position in the “Export brander” cell. Still of their business contributing only 5% of their they have a good point of departure for further total sales. They have managed to carve out a international expansion, so they are located certain market position in the U.S.A., but are pretty high up in this cell. for the rest a very small player in international Swix is a global market leader in ski wax – markets. They operate mainly in multi- particularly for cross-country skis. They domestic market settings, each market being compete against a handful of companies, no- more or less protected partly by different regu- tably Swiss, Italian and Finnish. They also latory regimes and partly by a relatively ce- sell ski poles and ski apparel. The ski pole mented competitor structure, with quite a market where they have a number two or number of local players. number three position, has more or less the Jordan has been marketing in international same competitive structure (but with different markets for more than 40 years. They have players than in the ski wax market), whereas gradually developed a staunch market leader the ski-wear market is more fragmented, and position in Northern Europe and have also a their position is here more marginal. Alt- challenger position in Central/Southern Eu- hough they primarily sell through independent rope. In overseas markets their market posi- distributors, they have – after more than 40 tion is more marginal. They are entirely de- years in the business – developed adequate pendent on their international sales and have control of their international marketing activi- developed an organisational culture that is ties, mainly due to good working relationships highly international. Even though they com- with these firms. pete against large global brands (Oral-B, Johnson&Johnson, Colgate Palmolive, Aq-

Journal of Euromarketing, 23: 22 - 36, 2014 Copyright © IMDA Press ISSN: 1049-6483 print / 1528-6967 online

When Does It Pay off to Link a Brand Name to a Country?

Erik B. Nes Geir Gripsrud

ABSTRACT. Some brands are associated with a country, while others are not. From a managerial point of view, the main managerial decision concerns when such an origin should be used explicitly, and when companies have to refrain from doing so. In this study, we propose that using country of origin (COO) in brand strategy enhances selected brand equity indicators whenever there is congruence between core brand image attributes and country image. We suggest that general country image and brand image con- structs are often insufficient to uncover the potential leveraging effects when applied on the individual brand level. We illustrate our arguments using an apparel brand case. The insights from the case indicate that brand equity is enhanced by the stated country-brand image congruence conditions even when the country has no special reputation in the product category. The paper gives new insight into the roles of country of origin in brand strategy.

KEYWORDS. Brand image, country image, congruence theory, brand equity, brand user characteristics, brand promise, country of origin, buying intentions

Twinings ties in to British tea drinking cul- INTRODUCTION ture; Nike uses “Designed in the U.S.A.,” and The role of the brand and the importance Volkswagen uses the expression “Das Auto” of managing brand equity have been acknowl- in its international advertising. IKEA uses the edged as key to a company’s success for some colors of the Swedish flag in their logo, and time. Particularly, since the seminal book by they use typical Swedish names on their prod- Aaker (1991), this topic has attracted a lot of uct series worldwide. These companies must interest (Keller 2001). Brand equity could be believe that tying brand image to country im- measured and analyzed from a financial per- age is likely to increase their brand equity. spective, but ultimately, it rests upon aspects However, we have very limited knowledge of of consumer behavior. As pointed out by Kel- the conditions under which country of origin ler (1993), consumer-based brand equity is enhances brand equity, when it has little or no defined in terms of marketing effects uniquely influence, or when it perhaps even has a nega- attributable to the brand. This means that we tive influence. The purpose of this paper is to need to focus on effects on consumers that contribute to our knowledge of the potential would not occur if the brand were different or ways to leverage brand equity by country of did not exist. A brand’s COO may be one fac- origin associations. This knowledge is im- tor that influences the effects of the brand on portant for a business executive faced with consumers. For example, L’Oreal ties in to deciding whether to include country of origin the French image of fashion and elegance; as part of the brand strategy. Our basic propo- Erik B. Nes, Ph.D. and Geir Gripsrud, Ph.D. are both Professors of Marketing, BI Norwegian Busi- ness School, Oslo, Norway. Address correspondance to Dr. Erik B. Nes, Department of Marketing, BI Norwegian Business School, Nydalsweien 37, 0442 Oslo. Norway. E-mail: [email protected]

22 Nes and Gripsrud 23 sition is that introducing country image as part The differential effect can be determined by of the brand image may enhance brand equity comparing the response of consumers to the provided that congruence exists between marketing of a brand, with and without the country and brand associations. We argue that brand name. Brand knowledge relates to the general constructs of both country and brand awareness and brand image and can be brand image are insufficient to explore the full conceptualized by characteristics and relation- potential of leveraging brand equity by em- ships between various brand associations. ploying country of origin in brand strategy. Consumer response may be measured as atti- Rather, the manager should study the unique tudinal change, change in behavioral inten- brand image characteristics and explore tions, or as change in actual behavior. Brand whether linkages to corresponding unique equity is a multidimensional construct consist- country images will enhance scores on brand ing of three dimensions (Yoo, Donthu, & Lee, equity indicators. We show how country of 2000; Yoo & Donthu, 2001) or of four dimen- origin in brand strategy may enhance brand sions (Cobb-Walgren, Ruble, & Donthu, associations and buying intentions in a quasi 1995; Pappu, Quester, & Cooksey 2007). The experiment. Country of origin information is four dimensions are brand awareness, brand introduced for a foreign brand when such in- associations, perceived quality, and brand loy- formation had not been previously stated. Our alty. The difference between the two con- paper applies insights from congruence theo- structs is that the three-dimensional construct ry, brand theory, and country of origin theory combines brand awareness and brand associa- in a new setting, i.e., the individual brand im- tions into one dimension. Building customer- age level. This is the most important setting based brand equity requires the formation of for the business manager who seeks ways of strong, positive, and unique brand associa- leveraging brand equity. Therefore, our study tions. Direct experience with the product or is also a response to calls to make research service is likely to create strong associations more managerially relevant (Taylor, 2011; in memory, but information about the product Josiassen & Harzing , 2008). In the next sec- or service may also be conveyed by the com- tion, we discuss consumer brand equity in pany or by other sources. This may create be- general and country of origin image related to lief associations without any personal direct brand equity in particular. The focus is on the experience with the product. In addition, in- importance of congruence between aspects of ferred associations may occur in consumers’ brand image and country image. We develop minds when the brand association is related to three hypotheses and go on to explain the other types of information in memory. methodology in a case of an apparel brand. Secondary associations for the brand may Finally, we report the findings and suggest arise based upon attributes primarily associat- implications for researchers and practitioners. ed with, for instance a) the company making the product or service, b) the distribution LITERATURE REVIEW AND channels where the product is available, c) the DEVELOPMENT OF HYPOTHESES country of origin of the product, d) endorse- ments, e) spokespersons, and d) other brands. Consumer-Based Brand Equity This leveraging effect requires that marketing managers understand consumer brand As stated by Keller (1993), “customer- knowledge and the ways in which it changes based brand equity is defined as the differen- with new information. Adopting a holistic tial effect of brand knowledge on consumer perspective that synthesizes the multidimen- response to the marketing of the brand” (p. 8). sionality of brand knowledge is, according to

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Keller (2003), critical to advancing brand the- gested that country of origin may be processed ory and practice. Keller (2003) emphasizes as a halo or a summary construct. how all kinds of different information may be Nebenzahl and Jaffe (1993) found that linked to the brand, e.g., awareness, attributes, willingness to pay the price for specific well- benefits, images, thoughts, feelings, attitudes, known brands depends on country of manu- and experiences. They may all be considered facture. Several other studies also found dimensions of brand knowledge. It is beyond product beliefs of brands are influenced by the scope of this article to create a holistic per- perceived country of origin; see for example, spective, but the multidimensionality of brand Erickson, Johansson and Chao (1984), Han knowledge combined with the multitude of and Terpstra (1988), Wall, Liefeld and Heslop possible secondary associations reveal the (1991), and Nes and Bilkey (1993). Chao, numerous potential paths for managers to lev- Wuhrer, and Werani (2005) found that a for- erage brand equity. The international manager eign celebrity and a foreign brand name di- must find a unique path that best serves the minished perceived quality and buying inten- brand. tions in an Austrian sample, and they attribut- ed this effect to ethnocentrism. Their findings Country of Origin and Brand Equity indicate that country of origin in international brand strategy sometimes may be a liability if The influence of country of origin on buy- no particular value from the country associa- er evaluations and purchase intentions has tion exists. been questioned because consumers tend to be Since country of origin may influence per- unaware of the origin of even well-known ceived brand quality and brand associations, it brands (Samiee, Shimp, & Sharma, 2005). may also influence brand equity. Yasin, Noor, Still, associations between particular product and Mohamad (2007) identified country of categories and country images exist as demon- origin as one of the sources of brand equity, strated by Usunier and Cestre (2007). Devel- whereas Pappu, Quester, and Cooksey (2007) opments in international business over the last found that both macro and micro country im- decades may have rendered the original coun- ages were significantly associated with con- try of origin concept less relevant as argued by sumer-based brand equity. Pappu, Quester, Usunier (2006). While recent research indi- and Cooksey used the definition of macro cates that country of brand has become more country image that was originally put forward important for consumers than country of man- by Martin and Eroglu (1993). They defined it ufacturing, Josiassen and Harzing (2008) in- as “the total of all descriptive, inferential and sist that research should focus on how the im- informational beliefs one has about a particu- ages of brand and origin can be managed op- lar country” (p. 193). These authors also sug- timally together. gested that the construct had three underlying The early studies of country of origin ef- dimensions: economic, political, and techno- fects on branded products took an approach logical. As for micro country image, Pappu, similar to the one used for unbranded products Quester, and Cooksey (2007) adopted the def- in focusing on the influence of country of inition originally proposed by Nagashima origin on product beliefs. Han and Terpstra (1970). He started from the product level and (1988) found that country of origin was more defined country image as “the total of beliefs important than brand name for bi-national one has about the products of a given country” products. Han (1989) tested two television set (p. 68). In this context, some researchers brands and two automobile brands and sug- (e.g., Han & Terpstra 1988) explore the coun- try image for particular product groups, while Nes and Gripsrud 25

others focus on the general image of all prod- reliable cars, but this does not imply that all ucts associated with the country. Japanese car manufacturers would benefit The strength of association of country im- from including “Japan” in their brand strategy. age with buying behavior depends on whether Images of countries are often even more the country image matches important product complex than are images of brands. They in- attributes. Roth and Romeo (1992) dubbed clude the general macro image (economic, po- this as “product-country matches” and Usunier litical, and technological aspects) as well as and Cestre (2007) as “product ethnicity.” the micro image of the country as a source of These two studies are concerned with matches products. In addition, the country image also between country image and product category encompasses everything else the country may characteristics. Willingness to buy related to be known for, such as nature, climate, politics, product-country match (Roth & Romeo 1992) music, arts, architecture, the role of religion, and product ethnicity (Usunier & Cestre, and people with their mentality and their way 2007) was explored, and the results showed a of living. Large networks of associations are greater willingness to buy products for which activated when a country is included in the there are such matches. The effect of country brand image, and the activation has the poten- of origin information on product evaluations tial of increasing the number of touch points varies between product categories. A country between the consumer and the brand. Market- may have an excellent reputation as the origin ers must be ready to look beyond the general of one category of products and a poor reputa- brand- and country image constructs to un- tion in other categories of products. For ex- cover the full potential of brand-country ample, France has an excellent reputation as touchpoints. When these touch points are im- the country of origin of fashion products, but portant elements of the brand image, a strong, not necessarily of reliable machinery. Germa- positive, and complementary country image ny may have the opposite image. Thus, the may enhance the brand image. country attributes may match attractive prod- We develop hypotheses and test them on uct characteristics in one product category, but an apparel brand with low country of origin have no value, or even may have a negative awareness to elucidate the potential influence value in other categories of unique brand-country congruence on brand We argue that the general macro and mi- equity indicators. cro country image constructs, which are ap- We study three indicators that tie in to plied in most previous studies, are insufficient brand equity dimensions, i.e., brand promise, to explain the impact of country-level image brand-user image, and buying intentions. on individual brands. The reason is that the images of individual brands may be richer and Personality and Brand-User Image much more complicated than the relevant country image at the product group level. Personality is “the combination of charac- Branding requires formation of unique brand teristics or qualities that form an individual’s associations. The brand associations that tie distinctive character” (Oxford Dictionary of in to general macro and micro country image English). Personality has been applied as re- may not be unique. In fact, if a country has search construct in at least two consumer be- earned an image for excellence in a product havior related contexts: brand personality and group, it is probably because of the combined consumer personality. Consumer personality efforts of several companies rather than be- was embraced with keen interest in the 1950s cause of the effort of only one company or one and the 1960s by marketing researchers. The brand. Japan may have an image for making early findings were, however, never very

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promising, with consumer personality explain- congruence are discussed in Kressmann et al. ing no more than 10% of buying behavior (2006). These include: (Kassarjian, 1971). Consumer personality has (1) Self-image congruity: when a con- largely been abandoned in consumer behavior sumer’s self-image matches brand-user image; research since the end of the 1970s, but has (2) Actual self-congruity: brand user im- recently received more attention in marketing age is matching with the consumer’s actual (Bosnjak et al., 2007). The weak results in the self-image; earlier studies can be attributed to the fact that (3) Ideal self-congruity: brand user image (1) the studies applied instruments developed is matching the consumer’s ideal self-image; primarily in clinical contexts to consumer be- (4) Social self-congruity: brand user im- havior, (2) that there were questionable psy- age is matching the consumer’s social self- chometric properties of the instruments used, image; and (3) and that researchers expected that highly (5) Ideal social self-congruity: brand user generalized traits could predict specific behav- image is matching the consumer’s ideal social ior (Bosnjak et al., 2007). self-image. We also consider brands as having human- A central argument in this paper is that like characteristics that form the brands’ dis- country image will influence brand attitudes tinctive character, which is expressed in the on characteristics that are shared by the brand brand personality construct. Brand personali- and the country of origin. This implies that ty is a symbolic attribute. It can be suggested dimensions of the country and brand images that such brand attributes are important in ex- must tap into some similar beliefs and feel- plaining consumer behavior (Aaker, 1997; ings. The most frequently applied scale for Austin, Siguaw, & Mattila, 2003; Sirgy, measuring brand personality was developed 1982). The argument is that brands are asso- by Aaker (1997). Subsequent research, how- ciated with traits that reflect the stereotypic ever, has found that his five-dimensional image of the typical user of the brand (brand- structure often is non-replicable across cul- user image). The brand-user image has sym- tures. For example, Aaker, Benet-Martinez, bolic and self-expressive implications for the and Garolera (2001) found that only three fac- consumer. Consumers evaluate a brand by tors applied to Spain, while in Japan, four of matching the brand-user image with their self- the five factors were relevant. This shortcom- concept, and this matching process is referred ing has led researchers to construct new brand to as self-congruity (Sirgy, 1982; Kressmann personality scales (Milas & Mlacic, 2007). et al., 2006) Self-congruity theory holds that Following the same reasoning as brand per- the brand-user image associations should be in sonality, d’Astous and Boujbel (2006) devel- congruity with the consumer’s self concept in oped a scale to measure personality dimen- order to influence consumer behavior (Sirgy, sions in country image. They identified six 1982; Kressmann et al., 2006). The ability to country personality dimensions, which were express (ideal) self-image is often associated labeled as follows: agreeableness, wicked- with positive effects, such as pleasure or pride, ness, snobbism, assiduousness, conformity, whereas inability is associated with negative and unobtrusiveness. The scale, however, effect (Swann, De La Ronde, & Hixon, 1994). must be valid on both the individual brand By using a specific brand, consumers may ex- level and on the individual country level, but press their own self, ideal self, or specific di- neither Aaker’s (1997) scale nor d’Astous and mensions of the self. Examples of various Boujbel’s (2006) scale satisfied this require- forms of brand user image and self-image ment. Moreover, trying to explain specific actions with the aid of highly generalized Nes and Gripsrud 27 traits is a classical problem of asymmetry, rarely applied in academic research. Brand which attenuates the interrelations between promise is highly related to brand mantra, variables. The scales for measuring macro which is a short articulation of the “heart and and micro images of a country are very broad soul” of the brand (Keller, 2009). It refers to and capture attitudes toward the country itself company statements related to the perfor- (macro image), or attitudes toward the country mance and benefits of the brand. Brand prom- as an origin for products in general or for ise is a commitment by an organization, since product categories (micro image). We argue making a promise to the customer is some- that these constructs (brand personality, coun- thing that must be followed up (Campbell, try brand personality, country macro image, 2002). Belief in brand promise is an indicator and country micro image) are too general to in the brand associations category of brand explain the full potential of attitudinal and be- equity. Given that congruence exists between havioral changes at the individual country- the brand promise and similar attributes of brand level. Rather, the marketing manager country image, we expect stronger belief in should explore whether desired brand-user the brand promise when country of origin in- characteristics are shared with country of formation is available than when it is unavail- origin characteristics. Thus, the characteris- able. Associations related to the country of tics are unique for each brand-country combi- origin will likely serve to reinforce the beliefs nation. Not all characteristics are positive, and regarding the brand promise in such cases. the impact of country image on brand user im- H2: If there is congruence between coun- age may be positive or negative. The market- try image and brand promise, belief in brand ing manager has to identify the characteristics promise will be stronger when country of that have a positive contribution, and whether origin is available than when it is unavailable. and how country of origin characteristics may enhance brand equity. In our case, we have Buying Intentions selected positive brand-user image character- istics that influence buying intentions positive- Using the same line of reasoning, we ex- ly. Brand-user image is also a common de- pect that buying intentions are higher when nominator that could be used to market a country of origin information is available un- brand internationally across cultures. The der conditions of congruence between country brand-user image is part of the brand associa- image and brand promise as well as country tion category in brand equity and, consequent- image and brand-user image characteristics. ly, may influence brand equity. We hypothe- The brand loyalty dimension of brand equity size that: is demonstrated as “the intention to buy the H1: If there is congruence between coun- brand as a primary choice” (Yoo and Donthu, try image and positive brand-user image char- 2001, p. 3). In line with this, we consider acteristics, brand-user image scores will be buying intentions in our study as indicator of higher when country of origin is available than the brand loyalty dimension of brand equity. when it is unavailable. Congruence here H3: If there is congruence between means country image is compatible with brand country of origin image and brand promise, image on selected characteristics. and congruence between country image and positive brand-user image characteristics, buy- Brand Promise ing intentions will be higher when country of origin information is available than when it is Brand promise is a concept that is often unavailable. found useful by marketing executives, but it is

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CASE STUDY: HELLY HANSEN At the end, the respondents were asked PERFORMACE APPAREL whether they knew the brand was Norwegian, and 88% of respondents did not know the We tested our hypotheses in a case where brand was Norwegian. In the second survey, the country of origin does not have a very the respondents were shown the same product strong product category reputation in order to pictures and logo, but the country of origin isolate better the brand-level effects on brand was introduced by the following text “Helly equity. The case company is the apparel mak- Hansen was established in Norway in 1877. er Helly Hansen, based in Norway. Norway Today Helly Hansen of Norway is used as never had an advanced manufacturing industry street fashion and known for high perfor- for apparel, and there is no reason why it mance clothing for survival, work, and sport.” should have a very good micro image in this Information regarding the image of Norway product category. The country has a challeng- and Norwegian products was collected in the ing natural sea environment, and Helly Han- second survey. Brand-user characteristics, sen started as a producer of high performance belief in brand promise, and buying intentions clothes for sailors. Today, Helly Hansen is were collected in both surveys. Aided brand known primarily for their high-quality per- recall collected in both surveys was 91%. formance apparel for survival, work, and According to our hypotheses, country im- sport. Most of their products are designed in age will influence brand associations under Norway, produced outside Norway, and mar- conditions of congruence between brand and keted internationally. Some versions of the country image. This implies that dimensions clothing are designed especially for skiing and of the country and brand images must tap into snowboarding. Helly Hansen is the most rec- similar beliefs and feelings. Existing brand ognized international brand for clothing with attitude scales are developed to measure im- origins in Norway, but the country of origin age at the brand level and they do not link has not been part of the international branding well to relevant country image attributes. Sim- strategy for several years. No reference to ilarly, the scales for measuring macro and mi- Norway is made on the product labels, on their cro images of a country are very broad and website, or in their advertisements. Helly capture attitudes toward the country itself Hansen products are now available in 16 (macro image), or attitudes toward the country countries. Helly Hansen has a strong position as an origin for products in general or for in Scandinavia, while in Europe, their market product categories (micro image). Thus, we share is only about 1%. Distribution channels developed and applied a scale that was unique are general sports retailers, specialty retailers, for our case. Respondents were asked to state and separate Helly Hansen stores with the slo- to what extent they agreed with the following gan “We work hard, so you can play harder.” statements concerning Norway’s micro image: Two surveys concerning Helly Hansen Products of Norwegian origin are 1) of high were carried out among students at a German quality, 2) innovative, 3) of sophisticated de- university. In the first survey, no country of sign, 4) exclusive, 5) trendy. The variables origin information was given. Respondents were measured on a 7-point Likert scale from were shown pictures of three typical Helly strongly agree (1) to strongly disagree (7). Hansen products, the Helly Hansen logo, and Simultaneously, brand-user characteristics the following text: “Helly Hansen was estab- were mapped by similar statements that reflect lished in 1877. Today Helly Hansen is used the same attributes on a personal level, and as street fashion and known for high perfor- were measured in the same way. mance clothing for survival, work, and sport.” Nes and Gripsrud 29

The brand promise is published on much) to 7 (not at all). Next, we needed to www.hellyhansen.com. Helly Hansen’s brand measure aspects of the country image that promise states, “Helly Hansen is tested by ex- might have an impact on attitudes toward the plorers who play in the harshest environments brand promise. The Helly Hansen brand on the planet to learn what is needed to create promise relates to nature and climate, which the best gear possible.” The respondents were have not been part of the general country mac- asked to evaluate to what extent they believed ro image scales in previous research. in this statement on a scale from 1 (very

Table 1. Items (All scales are 1–7) Brand-user characteristics coefficient alpha = .84 Variance explained = 58% Someone who buys Helly Hansen of Norway… Factor loading Buys innovative products . .705 Values sophisticated design .828 Buys exclusive clothing .773 Values a fashionable image .713 Demands high quality .791 Brand promise To what extent do you believe the following statement? “Helly Hansen is tested by explorers who play in the harshest environments on the planet to learn what is needed to create the best gear possible”. Buying intentions coefficient alpha = .93 Variance explained = 88% In the future, is it possible that you would… Factor loading Wear Helly Hansen winter clothing .931 Desire a Helly Hansen product .937 Buy a Helly Hansen product .946 Country Image Nature and Climate coefficient alpha = .72 Variance explained = 48% If you imagine Norway, to what extent do you agree upon the following? Factor loading Rough nature/extreme weather .765 Coastal land .543 Mountainous highlands .686 Cold snowy .693 Rainy and windy .747 Norway micro image coefficient alpha = .90 Variance explained is = 71% Products with Norwegian origin are… Factor loading Of high quality .812 Innovative .878 Sophisticatedly designed .892 Exclusive .828

The respondents to survey 2, which in- was expressed on a scale from 1 (strongly cluded country of origin information, were agree) to 7 (strongly disagree). The attributes asked, “If you imagine Norway, to what extent were: 1) Rough nature/extreme weather, 2) do you agree with the following?” Agreement Mountainous highlands, 3) Cold and snowy,

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4) Rainy and windy, 5) Coastal land. The at- females). The total sample was 243, of which tributes are adapted from Ronningen (2001) 140 were males and 103 females. and Norway’s tourist promotion website (www.visitNorway.com ). DATA ANALYSIS These five attributes reflect the harsh envi- ronment stated in the brand promise. The H1 requires congruence between country items are reported in Table 1, translated from image and perceived brand-user characteris- the original German version used for data col- tics. Congruence means country image is lection. compatible with brand image on selected The sample is a convenience sample of characteristics. In our case, the brand-user students at a university in Germany. The characteristics and country characteristics group is relevant as a target group for the match item by item. Furthermore, attitude brand. We assigned the respondents randomly congruence with a causation effect from one to the two experimental treatments. The num- attitude object to another requires that the ber of respondents in the survey without coun- scores between the attitude objects correlate. try of origin information was 124, consisting We show the correlations between brand–user of 72 males and 52 females. Concerning the characteristics and corresponding country im- survey with country of origin information, the age characteristics in Table 2. sample was 119 respondents (68 males and 51

Table 2. Correlations between Country Micro Image and Brand-User Characteristics Country micro image Brand-user characteristics

Someone that buys Helly Hansen of Norway

Products with Buys Values so- Buys ex- Values fash- Demands Norwegian innovative phisticated clusive ionable im- high qual- origin are products design products age ity Innovative .256***

Sophisticatedly .261*** designed Exclusive .175* Trendy .116 High quality .160* *** Correlation is significant at the 0.01 level (2-tailed). ** Correlation is significant at the 0.05 level * Correlation is significant at the 0.1 level

Two correlations are significant at .01, two acteristics and country image show a correla- correlations show a weak correlation at .1, and tion of .314 and .01 significance. We con- one is not significant. None of the correla- clude that congruence between selected char- tions are negative. This indicates congruence acteristics of country micro image and brand- between country image and brand-user charac- user characteristics is established in this case. teristics on certain characteristics, but not on H2 requires congruence between brand all of them. Index scales for brand-user char- promise and selected characteristics of Nor- Nes and Gripsrud 31

way’s image. To establish congruence we first between belief in brand promise and the five selected characteristics of Norway’s image country image attributes tapping nature and that are compatible with Helly Hansen’s brand climate. The correlations are given in Table 3. promise. Then we calculated the correlation

Table 3. Correlations Between Belief in Brand Promise and Country Image of Nature and Climate Country image Rough nature Coastal land Mountains Cold and snow Rainy/windy Brand promise .259*** .383*** .283*** .185** .166* *** Correlation is significant at the 0.01 level (2-tailed) ** Correlation is significant at the 0.05 level * Correlation is significant at the 0.1 level

Table 4. Differences in Means between Experimental Groups with National Origin and without National Origin ANOVA

Sum of Mean Squares df Square F Sig. Buying Inten- Between 24,246 1 24,246 9,600 ,002 tions Groups Within Groups 601,087 238 2,526 Total 625,333 239 Brand Promise Between 26,951 1 26,951 10,763 ,001 Groups Within Groups 595,982 238 2,504 Total 622,933 239 Brand-User Between 11,467 1 11,467 9,301 ,003 Char. Groups Within Groups 293,452 238 1,233 Total 304,920 239

As shown in Table 3, four of the correla- with and without country of origin infor- tions are significant, while one is only signifi- mation. The ANOVA results are given in Ta- cant at the 0.1 level. Calculating an index ble 4. Levene’s test for equality of means is score for nature and climate as measured by not significant for any of the variables. the five attributes listed, the correlation be- The mean values of the three brand equity tween the index score and belief in brand indicators differ significantly between the two promise is .366, which is significant at .01. experimental situations. Mean values are sig- We conclude that we have support for congru- nificantly lower when country of origin was ence between brand promise and selected stated, reflecting the scale utilized. Hence, characteristics of country macro image. H1, H2 and H3 are supported by the data. The We tested hypotheses 1, 2, and 3 by com- results indicate that brand buying intentions paring the mean scores of brand-user charac- are higher, belief in brand promise is greater, teristics, belief in brand promise, and buying and brand-user characteristics stronger, when intentions in the two experimental situations: country of origin was communicated.

32 JOURNAL OF EUROMARKETING

To understand better the degree to which brand-user characteristics scores, which are the effect of country of origin on buying inten- associations that are unique to the brand. To tions is due to changes in the unique brand further understand the role of general country associations, we tested a model with brand micro image in this case, we include Nor- origin availability as a dummy variable to- way’s micro image in a regression model in gether with brand-user characteristics and Table 6. brand promise. Table 5 shows the results. Brand promise and brand-user characteris- Brand origin availability is not significant, tics have significant impact on buying inten- which indicates that all country of origin ef- tions, whereas Norway’s micro image is not fects on buying intentions are captured by significant. This finding supports our conten- changes in belief in brand promise and brand- tion that the Helly Hansen case depicts a situa- user characteristics. tion whereby the country of origin’s general We explain the increase in buying inten- micro image gives little insight into the poten- tions by increases in brand promise and in tial role of country of origin in brand strategy.

Table 5. The Impact of Brand Promise, Brand-User Characteristics and Origin Presence on Buy- ing Intentions – Total Sample Independent variable Standardized Beta T Sig. Brand promise .253 4.100 .000 Brand-user characteri. .381 6.199 .000 Origin presence .070 1.281 .202 Dependent Variable: Buying intentions. R2 = .325 F 37.845 Sig. .000 All tolerance values are above .7, and all VIF values are below 1.4.

Table 6. The Impact of Country Micro Image, Brand Promise and Brand-User Characteristics on Buying Intentions – Origin Present Sample Only Independent variable Standardized Beta T Sig. Brand promise .311 3.248 .002 Brand-user characteri. .281 2.940 .004 Country micro image .017 .194 .846 Dependent Variable: Buying intentions origin present sample only R2 = .272 F 14.064 Sig. .000 All tolerance values are above .7, and all VIF values are below 1.5.

DISCUSSION this in a case of an apparel brand. In this case, we explored the influence of country image on The central theme in our article is that selected brand equity indicators when country brand managers must go beyond the general of origin was communicated and compared brand and country level constructs (brand per- the results to the same brand equity indicators sonality, country personality, country’s macro when country of origin was not communicat- image, country’s micro image) to explore the ed. We hypothesized that country image en- full potential of leveraging country image on hances positive brand-user characteristics and brand image. Our study extends present theo- belief in brand promise when country image is ry by examining the effects of image congrui- congruent with brand image. ty to country-brand matches. We illustrate Nes and Gripsrud 33

Belief in brand promise and positive Shimp & Sharma, 2005). The marketer may brand-user characteristics in our apparel case prefer this situation if negative effects from are indicators of the brand associations dimen- ethnocentrism (Shimp & Sharma, 1987) and sion of brand equity. The brand loyalty di- animosity toward the country of origin prevail mension of brand equity is demonstrated in (Klein, Ettenson, & Morris, 1998; Lwin et al., our case as the intention to buy the brand. It is 2010). Still, many famous brands are associ- well documented in several earlier studies that ated with a particular country of origin, and country of origin may affect perceived quality this association may be an important part of of individual brands, and we did not find it the brand strategy. In these as well as other necessary to confirm this relationship in our cases, the international marketing executive case. (Han & Terpstra, 1988; Han, 1989; Ne- must decide whether to include country of benzahl & Jaffe, 1993; Erickson, Johansson, origin in the brand strategy or to refrain from & Chao, 1984; Wall, Liefeld, & Heslop 1991; doing so. Association with a highly devel- Nes & Bilkey 1993; Chao, Wuhrer, & Werani, oped country cannot alone make a country- 2005). We conclude that communicating based brand strategy viable. This is supported country of origin as part of the brand strategy by the findings of Nes and Bilkey (1993). enhances consumer-based brand equity indica- They found no difference in perceived risk tors under the stated congruence conditions. and perceived quality between eight well- The original conceptualization of the mac- known brands without country of origin in- ro country image by Martin and Eroglu (1993) formation and the same brands randomly as- maintained that it has three underlying dimen- signed as “made in” eight industrialized coun- sions, namely economic, political, and techno- tries. This depicts a situation wherein the logical. This is a rather narrow interpretation source country, albeit a rich industrialized of country image, drawing attention particu- country, has no specific country image con- larly to the importance of the degree of eco- gruence with the image of the randomly as- nomic and technological development. In our signed brand. Companies have little or noth- case, the congruence demonstrated is between ing to gain by including country of origin in a unique brand image and aspects of country their brand strategy in such circumstances. image (nature and climatic conditions) not Moreover, when conditions of ethnocentrism previously considered in such research. Nor- and country-specific animosity prevail, such way has no tradition or reputation as an appar- inclusion may have negative influence. In- el producer. Still, we have demonstrated that stead, we both argue and demonstrate in our a particular brand associated with products case company that congruence between brand suited for the nature and climate in the country image and country image characteristics are may benefit from reference to country of necessary to improve brand equity. origin. Norway’s harsh climate and nature, Marketers should investigate whether and perhaps their famous polar explorers brand image and country image have attrib- Fridtjof Nansen and Roald Amundsen, acti- utes that directly or indirectly express the vate a larger associative network and increase same underlying characteristics. The general the number of touch points between consum- personality constructs (brand personality, ers and the brand. country personality) and country image con- Consumers have experienced that branded structs (macro country image, micro country products may be produced in any country image) do not give necessary insight into the without noticeable quality differences, while full potential of leveraging brand equity by consumers tend to be unaware of the national source country associations. Rather, the mar- origin of even well-known brands (Samiee, keter must choose the constructs that seem

34 JOURNAL OF EUROMARKETING most promising in each particular case. In our Austin, J.R., Siguaw, J.A. and Mattila, A.S. case, we found brand-user characteristics and (2003). A re-examination of the generali belief in brand promise useful. Other cases zability of the Aaker brand personality may benefit from other constructs. The full measurement framework, Journal of Stra spectrum of country image attributes has a po- tegic Marketing, 11(2), 77–92. tential role, for example folklore and stories, Campbell, M.C. (2002). Building brand equi nature, culture, climate, history, politics, mu- ty, Journal of Medical Marketing, 2(3), sic, arts, architecture, the role of religion, and 208–218. people’s mentality and way of living. For Chao, P., Wuhrer, G. and Werani T. (2005). brand practitioners, the important individual Celebrity and foreign brand name as mod brand image attributes represent the starting erators of country-of-origin effects, Inter point. national Journal of Advertising, 24(2), Possible inferences from these findings are 173–192. limited by the case, the convenience sample, Cobb-Walgren, C. J., Ruble, C. A. and Don and the quasi-experimental design. More thu, N. (1995). Brand equity, brand prefer studies across countries and brands are neces- ences, and purchase intent, Journal of Ad sary to verify our arguments. Future research vertising, 24(3), 25–40. should include cases where brand and country Erickson, G. M., Johansson, J.K. and Chao, P. images have low congruence, as well as cases (1984). Image variables in multi-attribute with incongruity between brand and country product evaluations: country-of-origin ef images. In the latter case, a negative relation- fects, Journal of Consumer Research, ship between country of origin information 11(2), 694-699. and brand equity may well be found. We also D’Astous, A. and Boujbel, L. (2006). Posi need more knowledge of whether and how tioning countries on personality dimen country animosity (strong disliking) and coun- sions: Scale development and implications try affinity (strong liking) impacts country im- for country marketing, Journal of Business age on dimensions that may influence brand Research, 60(3), 231–239. image associations. These are important is- Han, C. M. (1989). Country image: Halo or sues for researchers and for international summary construct? Journal of Marketing brand management. We hope our article will Research 26(2), 222–229. contribute in stimulating further inquiries into Han, C. M. and Terpstra, V. (1988). Country the area. of origin effects for uni-national and bi- national products, Journal of International REFERENCES Business Studies, 19(2), 235–54. Josiassen, A. and Harzing, A-W. (2008). De Aaker, D.A. (1991), Managing Brand Equity: scending from the ivory tower: reflections Capitalizing on the Value of a Brand on the relevance and future of country-of- Name, New York, N.Y.: The Free Press. origin research, European Management Aaker, J. L. (1997). Dimensions of brand per Review, 5(2), 264–270. sonality, Journal of Marketing Research, Kassarjian, H. (1971). Personality and con 4(3), 347–56. sumer behavior: A Review, Journal of Aaker, J.L., Benet-Martinez, V. and Garolera, Marketing Research, 8(4), 409-418 J. (2001). A study of Japanese and Spanish Keller, K.L. (1993). Conceptualizing, measure brand personality constructs, Journal of ing, and managing customer-based brand Personality and Social Psychology, 81(3), equity, Journal of Marketing, 57(1), 1–22. 492-508. Nes and Gripsrud 35

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Journal of Euromarketing, 23: 37 - 47, 2014 Copyright © IMDA Press ISSN: 1049-6483 print / 1528-6967 online

Private Label Brand Trends in the Grocery Retail Industry

Andrei Panibratov

ABSTRACT . This paper investigates how global companies develop their brand awareness on the Russian market using social networks. We identify key factors that influence the implementation of the marketing strategies of international firms in social networks and the development of methods to be used by other firms for building their brand in Russia. The author reveal which factors influence global companies’ marketing strategies in social networks, emphasizing particular users’ and compa- nies’ characteristics as having a great influence on the overall formation of brand awareness. Based on the evidence from three global firms operating in Russia, we have traced the transformation of the theoretically grounded framework into a practically proven model of brand development via social networks.

KEYWORDS. Marketing strategy, social networks, global firms, brand awareness, Russia

ver, as social networks enable interactivity, INTRODUCTION companies are more likely to catch market In the past decade, social networks have trends and reveal their customers’ needs and become a very attractive marketing platform. wants. This will help them eliminate the gap Many companies feel that they must be pre- between the offer and customers’ expecta- sent there, as these are the places where the tions, which in turn will lead to customers’ most customers are found. Electronic word of satisfaction and potential re-purchase (Par- mouth (e-WOM), ability to build one-to-one sons, 2011). communication, and constant real-time inter- Due to the interactive nature of social net- action with customers are among the main works, companies are able to get feedback strengths of social networks. from their customers about products and Some of the greatest advantages that social brands. Customers’ feedback helps companies networks can bring are brand loyalty and trust. to develop their products and services and Marketing through social networks makes the make them more attractive and appealing to companies more transparent and open for cus- real customers’ needs and wants, as well as tomers, which increases customers’ trust in the increase customer value and satisfaction (Ko- products and services that are offered (Corbae, tler & Armstrong, 2006). Organizations could Jensen, & Schneider, 2003). Due to the fact even directly ask their customers to help in that social networks enable companies to build product development, which can not only en- one-to-one communication, provide sustaina- large the inflow of great ideas and offers, but ble value, and enrich customers’ consumption also increase customers’ interest in the com- experience, effective marketing through these pany brand (Ang, 2011). More and more com- platforms can build loyalty to brand. Moreo- panies create their brand pages in different Andrei Panibratov, D.Econ, Professor of Strategic and International Management, Graduate School of Management, Saint-Petersburg State University, Saint Petersburg, Russian Federation. Address Correspondance to Dr. Andrei Panibratov, : Bolshaya Raznochinnaya 3-20, 197110, St. Pe- tersburg Russiaan Federation. E-mail: [email protected]

37 38 JOURNAL OF EUROMARKETING social platforms. Though social networks are tures of the Russian Internet audience influ- seen to be very opportunistic for realizing ence global firms’ marketing strategies? 3) companies’ marketing objectives, this could What changes do global firms have to imple- be very controversial as scale and speed of ment toward the theoretically developed mod- information spread in social networks is huge, el of marketing via social networks to increase and in cases when the company fails to satisfy their brand awareness in Russia? its customers, negative e-WOM may harm the To answer these questions, based on the company. review of existing literature, we provide full The aim of this paper is to analyse how analysis of online marketing and of its im- global companies on the Russian market de- portance for companies, and develop the mod- velop their marketing strategies in social net- el for companies’ marketing activities in so- works. Having outlined various sides of these cial networks. Next, we explain case selection strategies, we highlight methods to be used by and data collection methods. Then, we pre- international companies on the Russian market sent case companies and their brand develop- for building their brand awareness through ment strategies in social networks. After that, social networks. we shape findings and discuss the results, out- Recently, the scope of the Internet cover- lining case companies’ branding prospects. age across Russia has risen dramatically. Ac- Finally, we conclude, offering further model- cording to TNS (2012), the Internet users ling perspectives. share in 2012 was 57% of the total Russian population, compared to 49% in 2011. The LITERATURE REVIEW rising number of the Internet users resulted in the popularity of social networks in Russia. From Push to Pull Media Social network members account for 75% of all Internet users, which means that the popu- The development of new media types as larity of social networks in Russia is huge well as availability of new communication compared to other European countries. Russia channels has raised the bargaining power of is third place worldwide according to the consumers. Their buying behavior is no long- number of hours users spend on social net- er dependent on the message that companies works, which is about 9.6 hours per month are providing through traditional mass media, (ComScore, 2012). which permits companies to take control over The popularity of social networks is rising the message they deliver. The new era cus- not only among users, but also among compa- tomers are willing to be involved in all the nies. According to TNS (2012), Facebook processes of product design and implementa- (with 23%) and YouTube (with 21%) are the tion. most popular platforms for the businesses, The development of new marketing chan- closely followed by Vkontakte (with 19%) nels has empowered consumers, as now they and Twitter (with 11%). The users of social can interact not only with the company direct- networks are especially active in Moscow and ly, but with a lot of other consumers, whose Saint-Petersburg, and if the companies are op- scope can be great. Not long ago, dissatisfied erating on these markets, branding through customers could share their attitude towards social networks could be very effective. the product only with their closest friends and In this paper, we raise the following re- family, while today, with the help of the Inter- search questions: 1) How do global firms use net, they may reach thousands of people and social networks for their brand development ruin the company’s image (Barwise & on the Russian market? 2) Which specific fea- Meehan, 2010). Companies take this into ac- Panibratov 39

count and create a conversation that is influ- municate both with the company and with enced by the company. This leads to relation- other consumers. Creating the dialog is be- ship building, which is one of the key aspects coming the key goal for the companies (Dif- for customer loyalty (Diffley et al., 2011). fley et al., 2011). Traditional (or push) media are used to de- The interactive character of new media liver the company’s message using one way helps the company to create relationships with communication. Through these, media com- the customers, and as a result, provoke long- panies focus on pushing the product down term loyalty and retention. Moreover, the con- through the distribution channels to the end versation- building approach enables compa- consumers. The main disadvantage of this nies to learn more about their target customer method is that companies lack interactivity and get feedback on their products and ser- with the end customer, which is becoming vices (Chaffey et al., 2006). very important in today’s environment (Fill, New technology development has also in- 2005). fluenced the traditional way the customers With rising power of customers and new communicate with each other. The word of media channels’ development, companies start mouth (WOM) traditionally was perceived to implementing pull strategies to effectively in- be a very powerful tool for the company’s teract with their target segments. The pull product promotion. Today the impact of strategies deliver the companies’ message di- WOM has increased due to the rapidness of rectly to the end customer. As well as provide the information spread through the Internet; two-way communication. The key players in this has introduced the new term, electronic this strategy are customers who are encour- word of mouth (e-WOM), defined as “any aged to pull products through the channel positive or negative statement made by poten- network. As a result, companies are getting tial, actual, or former customers about a prod- more profound information about the custom- uct or company, which is made available to a ers’ needs and wants. New media channels multitude of people and institutions via the such as the Internet provide a good base for internet” (Hardey, 2011, p. 751). pull strategies implementation (Diffley et al., The customers’ willingness to talk about 2011). their purchasing experience in the synergy The main advantage of pull strategies is with the modern technology spreads the mes- that the customers are followed by their own sage to wide group of potential customers, intentions to contact the company. The only which can be a great opportunity for compa- difficulty is that the company is losing its con- nies. The message that was delivered by trol over the communication process. There- WOM and e-WOM is perceived to be more fore, they should encourage their customers to credible and reliable because the sender is not interact, which can be accomplished with the getting any benefits, which could influence the help of traditional media channels. So the ef- buying decision process. As a result, the posi- fective combination of pull and push strategies tive WOM can influence the companies’ sales can create a great value for the company and and image. On the contrary, the absence of increase interactivity, so none of these strate- WOM or negative WOM can ruin the brand gies should be ignored (Diffley et al., 2011). image and decrease sales (Gil-Or, 2010a). Traditionally, it was very difficult for the Conversation Building and E-WOM companies to participate and influence WOM. The scope of e-WOM is much wider than tra- New media channels have created an at- ditional WOM, which opened new possibili- mosphere where customers are free to com- ties for companies. For example, the devel-

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opment of online communities and forums Social media could be defined as a group enable companies not only to monitor the of Internet-based applications that are built on conversation, but also to participate and influ- the ideological and technological foundations ence the communication process. As the e- of the Internet and allow the creation and ex- WOM can be very critical for companies’ im- change of content generated by users (Kaplan age and sales, they should control the conver- & Haenlein, 2010). Social networks expanded sation process between the Internet users. Be- in 2004 with introduction of MySpace, fol- sides, participating in the conversation can lowed by such websites as Facebook, create a positive experience for customers, LinkedIn, and others. The rising popularity of which can increase trust and loyalty to brand these websites has resulted in companies los- and further willingness to talk about the com- ing control over their brand marketing, as the pany (Gil-Or, 2010a). employees had been actively participating in E-WOM may also turn to a threat, allow- the online community life. The main outcome ing negative feedback to spread in a short time was that the companies have lost control over period. Another problem with e-WOM is the the messages that are spread about the compa- difficulty of measuring its impact (Bulearca & ny and could be seen by customers. Bulearca, 2010). With online social media development, the process of content creation has partly moved Online Marketing in Social Media to customers. Therefore, the customers are gaining more power (Selke, 2011). Customers With Internet development, the companies are no longer satisfied with just buying prod- have implemented online marketing, which ucts or services, they are willing to engage was defined by Chaffey et al. (2006) as “the with the company to get some extra value, and application the Internet and related digital social media opens new ways to meet the cus- technologies in conjunction with traditional tomers’ needs (Diffley et al., 2011). communications to achieve marketing objec- Social media can be used for engagement tives” (p.8). The Internet provides a lot of op- and collaboration with the customers. Com- portunities for the companies’ marketing ac- panies can create real-time conversation with tivities, and can be used as an advertising me- their customers; they can ask the participants dium, direct response medium, as a platform to take part in the product development, or get for sales transitions, as a distribution channel, some feedback. for customer services, and finally, as a rela- tionship-building medium (Chaffey, 2006).

Table 1. Traditional vs. Social Media Traditional Media Social Media Fixed, unchangeable Instantly updated No real time interaction Real time No sharing and customer’s participation Sharing and participation is encouraged One-to-many communication One-to-one or many-to-many communication Active provision Passive provision Mass marketing Personalization (individualized marketing) Expensive, limited space Cheap, unlimited Image most important Information most important Based on: Chaffey et al. (2006) and Fill (2005).

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Additionally, social media can spread tomers, high speed of information spread, fast brand awareness among an unlimited number brand loyalty creation, ability to get immedi- of potential customers, increase sales, and ate feedback, low marketing costs, and con- make the marketing message go viral (Bar- stant availability (24/7). The cons are great wise & Meehan, 2010).In Table 1, the author expense in terms of time resources, risks of compares traditional and social media for a wrong communication, risk for data security, better understanding of future dimensions in and information’s obsolescence. social media marketing and branding. Customers are using social networks first As it follows from the Table 1, social me- for communication. That is why the market- dia has covered all the new marketing direc- ing strategies that companies implement tions, which proves online marketing via so- should be “environmentally friendly.” Other- cial media to be an effective way to align with wise they will be perceived to be annoying. the changing environment and to update tradi- The companies should not interrupt the cus- tional branding strategy. tomers, but help them to lead the dialog with one another (Diffley et al., 2011). Marketing Strategies in Social Networks Yet, most companies are trying to imple- ment traditional push-marketing strategies on Social networks are one of the effective social networks (using banner ads, sending channels that companies can use today to sat- commercial messages, etc.), which creates a isfy the customer’s needs. Online social net- negative attitude toward the company and its works could be defined as “as service facilitat- brand. Marketing through social networks ing the connection, collaboration and ex- should create conversation and transparency, change of information between individuals” and it should be multidirectional. The market- (Chaffey et al., 2006, p. 87). From this defini- ing activity should be focused on creating tion, it can be revealed that companies should trust, relations, and dialogue between the create content that will respond to the social company and the customer (Gil-Or, 2010b). network users’ primary objective. Though companies understand the im- Social networks have dramatically portance of online marketing, many of them changed over time (Chis & Talpos, 2011). still do not know how to build effective brand- The modern social networks provide larger ing strategies that would benefit the business. opportunities for communication, broaden the Several researches claim that companies that number of contacts each individual has, as succeeded in social networks had the follow- well as diminishing the geographical distance ing common features (Barwise & Meehan, and increasing the rapidness of the message 2010; Piskorski, 2011): they propose and delivery. Different types of social networks communicate clear and relevant customer can be defined according to their nature promises, provide interesting and exciting ma- (Turner & Shah, 2010): social networking terials for creating conversation, help people sites (Facebook, YouTube, Twitter); blogs; establish and strengthen relations, create addi- digital flyers (e-mail newsletters); websites tional value for customers, and increase will- updated by the users (Wikipedia); websites for ingness to buy companies’ products and ser- thematic groups (WikiLeaks); and presenta- vices. tion sharing sites (slideshare). The companies’ success in reaching their Chis and Talpos (2011) argue that there is strategic objectives lies in their ability to es- a balance between advantages and problems tablish a clear and effective strategy. De Wit of using social networks by companies. The and Meyer (2010) highlight the creation of pros are access to an unlimited number of cus- brand loyalty as one of the key steps that has

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to be implemented to reach the strategic objec- METHODOLGY tives, along with building relationships with customers, stimulating customer retention, and Why a Case Study? influencing customers during their decision making process. Research questions imply analysis of the Being the “sum of the customer’s experi- marketing strategies of global firms in social ences with the brand or organization across all networks on the Russian market. From this touch points” (Corbae, Jensen & Schneider, perspective, the most appropriate method is 2003, p. 61), brand loyalty can be more easily the in-depth case study. Due to the fact that created through social networks that provide branding through social networks is an undis- the companies with the ability to get in touch closed topic still, the case study analysis re- with their customers at every step of their de- sults in outcomes that could be relevant for cision making process. companies that are willing to establish a pres- Through social networks, companies may ence in these platforms. The set certain expectations related to the brand multiple case studies strategy, which aims and spread them to customers through conver- to answer the research questions that can be sation. Once the company has created a virtu- broadly described as how and why, is relevant al brand community where people share cor- as it allows building a theory that is accurate, porate values, beliefs, and thoughts, it is easy testable, and interesting (Yin, 1994). to influence the customers’ perceptions to- As research method, this study provides wards the brand. Moreover, loyal customers detailed description and analysis of case stud- are more likely to recommend the company to ies, and then focuses on their theoretical justi- their friends. On social networks, loyal cus- fication. In this research, the replication logic tomers often re-post the companies’ messages is used, with equal consideration of every and invite their friends to join the corporate point of the interest across all the case studies. page, as they perceive brand to be closely In keeping with Eisenhardt and Graebner connected with their personality and life out- (2007), we do not try to prove the artificially look. constructed view if it is not supported by all To summarize the above, companies the cases. The analysis of cases is based on should establish strategies that are focused on the common method, which supports the ob- a limited number of marketing responses that jectiveness of our research. One of the bene- are closely connected to brand awareness. fits of using the multiple case study method is Divol, Edelman and Sarrazin (2012) outline that one of the outcomes could be the case four main groups of responses in which we studies’ comparative analysis, which raises the highlight branding issues: monitoring (what is reliability and relevance of the research. said in social networks about their brands), Moreover, each case study is analyzed inte- responding (by replying rapidly, transparently, grally to prevent results adjustment (Yin, and honestly, the company may prevent brand 1994). vulnerability), amplifying (creating marketing The most common problem in applying campaigns in social networks that offer cus- case studies is their difficult generalizability. tomers an experience with the brand, or foster- This means that each particular company may ing communities around their brands), and have specific features that will influence its leading (bringing customers across long-term marketing strategy on social networks. As a behavioral changes, which increases brand result, it is very difficult to build one particu- awareness). lar scheme that would be fully appropriate for all the cases. In this paper, we describe the Panibratov 43

general marketing strategy that will provide Social networks themselves are very im- the common steps for companies, but it should portant sources of information. Different so- be taken into account that for each particular cial groups’ and companies’ social pages case it should be modified according to the could be used for data collection. Moreover, existing environment (Eisenhardt & Graebner, all social networks provide guidelines defining 2007). how they can be used by the companies. For our research, we have chosen the pro- These instructions are relevant for making ficient companies that have already estab- comparison analyses of different social plat- lished their brand pages in social networks and forms. are actively participating in the conversation As primary data collection, we used in- with customers. For this research, we have depth unstructured interviews. Due to the chosen the companies from different indus- novelty of the topic, the in-depth interviews tries to analyze the sector-specific influences with industry experts are the most effective on the set strategies and goals that global way to get recent information and from a pro- companies try to achieve through online mar- fessional viewpoint. Taking into account that keting. Three international companies (a car very few people have an expertise in the manufacturer, a cosmetics and beauty prod- sphere of online social marketing, or believe ucts firm, and a restaurant chain) were chosen that this area is of great opportunities, it was as case studies. Due to the fact that compa- important for us to find a person who is cur- nies can have a number of different brands rently working in this sphere and had already (with different products, oriented on different gained some experience in the Russian mar- niche markets), in our study we focus on the ket. That is why the interview was conducted particular brand that is presented by the par- with the head of an educational organization ticular firm. We hide these companies’ names in the sphere of social media marketing, who as well as our interviewees’ surnames due to is an expert in the field. the highly sensitive character of many issues Other interviews were conducted with in marketing and strategy implementation in marketing managers of case companies that Russia that we discussed. Hereafter, we call provided the essential information for the case them AM (auto maker), BC (beauty and cos- studies. It is relevant to mention that manag- metics), and CR (chain of restaurants), with ers who were chosen for the interview are re- brands A, B, and C consequently. sponsible for the online marketing in the target companies, as they are more competent on the Data Collection questions concerning marketing through social networks. As sources of secondary data, we have For the data reliability and statements jus- used academic journals to establish dimen- tification, we applied triangulation while using sions for future research. Though there are different kinds of information sources. First, very few research articles that are dedicated to we were interested in the company’s repre- the topic and published in respected journals sentative opinion, then the independent expert because of novelty of the topic, some of them opinion, and finally, we checked across the are very relevant for the understanding of con- information gathered from open sources. sumers’ behavior in social networks, specific The information gathered from in-depth factors of social networks, as well as market- unstructured interviews is used for identifying ing future dimensions that should be taken in- the companies’ main goals of marketing to account by the companies. through the social networks and the methods that were already used, both successfully, and

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unsuccessfully for reaching brand-related starting in 2012, AM was there to catch the aims. In addition, these interviews provide trend in time. The following are network sta- understanding of factors that influence net- tistics in 2012 for AM: in Facebook there workers when participating in virtual brand were 176,116 likes and 297 talking about communities. The rationale behind this is fig- brand A; in YouTube, there were 1,317 “fans” uring out things that we do not know, mainly and 1,514,120 viewers. since this area of research is so new. During the interview it was stated that the In the interviews, different types of ques- company is using only two social networks, tions were used. First, open questions that namely Facebook and YouTube (they have allowed getting general information on the their own channel). A company representative market specifics, companies’ methods and has claimed that the choice of these particular strategies used. Then probing questions per- social networks can be explained by their in- mitted us to get more specific information on ternational focus. Facebook is also more ef- the target companies’ actions, goals, and atti- fective in terms of target customers attraction tudes towards using social networks in mar- (luxury brand, Vkontakte is more focused on keting. And finally, some specific data and mass products), and YouTube’s popularity figures could be gathered with the help of among Russian Internet users ensures higher closed questions. traffic and brand awareness spread. For the interviews, we developed a guide Facebook was outlined to be more suc- that included all these groups of questions. cessful, as it provides more advanced applica- The guideline was not strictly followed, as an tions and technologies, which are very useful unstructured interview method was used. This for creating an advanced brand page and encouraged managers to give extra infor- tracking. AM’s brand page in Facebook is mation on the topic, which was of great im- very colorful and attractive, with a lot of im- portance for the research. ages and logos. According to the interviewee, there was a THE CASE STUDIES particular goal for using social networks: to be the first among premium car producers in Company AM (brand “A”) terms of number of fans and viewers in social networks. Though the company has included AM is a leading European automotive social networks into their marketing campaign firm, active both in the premium and supercar not long ago, the company perceives this type segments. AM operates with ten production of marketing to be very important for realizing plants located in different countries. During their branding strategy. According to recent 2010, AM produced over 1 million automo- internal research, 60% of customers buy cars biles and sold almost 1.3 million cars. influenced by direct advertising, and the re- AM works in the premium segment and is maining 40% are influenced through social known to be innovative in terms of design and networks. technologies. The strong attributes of the The target audience that the company at- company are strong brand, technological in- tempts to reach through social networks com- novations, high quality products, a variety of prises people in the age brackets from 18 to 55 offered models, extensive design, and country years old with high income levels. Through of origin. social networks, the company tries to establish AM has started to use social networks in communication with customers and get feed- Russia for marketing purposes in March 2010. back. As a result, in the long term, AM sees With the rising popularity of social networks social network marketing to be very effective Panibratov 45

in terms of creating brand loyalty. They also AM uses social networks to get feedback use a brand page and a YouTube channel to from existing customers. Users are free to attract new customers. publish information about difficulties that The company has placed YouTube and arise with the cars and problems with dealers. Facebook links on its website home page and The company answers all customers’ com- has integrated the YouTube and Facebook ments and resends information about the prob- pages, so when a user presses the “Like” but- lem to customer care, where the problem can ton on the YouTube video, this appears on the be solved. Then, they contact the customer user’s Facebook account and in the group. directly, as well as publish information on Recently, AM has launched a TV commercial their brand page, to ensure that the customer where they also have information about Face- got the message. They also ask the customers book’s branded page. to publish information on how these problems The main topics on the corporate page are were solved. connected with the brand, its history, products AM considers their Russian customers that are offered, and technologies for car mod- who joined the social network groups as its els’ development. The content on the branded primary targets in establishing connections page outlines all the benefits of the products between the brand and the customers. The (quality, design, innovation, unbelievable ex- company tries to fulfill all the customers’ perience). Through the observation of the needs and establish strong relations. As a re- company web page, we have defined that AM sult, the company management sees social is creating a kind of cult of its brand. Estab- networks to be very effective in realizing the lishing brand personality, the company attracts company’s marketing strategy and creating customers, who identify themselves with the brand value. brand. They are focused on prestige, the unique experience that customers can get due Company BC (Brand “B”) to advanced R&D and design, exceptionality, and luxury. BC is the world’s largest cosmetics and The company provides their customers beauty company with activities in all field of with interesting information that is valuable cosmetics, concentrating on hair color, skin for car lovers (and all the posts are connected care, sun protection, make-up, perfumes, and with brand A), such as new car models, plans hair care. Brands of the company are general- for future development, interesting historical ly categorized by their targeted markets, such facts, interesting facts about technology, or as the mass, professional, luxury, and active advice for drivers. AM also covers other top- cosmetics markets. Brand B is in the division ics that are connected with the company, such of luxury products and is one of the prestig- as corporate events and exhibitions. The cor- ious products’ of the company. It offers skin porate page contains commercial videos, car care, fragrances and make-up products at photos, and questionnaires about customers’ higher-end prices. preferences. To establish communication, Brand B has been using marketing through AM also encourages its fans to talk about in- Facebook starting in 2011. During the inter- teresting events they participate in. view, several reasons why the company is us- The company posts and updates infor- ing only Facebook were stated. First, our re- mation 3-4 times a week on Facebook and spondent mentioned that the choice of the so- usually adds one video on YouTube per week. cial networks is dependent on the brand image For subscribers, AM creates different compe- and the product’s positioning. B is a global titions and offers invitations to private events. brand that is oriented toward high-end cus-

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tomers. Second, Facebook provides a huge found in different Russian perfume and cos- variety of different instruments for the brand’s metics chains. promotion, such as applications and content The company has defined clear brand val- services, which the company perceives to be ues, beauty and health, but they are not re- very important. To compare Facebook with vealed on their brand’s page. Yet, the compa- Russian network Vkontakte, the latter is more ny has clearly defined the main reasons for beneficial for mass products that need a wider using social networks in the company’s mar- audience. Additionally, it is very difficult to keting activities, such as brand presence in promote an international brand’s image different communication context, access to a through Vkontakte, and the limited number of young target audience, communication and available advertising opportunities and appli- feedback, products’ promotion, image crea- cations made this social network inapplicable tion, and willingness to economize on the tra- for the company. ditional means of advertising. During the interview, it was stated that so- According to interviewee, the company is cial networks are very effective in terms of not really putting in enough effort to achieve creating communication (direct dialog) and these goals. For example, the company could getting customers’ feedback. Because B has improve by updating the content more regular- no call center, social networks are the only ly. Our respondent has stated that content way to get customers’ comments and opinions should be updated each 2-3 days, but in reali- about the products. Though it is claimed that ty, new posts are added few times a month. feedback is very important for the company, Nevertheless, the company treats its cus- they do not try to solicit real customers’ views tomers positively, offering fans special dis- and attitudes (do not ask their fans for reflec- counts for the products, organizing competi- tion, do not use questionnaires). As a result, tions, and sending invitations to special the participation level is very low. B brand events. Moreover, B tries to help their cus- page in Facebook is modestly visited: 11,274 tomers to choose the most appropriate prod- Likes and 21 talking about the page. Fans are ucts and to advise which product line would not interested in the conversation and very be the most suitable for them. Otherwise, the rarely leave posts. company does not encourage customers to The target audience that the company is leave comments about their experience. oriented to in social networks is 22-30 year Another reason for low traffic on the old women interested in luxury products. brand’s page could be inappropriate integra- They are targeting not only regular customers, tion with other marketing channels. For ex- but also people who like the brand but cannot ample, information about their Facebook page afford to be constant buyers. is not vivid on the website and customers must Though the target audience is well de- search to get the link. fined, the company does not provide valuable information for its customers. Mostly, they Company CR (Brand “C”) use their brand page for posting information about different events and promotions in cos- CR with its franchisees operates over one metics shops where the brand products are thousand restaurants in several dozen coun- sold, and not the luxury market fashion trends, tries and is, with its few brands, one of the make up trends, information about companies’ most internationalized in the world. C, a rec- products, or benefits of these products (quality ognized leader in the bar and casual dining, and fashion). The brand page mostly reminds has been operating restaurants for almost 40 users of the schedule of events that could be years. During 2011, the company has nearly Panibratov 47

doubled its revenue, successfully operating on works that are mainly used by the company the international market. In 2011, the average are not very effective in terms of interaction annual sales volume per C restaurant was (Foursquare and Twitter), and in Vkontakte around US$3 million. they are not active (posts are not regular and In Russia, CR recently opened few restau- very rare). CR did not established clear values rants oriented toward customers with above- that could unite company and its customers in average incomes. CR is focusing all its efforts social networks, and they did not identify the on the creation of a stable customer base to customers’ interests, which also prevents the overcome the payback period. dialog development (there no common topics, The case with brand C differs from A and except brand C). B. Though this company has established its Second, CR is very interested in attracting operations in many countries and is one of the new customers. In this case, Foursquare and biggest multinational restaurants chains, this Twitter could be very effective. On Twitter, company is new in Russia and has not gotten short messages can be sent to inform about much recognition yet. That is why our re- different promotions, new menu, or interesting spondent (marketing manager of Russian facts. In Foursquare, the company encourages chain) has stated that social networks are very their customers to check-in every time they important for brand awareness development. are in the restaurant by introducing special Concentration of social networks users is offers (free drinks, discounts, loyalty cards). very high in Moscow, and this is why CR tries When the customer checks-in on Foursquare, to use different types of social platforms: the information appears on his friends’ tele- Vkontakte, Twitter, and Foursquare. Also, the phones like a notification, so it ensures that company develops its Facebook brand page. everyone will see it. The most successful are perceived to be Twit- To better organize its marketing activities ter and Foursquare. The company has placed in social networks, the company does the fol- the links to all of the brand’s social network lowing: updates group pages and adds new pages on their website home page, and in each comments every time when new information group, the link to other groups can be found. appears (yet, not on a constant basis, usually The expected marketing outcome is to in- once a month); answers all the customers’ crease restaurant attendance and build cus- comments on their pages; organizes different tomer loyalty. The company considers that deals and discounts for their fans; and, when though many companies use social networks the negative comments appear on the group as a marketing tool, it still can create a com- wall, tries to solve the problem and give some petitive advantage for CR. benefits to change the client’s attitude. During the interview there were outlined The results of CR’s marketing activities in the main purposes why the company uses so- social networks are the following: 314 group cial networks in their marketing. First, one of members on Vkontakte, 188 reads and 70 the main reasons for using social networks readers on Twitter, and 4,000 visitors and from the interviewee’s point of view is the 8,835 check-ins on Foursquare. The target au- ability to create communication with the cus- dience that the company is eager to reach is tomers and, as a result, develop customer loy- young people under 35 years old with middle alty. The primary goal is to get feedback on and high level of income. The main reasons customers’ experience, to further use this data why customers join the brand’s pages is that for services development and improvement. they take an interest in the company (taking Yet, they are not encouraging their customers into account that brand is unknown). to leave comments. Moreover, social net-

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Table 2. Case Companies’ Marketing Outcomes through Social Networks Activities AM BC CR Determination of most valuable customers for the company No Yes No the target audi- understanding customers’ interests directly related to the brand Yes No No ence understanding customers’ interests indirectly related to the brand Yes Yes No Building the visual content that is special for this particular brand (logos, special col- Yes Yes (special de- Yes (Logo, brand personality ors, iconic assets, etc.) (but sign with a lot of special col- very elements) ors) few) brand’s key values Yes (don't Yes No cover) brand’s “character” for setting up a well-defined voice and personality (the way the brand behaves, speaks, reacts according to the brand’s val- Yes No No ues) Channels integra- integration into the website Yes (not viv- Yes Yes tion id) integration of social networks into traditional marketing channels (TV Yes No No ads, links in press, etc.) Creating relation- touch points identification (between customers and brand) Yes No No ships with cus- interaction with customers at each stage of their decision making journey No tomers No (stages (only Yes before sale) buying stage) one-to-one communication (post answers, problems solving, etc.) Yes Yes (constantly) Yes (rarely) (rarely) conversation development (through questions, asking for opinion and Yes No No feedback, etc.) distance mitigation (transparency, customers’ are perceived as friends) No (more com- mercialized No No communication) focused content (valuable for brand “fans”) Yes No No feedback encouragement Yes No No customers’ entertainment: make experience more entertaining and excit- Yes No (only rare No Panibratov 49

ing (interesting and fresh content, applications, games, competitions, competitions) etc.) being honest (never delete negative feedback, admit mistakes, etc.) Yes Yes Yes not being self-centered (60% posts about lifestyle, not brand) No No No limited number of commercials Yes (but no Yes commercials No at all) being active on the branded page (maintaining and updating the content Yes No No constantly) Establishing clear beliefs and values (shared among all “fans”) No No No brand community common areas that unite all members Yes No No communication establishment between participants No No No brand—as a central united topic Yes No Yes Creating loyalty setting up customers’ expectations about product or service Yes No No driving expectations according to real experience that could be had Yes No No customers’ self-identification with the brand (brand should be meaning- Yes (create No No ful for customers: prestigious, healthy, posh, etc.) brand’s cult) special benefits for participants (special offers, coupons, rewards, invita- Yes (infor- tions, etc.) Yes (extended mation about service through different Yes SNS, invita- promotions tions) and invita- tions) Adaptation Extensive customers databases No No No Tracking changes in lifestyle, perceptions, attitudes, etc. No No No weak areas identification Yes No No adaptation to customers (to bring more value for customers) or problem Yes No No solving (when adaptation is impossible) New customers’ rewarding system for existing “fans” (for re-posting and sending invita- No No Yes attraction tions) viral messages No No No entertaining, exciting, interesting, etc., content that customers would like Yes No No to resend Like and Share buttons Yes Yes Yes

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RESULTS AND DISCUSSION ers. To attract these customers to the brand page, it is important to understand their inter- Putting together all the findings from the ests, which both of the companies have failed case companies’ social network marketing to do? outcomes, we follow the framework of the Social networks are mainly used for com- literature based analysis with the emphasis on munication with close friends, which is why core dimensions such as determination of the the company should establish a kind of “per- target audience, building the brand personali- sonal” profile, the same kind users create for ty, channels integration, creating relationships themselves. It should outline the main “char- with customers, establishing brand communi- acter traits” that would show the brand’s val- ty, creating loyalty, adaptation, and new cus- ues. This will help to establish more trustful tomers attraction (Table 2). relations with customers and attract more as- From Table 2, we can see how the online sociates. The most successful company in this marketing strategies in social networks on the term was AM, which established clear compa- Russian market of global firms can be studied ny values, which are indirectly reported to with the help of framework that was devel- customers through posts, comments, and in- oped based on the literature review. formation. The company should not only es- From the analysis of the case studies, we tablish values, but also try to pass them to cus- can see that AM and CR did not identify their tomers. BC has clear corporate values, but most valuable customers. For AM, this factor they are not transmitted to the customers. As could not be as important as for CR due to the a result, it is very difficult to find the common nature of the product they offer. One of the areas between the company and the customers key aspects for AM is to establish a kind of a and to develop the customers’ sense of be- cult for its brand A. Through social networks, longing. they can attract not only clients who can af- Like users try to make their pages colorful ford to buy A brand today, but also people and attractive, the company should put even who passionately want to have it, but for some more effort into the design to attract custom- reason cannot buy it. These people can not ers’ attention. The design should also be con- only become the clients in the long-term, but nected with the brand’s symbols (logos, spe- also create buzz and spread information about cial colors that are associated with the brand), the brand. This widens the target audience this will ensure the customers’ recognition. that the company tries to reach through social All the case companies have developed unique networks. Clearly identifying the customers’ designs in social networks. interests guides further activities of the com- AM’s achievement is the creation of pany in social networks. For example, AM is strong relationships with customers’ in social the official sponsor of Olympic Games 2014, networks. The company has clearly defined so people who are interested in sports could be the touch points between itself and fans, attracted. which helped to develop the dialog, stimulate For CR and BC, it is important to identify customers’ self-identification with the brand, the most valuable customers, because the fre- and maintain communication. Also, AM ac- quency of purchases of these companies’ tively stimulates customers to communicate, products and services can be very high, and it asking questions and requesting feedback and is important to be mainly focused on the loyal opinions. Due to this fact, customers feel that customers to ensure customer retention. Also, they are important to the company, which is these customers are more likely to spread the first step in building long-term relation- brand information to other social network us- ships. Panibratov 51

AM creates extra value for the customers networks could bring (feedback, interaction, through social networks, providing content relationships building) are not realized. that is interesting for customers and connected All case companies are self-centered, and to the brand. AM found the balance between most of their content is about the brand (which these two issues by posting interesting content contradicts the established idea about the about cars’ histories, new models and con- damage done by such self-centrism, decreas- cepts, production, and technological facts, all ing the customer’s value). AM is a brilliant of which are at the same time very entertain- example of how the company can be self- ing, curious, and connected with the compa- centered and add value to its customers. ny’s products. Also the company publishes However, this strategy may be successful only information about different events and compe- for a well-established brand. In Russia, peo- titions where the company and its customers ple’s interest in luxury cars is very high, and participated. For example, in 2012, AM spon- A is one of the most popular brands among car sored the ice rink in Red Square at the Krem- lovers. This means that AM has already de- lin in Moscow, after which AM encouraged veloped high interest in its brand, and people fans to share their experience if they also were perceive that this brand can bring them status skating there. and support their personality (A is already a Relationship development highly depends lifestyle). As a result, a self-centered ap- on the company’s activity on the branded pag- proach can only be implemented by compa- es. Though A has already developed a huge nies having brands that are already strong at fan base and the frequency of new comments the market in terms of customers’ recognition. from customers is very high, they answer all This may concern not only luxury, but also the posts, comment on pictures, or leave environmentally friendly brands, which will Likes. They have established one-to-one highlight customers’ kindness, care, and in- communication with their customers’, which volvement with ecological problems. is the main outcome of using social networks. For BC and CR, the self-centered ap- Other case companies succeeded less in proach is not effective because they have to developing relationships with customers. CR develop the sense of customers’ belonging to did not identify its valuable customers nor de- the brand, as in this term, their brands B and C fine their interests. BC has identified its valu- are not as strong on the market as A. They able customers and their interests, but did not should clearly identify what this brand could provide any information that could be interest- mean to the customer (e.g., celebrities using ing for their customers. Though the company cosmetics and customers identifying them- has claimed to use social networks mainly for selves with these celebrities for B, or a travel- communication with customers, it has put all ling theme with references to various cities its effort not on finding key touch points be- and places, where restaurants are also situated, tween company and customers, but on cover- for C). ing all the promotional campaigns that could AM is very successful in creating custom- be found in different cosmetics shops across ers’ brand loyalty. On its brand page, the the country. This information is interesting company places information about the prod- for customers, but if it is the only content, true ucts’ characteristics, quality, and design, communication will not be in place. which can create exact customer expectations. We also have revealed that the participa- AM also posts messages that can arouse emo- tion level of CR and BC is very low, and as a tional expectations, like an exceptional feeling result, fans are not involved in the communi- when driving the A cars. cation process, and all the benefits that social

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BC and CR do not publish enough infor- ticket from KaroFilm [large Russian cinema mation about their products and services in chain] and get the drink for free”. social networks. They do not cover the bene- Adaptation seems to be a very difficult is- fits of their offers, quality, or any other char- sue for A and B brands as these products can- acteristics that could be relevant for custom- not be easily adapted to each particular cus- ers. This results in customers misunderstand- tomer preferences. They are only able to iden- ing what they can get if they choose their tify the major trends and to meet the needs of products. CR only has posted the menu of the the majority. Besides, the absolute adaptation restaurant in Vkontakte, but they do not really for these two companies means the develop- outline the quality and taste of their dishes, ment of new products, which is enormously nor special atmosphere, as some of the local costly. For C, adaptation is much easier and is Russian restaurant chains do (e.g., Panibratov, more crucial. Surprisingly, C also does not 2012). BC does not have any information use all the benefits of social networks, alt- about products, except some TV advertise- hough for them it could create a lot of ad- ment videos. vantages. All case companies provide their fans with To attract new customers, case companies special offers that can increase customers’ make an effort. Actively using Foursquare, value and turn into loyalty. AM invites their CR stimulates customers (offering free drinks fans to private parties and to some events that for those who have checked-in in the restau- the company organizes (like invitations to the rant, so that all friends immediately receive ice ring in Red Square). Also, they have de- this information on their smart phones, re- veloped the customers’ help center in Face- warding the most active customers with other book. For example, if the customer has some offers). AM provides customers with enter- problems with the dealer or service stations, taining and interesting information that cus- they can publish an inquiry in the group, and tomers may like to resend to their friends in this message is forwarded to customer care. social networks. Also, they can Like the in- The company contacts the service provider teresting post and this information will appear with whom the customer has problems and in the friends’ News Feed. BC only uses like tries to solve it. The outcomes are sent to the and share buttons. None of case companies customer in a private message and are pub- use a viral marketing through social networks lished on the brand page to ensure that the that existing research outlines to be very effec- customer will get all the essential information. tive. After the problem is solved, the company en- To integrate better different marketing courages the customer to publish whether the channels, AM and CR provide on their web- problem was successfully solved and the cus- site home page the links to social networks tomer was satisfied. they use. Besides, they inform customers In order to develop their customers’ loyal- about brand page existence through traditional ty, BC invites them to different brand events, marketing channels. AM announces about its publishes information about promotions in Facebook page in the TV ad (which other case shops, and sometimes sends presents for cus- companies do not). tomers who won in the competitions that are Additionally, the case companies use other organized through Facebook. Also, if cus- methods that are not exactly described in the tomers ask for advice on which product to existing literature. AM has integrated Face- buy, they give complete answers with the de- book into YouTube and created the direct link scription of the product. As for CR, they or- between theses social networks: when the user ganize different promotions, like “bring the presses Like button on YouTube, this infor- Panibratov 53 mation appears both on his private page and fying the target audience, it is important to on the brand page. CR has placed links to all decide on which social platform this segment their accounts in each brand group: in Vkon- can be reached. For brands A and B, Face- takte, they have the link to Foursquare, Twit- book is the best place where they can com- ter, and company’s own groups. municate with their target audience, as they Being of crucial importance for a success- are mainly luxury brands. Facebook’s audi- ful marketing strategy, influence on custom- ence is seen to be wealthier, which is also due ers’ decision-making is better implemented by to the fact that this network is mainly popular AM. At all stages (first consideration, evalua- in the largest Russian cities. Companies striv- tion, and buying) the company influences ing for nationwide coverage should use Vkon- customers by publishing information about takte (for a younger audience) and Odnoklass- products, establishing dialog with customers, niki (for an older audience). The importance inviting customers to different events and par- of choosing the social platform for branding ties, providing extensive service, and helping purposes was stressed by all case companies. to resolve problems. CR and BC concentrate their efforts on in- CONCLUSION fluencing customers at the first stages of the customers’ decision making. CR influences In this paper, we see how the conceptual its customers at the buying stage by offering model of how brand awareness develops via special deals and promotions. BC tries to in- social networks resulting from the literature fluence customers at the consideration and analysis transforms in the Russian context. evaluation stages by giving them recommen- Though main elements remain the same, some dations, but this initiative comes from custom- of the elements were found to be unimportant ers, who have already chosen brand B and on- and some of them could not be implemented ly need to find the most suitable product. in the Russian market. Finally, we stress the role of the Russian The model that has been used by case context for this study. First, the Russian so- companies and can be applied by other global cial networks market is new; this is why Rus- companies is based on the elements of the sia still lacks professionals who are competent case companies marketing strategies in social in creating successful marketing strategies via networks and takes into account Russian mar- social networks. Marketing managers in com- ket specifics that influence firms’ marketing panies are not very experienced in this area, strategies. The model shows what activities either. Our analysis shows that only AM hired the companies implement in order to reach an online manager who was more proficient in their strategic objectives (the strategic objec- building online marketing strategies. CR at- tives of the case companies were found to be tracts new customers using on push-strategies quite similar, as they are oriented in social in social networks, and BC, in order to raise networks on attracting new customers, creat- the popularity of its brand page, mostly focus- ing long-term relations with customers, devel- es on promotions and competitions, while cus- oping brand loyalty, and raising brand recog- tomers use social networks for communication nition). mainly. In Table 3, we illustrate the relationship Second, in Russia international firms, be- between key elements of this model and the fore setting corporate pages, should carefully practicality of Russian strategy. consider which social platforms to choose. Thus, we claim that the model has univer- Social networks in Russia are highly diversi- sal application and can be implemented by fied in terms of users’ profiles. When identi- other international companies from various

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Table 3. Model of Brand Awareness Development via Social Networks The Element of the Adjustment to Russian Market Marketing Strategy Identification of the key Focusing on customers and on their mutual interaction, not on their participation in groups. objectives Determination of the While identifying the key segment, focusing on those customers who may be valuable in the future. target audience Recognizing customers’ interests more comprehensively (both directly and indirectly related to the brand). Choosing the social Evaluate the difference between platforms trying to find the reference to various groups of customers. networks Building the brand ‘per- While visualizing content for particular brand, trying to avoid replication or crossing with local firms. sonality’ Aligning brand “character” with local cultural specifics (personality, message, voice, etc.). Publishing information about company achievements in the country, not globally. Channels integration Integration not only in international networks, but also in local ones. Bundling respective brand pages. Integration of social networks into local media channels. Creating relationships Re-defining touch points identification (between customers and brand). with customers Extending one-to-one communication tools besides online (e.g., answering questions and solving problems by phone where Internet is unstable). Identifying who are “fans” and what their other interests are (related with local behavioral habits) for better focusing of the content. Being honest (never deleting negative feedback, admitting mistakes), which is especially unusual and, hence, valuable for many Russian customers. Being active similarly on Russian and English page, which will demonstrate the respect to customers with different language skills. Creating loyalty Setting up and driving customers’ expectations on the branded product comparatively to both local and oth- er global brands. Achieving the high meaningfulness of the brand for customers via re-assessing the im- portance of core values in Russia (e.g. wealth, security, prestige, health). Adaptation Tracking changes in lifestyle, perceptions, and attitudes across different regions, not only on the country level. Adaptation to customers, accordingly focusing on the most important dimensions, with an additional em- phasis on local economic and social factors (e.g. stability of wages, legislative restrictions, ecologic re- quirements). New customers’ attrac- Rising the outcome (including financial) of existing rewarding system for “fans”. tion Aligning the entertaining content that customers would like to resend with the burning local issues.

Panibratov 55

industries on the Russian market. Yet, it ComScore (2012). www.comscore.com/ should be adapted as far as possible to each Inights/Press_Releases/2012/12/Argentina particular case, depending on the marketing _ Ranks_ First_in_Worldwide_Desktop_ objectives, the nature of the brand and its Social_Networking_Engagement. power on the market, specifics of the products Corbae, G., Jensen, J.B. and Schneider, D. that company offers, and characteristics of (2003). Marketing 2.0 Strategies for Clos customers. Even within this offered frame- er Customer Relationships. New York, work, the company may have emphasized dif- NY: Heidelberg. ferent elements of the model. De Wit, B. and Meyer, R. (2010). Strategy: We see two major limitations of this study. Process, Content Context. International First, we have identified the main specific Perspective. 4th ed. Cengage Learning, characteristics of customers that influence the EMEA. companies’ marketing strategies in social net- Diffley, S., Kearns, J., Bennett, W. and Kawa works without having revealed more detailed lek, P. (2011). Consumer behavior in so psychological and sociological features of us- cial networking sites: implications for ers. Second, we have focused on how compa- marketers. Irish Journal of Management, nies develop their brand awareness in social 30(2), 47-65. networks, and do not discuss particularly what Divol, R., Edelman, D. and Sarrazin, H. are the outcomes of these strategies in terms (2012). Demystifying social media. of brand value increase. All the above could McKinsey Quarterly. https://www.mckin be topics for further research. seyquarterly.com/Marketing/Digital_ Marketing/Demystifying_social_media_ REFERENCES 2958, Accessed on May 25, 2013. Eisenhardt, K.M. and Graebner, E.M. (2007). Ang, L. (2011). Community relationship man Theory building from cases: Opportunities agement and social media. Journal of Da and challenges. Academy of Management tabase Marketing and Customer Strategy Journal, 50(1), 25-32. Management, 18(1), 31-38. Fill, C. (2005). Marketing Communications Barwise, P. and Meehan, S. (2010). The one Engagements, Strategies and Practice. 4th thing you must get right when building a ed. London: Prentice Hall Europe. brand. Harvard Business Review, 88(12), Gil-Or, O. (2010a). Building consumer de 80-84. mand by using viral marketing tactics Bulearca, M. and Bulearca, S. (2010). Twitter: within online social networks. Advances a viable marketing tool for SMEs? Global in Management, 3(7), 7-14. Business and Management Research, 2(4), Gil-Or, O. (2010b). The potential of Facebook 296-309. in creating commercial value for service Chaffey, D., Ellis-Chadwick, F., Jonston, K. companies. Advances in Management, and Mayer, R. (2006). Internet Marketing 3(2), 20-25. Strategy, Implementation and Practice. 3rd Hardey, M. (2011). Generation C. Internation edition, New York, NY: Pearson Educa al Journal of Market Research, 53(6), 749- tion Limited. 770. Chis, L. and Talpos, M.F. (2011). Pros and Kaplan, A.M. and Haenlein, M. (2010). Users cons of corporate social networking. Re of the world, unite! The challenges and view of Management and Economic Engi opportunities of social media. Business neering, 10(2), 83-92. Horizons, 53(1), 59-68.

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Kotler, P. and Armstrong, G. (2006). Princi Selke, J.H. (2011). Social marketing: Where ples of Marketing. 11th ed. New Jersey: should you start? Camping Magazine, Pearson Prentice Hall. 84(6), 36-39. Panibratov, A. (2012). Russian restaurant with TNS. Web Index (2012). http:// Japanese cuisine makes foreign markets’ http://www.tns-global.ru/rus/data/ratings/ selection: The case of Two Sticks. Asian index/, Accessed on May 29, 2013. Case Research Journal, 16(2), 335-346. Turner J. and R. Shah. (2010). How to make Parsons, A.L. (2011). Social media from a money with social media: An Insider’s corporate perspective: A content analysis guide on using new and emerging media to of official Facebook pages. Allied Acade grow your business. New Jersey. mies International Conference: Proceed Yin, R. K. (1994). Case Study Research: De ings of the Academy of Marketing Studies sign and Methods. 2nd ed. Newbury Park, (AMS), 16(2), 11-15. CA: Sage. Piskorski, M.J. (2011). Social strategies that work. Harvard Business Review, 89(11), 116-122. Journal of Euromarketing, 23: 57 - 73, 2014 Copyright © IMDA Press ISSN: 1049-6483 print / 1528-6967 online

“Made in Italy” Brands in the U.S. and China: Does Country of Origin Matter?

Donata Vianelli Giovanna Pegan

ABSTRACT. The purpose of this paper is to examine the relationship between brand and country of origin (COO) from the perspective of a company. In particular, this analysis seeks to investigate the role of the brand in relation to country of manufacture and country of brand when the relationship between a given country image and a certain product category is perceived as strong and positive. Employing a qualitative method, the empirical focus of the research is here made up of a sample of 14 Italian SMEs operating with direct investments in the US and Chinese markets. In-depth interviews point out how, particularly in recent years, a positive COO does not represent anymore an adequate base to grow in foreign markets, making investment in a brand necessary despite limited financial resources. Without a strong brand image that has the ability to create a positive association be- tween a product and its country of origin in the consumer’s mind, the COO loses its capacity to develop a distinc- tive product image in foreign countries.

KEYWORDS. Brand, country of origin, China, U.S., “made in Italy”, small and medium-sized enterprise (SME).

considerable number of scholarly investiga- INTRODUCTION tions of this issue from various perspectives. During purchasing processes, consumers Several authors have considered whether need to process a wide range of information the brand is able to play a more important role that affects their preference and buying deci- than COO in influencing the evaluation pro- sions. The complexity of markets and the cess of a consumer. These authors have come abundant supply of domestic and foreign pro- to divergent conclusions. Han and Terpstra ducts push the consumer to make use of (1988); Wall, Liefeld, and Heslop (1991); Tse synthesizing indicators of quality assessment, and Gorn (1993); as well as Darling and Ar- such as brand and country of origin (COO) nold (1988) have concluded that COO has which can streamline their decision-making greater influence than brand in regards to the process (Han, 1989; Oberecker & Diaman- perception of quality. topoulos, 2011). The importance of a brand in Other scholars (Verlegh and Steenkamp, the evaluation process of a consumer in terms 1999; Ulgado, 2002; Hui & Zhou, 2003; of its interaction with COO has prompted a Srinivasan, Jain, & Sikand, 2004) Donata Vianelli, Ph.D.is a Professor of Marketing at the University of Trieste and Head Coordinator of the Bachelor Degree in Management at MIB School of Management, Trieste, Italy and Giovanna Pegan, Ph.D. is a professor at the Department of Economic Sciences (DEAMS), University of Trieste, “ Trieste, Italy Address Correspondence to Dr. Donata Vianelli, MIB School of Management, L. go Caduti di Na- siriya 1, 34142 Trieste, Italy. E-mail: [email protected]

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have supported the opposite view, considering vantage of “a made in effect” rather than in- the effect of the brand to be most important. vesting in a brand may be more favorable for Links between brands and their COO have companies of limited size. On the other hand, been recently analyzed from a new point of in regards to investment in brand image, com- view. The diffusion of hybrid products and panies could choose to employ a country’s the consequent difficulty for consumers to image (Roth & Diamantopoulos, 2009) as a precisely identify these product’s actual coun- feature that helps to enrich strategic brand po- tries of manufacture (Chao, 1993) has led ma- sitioning (Pastore, Ricotta, & Giraldi, 2011). ny scholars to focus on consumer perception According to the logic of co-branding, using a of a product’s origin in relation to brand asso- combination of the above two angles, a coun- ciations (Thakor & Lavack, 2003). Thus, a try’s image could be used for the reinforce- new concept of brand origin has gradually ment of a brand image (Busacca, Bertoli, & emerged, one defined by the consumer’s per- Molteni, 2006; Aiello et al.., 2008) so that the ception of a product’s origin in relation to its value transferred to the market could be in- brand. This new concept tries to go beyond creased (Bursi, Grappi, and Martinelli, 2012). the traditional paradigm of COO (Thakor & An analysis of the relationship between a Kohli, 1996; Hamzaoui, Merunka, & Bartik- brand and its COO from a business perspec- owski, 2011). tive led this study to develop a qualitative Despite numerous contributions aimed at research based on in-depth interviews (Yin, understanding the relationship between a 2011) from 14 Italian SMEs operating in the brand and its COO from a consumer perspec- U.S. and China. The choice of this sample is tive, studies investigating this phenomenon primarily due to the fact that when choosing from the perspective of the company are SMEs operating in highly dynamic and com- scarce (Usunier, 2006; Josiassen, & Harzing, plex markets such as the U.S. and China, we 2008). The present study aims to fill this gap could better highlight the issues of the by focusing on the relationship between researched relationship (Vianelli et al., brands and COO from the point of view of the 2012a). Secondly, the selected companies company. In particular, our analysis seeks to are significant not only because they operate investigate the role of a brand relative to its in industries where a brand can be a source country of manufacture and country of brand. of competitive advantage for the firm, but Such analysis of the relationship between also because, traditionally, these firms can brands and their COO appears to be of consi- take advantage of a positive halo effect deri- derable interest in relation to European SMEs. ving from a COO effect (Bursi, Grappi, & Indeed, recent studies have pointed out that Martinelli, 2012). country of origin can be an important feature on which to develop distinctive positioning in LITERATURE AND PROPOSITION international marketing strategies (Bertoli & DEVELOPMENT Resciniti, 2012). This is particularly true in cases of a highly-perceived fit between coun- The current global competitive scenario try image and product category (Roth & Ro- has complicated the theoretical analysis and meo, 1992; Hamzaoui & Merunka, 2006). In interpretation of the COO. Indeed, such a situ- these cases, a strong link with a territory rich ation has led to the reassessment of the nature in symbolic connotations and values serves to of the COO in order to identify a solid inter- imbue products with new meanings and in- pretative paradigm in response to this phenom- crease their value as perceived by the consu- enon. This reassessment has drawn on two mer. From a financial standpoint, taking ad- different modes of analyses, i.e., the so-called Vianelli and Pegan 59

deconstruction strategy followed by the asso- make the results of different studies puzzling ciation strategy. and difficult to compare. The first approach, identified as the de- Extant research has identified the country construction-strategy, seeks to identify a set of of design as the major component of the COO sub-concepts that differently affect a custom- in its ability to affect a customer’s qualitative er’s qualitative perception during buying pro- perception (Li, Murray, & Scott, 2000; Brad- cesses based on the origin of a product (Li, ley, 2001). However, Quester, Dzever, and Murray, and Scott, 2000; Chowdhury & Ah- Chetty (2000) have suggested that consumers med, 2009). In the initial conception, COO mostly value the COO in regards to product constituted a cue of association with the prod- components rather than a product’s country of uct that possessed the ability to influence the design or assembly. Furthermore, Chao customer’s decisional process (Dichter, 1962). (2001) has added that there is a more positive However, the typical dynamics of a globalized customer response when the parts of a product economy complicated the definition of COO come from within the same country as where it (Phau & Prendergast, 2000). The spreading of is assembled. In a recent study, Hamzaoui, production, decentralization, outsourcing, the Merunka, and Bartikowski (2011) have shown dematerialization of the offer, and above all, how knowledge of the country where a product the emergence of so-called hybrid products has is designed can bring about effects only if a served to make the exact identification of a product has symbolic value. In the majority of product’s origin more complicated (Li, Mur- cases, customers consider the country where a ray, & Scott, 2000; Phau & Chao, 2008). product is manufactured to be of greatest im- From such a methodological perspective, the portance. concept of COO is enriched with multidimen- Ulgado (2002) has endorsed the idea that, sional value that incorporates different aspects in the evaluation process of a product, most generated in modern production processes consumers are inclined to base their opinion (Han & Terpstra, 1988; Chao, 1993; Ahmed & on the country of brand over the country of D’Astous, 1996; Allred, Chakraborty, & Mil- manufacture. Such evaluation is more likely ler, 2000). to happen given the large number of attributes In the marketing literature, there is no to be considered by customers during the buy- unanimous consensus among researchers on ing process (Ulgado & Lee, 1993). Verlegh the extent to which it is possible to identify the and Steenkamp (1999) have concurred with effects of the COO. Some authors (Quester, such an assessment by showing via empirical Dzever, & Chetty, 2000; Chao, 2001; Insch & research how the effective strength of the McBride, 1998; 2004) have considered COO COO does not differ much if the products are to include country of design, country of parts, designed and manufactured in the same coun- and country of assembly. Others (Chen, 2004; try or in different countries. The reason, they Ulgado, 2002; Thakor & Lavack, 2003) have argue, for a consumer’s choice is most often instead chosen to distinguish the country of much more affected by brand image, as con- brand origin from the country of manufacture. sumers often do not know the origin of the Finally, Leila, and Merunka (2006) have con- good. sidered the significance of the country of de- Some authors have deemed the country of sign and the country of manufacture. Various manufacture to have greatest impact on the studies have shown the dynamics and relations buying process (Han & Terpstra, 1988; Wall, between each of these variables. However, the Liefeld, & Heslop, 1991; Tse & Gorn, 1993). existence of different classifications serves to Others, particularly when considering hybrid products, have focused more so on the country

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of brand and on the brand itself (Verlegh & quiry in the affective and normative area Steenkamp, 1999; Ulgado, 2002; Hui & Zhou, (Dmitrovic & Vida, 2010). This second per- 2003; Srinivasan, Jain, & Sikand, 2004). spective, which expresses conviction in the su- However, many authors have pointed out how periority of the country of the brand over the factors such as brand equity, brand country of manufacture of the product, has knowledge, or the phase of a product’s life spread widely among researchers. Neverthe- cycle may significantly influence different less, it is worth noting that even though cogni- research results. For instance, Hui & Zhou tive aspects have been losing importance in the (2003) found out that when the country of globalized world, the recent economic crisis manufacture has a less reputable image com- has led to an increased customer awareness of pared to the country of brand, this information the support that can be given to their domestic may have a negative effect on product evalua- economy in buying local products (normative tion. This effect is worse when a company component). Hence, in such a situation, people has low brand equity. High-equity brands may be pushed to choose domestic products might overcome the influence of the country and, therefore, significantly increase the im- of manufacture and compensate for this nega- portance of the country of manufacture tive effect by strengthening the role of the (Dmitrovic & Vida, 2010). country of brand. For instance, Schaefer Given the results of studies analysing con- (1995) has pointed out how the effect of the sumer perceptions, it is relevant to investigate COO may become less important as customers what, from a company’s perspective, is the become more familiar with a specific brand. role of the concept of manufactured in with Lampert and Jaffe (1998) have shown alterna- regards to associations drawn between a coun- tively that while a country’s image may be try and a specific brand. It is necessary to un- important in affecting customer opinion in the derstand then, when considering a firm’s mar- product introductory phases, a brand image keting strategy on a global level—particularly becomes more influential in the stages that in cases in which there is a good relationship follow. This is due to the elevated number of between a country’s image and the product brands in a given sector and customers’ category—whether the country of manufac- knowledge of a specific brand. ture is of increased or decreased importance as The association strategy considers custom- the importance of the country of brand origin ers’ associations between a product or service increases. Therefore: and its brand and COO (Andehn & Berg, 2011). From this perspective, the focus of re- P1a/P1b – In a firm’s global marketing strat- search on the COO is moved from production egy, the country of manufacture be- to consumption (Andehn & Berg, 2011). The comes more/less important than the importance of the location where a product has country of brand origin. been manufactured designed or assembled de- creases in favour of customers’ perception and Recent studies require further examination identification of the country of origin (country beyond the simple consideration of the coun- of association). In other words, the former try of brand origin to a better understanding of method of analysis focuses on the effects of the consumer behavior. Certain authors have COO considered as a qualitative attribute of the suggested that one should consider the exact product (i.e., related to the cognitive processes location of a firm to be less important, since of customers), while the latter method focuses consumers may not be fully aware of it, thus on the effect of the origin of the product as grounding their choices more on personal identified by customers, representing an in- opinions deriving from direct or indirect expe- Vianelli and Pegan 61

riences with a product and its brand (Andehn guistic factors (phonetic, morphologic, and & Berg, 2011; Hamazoui, Merunka, & Bartik- semantic) added to a brand in order to stimu- owski, 2011). Thakor and Kohli (1996) have late positive perception from customers (Lim coined the term “brand origin”, defining it as & O’Cass, 2001; Harun et al., 2011) and indi- “the place, region or country where a brand is cate the origin of the product to the consumer perceived to belong by its target consumers” (Thakor & Lavack, 2003; Li & Shooshtari, (p. 26). These researchers have noted how 2003). customer perception may differ in relation to Consequently, a brand image appears to be the location where a product (linked to a spe- able to suggest to a consumer’s mind associa- cific brand) has been manufactured, or to a tions that are linked to the origin of a product, manufacturing firm’s location. Various fac- regardless of the location of production (Papa- tors may deceive consumers, such as igno- dopoulos & Heslop, 1993; Samiee, 1994; rance, low interest, or lack of information O’Shaughnessy & O’Shaughnessy, 2000; Jo- concerning the origin of a product in the effort siassen & Harzing, 2008). The issue then to avoid negative evaluations in its target mar- becomes understanding if firms, particularly ket. Therefore, there is an issue associated SMEs often characterized by limited financial with consumer awareness (Samiee, Shimp, & resources, can best promote their offers mostly Sharma, 2005; Balabanis & Diamantopoulos, based on the country of manufacture and/or the 2008; Samiee, 2010), and consequently, with country of the brand, or by investing in the the decision of marketing managers on how brand as a vehicle for the creation of a brand much to invest in marketing communications origin culture. Hence: in order to ensure consumers’ positive asso- ciation with product quality and brand image, P2a/P2b – In a firm’s global marketing strate- thus marginalizing the impact of country of gy, the brand plays/does not play a manufacture (Clarke, Owens, & Ford, 2000). primary role with regards to the coun- Different strategies may be adopted to en- try of manufacture and/or country of sure such a connection. These could include, brand. but are not limited to, using a brand name that suggests a firm’s location (Thakor & Lavack, METHODOLOGY 2003; Usunier & Cestre, 2007), using symbol- ic images related to a specific country, such as This study is based on the use of qualita- the colors and stylized shapes of a flag (Insch tive analysis techniques in the form of semi- & Florek, 2009), the choice of a particular structured interviews (Yin, 2011). The results language apt to recall a specific country or of this study have been derived from an inter- geographic area through the brand name, and pretative research approach that allowed for others (Harun et al., 2011). Some effects of a articulate answers to the following research product’s origin may be spontaneously evoked questions related to brands and their COO: by consumers due to a strong association with - What is the relation between the a country without any necessary marketing country of manufacture and the coun- effort, such as with pasta in relation to Italy, or try of branding, and what are the dy- sushi in relation to Japan (Usunier & Cestre, namics that characterize this relation? 2007). Recent studies have further developed - What is the role of a brand in relation the concept of brand origin by presenting a to its country of manufacture and/or more developed paradigm for evaluating the country of branding? impact of the COO, denominated “culture of Interviews have been carried out with ex- brand origin”, which focuses on cultural lin- port and marketing managers who have direct

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responsibilities in the markets analyzed here perceived fit between the product’s and have in recent years been strongly in- country and the product’s distinctive volved in the strategic decisions of their re- attributes (Hamzaoui & Merunka, spective companies. Given the purpose of 2006). this study, the use of qualitative research 2. Italian companies with production methods is particularly adequate since it al- and/or sales subsidiaries both in the lows for in-depth understanding of the multi- Chinese and American market. dimensionality of the COO construct in branding decisions, and is thus better suited Utilizing the Bureau Van Dijk database, for the purpose of this research than a quanti- 39 companies were identified and invited by tative approach. The latter appears very ap- email to participate in the research. Fourteen propriate when used in relation to a consum- companies agreed to participate in the in- er-based perspective, but it risks ironing out depth interviews. Fifteen companies did not the company’s perspectives that are very im- answer, and 10 firms declared themselves un- portant in providing, via descriptions of their able to participate, with most of these provid- operative experiences, useful information to ing no reasons. For confidentiality reasons, examine brand and COO dynamics in-depth. all of the companies asked not to be identified The research sample used for qualitative in the study (Table 1). analysis comprises of 14 Italian companies. In a European context, the choice of Italy is FINDINGS particularly well suited for the study, as the “Made in Italy” label represents a competitive The results of the interviews have business advantage both in terms of the coun- been divided into two parts. The first part try of manufacture and the country of brand. investigates the importance of country of Regarding the foreign countries of entry, the manufacture in respect to the country of choice of the U.S. and China has been moti- brand as an element of distinctiveness in the vated by the following considerations: for international marketing strategy of a com- Italian companies, the United States repre- pany. The second part analyzes the rela- sents the most important commercial partner tionship between brand, country of manufac- outside the European Union, which has long ture, and country of brand. term relations with Italian firms and which Country of Manufacture and Country of offers them relevant growth opportunities. A Brand “Made in Italy” label is strongly appreciated in the US, especially in the country’s tradi- The relationship between country of man- tional industries of food, fashion, and furni- ufacture and country of brand is described in ture (ICE, 2012). China represents a market different ways depending on the sectors con- of future growth where Italian companies cur- sidered. This approach has the advantage of rently have limited direct investments, strug- presenting multiple perspectives and interpre- gle to grow via exports, and are often unpre- tations that are at the same time consistent in pared to operate in such a culturally different the overall assessment. market (Vianelli, de Luca, & Pegan, 2012a). In the fashion industry, major luxury The following details this study’s compa- brands that once differentiated themselves by nies’ selection criteria: highlighting their artisanship in terms of local 1. Italian companies belonging to the production linked to the peculiarity of a terri- 3 F industries (fashion, furniture, and tory now want to stand out via different strat- food) characterized by a highly- egies. Some companies, for example, argue that it is not where a company produces but Vianelli and Pegan 63 how a company is perceived in terms of the retailing, which is seen as the primary means origin of its brand that lends it distinction. In of spreading the image of a country and there- this sense, emphasis is placed on the role of fore the brand connected to the country.

Table 1: Characteristics of the Sample Company Industry Country of manufacturing Italy USA China A Food (wine) Y N N B Food (wine) Y N N C Food (wine) Y N N D Food (ham) Y Y Y E Food (cheese) Y N N F Food (dessert) Y Y N G Food (coffee) Y N N H Food (coffee) Y N N I Apparel N N Y J Apparel N N Y K Apparel (Shoes) N N Y L Furniture Y Y Y M Home / furniture Y N N N Furniture Y N Y

This sensibility rings through in a state- new important phenomenon is increas- ment from the owner and vice president of one ingly emerging. It is defined as “mass of the companies analyzed (Company J): privilege”, that is the opportunity to Does it really matter where the product purchase a luxury item that in the eyes is realized? If we want to communi- of the consumer appears to be unique, cate the Italian origin, we need to work although it is not accompanied by the on the design of both the garments and added value of the real made in Italy. the shops. Italian products can be For instance, our lines that we have found almost everywhere. The same made available at Target were made in cannot be said about authentic Italian Japan and with different materials than shops. our other products. The limited relevance ascribed to the The above comments appear equally ap- country of manufacture in the fashion industry plicable in regards to the Chinese market, is clearly pointed by the companies analyzed. where appreciation for the “Made in Italy” For instance, one respondent highlights the label is high, but ultimately, purchases are de- lack of appeal of the country of manufacturing termined by the perception of brand origin. In when describing the partnerships their compa- a country where “Armani is perceived as a ny is drawing up in the American market to French brand”, where “it does not matter that strengthen brand awareness (Company I): [a] dress has been made in Italy”, and where Our consumers do not really care if the all that matters is that “consumers feel that product has been manufactured in Italy they are wearing a garment that embodies the or not. On the contrary, we are follow- Italian style” (Company J), value shifts from ing the trend of collaborating with qualities linked to manufacturing in the terri- mass American retailers. Indeed, a tory of origin to the perceived country of

64 JOURNAL OF EUROMARKETING brand origin. In this way, production can easi- veal several interesting aspects regarding a ly move away from the area of origin without product’s country of manufacture. Indeed, in damaging the image of the product. this sector, the success of many Italian- Even in other industries, the interviews in sounding products makes one think immedi- this study appear to confirm trends seen in the ately about the real meaning of manufactured fashion industry. Those in the furnishings in Italy and the role that it plays with the con- sector, for example, certainly recognize a con- sumer. Many companies surveyed emphasize sumer segment that wants an authentically the limited knowledge of the final consumer, Italian product. However, the growth poten- who only in rare cases is able to recognize and tial for this kind of product in foreign markets appreciate the true origin of a given product. is marginal. The head of an Italian company This occurs even in markets such as the wine located in Shanghai reports (Company N): market, where origins should be an essential My clients buy a few pieces that we feature in product evaluation. Several manag- produce in the Italian plant. However, ers, such as this one from a well-known com- later, they ask me to produce them pany in the wine sector, emphasize this issue again here at lower prices, precisely (Company B): equal in all respects to the products All that is Italian is always a step produced in Italy. What really matters ahead of all the other products in the is the Italian style brand made in Chi- market. However, it makes me smile na, not the real product made in Italy. when I see “Made in Italy” products in There are also many Italian companies in the U.S. market that actually have been China that export the “Made in Italy” brand manufactured in Canada or in the while at the same time producing models in United States. Unfortunately, the the Chinese market that have success due to American consumer that lives along their strong association with Italy. As report- the coast—in cities like New York and ed by the Asian manager of a well-known San Francisco—is the only one who brand of Italian furnishings (Company C): knows Italy pretty well. On the con- Concerning our image, the dual rela- trary, if we move to the Central states tionship between the export of Europe- of the U.S. (where 90% of the wine is an brands and the on-site manufacture purchased), the consumer is not in- of our Chinese brands in China is formed at all and, therefore, mix up working well. In order to sell brands “Made in Italy” with everything that is directly manufactured in China, in- proposed in this way. deed, we focus on factors like design Competitiveness is another problem re- and quality. A local brand of our ported by companies. An over-arching theme company, for example, is translated in- found in all of the interviews with companies to Chinese with an expression similar in the food sector is that the major competitors to “German friend”. The aim is to of companies in Italy are mainly Italian com- convey the idea of the German brand, panies in America, while in China they are synonymous with quality and innova- generally European companies. Since Italian tion. Another brand, instead, is trans- products are numerous in the former market, lated into something like “beautiful Italian managers rightly argue that differentia- Italian kitchen”, focusing on the design tion in regards to the country of manufacture and Italian lifestyle. becomes irrelevant. Similar is the issue in Moving to the analysis of the food indus- China, where competition increases every try companies in the study, the interviews re- year, and companies with origins in individual Vianelli and Pegan 65

European countries are often aggregated in the its being associated with a problem of dis- consumer perception into the undifferentiated tance. In the U.S., the manager of an Italian “Made in Europe”. food company stresses this (Company F): Finally, an issue pertaining to various in- “They came to us just because we produce dustries is the need to offer a high-level ser- here. Many Italian chain restaurants recognize vice. This is highlighted in the interviews and the value of ‘manufactured in’, but they are contrasted in regards to the country of manu- afraid. They prefer local suppliers because facturing. The export managers of two well- they do not want to risk with logistics.” known coffee companies point out (Company The situation in China is not much differ- H) (Company G): ent. One furniture company manager reiter- What really matters is to associate the ates (Company M): intrinsic quality to an equally high- Italians expect to come here with the perceived quality, which only partly catalogue, give it to the distributor say- depends on where the product is made. ing “buy” and not giving any kind of In selling coffee, the service dimension help. Once you sell, it is “bye bye” is very important because coffee is a and they do not want anything to do semi-finished product till the moment with problems. If a piece breaks, there it is poured into a coffee cup. Hence, is nobody here, then it is a disaster, an excellent semi-finished product can there is no assistance because the be turned into a tin-pot finished prod- company is not present, and the local uct in case we don’t succeed in teach- partner is unable to provide it. For this ing our barmen the Italian way to pre- reason, I am investing on moving the pare a good coffee. I would say that production here in China. producing it in Italy or here in the U.S. does not really make the difference. Investing in the Brand What does matter is the service that we offer here to our bartenders. Concerning the role of a brand, industry You can concentrate your efforts only differences become marginal. Overall, there on producing in the country of origin, is a common approach to the choice of inter- focusing on technologies that can de- national marketing strategies among the ana- crease the difficulties a foreign barman lyzed companies. Even in a different geo- often faces when preparing a coffee. graphic context, trends in the role attributed to However the risk is to increase the brands tend to be very similar both to the quality of the cup of coffee but to cre- American and Chinese markets. ate a negative effect on the “romance”, Some companies emphasize the need to that is the pride of the bartender to be invest in a brand because they believe it is the recognized as an “artist” of the Italian only way to differentiate themselves from oth- coffee. To say that the coffee is pro- er brands that are not made in Italy, even if duced in Italy is quite important, but it they are presented as such. The head of an is much more important if it is per- American branch of a famous company in the ceived as “born” from the hand of the food sector speaks in this regard (Company local American or Chinese bartender. E): The above discussion of customer service When you look at the brand image relates to logistics and after-sales service. developed by Amano Artisan Choco- From this perspective, the country of manu- late, a U.S. company based in Utah, facture takes on a distinctly negative value in you immediately realize that the first

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step to be successful here is to invest vesting in our brand we can increase in the brand. The word Amano our differentiation to become more comes from the Italian translation “by competitive also against other Italian hand” and “they love,” which is the brands. way the company describes their cho- The companies belonging to the sample colate. In other words, by investing consider the brand as one of the main tools to in the brand, this company is able to increase perceived quality. According to create a strong association with the some of these companies, it does not really country of manufacturing and the matter whether the product is “Made in Italy” (inexistent) Italian origins for the or in a foreign country. This is confirmed by consumers. one of the surveyed managers (Company E): Paradoxically, companies such as those Our products are made in Italy and operating in the wine industry, where the many of us think that this is important origin of the product should have the ability to to ensure better quality control. I drive the image of the product, are actually know both the American and the among those which show that “if you want to Chinese market, and I know that this grow, you must invest in the brand” (Compa- does not apply in their case. It is per- ny A): ceived quality that counts. In the If we add up the two parameters to market, the “authenticity” factor in 100%, for us, the brand counts for the equation “Parmigiano = Italy” is 70% and the origin 30%. The strate- not a critical factor for success, but gy of the whole group is to enhance the brand is. And our problem is pre- the brand more than the origin: the cisely the lack of credibility of a qua- origin is a consequence, because then lity brand that is still in its infancy. when one speaks of our brand it is di- The fact that we are Italian counts, rectly connected with Tuscany and but we can only do this if we com- Italy. All the policies we implement municate through a known brand. create value through brand focus, we Communicating through a brand also make global projects, we localize means creating a bridge with a foreign market. them for different markets and impor- This means developing associations that not ters give us suggestions to improve only recall the home market, but also get clos- results. er to the country served. This is very im- Or, as reported by the owner of a famous portant in countries like China where appreci- winery (Company C): ation of western styles coexists with a strong attachment to local culture. This is what the At the outset, the label on our bottle manager of a company in the Chinese food for American supermarkets had Pro- secco written in big letters. Cur- sector said (Company D): rently, there are about forty different Italian managers and their target con- brands by many different companies sumers are concerned with authentici- on the shelves, from Ciao [Hello] to ty, about controlled designation of Primo Amore [First Love]: we had to origin, the link with the territory. But change the label by writing our name the buyers are Chinese buyers and in big letters to differentiate their clients, and after a difficult start, ourselves. Our worst “enemies” are we realized that they do not consider it the Italians abroad, and only by in- essential to buy a product that is truly Italian, but rather a product of Italian Vianelli and Pegan 67

identity, adapted to their market, ideal- tunity instead. Indeed, the market ly. Identity is created exclusively must first be aware of the peculiari- through marketing. For example, we ties of the product itself in order to be replaced the company’s historic bell receptive to a company that proposes logo with a panorama of the Alps in a product such as Italian Espresso. the background for our sausages made Leave it to Starbucks to invest in the in China, with a Venetian image concept of Italian product, it allows marked “Marco Polo”, evocative of It- our company to move directly from aly’s relations with China. the image of the territory to investing Moreover, some of these companies claim in the brand, to put itself forward pre- that investing in the brand helps to take ad- cisely as a brand of superior quality. vantage of the “Made in Italy” label by em- Indeed, the country of manufacturing phasizing only positive aspects and avoiding and/or the role of brand origin are en- contingent negative dimensions. One of the hanced primarily by investing in the managers points out (Company F): brand. Made in Italy is a reinforcement and Finally, the importance given to a brand yields a bigger margin compared to by consumers and retailers requires strong its competitors. As an Italian, you marketing investments. Italian companies have a certain appeal, but then you must be able to create an image that goes be- have to be able to keep your pro- yond the concept of “Made in Italy”, and one mises. The food scandals (botox, that can still be competitive compared to other buffalo, ethanol, Parmalat) were des- European and even Chinese companies. As tructive: they had a devastating im- noted by the CEO of a company in the fashion pact on the “Made in Italy” image for industry (Company K): all Italian companies abroad. Our Italian shoes are beautiful; if they are company is proud to be Italian, but expensive, that’s fine. In fact, it’s we realize that it is important to esta- even better, but in China if the brand blish the brand disconnecting it from is not known, no one will buy them, the Italian flag. even if they are the best shoes on Another important element regarding earth. It doesn’t matter. No one will brands emerged from the interviews. The buy them. This is a concept that Ital- presence of international players is seen not ians do not seem to understand. always as a threat, but also as an opportunity by SMEs deciding to invest in brand image. DICCUSSION AND CONCLUSION In fact, if on the one hand major competitors invest in advertising with a budget that would In the in-depth interviews carried out with be completely inconceivable for SMEs, on the Italian SMEs operating with direct invest- other hand, these enormous investments can ments in the U.S. and China, manager experi- serve to create product/country knowledge on ences frequently emphasize the importance of which Italian companies can capitalize and the country of brand. In particular, these which can help them point out the characteris- companies have described how much they tics of their brands (Company G): have invested to configure their brands with Direct confrontation with financially the symbolism of Italy that is so appreciated powerful competitors such as Star- and recognized by U.S. and Chinese consum- bucks would be a waste of capital. Its ers, regardless of the origin of manufacturing. presence should be seen as an oppor- Therefore, in terms of importance, a clear le-

68 JOURNAL OF EUROMARKETING nience emerges toward the country of brand heavy research focus on the consumer can over the country of manufacture. In all of the force an evaluation while losing significance analyzed industries, companies seem to rec- from a managerial perspective (Usunier, 2006; ognize the prevalence of the affective and Insch, Prentice, & Knight, 2011). normative dimension (Dmitrovic & Vida, The change highlighted above pertains 2010) over the cognitive one (Verlegh & more to the analysis of brand role. Even when Steenkamp, 1999). This can be deduced by we have a strong and positive fit between continuous references given to brand origin country image and product categories, which perception and to the necessity to point out is a situation that creates conditions for em- product origin regardless of the country of ploying the COO “Made in Italy” label in or- manufacture. In light of these results, we can der to establish a differentiated market posi- therefore suggest that only proposition P1b tion of a product, companies still stress the has been supported: in a firm’s global market- necessity of investing in a brand as a means of ing strategy, the country of manufacture be- achieving competitive advantage in the long comes less important than the country of run. This applies also to SMEs that are often brand. characterized by shrinking financial resources Furthermore, the interviews have shown which limit costly investment in branding. that, from a company’s perspective, COO The interviewed enterprises, therefore, support analysis is strongly simplified in recognizing the P2a proposition: in global marketing strat- only the country of manufacture, the country egy, the brand becomes more important than of design, and the country of brand as sub- the country of manufacture and/or the country concepts influencing consumer behavior of brand. (Chen, 2004; Ulgado, 2002; Thakor & Studies suggesting investment in consum- Lavack, 2003; Leila & Merunka, 2006). Fur- er awareness are thus confirmed in pointing ther distinctions proposed by the studies, such out the necessity of creating a culture empha- as those pertaining to the country of parts and sizing brand origin (Lim & O’Cass, 2001; Ha- the country of assembly (Queter, Dzever, & run et al.., 2011; Thakor & Lavack, 2003; Li Chetty, 2000; Chao, 2001; Insch & McBride, & Shooshtari, 2003; Samiee, Shimp, & Shar- 1998; 2004), have never been quoted, con- ma, 2005; Balabanis & Diamantopoulos, firming the increasing importance of the per- 2008; Samiee, 2010) that serves to strengthen ception of the country in terms of brand origin positive associations with a brand (Atilgan et over the productive dimension. The country al., 2009). From the perspective of a compa- of design, recognized by previous studies as a ny, such necessity becomes compelling so that COO component able to influence the con- companies can differentiate their prod- sumer’s qualitative perception (Li, Murray, & ucts/services from foreign sounding brands, a Scott, 2000; Bradley, 2001), has been consid- perspective often neglected in academic stud- ered by the interviewed companies as an ante- ies that focus mainly on consumers. cedent to the country of brand, which repre- One particular aspect that we have to con- sents the influential image of the country sider in the evaluation of company strategies where a brand has originated from. In other in diverse markets such as China and the U.S. words, the analysis of the COO from the com- is the similarity in the importance conferred to pany’s perspective usually simplifies decon- the brand. Although companies operate in struction strategy theories significantly by fo- different market and product contexts, which cusing more on consumers and their associa- are characterized by different life cycle phas- tions (Andehn & Berg, 2011). From a theoret- es, the conclusion of Lampert and Jaffe ical perspective, such a result confirms how a (1998), i.e., that COO is more important in the Vianelli and Pegan 69 introductory phase but that a brand’s image uct origins if the COO effect is negative (Tha- becomes more influential in the following kor & Kohli, 1996), but also to employ the stages, has not been confirmed. The reasons brand in the creation of a brand origin culture for such a divergence from Lampert and that rests on positive perceptions of a country. Jaffe’s (1998) findings may primarily be at- If, from the consumer’s perspective, brand tributed to the accelerated business develop- origin exists only in the long-term memory ment over the last few years. Firstly, growing and constitutes a strong brand association globalization has led to swift diffusion of in- (Keller, 2003), any negative variations of per- formation about new products and brands ception in regards to the country of brand or of even before their effective presence in foreign the country of manufacture will probably have markets. Hence, a product’s and/or brand’s a minor impact on the brand image. familiarity exists even in the introductory The relation between brand, country of phase of the product life cycle (Schaefer, manufacture, and country of brand has shown 1995). Secondly, the relation between country dynamics that suggest areas for future re- and brand image should take into account dif- search focused both on company and consum- ferent cultural contexts, particularly with ref- er perspectives. The experience of Italian erence to emerging markets. For instance, in SMEs present in the Chinese and American China, buying a well-known brand assists in markets has firstly shown how a positive COO the acquisition of social respect by displaying may be considered as positive in the beginning social status and communicating characteris- but, particularly in recent years, does not an- tics of personality and uniqueness (Vianelli, ymore constitute an adequate base for ensur- de Luca, & Pegan, 2012a). Last but not least, ing growth in foreign markets. Hence, making the growing internationalization of companies investment in a brand has become a must. Fu- has influenced competitive dynamics as well. ture studies could therefore employ a large Companies with the same country of brand sample population of export companies to ob- origin often compete against each other in for- tain numerous responses that would make eign markets. As data from the Italian com- these studies more reliable and valid in the panies analyzed in this study suggests, a coun- analysis of a positive country of brand or try’s image may enrich a brand image while brand image of a company. Secondly, the not being particularly distinctive. In regards prominent role of country of brand over coun- to current markets such as the U.S. and China, try of manufacture suggests that future re- one interviewed manager states, “the worse search should focus not only on consumer competitors are Italians abroad” (Company perception in regards to the country of brand, C). as is the case already in recent literature, but Another important finding emerging from also on marketing decisions that can facilitate the analysis in this study is the role attributed the role of a brand as a generator of positive to brands that can help companies to disen- perceptions of the country of brand to foreign gage from a negative perception of the country consumers. It is worth highlighting here again of manufacture and/or the COO. The inter- the key roles of retailing, communication, and viewed companies, although enjoying a posi- brand adaptation to the country of destination, tive COO effect, deem the creation of a strong with the latter being particularly important in brand as a guarantee in reducing any eventual emerging markets. negative side effects, such as food scandals, Finally, attention is drawn towards the political problems, or the weakening of their relationship between brands and the country respective country’s image. Hence, managers of brand in global channels (Vianelli, de Luca, see a brand not only as a means to blur prod- & Bortoluzzi, 2012b), particularly in export

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Journal of Euromarketing, 23: 74 - 84, 2014 Copyright © IMDA Press ISSN: 1049-6483 print / 1528-6967 online

Climbing the Brand Ladder: From Fashion Accessory to Dis- tinctive Country-of-Origin Brand

Đurđana Ozretić Došen

ABSTRACT. This paper analyses a fashion accessory brand and its potential to become a distinctive brand, which would convey a positive country-of-origin image, too. The author seeks to explore if specific brand features and attributes linked to the historic perception of the country-of-origin imple- mented in product development and subsequent marketing activities can help achieve powerful brand differentiation, successful positioning, and desirable brand personality, thus leading to the creation of positive associations related to the brand's country-of-origin. The paper relies on qualitative method- ology, i.e., its findings are based on a case study. The research findings support the assumption that the principles of branding should follow an emotional branding approach in order to achieve images and stories about a particular brand, which can subsequently lead to the desirable results with regard to brand attractiveness and brand loyalty and convey a favorable country-of-origin image.

KEYWORDS. Fashion accessory brand, country-of-origin-image, Croatia brand

INTRODUCTION through “distinction brands show how compa- companies can enter established markets but Brands convey intended positioning, es- still succeed, by defining themselves against tablish product differentiation, help to create a (rather than following) the competition” new market segment, and/or build a desirable, (Haig, 2004, p. 107). Distinctiveness in brand distinctive image. In order to be able to personality (as one of the primary components achieve the aforementioned, brands’ features of brand image) is, as stated by Lin (2010), a and attributes should translate into a higher key success factor which enables developing a order of perceived benefits to the consumers strong connection between consumer and the (Davis, 2002). Brands’ perceived benefits and brand and, as reported by Maehle and Shenor reputation are the basis for competition among (2010), with a possible hierarchy of brand per- companies which offer similar products and/or personality dimensions’ influence. According services. However, “a sustainable point of to Fournier (1998), strong consumer-brand differentiation with respect to a key attribute relationships rely on the combination of socio- can be difficult to create, especially if one’s emotive attachments, behavioral ties, and sup- competitors are established” (Aaker, 2004, p. supportive cognitive beliefs. In line with that, 205). Marinova et al. (2012) stress the importance Brands need a distinctive image that cap- of strategies based on increased interactions captures a product’s character and benefits: Đurđana Ozretić Došen, D Sc. Is a Professor of Marketing, Faculty of Economics, University of Za- greb, Zagreb, Croatia.. Address correspondence to Dr. Đurđana Ozretić Došen, Department of Marketing, Faculty of Eco- nomics, University of Zagreb, Trg J. F. Kennedyja 6, 10000 Zagreb, Croatia. E-mail: [email protected]

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between the consumer and the brand for the country with negative image (Laroche et al., creation and reinforcement of key brand asso- 2005). According to Thakor and Lavack associations. In emotional branding literature, (2003) in some product categories perceived as stated by Thompson, Rindfleisc and Arsel origin is very important to their image, i.e. (2006), “Consumers are commonly portrayed perceived origin associations are very as enthusiastic partners who engage in inti- powerful source of brand appeal. Jaffe and intimate dialogues with other brand users and Nebenzhal (2001) state that while the image of brand managers to create mutually beneficial, the country affects the image of its products identity-enhancing, as well as community- and services, experience with these products building and loyalty sustaining meanings” (p. and services causes revisions in the country 52). image, too. All leads to conclusion that Brands talk about their origin, too. country-of-origin image develops over time, is Findings of extant marketing research, which deeply rooted, and may have a significant emerged more than 40 years ago, suggest that influence on consumer choice. the country image construct represents the This paper is focused on the integration of image source for product-related and service- brand management and country-of-origin related country associations. The first image, and in examining if and how that definition of country image comes from integration may influence both the marketing Nagashima (1970), who defines it as the strategy of the individual company, which picture, the representation, or the stereotype wants to develop strong brand personality and that businessmen and consumers attach to internationalize the brand, and the products of a specific country. “The country- improvement of the country-of-origin image. of-origin notion fits within perceptual, Relevant findings from marketing literature attitudinal, and belief constructs, which are have been combined with practical insights commonly accepted as determinants of choice from the case study. The first version of the and buying behavior” (Morello, 1993, p. 288). case study (Ozretic-Dosen, 2002) has been Therefore, country-of-origin image is often a revised; the context and findings are presented cue for evaluating products. There are authors for illustrative purposes only. who claim that favorable perceptions about the country result in accordance to the THE CROATA BRAND approving attributions to brands from that country (Paswan & Sharma, 2004). Did You Know that the Necktie Originates According to Roth and Romeo (1992), from the Croats? consumers’ evaluations of a specific product from country X are based on the match The idea embodied in the Croata brand between the perceptions of the product and the (Figure 1) is best described in the words of its country. Papadopoulos and Heslop (1993) author and founder, Mr. Marijan Bušić: have found that consumers tend to devaluate The idea of the tie as an authentic products originated from developing countries medium which could help to present and often associate them with poor quality and Croatia and Croats to the world durability, technological gap, lower price and occurred to me in the summer of 1972, value, unreliability, etc. However, there are in my native town of Nova Gradiška, situations of incongruence between beliefs when I was still a student of about the country and beliefs about the philosophy and sociology at the country’s products; e.g., Iranian rugs are con- University of Zagreb. Even then, I re- sidered high quality products originating from alized that this thought was so signifi-

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cant and strong in a cultural sense and mer Yugoslavia), and after that, the brand pro- in terms of marketing that it could tection was validated at the Croatian Patents change the image of Croats and their Institute in Zagreb. In the beginning of 1991, position in the world. However, the fiirst boutique with a selection of high- through the years, the awareness that quality designs of ties was opened in Zagreb. this idea would be impossible to ac- At the end of the same year, the first Croata tie complish without a worthy product and of an original, historical heritage design ap- acceptable production, was maturing peared. During the following year, an entire inside me. Moreover, without a suita- assorttmment of original historical designs was ble infrastructure the encyclopedic en- offereed, which raaised significant interest in try which had been the basis of the Croatia and abroad. The quality of the prod- idea could even become counterpro- uct, the innovative design and approach, as ductive since an inadequate product well as the story behind it, were the key dif- would be regarded as a fault of the ferenttiating elements whichh made the new Croatian national genius which, in produuct exclusive and enabled it to position spite of obvious advantages, did not itself as special and distinct from the competi- use the possibilities of a prestigious tion. idea which had presented itself. Figure 1. Croata Brand

The professional life of Marijan Bušić is interesting and unusual. During the first twen- ty years of his work experience, he performed different jobs entirely outside his profession (graduate of philosophy and sociology) be- cause he was unwelcome and politically unac- ceptable in the former socialist system. In those years, he acquired experience and skills in commerce and similar fields, which subse- quently helped him to turn his idea into a business venture. In 1989, he founded a pro- The history behind the Croata brand duction and trade company. Feeling that the Croata brand project would need more energy, According to Chaille, (1994) the history of he decided to go into partnership with his the tie could be summarized as follows. Facts friend Mr. Zlatko Penavić. The friendship of indicate that in thhe first part of the 17th centu- Mr. Bušić and Mr. Penavić goes back to their ry, Crroatian soldiers were part of the army that common active involvement in the laic fought for the French king in the thirty-year movements of the Roman Catholic Church. war raging then through Europe. They distin- An economics graduate, Zlatko Penavić, be- guished themselves from other soldiers with fore his partnership with Mr. Bušić, had an original piece of clothing; a scarf tied in a worked and earned his experience in foreign knot around their necks. The scarves differed: trade. while common soldiers wore scarves made of Potomac Ltd. Company was founded in cheap cloth, officers had theirs made of fine Zagreb on 30 March 1990. The partners material, cotton or silk. Such an item of cloth- agreed on a 50% stake in the company. The ing accessory, until then entirely unknown in Croata brand was patented in the Federal Pa- Europe, surprised the French aristocracy and tents Institute in Belgrade (the capital of for- the bourgeoisie and even aroused their admi- ration. Many French officers adopted the Došen 77

scarf worn by the Croats, and on returning a travelling Croatian heritage. For this pur- home, some of them were not slow to flaunt pose, it continuously plans and organizes a this fashion even at court. The fashion of the variety of different activities, targeted at par- cravat was launched around 1650 in France. ticular groups, the purpose of which are to of- Ten years later, the cravat conquered England fer new ways to present the cravat as a medi- and its American colonies. um, a cultural phenomenon, and an elegant accessory. It is estimated (according to (Cravate, f.f. (Mod.)- ancien ajustement de http://www.academia-cravatica.hr/hr) that toile fine, plie; on faisoit plusieurs tours autour du cou, and les deux bouts noues sous le menton, des- over a billion people around the world have cendoient le long de la poitrine. Les tours de cou seen Academia Cravatica’s largest projects. ont succede aux cravates. (Diderot, M. (1754). En- In the summer of 2006, Academia Cravatica cyclopedie ou dictionnaire raisonne des sciences, performed the spectacular project Cravat des arts et des metiers, par une societe de gens de around Croatia. The basic idea was to con- lettres (Tome Quatrieme). Paris: L’Academie Roy- ale des Sciences and des Belles-Lettres de Pruffe. - nect all Croatian regions with a red ribbon, Cravate - an ancient adjustment made of fine cloth, which symbolises connecting Croatian cultur- pleated, wrapped around the neck several times and al and geographical diversities into a whole the two ends tied under the chin, descending down along the state borders, as well as to organise the chest. The tie originates from this cloth various activities in cities and interesting tour- wrapped around the neck (Translated text from French). ist locations. The project installation A Cravat around Arena was performed in Pula on 18th The tie - (French cravate), a long piece of October 2003, a project performed in the best material (silk, cotton or some other material) preserved Roman amphitheatre in the world, which is worn around the neck, usually pulled symbolically connected the past and the fu- under the collar of a shirt or blouse. The tie- ture, the ancient times and the modern civili- cravat was at first the name for wide neck zation. scarves worn by Croatian soldiers in the 17th century. (1974: 508). Leksikon. Zagreb: Jugo- The Characteristics of the Croata Brand slavenski leksikografski zavod. Researchers have attempted to find out The Vision “Croatia, Homeland of the Tie” and to examine various variables which could be linked the brand differentiation and distinc- The building, strengthening, and promo- tiveness. Moore, Fernie, and Burt, (2000) tion of the image “Croatia: homeland of the state and their research confirms that brand tie” are the essence of the vision of the group awareness and image are crucial for the suc- of companies to which Croata brand belongs. cessful, international spreading of fashion The group is made up of the following com- brands. panies: Potomac Ltd, Šestine Ltd, Croata Ltd, The root of the Croata brand lies in the Oktogon Ltd, and the institution Academia idea that, due to the native origin, the produc- Cravatica. Potomac Ltd is the owner and pro- tion of ties with autochthonous Croatian de- ducer of the brands Croata, Ban, Torpedo, and signs, supported by the promotion of Croatia Šestine. Croata Ltd. is a designer company as the homeland of the tie, presents an excep- that creates the design of all original brands of tional opportunity both to make profitable the group of companies. Oktogon Ltd. deals business and to promote the image of Croatia with retail sales. Academia Cravatica is a around the world. The first ties with national non-profit organization whose mission is the designs that appeared in 1991 were sold under preservation and the development of the tie as the name Kravata Croata. They experienced a

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boom on the national market thanks to the world trends in fashion. For this collection, new, attractive design, and due to the fact that creations by the renowned Croatian designers demand for luxury ties had not been satisfied Miroslav Šutej, Željko Kovačić, Boris Ljubi- (Croatian-made high-quality ties were scarce, čić, as well as others are also used. Regarding and the selection of imported products was technical and functional quality, the products limited, while their prices were high). Produc- of both collections have the same characteris- tion and sales recorded growth, and conse- tics. quently, the assortment widened. The produc- In the assortment of the Croata brand, tion of various ties started, along with leather products of exclusive design may be made by goods and fashion clothes. As a result, the order (for instance for the President’s Office). widening of the assortment created a need to Also, there is a collection for the needs of the change the name of the brand, so Kravata VIP guests: unique pieces, so-called gift fold- Croata became Croata. ers, containing gifts such as a handmade Presently, Croat is a family brand. The sculpture or a painting, and a tie, a bow tie or assortment comprises ties and variations of a scarf with distinctive motifs appearing on ties, leather goods, and clothes. A list of the sculptures or the paintings. products branded Croata includes: neckties, bow ties, cravats, gentlemen’s and ladies’ The Croata Brand Constants scarves, handkerchiefs, tuxedo belts, waist- coats, gentlemen’s shirts and suits, ladies’ Agrawal and Kamakura (1999) state that shirts, a variety of leather goods such as key- many brands use cues which are implied in the chains, wallets, belts, covers for documents, brand name and/or in promotional appeals, to passport covers, tie cases, shirt cases, jewelry achieve perceived country-of-origin associa- boxes, toilet bags, vanity boxes and braces, as tions. In line with that, Croata is the brand well as a combination of leather-silk goods name which reminds straight away of Croatia, with same range as leather goods. The leading the homeland of the tie. Since the tie is the product of the entire assortment is the Croat leading, most famous product of the company, tie. and since at one time, ties were sold under the Inspired by history and national heritage, name Kravata Croata, the name has been im- the Croata brand designs are created exclu- planted in the domestic consumers’ minds sively by the designers in the Croata Ltd. having become synonymous with the Croata Some of the most recognizable designs which brand. However, the full assortment of the have been inspired by historical features in- brand is not well recognized as most people clude motifs like the Croatian braid, the Glag- still think that the brand relates only to ties olitic script, elements of the Croatian coat-of- and perhaps ladies’ scarves. Meanwhile, arms, the coat-of-arms of Croatian counties, Croata is the name of the chain of exclusive towns and families, and cultural and historic shops where, besides the products under the monuments. They are printed on the ties, Croata brand, products of other brands of the scarves, leather goods and other products from group can also be bought, for instance, the the assortment. The appeal of the Croatian imported and licensed brand. national motifs lies in their originality and The brand logo is made up of the name novelty value for buyers, which make the Croata in which the first A is shaped in the products remarkably well received on the form of a tie (Figure 1). The slogan “Did you market, especially by foreign buyers. The de- know that the necktie originates from the Cro- sign of one part of the assortment, which ats?” is original, inventive, and communicates might be called a fashion collection, follows the vision of the group of companies (“Croa- Došen 79

tia: homeland of the tie”). However, some- ished by hand. These distinctive techniques times it is confusing, because it relates only to are regarded as the best technologies for high ties as part of the assortment, which creates quality tie production, especially when the more of a problem in positioning the brand in material used is pure silk of certain quality the minds of the consumers and in clarifying supplied by top world producers. The design what comprises the assortment of the brand. is achieved by applying two characteristic Although the idea of the necktie unites all the techniques: printing and weaving (French, shapes of the neck, it is uncertain how many jacquard). In order to obtain special effects, customers are aware of this fact that not only apart from silk, cotton or woolen threads can the classic tie but also variations of it such as be woven into the tie. Quality is additionally cravats, scarves, and shawls are included. The obtained by inserting a stiffener, which is also other products labeled as the Croata brand, for made of excellent quality material, and a lin- example, gentlemen’s shirts, leather goods, ing with the Croata logo. Due to the applica- etc., lie fully outside the brand slogan. The tion of the hand finishing technique, an inte- company has not yet found ways to make the gral part of the tie is also a security knot at the slogan cover the full range of the assortment end of the thread which completes the tie. offered. This gives elasticity to the tie and avoids the The colors of the brand are grey and red. breaking of threads. However, they could be used more consistent- The ties are in the shape of a half-bottle ly. The color shades vary according to where (non-linear) and are of standard dimensions. and when the logo is printed, mostly due tech- Also, a special so-called “long tie” is made, nological reasons, hence the need to change designed for tall people (a niche product on providers frequently due to their lack of busi- the Croatian market). A children’s assortment ness sense and their difficulty in ensuring con- is specially made: bow ties and small ties, sistent quality, color, prices, etc. This situa- waistcoats, dickeys, and bows. All ties have a tion again brings into question the relevant band guide made of the same material as the positioning of the brand in the minds of the tie itself, through which the narrower part of consumers over time and the image building the tie can run, a functional detail supplied of the brand and of the company. In the past, only by the world’s most prestigious brands. the logo frequently appeared in gold and sil- Ties and variations of ties are packed in ver, as well as in yellow-blue combinations. cellophane and in cardboard packaging. Both A gold logo has been used on several leather types of packaging follow the shape of the products and in the decoration of the interiors product. The cellophane has a protective of shops. Additionally, some company em- character, and the cardboard box has, besides ployees think that the periodical changing of a protective function, also a communicative color shades and using different colors for the purpose between the producer and the buy- logo are attractive features, because they re- er/consumer, and in this way it represents both flect an aspiration towards dynamism and dis- an integral part of the product and an element tinction. of marketing. The cardboard packaging is made of resistant cardboard and the brand Other Marketing Features of Croata Ties logo appears on it. On the inner side of the tie packaging there is also the famous history of The quality attributes of technical and the tie, written in Croatian and English. Apart functional nature seem first-rate. For instance, from the described standard packaging, a pre- all ties are handmade made or initially pro- mium packaging for VIPs is also available duced by sophisticated machines and then fin- (which can be bought retail at supplementary

80 JOURNAL OF EUROMARKETING cost), and special packaging is made for sales ating characteristic element of the exterior de- on airplanes. sign is the gold metal brand symbol. Ties and related items of the Croata brand Among the distributors on the Croatian are provided with tags. The card tags are blue, market, most are outlets retailing luxury the motif used in the design of the product is goods. The distributors have to satisfy the represented, and an explanation on that partic- conditions set by the brand. These conditions ular motif is given in Croatian and in English. comprise the following elements: the location As found and highlighted in recent re- of the shop, the type of interior design (the search by Shukla (2012), uniqueness and showcases for ties are an integral part of the price-quality perceptions significantly influ- display of the Croata brand and are installed at ence consumers of luxury brands in western, all the selling points which have satisfied the developed countries while price-quality per- conditions of distributorship), the expertise ceptions have a significant role for consumers and the manner of the staff. Only consignees in emerging markets, too. On the national who can satisfy the required conditions can market, the Croat brand is positioned by price become distributors, and the distribution is in the up-market category. The prices are kept continuously supervised. In Croatia, the brand constant; there are no reductions, no special can be found in some fifty locations, from offers, and no sales. The policy of prices has specialized boutiques to outlets with a special- been adapted to the current economic situation ly arranged tie section. in Croatia. On foreign markets, the price of Croata products are exported to all conti- the products from the Croata assortment var- nents except Africa. They are sold to whole- ies. Although the hope is to position the sale and retail distributors. Agents specializ- products up-market, prices vary a great deal ing in trading in ties, and who have their own depending on the market. The intention is to network of specially educated and trained standardize prices on the international market sales staff, are used for the markets of Ireland, over a long period, but this has not been Japan, China (Hong Kong), Germany, etc. achieved yet, for different reasons. Croata ties are sold in Australia, Austria, Can- ada, the Czech Republic, New Zealand, Swit- The Sales and Distribution of Products of the zerland, and the U.S.A. among many other Croata Brand countries.

The Croata brand products are sold direct- PROMOTION AND COMMUNICATION ly to larger buyers, and are sold in retail in WITH THE MARKET their own shops, as well as through distribu- tors. The company has 14 shops at the mo- Mr. Penavić pointed out: “Croat ties are ment, out of which 13 are in Croatia and 1 in seen round the necks of many politicians, dip- Bosnia and Herzegovina. The characteristic lomats and businessmen. The fact that many elements of the interior and exterior design of renowned persons have chosen some from these exclusive outlets represent a means of more than a thousand designs of Croat ties communication and a way of portraying the means that we have become recognizable on image of the brand and the country-of-origin the world stage of fashion.” of the product. The basic features of the inte- In the previous promotional policy, the rior design are the showcases (specially made stress was on advertising, with television as for ties) made of lightwood (cherry with the the main medium. The slogan “Did you know addition of reddish coloring). The differenti- that the necktie originates from the Croats?” was broadcast via satellite as far as North Došen 81

America. Advertising in magazines has been Parallel to Croatia, the brand is promoted used less frequently, although an advertise- overseas through articles, announcements and ment regularly appeared in the in-flight maga- short information fragments in daily newspa- zine of the national airline company, Croatia pers and specialized magazines. Most recog- Airlines. nizable campaigns are conducted in Italy, The starting point for changes which were France, Ireland, Portugal, the United King- made in the marketing communications was dom, the U.S.A., and many others. Thus, the the idea that Croat ties in particular represent Croatian Television has recorded and broad- an inexhaustible source of ideas for news and casts a 9-minute show entitled, “The tie comes for organizing events and miscellaneous at- home”, in which the Croata brand appears as tractions. The aims were to promote the quali- an example of the Croatian production of ties. ty of the brand and make it distinctive, while The web site of the company, creating a sense of loyalty in the buy- www.croata.hr, apart from exercising promo- ers/customers. For this reason, specific media tional effect, represents a communication de- of limited reach to target potential customers vice and enabling on-line shopping. Fast and (e.g. various magazines of top-quality print) direct contact with potential buyers and all were used. A special type of promotional ac- others who may be interested in buying Croata tivity is the production of “Fan ties”, designed branded products is facilitated. Besides usual within Croata for Croatian sports fans. type of customer information containing, for Especially significant for promoting the example, gift cards, delivery information, tes- brand is a large number of foreign buyers who timonials and the like, an interesting section, “export” Croatian design and quality. In the called Style Advisor offers a variety of useful book of comments, there are numerous obser- information tips related to the culture of wear- vations from buyers. Some customers who ing a tie and other accessories. decided to write their impressions said, “This is not my first visit to Croat and it will not be BRAND PROTECTION my last. I love your neckties and my wife The Croata brand is protected in order to loves your scarves.” fight against possible imitations and counter- Written in German: “Ich war begeistert feiting. It is protected nationally and interna- von der grossen Auswahl an Krawatten un der tionally by the Croatian Patents Institute. sehr netten Damen, die mich gut beraten ha- However protection covers brand name and ben. Ich komme bestimmt wieder.” The Eng- logo only. As stated by Hilton, Choi, and lish translation: “I was delighted by the large Chen (2004), a significant proportion of mar- choice of ties and the very nice ladies who ket value in clothing and accessories indus- gave me good buying advice. I am sure I shall tries derive from their designs, and by fre- come back again.” quent, seasonal design changing, designers are “The best of Croatia is embodied in trying to limit the impact of imitating and Croata brand - the striving for the best in qual- counterfeiting. Since the designs of the motifs ity with design and presentation that is abso- which appear under the Croata brand have not lutely world standard. You can be sure that been protected, imitations by competitors are you will be successful.” commonplace. For example, various national Written in Italian: “Lo stile e la corte- producers sometimes sell ties with the design sia non hano nulla da invidiare all’Italia, an- of the braid. There is evidence from the past zi.” The English translation: “The style and about several foreign producers who used the courtesy have nothing to envy Italy for, on the motif of the Dalmatian dog in the design of contrary.” their ties. There have been numerous cases in

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which the braid design has been imitated by influence the image of Croatia in the world foreign country producers. Even an imitation and enhance the self-esteem of Croats as a na- of the motif of St. Euphrasius’ basilica in tion. Poreč was also uncovered. The control and The case study findings suggest that the protection of the Croata motifs on internation- greatest potential to maintain and exploit the al markets are more problematic due to the brand competitive advantage on the national fact that Italian business partners hold the cli- market, as well as its successful penetration chés used in the application of designs created and affirmation abroad is related to the emo- by the Croata designers. The design applica- tional brand management. As defined by tion is done entirely in Italy due to the lack of Roberts (2004), the consumer-centric, rela- appropriate technology in Croatia. Therefore, tional, and story-driven approach of emotional consistency in the quality of the product, in- branding helps make deep and lasting affec- novation and originality of designs, the con- tive bonds between customers and the brand. stant building of the brand image, as well as Having in mind the existing features of the its competitive positioning in the minds of the Croata brand, it can be concluded that a solid customers, are the basic elements of utmost ground for future emotional branding is pre- importance which can help the Croata brand to sent. Consequently, Croata brand managers deal successfully with imitators and counter- should consider concentrating their efforts in feiters. enhancing brand meaning, which will eventu- ally result in passionate and loyal customers. A future strategic brand management policy DISCUSSION AND MANAGERIAL based both on historical traits and emotional IMPLICATIONS appeals could help develop distinctive brand personality and move the brand up the ladder The case study indicates that the potentials of brand identity towards the ability of creat- of the Croata brand are still to be exploited. ing desirable brand image, even a luxury The analysis of the past and current marketing brand, distinctively based on an affirmative activities reveals that the following factors country-of-origin image. have distinguished themselves as differentiat- Several useful directions for strategic ing elements, and therefore should be thinking, marketing, planning, and implemen- strengthened over time: tation of different marketing activities include: a) Apart from the admirable functional, a) Enhancing of relevant and substan- technical, and technological features, Croata tial intangible and tangible features of the brand possesses tangible and intangible com- Croata brand that will serve as unique, distinc- ponents, created both by a synergy of the fash- tive, and meaningful differentiators. ion and culture of clothing and Croatian histo- b) Building brand personality having ry combined with popular culture apprecia- in mind the relationship to the personality tion. types of consumers, i.e., relationships between b) As a leading product in the assort- self- image and brand preferences. ment, the Croata tie reflects the aesthetic, his- c) Brand positioning that enables clear toric, and cultural characteristics of its origin, and lasting impressions in the minds of the and, as such, it conveys not only the universal- customers, connected with brand values and ity of the product, but also the individuality of country-of-origin. the person wearing it. d) Constant enrichment of the commu- c) The brand expresses the idea of nication efforts of the company with its cus- products made in Croatia that are Croatian by tomers based on interactive marketing com- origin. Therefore, the brand could positively Došen 83

munication efforts of the company with its Tome Quatrieme (reprint). Paris: customers based on interactive marketing L’Academie Royale des Sciences and des communications possibilities (brand Belles-Lettres de Pruffe. communities, social media, mobile marketing, Fournier, S. (1998). Consumers and their location-based mobile marketing, etc.). brands: developing relationship theory in e) Considering connection of the brand consumer research. Journal of Consumer with well-known Croatian endorsers who Research, 24(3), 343-373. enjoy positive image internationally, with Haig, M. (2004). Brand Royalty – How the extreme attention given to the selection and World’s Top 100 Brands Thrive and characteristics of the endorsers. Survive. London and Sterling: Kogan f) Strengthening the alliance with the Page. Academia Cravatica, which studies, preserves, Hilton, B., Choi C.J. and Chen, S. (2004). The and improves the cravat as a part of Croatian ethics of counterfeiting in the fashion and world heritage. industry: Quality, credence and profit Finally, it can be concluded that despite issues. Journal of Business Ethics, 55, the vast body of marketing literature and 345-354. numerous research studies on emotional Jaffe, E.D. and Nebenzahl, I.D. (2001). Na branding and country-of-origin image per se, tional Image and Competitive Ad van the phenomenon of their relationships still tage. Copenhagen: Copenhagen Business remains under-researched. Therefore, future School Press. conceptual development and empirical Laroche, M., Papadopoulos, N., Heslop, A.L. research in this area are needed and welcome. and Mourali, M. (2005). The influence of country image structure on consumer REFERENCES evaluations of foreign products. International Marketing Review, 22(1), Aaker, D.A. (2004). Brand Portfolio Strategy 96-115. - Craeting Relevance, Differentiation, En Leksikon (1974) . Zagreb: Jugoslavenski ergy, Leverage and Clarity. New York: leksikografski zavod. Free Press. Lin, L. Y. (2010). The relationship of con Academia Cravatica, www.academia- cra sumer personality trait, brand personal vatica.hr/hr, Accessed on April 29, 2013. ity and brand loyalty: an empirical study Agrawal, J. and Kamakura, W.A. (1999). of toys and video games. Journal of Country of origin: a competitive ad van Product and Brand Management, 19(1), 4- tage? International Journal of Research in 17. Marketing, 16(4), 255-267. Maehle, N. and Shenor, R. (2010). On con Chaille, F. (1994). La grande historie de la gruence between brand and human per cravate. Paris: Flammarion. sonalities. Journal of Product and Croata, http:// www.croata .hr, Accessed April Brand Management, 19(1), 44-53. 30, 2013. Marinova, S., Cui, J., Shiu, E., and Marinov, Davis, S.M. (2002). Brand Asset Management M. (2012). Impact of customer relation – Driving Profitable Growth Through ships on brand equity in Chinese reatil Your Brands. San Francisco: John Wiley banking. Journal of Euromarketing, 21, and Sons Inc. 37-52. Diderot, M. (1754). Encyclopedie ou diction Moore, C.M., Fernie, J. and Burt, S. (2000). naire raisonne des sciences, des arts et des Brands without boundaries – The metiers, par une societe de gens de lettres internationalization of the designer

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Journal of Euromarketing, 23: 85 - 110, 2014 Copyright © IMDA Press ISSN: 1049-6483 print / 1528-6967 online

Relationships between Brand Perception, Ideology and Con- sumer Ethnocentrism in Post-Communist Romania

Andreea Iacob John Kuada Lartey G. Lawson

ABSTRACT. The present study seeks to test empirically the relationship between ideological orien- tation, consumer ethnocentrism, brand perception, and demographic factors in Romania. Since previ- ous studies have not empirically examined these relationships, the present study therefore contributes to filling this research gap. The study results show a strong link between communist ideology and consumer ethnocentrism and between the ethnocentric tendency of the Romanian consumers and their brand perception. Furthermore, demographic characteristics, like gender, age, and education, seem to moderate the ideological orientations as well as the degree of ethnocentrism and brand perception. Additionally, the decomposition of the ethnocentric statements in the CETSCALE into 3 component factors adds value to existing research knowledge in the field since previous studies have been based on uni-dimensional or two-factor estimates.

KEYWORDS. Brand perception, ideology, consumer ethnocentrism, Central and Eastern Europe.

INTRODUCTION et al., 2001; Beverland, 2001; Keller & Moorthi, 2003; Al-Khatib Robertson & Las- The collapse of the Soviet Union has been cu., 2004; Reiner et al., 2008). During the heralded by some scholars as a victory for early post-communist era, some scholars be- market-driven economic systems (see Mari- lieved that, with time, consumers in these nov et al., 2001; Coulter, Price, & Feick, countries would adopt Western consumption 2003; Schuh & Holzmüller, 2003; Petrovici & patterns and behavior, and Western firms Marinov, 2007; Schuh, 2007; Strasek, 2010). could conveniently apply marketing strategies The resulting transition from a centrally that have proved successful in the capitalist planned system to a free market economy in economies within the CEE countries as well the countries of Central and Eastern Europe (Naor, 1990; Lascu, Manrai & Manrai, 1996). (CEE) has provided an opportunity for com- But the “winds of change” initiated in panies from Western economies to re-establish 1989 with the fall of the Berlin Wall have not business presence in these markets (Marinov translated fully into a total eradication of

Andreea Iacob, MSc. is a Ph.D student, John E. Kuada, Ph.D. is a Professor and Grundfos Chair, and Lartey G. Lawson is affiliated with Department of Business and Management, Aalborg University, Aal- borg, Denmark Address correspondence to Andreea Iacob, Department of Business and Management, International Business Center, Aalborg University, Fibigerstraede 4, 9220 Aalborg, Denmark. E-mail: [email protected]

85 86 JOURNAL OF EUROMARKETING communism in the mental fabrics of the citi- er & Mazurek, 2010). Since brand image has zens of the CEE countries. Recent research been found to be a strong predictor of con- suggests that an increasing number of citizens sumers’ attitudes to foreign products, investi- in these societies yearn for a return to the gations into the link between ideology and communist era, and nationalistic tendencies brand perceptions have also been considered seem to appear in consumer preferences useful (Yagci, 2001). This study contributes (Gellner, 1993; Verdery, 1993; Molchanov, to diminishing the extant research gap. 2000; Marinov et al., 2001; Demirbag, Sa- The structure of the study is as follows. hadev & Mellahi, 2010; Siemieniako et al., First, we examine the premise that there are 2011). links between ideology, ethnocentrism and The emergent ethnocentric tendencies consumer brand perception in the former among consumers in CEE countries have, communist economies. Further on, we have moreover, become a major concern for West- developed a conceptual model to illustrate the ern companies which are operating in these relationships based on earlier studies by such markets (Beverland, 2001; Pecotich & Rosen- scholars as Crockett and Wallendorf (2004), thal, 2001; Dmitrovic, Vida & Reardon, and O’Reilly (2006). Second, by studying 2009). The challenge for most of them is to consumer perceptions and intentions in Ro- design strategies that ensure superior perfor- mania, the study provides empirical evidence mance in spite of consumer preferences for for the insights from our model and offers local products. Multinational firms that are some suggestions for subsequent research in eager to use standardized strategies tend to other emerging market economy contexts. wonder if local adaptations of their strategies In specific terms, the empirical part of the are actually worth the incremental costs (Las- paper seeks to address the following ques- cu, Manrai and Manrai, 1996). Some firms tions: operate with the view that adaptations are nec- 1. Does communist ideology relate to con- essary. For example, Beverland (2001) found sumer ethnocentrism in Romania? that New Zealand companies frequently al- 2. Does communist ideology impact Roma- lowed their distributors in CEE countries to nian consumers’ perceptions of imported repackage New Zealand products and sell brands? them under local brand names. The use of 3. Do Romanian consumers’ ethnocentric context-specific variables (including ideology) orientations influence their brand perception? for market segmentation and product position- In section two of the paper, we have brief- ing strategies has also been suggested by other ly reviewed the extant literature on ideology, scholars (see, for example, Saffu & Walker, consumer ethnocentrism, and brand perception 2005). in order to develop a conceptual model for the In spite of the emerging evidence of eth- present study. We then formulate hypotheses nocentric tendencies among consumers in for the empirical investigation in section three, CEE countries, their determinants and market- again drawing on knowledge from the existing ing strategy implications are not understood literature. These are followed by a presenta- well. There are some suggestions that ideolo- tion of Romania covering the context of the gy may be among the causes of ethnocentrism, empirical investigation in section four. In sec- since some previous studies have shown links tion five, the methodological approaches used between ideology and consumer intentions for the empirical investigation and data mate- and behavior (Schwarzkopf, 2011). There is a rials are presented. Section six presents the dearth of empirical knowledge on the nature results of the empirical analyses. Section sev- and strength of the relationships (Saffu, Walk- en discusses the findings, points out their im- Iacob, Kuada and Lawson 87 plications for marketing strategy formulation lins, Steg, and Koning (2007) studied the rela- as well as the limitations of the present study. tionships between values and consumer be- haviour and found that individuals who hold LITERATURE REVIEW AND MODEL collective, society-directed values are more DEVELOPMENT likely to demonstrate environmentally and so- cially responsible orientations than those who Political science scholars have long hold individualist, self-directed values. Fur- acknowledged the importance of political val- thermore, scholars such as Hirschman (1993); ues and ideologies in understanding the Cunningham, Nezlek, and Banaji (2004); and worldviews of various social groups (Crockett Arnould and Thompson (2005) argue that & Wallendorf, 2004; O’Reilly, 2006). Crock- consumers tend to defend their dominant in- ett and Wallendorf, (2004) define ideology as terests and political ideologies in their socie- “a world-view readily found in a population, ties through their purchase decisions and other including sets of ideas and values that cohere, economic actions. For example, in the 1980s that are used publicly to justify political stanc- and 1990s, Hirschman (1993) studied the es, and that shape and are shaped by society” masculine and feminine ideologies and their (p. 512). These authors use the term “political impact on the consumer behavior in the socialization” to describe the processes by U.S.A. Similarly, Crockett and Wallendorf which people come to acquire political values (2004) studied how cultural values and politi- and ideology. Hirschman (1993) suggests that cal ideology might undergird the consumption political ideologies tend to shape not only the attitudes of African-Americans in the U.S.A. views and attitudes that people hold on gov- Building on previous studies, we argue ernment but also on economic management that there are links between ideology, con- processes. Different political ideologies may sumer ethnocentrism, and branding strategies. coexist and complement rather than challenge Our arguments are also based on recent stud- each other in pluralistic societies. However, ies calling for multidisciplinary research on each ideology is usually championed by the consumer behavior. For example, Askegaard most powerful members of the society who (2006) argued that branding strategies can seek to propagate their tenets through co- gain much from insights into various disci- option and/or coercion. plines as sociology, politics, and anthropolo- In recent years, business scholars have gy. Moreover, Schroeder (2009) suggests that shown some interest in the relationships be- “if brands exist as cultural, ideological, and tween ideology, values, and marketing prac- sociological objects, then understanding tices (Crockett & Wallendorf, 2004; O’Reilly, brands requires tools developed to understand 2006). Adorno et al. (1950) published a book culture, ideology, and society, in conjunction entitled The Authoritarian Personality in with more typical branding concepts such as which they described the links between ideol- brand equity” (p. 124). In other words, an ogy, on the one hand, and the cognitive orien- awareness of the association between ideolo- tations of individuals in societies on the other. gy, politics, ethnocentrism, and brand percep- They also suggested that there existed a rela- tion would enable a firm develop and position tionship between these variables and the eth- its marketing communication tools more ef- nocentric dispositions of people in the socie- fectively. ties. They saw ethnocentrism as part of a Some scholars have investigated empiri- broader right-wing ideological orientation that cally these links. For example, Samiee, reflected conservative attitudes toward social Shimp, and Sharma (2005) showed that varia- issues generally. Fifty-seven years later, Col- bles such as socioeconomic status, ideology, 88 JOURNAL OF EUROMARKETING foreign language skills, and degree of interna- Based on the discussions above, we pro- tional exposure influence U.S. consumers’ pose a conceptual model, which presents the knowledge in recognizing foreign brands and link between brand perception, ideology, and subsequent brand perception. Furthermore, consuummer ethnocentrism. We also argue that some scholars have suggested that a brand’s demographic factors such as gender, income, country of origin is an important factor in un- educaattion, and occupation may moderate the derlying brand equity, consumer judgments, impact of the other variablles on consumer and choice processes (see, for example, Bilkey brand perception. The theoretical rationale for & Nes, 1982; Keller, 1998; Thakor & Lavack, this suggestion is presented below. This mod- 2003). el has also guided our hypothesis formulation.

Figure 1. Conceptual Model

Other scholars suggest that ethnocentrism HYPOTHESES is positively associated with other domination ideologies such as xenophobia and social Ideologyy and Ethnocentrism dominance orientaation (Keilloor & Hult, 1999; Wang, 2005; Altintas & Tokol, 2007). Simi- Previous studies have suggested a link larly, Shankarmahesh (2006) argued that so- between consumers’ ideological preferences cio-psychologicall constructs, such as ani- and their degree of ethnocentrism. The pre- mosity, materialism, and dogmatism, as well vailing understanding in the literature is that as economic and political parochialism, re- ideology feeds nationalism and thereby eth- flect consumer ethnocentrism. According to nocentrism. Thus, Han (1989) suggests that Marinov et al. (2001), economic and political ethnocentrism may have its roots in national- factorrs have shaped the post-communist ideo- ism. Consumer behavior scholars have, logiess of consummers in the CEE countries of therefore, used ethnocentrism to describe Bulgaria, Romania, and the Ukraine. We consumers’ belief that locally produced prod- therefore hypothesize the following: ucts are superior to imported products (Shimp & Sharma, 1987; Herche, 1992; Saffu & H1: Communist ideology has direct impact on Walker, 2006; Saffu & Scott, 2009). Romannian consumers’ ethnocentric disposi- tions. Iacob, Kuada and Lawson 89

ETHNOCENTRISM AND BRAND likely to reject foreign brands, not so much PERCEPTION because of their knowledge of the specific attributes of the products in question, but due Some existing studies have uncovered a to their brand image. In this regard, ideology strong link between consumer ethnocentric and ethnocentrism can jointly influence con- orientations, brand perception, and/or buying sumer brand perception and buying behavior. behavior (e.g. Bilkey & Nes, 1982; Peterson These considerations justify the following & Jolibert, 1995; Verlegh & Steenkamp, hypotheses: 1999; Pecotich & Rosenthal, 2001; Papado- poulos & Heslop, 2002; Kaynak & Kara, H2: There is a positive association between 2002; Pharr, 2005; Vida & Reardon, 2008). the ideological preferences of Romanian con- Consumer ethnocentrism (CE) may lead to sumers and their attitude towards foreign exaggerating the quality of locally made brands. products while undervaluing that of foreign- H3: The more ethnocentric Romanian con- made products (Huddleston, Good, & Stoel, sumers are, the more likely it is that they will 2001; Erdogan & Uzkurt, 2010). These per- have negative perception of foreign brands. ceptions tend to be guided by rational, emo- tional, and even moral considerations. In oth- Demographic Characteristics, Ethnocen- er words, ethnocentric consumers are inclined trism and Brand Perception to view purchasing of imported products as wrong because it hurts the domestic economy Previous studies disclose that demo- and is not congruent with their in-group feel- graphic factors such as age, education, in- ings of patriotism and belonging to their soci- come (Watson & Wright, 2000; Erdogan & eties (Shimp & Sharma, 1987). For example, Uzkurt, 2010), gender (Sharma, Shimp & Netemeyer, Durvasula, and Lichtenstein Shin, 1995), and occupation (Carauna & Ma- (1991) found that consumers in such countries gri, 1996; Othman, Ong, F.S. & Wong, 2008; as France, Germany, Japan, and the U.S.A. Ramsaran-Fowda, 2010; Hamelin, Ellouzi & had negative attitudes toward imports. Other Canterbury, 2011) impact consumer ethno- studies found negative consumer attitudes to- centrism. Other studies have shown that so- wards products imported in Canada (Wall & cio-psychological factors including patriotism Heslop, 1986), China and Russia (Klein, Et- and nationalism (Vida & Fairhurst, 1999; tenson & Krishnan, 2006), and the Nether- Yelkur, Chakrabarty & Bandyopadhyay, lands (Nijssen, Douglas, & Bressers, 1999). 2006; Javalgi et al., 2005) influence consum- Kucukemiroglu (1999) uncovered that non- ers’ ethnocentric dispositions considerably. ethnocentric consumers had more favorable With respect to age, it has been shown that beliefs, attitudes, and purchasing intentions while older shoppers are more hardened in toward imported products than did ethnocen- their brand loyalty and consequently more tric consumers. difficult to switch to other brands, including Previous research has revealed that when foreign brands (Auty & Elliot, 1998), younger consumers lack information about a product, consumers show a stronger inclination to buy they tend to rely on the brand name as an in- foreign products (Sharma, Shimp & Shin, dicator of the product’s quality (Ahmed et al., 1995; O’Cass & Lim, 2002; Wang, Siu, & 2004). Furthermore, brand image has been Hui, 2004; Hsu & Nien, 2008). Levels of ed- found to be a strong predictor of consumers’ ucation also impact attitudes to foreign goods. attitude toward foreign products (Yagci, The available empirical evidence suggests 2001). Ethnocentric consumers are therefore that the higher the educational level of con- 90 JOURNAL OF EUROMARKETING

sumers, the more positive their attitudes will RESEARCH CONTEXT be towards foreign or imported products (Good & Huddleston, 1995; Ueltschy, 1998; Romania is one of the 17 CEE countries. Erdogan & Uzkurt, 2010). Certain prior stud- It has a population of above 21 million peo- ies have identified that high income levels are ple, making the country the second largest directly related to positive attitudes towards national market in the region after that of Po- foreign products (e.g., Wall et al., 1990), land. It was part of the communist block of whereas other studies ascertained no such re- nations during the Cold War era and com- lationships (refer for instance to McLain and menced its transition to free market economy Sternquist, 1991). in December 1989 after the collapse of com- Studies of the relationships between gen- munism marked by the fall of the then Roma- der and ethnocentrism have produced incon- nian president, Nicolae Ceaușescu. The Ro- clusive results. Thus, Schooler (1971) found manian transition has been turbulent. During out that customers belonging to the female the 1990s, there was an economic downturn, gender tend to rate foreign-made products more significant in the first transition years more favorably than their male counterparts. (1990-1992), in which the economy shrank by All the same, studies by Vida and Fairhurst 27%. The period between 2000 and 2008 (1999), Balabanis et al. (2001, 2002), and Ja- brought a clear economic recovery, with an valgi et al. (2005) have uncovered that female annual growth rate of above 6%. Romania customers are more ethnocentric in their con- joined the European Union on 1 January sumption decisions than male buyers. Simi- 2007. The adoption of free market economic larly, studies testing the degree of association policies has opened the country to foreign between occupation and consumer brand per- companies seeking to sell their products in the ception have produced no consistent results. country (Marinov et al., 2001). Consequent- Carauna and Magri (1996), Ramsaran-Fowda ly, foreign products flooded the Romanian (2010), as well as Hamelin, Ellouzi, and Can- market in the 1990s (Lascu, Manrai, & Man- terbury (2011), found no statistically signifi- rai, 1996). A study conducted by Manrai, cant links between occupation and ethnocen- Lascu and Manrai (1999) indicated that Ro- trism. However, Wei (2008) has found that in manian consumers felt that the availability of China, respondents’ occupations do have an products and services increased in the post- impact on ethnocentrism. For example, communist era. Wei’s research noted that farmers among all The past years have brought variations in the occupational groups are the most ethno- consumers’ attitudes to products originating centric customers. Othman, Ong, and Wong from Western countries. Some consumers (2008) conducted a study on urban consumers found their consumption as evidence of social in Malaysia, as a result of which the authors mobility while others consider their purchas- concluded that consumers with clerical and ing unpatriotic (Milanova, 1999). production occupations showed a higher ten- dency for ethnocentric behavior. METHODOLOGY These considerations justify the following hypothesis: Survey Instrument H4: There is a positive association be- tween the demographic profiles of Romanian Data were collected using questionnaires consumers and their attitude towards foreign consisting of a 31-item scale, scored on a 5- brands. point Likert-type scale ranging from “strongly disagree” to “strongly agree”. Of the identi- Iacob, Kuada and Lawson 91 fied 31 items, 9 relate to brand perception, 5 tionnaires for final analysis. Table 1 provides to ideological orientation, and 17 to consumer a descriptive profile of the 317 respondents. ethnocentrism. The items measuring ethno- centrism are based on those developed by Table 1. The Percentage Distribution of the Shimp and Sharma (1987) and generally re- Socio-demographic Profile of the 317 Re- ferred to as Consumer Ethnocentric Tenden- spondents cies Scale (CETSCALE). The CETSCALE Demographic characteristics % has been tested in various countries including Gender the U.S.A., France, Germany, Republic of Female 57.4 Korea, and Japan, as well as in some CEE Male 42.6 countries (see Netemeyer, Durvasula, & Lich- Age in years tenstein, 1991; Huddleston, Good, & Stoel, < 26 33.1 2001; Lindquist et al., 2001; Saffu & Walker, 26 - 45 42.9 2006, Saffu & Scott, 2009). The results from > 45 24.0 the previous tests have confirmed its validity Education and reliability in different socio-cultural set- Primary 6.3 tings, hence its use in this study. Secondary 28.1 University 46.4 Data Collection Process Post University 19.2 Occupation The questionnaire was first written in Students 26.2 English, translated into Romanian by one of Unemployed 16.1 the authors who is Romanian, and then back- Employee 11.0 Employed with Higher Education 34.1 translated to English by another Romanian Employer 12.6 fluent in both English and Romanian. Conse- a Monthly income quently, questionnaire translation into Roma- Zero 20.2 nian was finalized. The questionnaire was < 1501 38.8 then pretested on Romanian students studying 1501- 2500 23.3 at Aalborg University in Denmark. The ques- > 2500 17.7 tionnaire was then administered to respond- Note:a in RON; 1 RON = 4.4 EUR ents in Bucharest, Cluj-Napoca, and Sibiu, the capital and two major cities in Romania. A Data Analysis mall intercept method was used to sample 325 respondents for the study. The mall intercept The data analysis was conducted in five approach has been used in a number of previous steps. First, we did a descriptive analysis to consumer ethnocentricity studies (Saffu & get an overview of the respondents’ replies to Walker, 2006). Data quality from previous stud- the items in the questionnaire. Second, we ies was found comparable to telephone inter- views (Bush & Hair, 1985). used the Cronbach alpha to analyse the inter- Respondents filled in nearly 90% of the nal consistency for all items. Third, we questionnaires without assistance from the re- steered confirmatory factor analysis of the searchers. The data were screened for uni- items describing the four constructs in our variate outliers and data editing was per- model: ideological preferences, consumer formed in order to identify omissions and er- ethnocentrism, demographic characteristics, rors in the responses. Eight questionnaires and consumer brand perceptions. The aim were deleted in the process, leaving 317 ques- was to reduce the responses to a smaller number of well-defined variables for further 92 JOURNAL OF EUROMARKETING analysis. Fourth, a one-way analysis of vari- 79.2% of the respondents believed that gov- ance (ANOVA) was used to investigate ernment regulations were needed to control whether or not the individual demographic the monopoly of the companies in the coun- characteristics moderate respondents’ brand try. Respondents’ attitudes to a free market perception, ideology, and ethnocentrism. Fi- economic system were somewhat unclear. nally, we conducted hierarchical multiple re- On the one hand, 60.6% of the respondents gression analysis to test our hypotheses. All agreed to the statement that a free market analyses were done using the SPSS version economy would lead to economic prosperity. 19. On the other hand, nearly half of them (47.6 %) agreed to the statement that a free RESULTS market economy was exploitative and unfair towards the working class. The composite The Ideological Orientations of Romanian mean score for all the items was 3.55, sug- Consumers gesting a more than average ideological ori- entation among the respondents. The distribution of the responses for the The confirmatory factor analysis (CFA) 5-item ideology statements are presented in conducted on the 5 items showed that 3 of the Table 2. The results showed that over a third items (items 3, 4, and 5) related to “com- of the respondents were of the opinion that munist ideology”. Item 1 conveyed “anti- products produced during the communist re- monopoly” sentiment while item 2 reflected gime were better than those produced in Ro- “free market” sentiment. An inter–item cor- mania in the recent years. At the same time, relation test recommended by Pallant (2005)

Table 2. Percentage Distribution of Respondents Scores for the Ideology Constructs (n = 317) Number and statement Items a Totally Rather Neutral Rather Totally Mean Std. agree agree disagree disagree 1. Government regulations are 45.1 34.1 11.7 4.4 4.7 4.10 1.08 needed to control monopolies. 2. A free market economy (no 19.6 41 18.3 12.3 8.8 3.5 1.2 business regulations) is the best way to ensure prosperity and fulfilment of individual needs. 3. People are basically good, 35 35.3 16.4 8.5 4.7 3.87 1.12 but they can be corrupted even under communism. 4. The free market economy is 19.2 28.4 21.1 19.6 11.7 3.24 1.3 exploitive, so unfair towards the working class. 5. The products offered in the 13.6 23.3 31.9 14.5 16.7 3.03 1.26 communist regime were better than the ones offered nowadays in terms of quality and taste. Composite Ideology measure 3.55 1.19 Notes: aThe response format is a five-point Likert-type scale (1= strongly disagree, 5= strongly agree.) was done for the three “communist ideology” measured the same construct. Furthermore, items. The results showed that all three items the results of the Kaiser-Meyer-Olkin meas- Iacob, Kuada and Lawson 93 ure of sampling adequacy was 0.603 (i.e., the 5 items—i.e., (1) “communist ideology”, slightly above the commonly recommended (2) “anti-monopoly”, and (3) “free-market value of 0.6), and Bartlett’s test of sphericity economy”. The results of these analyses are was significant (2 = 48.566, p < 0.000). We presented in Table 3. therefore retained the three factor solution for

Table 3. PCA Factor Loadings for the 3-items Measuring the “Communist-Ideology” Items (n = 317). Component Factor loadings Number and statement items “Communist Ideology” a 3. People are basically good, but they can be corrupted. .688 4. The free market economy is exploitive, so unfair towards the .724 working class. 5. The products offered in the communist regime were better than .692 the ones offered nowadays in terms of quality and taste. Note: a Principal Component Factor loadings. Only loadings with a value of greater than 0.5 are of rele- vance.

Degree of Ethnocentrism among Romanian The first factor contained items 5, 12, 14, 15, Consumers and 17. Together, these 5 items expressed a strong nationalistic attitude, suggesting that The distribution of Romanian consumers’ the respondents endorsed the view that im- responses to the 17-item CETSCALE state- posing high taxation on imported items would ments is presented in Table 4. Cronbach’s benefit the Romanian economy. We therefore alpha overall reliability test of the items pro- labelled this factor “taxing imports”. The duced a reliability coefficient of 0.94, well second component contained items 1, 2, 3, above the recommended coefficient of 0.70. and 4. These statements are relatively softer This indicates that the CETSCALE was a re- in their tones and simply express Romanian liable measure of ethnocentrism among Ro- consumers’ desire to buy domestic products. manian consumers. We label it “buy Romanian products” (See We have also conducted a confirmatory Table 6). factor analysis (CFA) of all 17 items. The The other 8 items (i.e., 6, 7, 8, 9, 10, 11, results are presented in Table 5. The initial 13, and 16) produced a single factor. All factor loadings of all the 17 items were higher these items relate to the view that the pur- than 0.5, indicating that all variables meas- chase of Romanian products amounts to sup- ured the same concept of consumer ethnocen- porting the Romanian economy. We there- trism. However, the rotated varimax solution fore labelled this factor “support Romanian (with Kaiser normalization) suggested that economy”. The results are presented in Table items 6, 7, 8, 9, 10, 11, 13, and 16 loaded on 7. two components. Therefore we decided to do Romanian Consumers’ Brand Perception two sets of principal component analysis for the two groups of items: one for items 1, 2, 3, Table 8 provides descriptive statistics on 4, 5, 12, 14, 15, and 17, and another for items the respondents’ brand perception. The anal- 6, 7, 8, 9, 10, 11, 13, and 16. ysis shows that 66.3% agree that brands make The results of the analysis of the first it easier for them to choose a product. It fur- group of items produced 2 factor components. ther shows that 81.4% of the respondents 94 JOURNAL OF EUROMARKETING

Table 4. Percentage Distribution of Respondents Scores and Mean Scores for Ethnocentric Statements (n=317)

Totally Rather Neutral Rather Totally Mean Std. Number and CETSCALE items a agree agree disagree disagree 1. Romanian people should always buy 29.1 19.3 19.6 19.9 12 3.24 1.301 Romanian-made products instead of imports. 2. Only those products that are unavail- 27.8 34.2 11.7 14.2 12 3.58 1.393 able in Romania should be imported. 3. Buy Romanian-made products and 61.5 25.6 7.3 3.5 2.2 4.41 .929 keep Romania working. 4. Romanian products, first, last, and 15.8 31.5 24 20.8 7.9 3.26 1.185 foremost. 5. Purchasing foreign made products is 5.7 14.9 22.2 25 32.3 2.37 1.234 un-Romanian. 6. It is not right to purchase foreign 9.8 20.6 24.1 25 20.6 2.74 1.268 products, because it puts Romanians out of work. 7. A real Romanian should always buy 16.1 19.3 18 21.8 24.7 2.80 1.419 Romanian-made products. 8. We should purchase products manu- 26.2 23.3 16.1 21.8 12.6 3.29 1.388 factured in Romania instead of let- ting other countries get rich of us. 9. It is always best to purchase Roma- 18.6 28.7 16.1 22.7 13.9 3.15 1.340 nian products. 10. There should be very little trading or 24.7 20.6 15.8 22.8 16.1 3.15 1.432 purchasing of goods from other countries unless out of necessity. 11. Romanian people should not buy 11.7 23.2 21.6 23.2 20.3 2.83 1.312 foreign products, because this hurts Romanian business and causes un- employment. 12. Restrictions should be put on all im- 6 10.4 14.8 20.8 47.9 2.06 1.259 ports. 13. It may cost me in the long run, but I 11.7 24.7 19.6 24.4 19.6 2.84 1.313 prefer to support Romanian products. 14. Foreigners should not be allowed to 3.8 8.5 13.6 26.8 47.3 1.95 1.136 put their products on our markets. 15. Foreign products should be taxed 11.7 16.1 18.6 28.4 25.2 2.61 1.331 heavily to reduce their entry into Romania. 16. We should buy from foreign coun- 25.6 24.9 15.5 18.3 15.8 3.26 1.422 tries only those products that we cannot obtain within our own coun- try. 17. Romanian consumers who purchase 6.6 8.5 25.9 18.9 40.1 2.23 1.245 products made in other countries are responsible for putting their fellow Romanians out of work. Composite CET measure 4,75 1.31 Note: aThe response format is a five-point Likert-type scale (1= strongly disagree, 5= strongly agree).

Iacob, Kuada and Lawson 95

Table 5. First PCA Initial and 2 Component Factor Loadings for the 17-items Measuring the “Ethnocentrism” Based on CETSCALE (n = 317)

Initial Rotated load- Rotated load- Number and CETSCALE items Factor ings b for ings b for loadings b component 1 component 2 1. Romanian people should always buy Romani- .675 .251 .782 an- made products instead of imports. 2. Only those products that are unavailable in .610 .355 .696 Romania should be imported. 3. Buy Romanian-made products. Keep Romania .457 -.051 .674 working. 4. Romanian products, first, last, and foremost. .595 .225 .738 5. Purchasing foreign made products is un- .517 .632 .343 Romanian. 6. It is not right to purchase foreign products, .556 .623 .411 because it puts Romanians out of work. a 7. A real Romanian should always buy Romani- .684 .510 .651 an-made products. a 8. We should purchase products manufactured in .624 .537 .580 Romania instead of letting other countries get rich of us. a 9. It is always best to purchase Romanian prod- .682 .488 .667 ucts. a 10. There should be very little trading or purchas- .660 .592 .557 ing of goods from other countries unless out of necessity. a 11. Romanian people should not buy foreign .676 .686 .453 products, because this hurts Romanian busi- ness and causes unemployment. a 12. Restrictions should be put on all imports. .711 .823 .183 13. It may cost me in the long run but I prefer to .546 .485 .557 support Romanian products. a 14. Foreigners should not be allowed to put their .788 .875 .148 products on our markets. 15. Foreign products should be taxed heavily to .553 .691 .275 reduce their entry into Romania. 16. We should buy from foreign countries only .626 .482 .627 those products that we cannot obtain within our own country. a 17. Romanian consumers who purchase products .647 .794 .128 made in other countries are responsible for putting their fellow Romanians out of work. Note: a Items with complex loadings. b Only loadings with a value of greater than 0.5 are of main relevance. agree to the statement that well-known brands The confirmatory factor analysis of are of good quality. Two-thirds of the sample the data (together with the rotated varimax (i.e., 66.6%) think that foreign brands are of solution) produced three component factors good quality. which explain 76.3% of the total variance. 96 JOURNAL OF EUROMARKETING

Table 6. Second PCA Initial and 2 Component Factor Loadings for the 9-items Measuring the “Ethnocentrism” Based on CETSCALE (n = 317)

Initial Rotated loading a for Rotated loading a loading component1: for component 2: Number and instrument items “Taxing imports” “Buy Romanian products” 1. Romanian people should always buy Roma- .746 .304 .809 nian-made products instead of imports. 2. Only those products that are unavailable in .627 .388 .690 Romania should be imported. 3. Buy Romanian-made products. Keep Roma- .566 -.036 .752 nia working. 4. Romanian products, first, last and foremost. .589 .263 .721 5. Purchasing foreign made products is un- .538 .636 .366 Romanian. 12. Restrictions should be put on all imports. .733 .840 .167 14. Foreigners should not be allowed to put their .822 .896 .139 products on our markets. 15. Foreign products should be taxed heavi- .599 .716 .294 ly to reduce their entry into Romania. 17. Romanian consumers who purchase prod- .674 .812 .122 ucts made in other countries are responsible for putting their fellow Romanians out of work Variance explained in % 50.0 15.5 Note: a Only loadings with a value of greater than 0.5 are of main relevance.

Table 7. Third PCA 1 Component Factor Loadings for the 8-items Measuring the Ethnocentrism

Factor loading a Number and CE instrument Items “Support Romanian products” 6. It is not right to purchase foreign products, because it puts Romanians .739 out of work.. 7. A real Romanian should always buy Romanian-made products.. .855 8. We should purchase products manufactured in Romania instead of let- .821 ting other countries get rich of us 9. It is always best to purchase Romanian products. .834 10. There should be very little trading or purchasing of goods from other .831 countries unless out of necessity. 11. Romanian people should not buy foreign products, because this hurts .834 Romanian business and causes unemployment. 13. It may cost me in the long run but I prefer to support Romanian prod- .754 ucts. 15. We should buy from foreign countries only those products that we .785 cannot obtain within our own country. Note: a Only loadings with a value of greater than 0.5 are of relevance. Iacob, Kuada and Lawson 97

The Kaiser-Meyer-Olkin measure of sam- normally distributed N (0,σ2). This general pling adequacy was 0.736, and Bartlett’s model is specified for ethnocentric constructs: sphericity test was significant (2 = 990.056, “taxing imports”, “buying Romanian prod- p < 0.000). ucts”, and “supporting the Romanian econo- The first factor, with items 4, 6, 7, and 9, my,” and for brand perception constructs: is related to the statements emphasizing the “buying branded products”, “quality of advantages in buying branded products. Con- branded products ”, and “Romanian brands”. sequently, we label this factor “buying brand- The results for the ethnocentric constructs ed products”. The second factor, covering are presented in Table 10. They show that items 1, 2, and 3, is related to brand quality. Romanian consumers with communist ideo- So we labelled it “quality of branded prod- logical preference turn to support “taxing im- ucts”. Items 5 and 8 have the highest factor ports”, “buying Romanian products”, and loadings in the third factor component. They “supporting the Romanian economy”. The relate to consumers’ perception that Romani- sizes of the unique R2 for these relationships an brands are of good quality. We label this are 7.9%, 7.8% and 15.4% for “taxing im- factor “Romanian brands”. The results are ports”, “buy Romanian products”, and “sup- presented in Table 9. port Romanian economy” respectively. That is, when we disregard consumer “anti- Results of the Hierarchical Regression monopoly” and “free market” ideological Analyses preferences, consumers’ communist ideologi- cal preferences account for about 8% of the As mentioned earlier, we used hierar- variations in consumer ethnocentric tenden- chical regression models to examine the links cies reflected in consumers’ attitudes to “tax- between communist ideology, consumer eth- ing imports” and “buy Romanian products” as nocentrism, and brand perception. According well as 15% of the variation in “support Ro- to Kahane (2001), hierarchical regression manian economy”. models allow researchers to control for the Furthermore, we found that consumers possible effect of a set of variables and then with anti-monopoly ideological orientations investigate if other variables can predict a are likely to exhibit ethnocentric tendencies significant amount of variance in a dependent expressed in terms of “buy Romanian prod- variable. For example, in this study, we need ucts” and “support Romanian economy”. The to control for “anti-monopoly” and “free unique R2 of these relationships are 4.6% and market economy” factors while we investi- 1% respectively. Finally, the relationships gate the link between “communist ideology” between consumers’ “free market” ideologi- and consumer ethnocentrism in Romania. cal dispositions and ethnocentric tendencies This accounts for our choice of the hierar- expressed in “taxing imports” and “support chical regression model. The estimated func- Romanian economy” are negative. Their tional form for our first model is as follows: unique R2 are 1.2% and 2.7% respectively. These findings, therefore, support hypothesis Y     Z   X   ijk 0 k ik j ij ijk 1, stating that the communist ideology has a Where i represents an individual respond- direct impact on Romanian consumers’ eth- ent; Y is a vector of components factor scores nocentric dispositions. But the impact was of interest. β0 is the grand mean; Zk are first not as strong as expected. level independent variables of interest; Xj are The results of the combined impact of the second level variables of interest. The β0, ideology and ethnocentrism on brand percep- βj and γk are the parameter coefficients to be tion are presented in Tables 11 and 12. estimated and εijk the error term assumed to be

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Table 8. Percentage Distribution of Respondents Scores and Mean Scores for Brands Perception (n = 317) Neither Number and instrument Totally Rather Rather Totally agree nor Mean Std items a agree agree disagree disagree disagree 1. Well-known brands are of 23 58.4 10.1 7.6 0.9 3.95 0.848 good quality 2. Foreign brands are of good 21.5 45.1 20.8 11 1.6 3.74 0.970 quality 3. Unknown brands are of 4.1 19.6 39.4 28.4 8.5 2.82 0.978 low quality 4. I usually buy branded 15.5 49.5 18.3 13.6 3.2 3.61 1.006 products 5. Romanian brands appeal 24 36 19.2 11 9.8 3.53 1.241 to my national feeling 6. I prefer buying well- 25.2 44.8 18.3 10.7 0.9 3.83 0.960 known brands 7. Brands influence my 24.6 43.8 14.2 4.1 13.2 3.72 1.100 choice of purchase 8. If I had the choice, I would 24.6 26.8 20.8 16.4 11.4 3.37 1.319 buy only Romanian brands 9. Brands make it easier to 21.8 44.5 19.2 8.5 6.0 3.68 1.090 choose the product Note: a The response format is a five-point Likert-type scale (1= strongly disagree, 5= strongly agree.)

Table 9. PCA and Identified Components for Consumer Perception of Brands (n = 317)

Component 2 Initial Component 1 Component 3 ” Quality of Number and instrument items Factor ”Buy branded ”Romanian branded prod- loading a products” brands ucts” 1. Well-known brands are of good quality .633 .261 .743 .113 2. Foreign brands are of good quality. .710 .133 .832 .013 3. Unknown brands are of low quality. .358 .069 .594 .021 4. I usually buy branded products. .656 .787 .164 -.098 5. Romanian brands appeal to my nation- .850 .062 .026 .919 al feeling. 6. I prefer buying well-known brands. .708 .808 .234 .026 7. Brands influence my choice of pur- .765 .873 .053 .016 chase. 8. If I had the choice, I would buy only .844 -.075 .096 .911 Romanian brands. 9. Brands make it easier to choose the .745 .847 .161 .047 product. Variance explained in % 40.2 21.8 14.1 Notes: a Only loadings with a value of greater than 0.5 are of relevance.

Iacob, Kuada and Lawson 99

They show that there is a positive and sta- Hypothesis 3 is, therefore, only partially sup- tistically significant relationship between ported. consumers’ communist ideological disposi- With regard to the demographic character- tions and their willingness to “buy Romanian istics, the results presented in Table 13 indi- brands” (p<0.001. See Table 12, Model 1). cate that male respondents exhibit positive Those with an “anti-monopoly” orientation dispositions towards communist ideology but also show a moderately significant link with are not ethnocentric. They are indifferent the “buy Romanian brand” (p<0.06). concerning buying both foreign and Romani- A further breakdown of the analysis an branded products. The female respondents (model 2) shows that the relationships be- exhibit opposite dispositions. These associa- tween “communist ideology”, “anti- tions are, however, not significant. monopoly”, and “free market” dispositions on The results also show that respondents’ the one hand, and “buy Romanian brands” on ages have a statistically significant associa- the other, are rather weak. Furthermore, con- tion with ideology, ethnocentrism, and brand sumers with strong “communist ideology” perception (p<0.05). Consumers above the and those with “anti-monopoly” orientations age of 45 years consider branded products to tend to be completely indifferent to the issue be of superior quality. They also endorse of brand quality. As expected, there is a posi- communist ideology and show higher prefer- tive and significant association between con- ence for Romanian products in general and sumers with “free market” ideological orien- for Romanian brands in particular. tation and their views that foreign brand We also found education to impact ethno- names signify good quality products (p<0.01). centric orientations and brand perception. These findings support hypothesis 2 confirm- Consumers with university education (i.e., ing the existence of a link between ideology 46.4% of respondents) compared to those and brand perception. with lower educational levels do not agree to But consumers favoring “taxing imports” the statement that well known or foreign and “buy Romanian products” tend to have a brands necessarily signify good quality. They negative association with the view that brand- also have negative dispositions towards buy- ed products signify good quality (p<0.001; ing Romanian brands (Table 13). But they p<0.05). Furthermore, contrary to our expec- are indifferent to both communist and free- tations, the results also show that consumers market ideologies. Thus, apart from education who endorse “support Romanian economy” and age, the demographic factors do not seem tend to have positive and statistically signifi- to have any significant impact on ideology, cant association with the view that foreign ethnocentrism, and consumer brand percep- brands signify high quality products tion in Romania. (p<0.005). They also have a positive and sig- nificant (p<0.05) relationship with the “buy DISCUSSION Romanian brands” factor. The relationship with “buy branded products” in general is The present study seeks to examine the negative and not statistically significant. A extent to which communist ideology contin- possible explanation for these findings is that ues to impact consumer ethnocentrism and although Romanian consumers may generally brand perception two decades after the col- consider branded products (especially foreign lapse of communism in Romania. The re- brands) to be of high quality, this does not sults show that those consumers in our sample necessarily imply that they would buy them. who shared a communist ideological orienta- tion are more likely to support policies that

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Table 10. Regression Estimated Impact of Decomposed Ideology Components on Ethnocentric Components

Dependent variables: - Buy Romanian Products - Support Romanian Economy - Ethnocentric compo- Tax on Imports - CEFscore CEFscore CEFscore nents Ideology components B SE Beta P UR2 B SE Beta P UR2 B SE Beta P UR2 Model 1: R2 2,0 6,4 5,6 (Constant) 0,350 0,186 0,06 -0,45 0,182 0,01 -0,00 0,183 0,99 Anti-monopoly -0,073 0,089 -0,05 0,42 0,2 0,37 0,087 0,23 0,00 5,3 0,20 0,087 0,13 0,02 1,6 Anti-regulation -0,164 0,068 -0,14 0,02 1,8 -0,13 0,066 -0,11 0,05 1,1 -0,24 0,066 -0,20 0,00 4,1 (Free Market) Model 2: R2 9,9 14,2 21,0 (Constant) 0,352 0,179 0,05 -0,45 0,175 0,01 0,00 0,168 0,99 Anti-monopoly -0,100 0,086 -0,06 0,24 0,4 0,34 0,084 0,21 0,00 4,6 0,16 0,080 0,10 0,05 1,0 Anti-regulation -0,131 0,065 -0,11 0,05 1,2 -0,10 0,064 -0,08 0,13 0,6 -0,20 0,061 -0,16 0,00 2,7 (Free Market) Communist-Ideology 0,282 0,054 0,28 0,00 7,9 0,28 0,053 0,28 0,00 7,7 0,40 0,051 0,40 0,00 15,4 Fscore345 R2 change 7,9 7,8 15,4 B = Un-standardized Coefficients; Beta = Standardized Coefficients; SE = Standard Error; UR2 = Variable specific unique R2 ; P = Significant level Iacob, Kuada and Lawson 101

Table 11. Distribution of Respondents and Mean Estimates of Brand Perceptions by Ideology and Ethnocentrism Respon- Buy Romanian Brands Quality of Brand Products Buy Brand Products dents Component 3 Component 2 Component 1 % Mean SE Mean SE Mean SE Total 317 100 0 0,056 0 0,056 0 0,056 Ideological Preferences Communist-ideology component ns High-non-communist 50 15,8 -0,214b 0,138 0,006 0,142 0,142 0,117 Less-non-communist 127 40,0 -0,112b 0,093 0,001 0,088 0,035 0,083 Less-communist 83 26,2 0,066ab 0,095 -0,114 0,105 0,007 0,113 High-communist 57 18,0 0,341a 0,135 0,158 0,141 -0,213 0,159 Anti-monopoly component Disagreed 29 9,1 -0,385b 0,174 -0,226 0,206 0,013 0,185 Neutral 37 11,7 -0,016b 0,167 -0,131 0,134 -0,019 0,159 Agreed 251 79,2 0,047a 0,063 0,045 0,064 0,001 0,064 Anti-regulation component Disagreed 70 22,1 0,185 0,132 -0,174b 0,127 -0,400b 0,133 Neutral 55 17,3 -0,057 0,128 -0,221b 0,138 -0,160b 0,122 Agreed 192 60,6 -0,051 0,070 0,127a 0,069 0,192a 0,068 Ethnocentric Tendencies (CE) Tax on Imports, component 1 High-non-CE 50 15,8 0,220a 0,095 0,234 0,150 0,340a 0,128 Less-non-CE 122 38,5 -0,171b 0,096 0,033 0,091 -0,001a 0,082 Less-CE 94 29,6 0,003b 0,106 -0,092 0,096 -0,151b 0,102 High-CE 51 16,1 0,189b 0,142 -0,137 0,142 -0,054a 0,174 Buy Romanian Products, component 2 High-non-CE 53 16,7 -0,842d 0,126 -0,075 0,145 0,061 0,130 Less-non-CE 95 30,0 -0,370c 0,090 -0,089 0,107 0,115 0,097 Less-CE 118 37,2 0,315b 0,079 0,094 0,087 0,036 0,084 High-CE 51 16,1 0,835a 0,080 0,025 0,140 -0,362 0,176 Support Romanian Products, component 3 High-non-CE 66 20,8 -0,503c 0,113 0,063a 0,140 0,119 0,114 Less-non-CE 101 31,9 -0,172b 0,094 -0,032a 0,102 0,120 0,090 Less-CE 90 28,4 -0,031b 0,101 -0,173b 0,093 0,010 0,097 High-CE 60 18,9 0,890a 0,081 0,245a 0,119 -0,349 0,163

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Table 12. Regression Estimated Impact of Decomposed Ethnocentric and Ideology Components on Brand Perception Components

Dependent variables: Brand perception compo- Component 3 Component 2 Component 1 nents Buy Romanian Brands Quality of Brand Products Buy Brand Products B SE Beta P UR2 B SE Beta P UR2 B SE Beta P UR2 Model 1: R2 5,5 2,8 6,8 (Constant) -0,17 0,18 0,37 -0,48 0,19 0,01 -0,42 0,18 0,02 Communist_Ideology 0,19 0,06 0,19 0,00 3,4 0,02 0,06 0,02 0,68 0,1 -0,08 0,06 -0,08 0,16 0,6 Anti-monopoly 0,17 0,09 0,11 0,06 1,1 0,14 0,09 0,09 0,11 0,8 0,01 0,09 0,00 0,95 0,0 Anti-regulation (Free Mar- -0,09 0,07 -0,07 0,20 0,5 0,17 0,07 0,14 0,01 2,0 0,29 0,07 0,24 0,00 5,8 ket) Model 2: R2 36,6 6,1 7,6 (Constant) 0,08 0,15 0,62 -0,45 0,19 0,02 -0,43 0,19 0,02 Communist-Ideology -0,01 0,05 -0,01 0,88 0,0 0,02 0,06 0,02 0,70 0,0 -0,04 0,06 -0,04 0,53 0,1 Anti-monopoly -0,04 0,07 -0,02 0,61 0,1 0,12 0,09 0,07 0,21 0,5 0,03 0,09 0,02 0,75 0,0 Anti-regulation (Free Mar- -0,01 0,06 -0,01 0,88 0,0 0,18 0,07 0,15 0,01 2,2 0,28 0,07 0,23 0,00 4,9 ket) Tax on Import -0,08 0,08 -0,08 0,33 0,2 -0,30 0,09 -0,30 0,00 3,2 -0,03 0,09 -0,03 0,79 0,0 Buy Romanian Products 0,48 0,07 0,48 0,00 9,0 -0,17 0,09 -0,17 0,05 1,1 -0,06 0,09 -0,06 0,54 0,1 Support Romanian Econo- 0,20 0,10 0,20 0,04 0,9 0,34 0,12 0,34 0,00 2,5 -0,04 0,12 -0,04 0,70 0,0 my R2 change 31,1 3,3 0,8 B = Un-standardized Coefficients; Beta = Standardized Coefficients; SE = Standard Error; UR2 = Variable specific unique R2 ; P = Significant level

Iacob, Kuada and Lawson 103 emphasize “taxing imports”, “buying Roma- nia and probably other CEE countries can be nian products” and “support Romanian econ- an urban rather than rural phenomenon. Fur- omy”. In other words, the results suggest a thermore, the results must not be taken to strong association between communist ideol- mean that non-communist ideologies will ogy and Romanian consumers’ ethnocentric never gain acceptance among consumers in orientations. Thus, contrary to popular expec- CEE countries. Parts of our analysis have tations, free market ideology has not, as yet, shown that when free market ideology is fully won over communist orientations in this part embraced by consumers, they are likely to of the world. accept foreign branded products. Some of the These results are consistent with past demographic characteristics of consumers findings from studies on the attitudes of CEE such as gender, age, and education seem to consumers a decade ago. For example, moderate their ideological orientations as well Witkowski (1993) observed from a study of as their degree of ethnocentrism and brand shopping activities in Poland in 1992 that “the perception. The younger generation in Ro- transition from a centrally planned communist mania as well as the women and university society to a free-enterprise democracy is not educated respondents tend to have weaker universally applauded in Poland. Very con- attachment to the communist ideology and are servative attitudes persist in rural areas and less ethnocentric than their male and older among older people and the lower classes” (p. counterparts as well as the relatively poorer 16). Similarly, Milanova (1999) concluded consumer segments. The results are, there- from her study of Bulgarian consumers’ be- fore, consistent with the studies conducted by haviour in 1998 that “the experience of Bul- other scholars such as Sharma, Shimp, and garian consumers with low quality foreign Shin (1995); Ueltschy (1998); Watson and goods that flooded the market in the early Wright (2000); and Erdogan and Uzkurt 1990s brought about a shift in attitudes to- (2010), who found that younger consumers wards the qualities of the goods produced in have more open attitudes towards foreign the country. At present Bulgarians demon- products, and are less ideologically disposed strate preference towards local brands as far (O’Cass & Lim, 2002; Wang, Siu, & Hui, as food, clothing, and footwear are con- 2004; Hsu & Nien, 2008). cerned” (p. 430). Furthermore, Lascu, Man- Another finding of this study is that it rai, and Manrai, (1996) advised that the provides additional empirical confirmation communist abhorrence of ostentatious con- for the multi-dimensionality of the sumption persisted among Romanian con- CETSCALE (see Saffu & Walker, 2006). sumers in the 1990s, and individuals who Earlier studies have presented the were better off than their neighbors tended to CETSCALE as loading on a single factor at a downplay that fact. The communist ideologi- time (see Shimp & Sharma, 1987; Netemeyer, cal orientations were also found to influence Durvasula, & Lichtenstein, 1991; Sharma, consumers’ perceptions of brand quality. Shimp, & Shin, 1995; Kaynak & Kara, 1996; Thus, Huddleston, Good, and Stoel (2001) Watson & Wright, 2000). Our principal reported that Polish consumers found domes- component analysis on the 17 items of the tic products to be of equal or superior quality CETSCALE showed that they could be de- to many similar international brands. composed into 3 component factors. Our Contrary to Witkowski’s (1993) findings findings, therefore, corroborate the results in Poland, the results of this study suggest from Marcoux, Eiliactrault, and Cheron’s that the influence of communist ideology on study (1997). ethnocentrism and brand perception in Roma-

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Table 13. Estimated Mean for Demographic Characteristic by the Components of Consumer Brand Perception, Ideological Preferences and Ethnocentrism Perception of Brands Ideology Consumer Ethnocentrism Buy Quality of Communist Anti- Tax on Buy Roma- Support Ro- Branded Branded Buy Roma- ideology mo- Anti-regulation Imports nian manian Products Products nian Brands Fscore nopoly (Free market) CE_FS _CE_FS _CE_FS N % MeanMean Mean Mean MeanMean Mean Mean Mean Total 317 100 0,000 0,000 0,000 0,000 1,700 1,385 0,000 0,000 0,000 Gender ns ns ns ns ns ns ns ns ns Female 182 57,4 -0,081 -0,056 -0,029 -0,013 1,720 1,297 0,049 0,056 0,025 male 135 42,6 0,110 0,076 0,039 0,018 1,674 1,504 -0,066 -0,076 -0,034 Age# ns ns ns < 26 105 33,1 0,098 -0,288c -0,347c -0,079 b 1,648 1,314 0,165 a -0,209 b -0,067 b

26 - 45 136 42,9 0,003 -0,002b -0,025b -0,101 b 1,735 1,463 -0,104 b -0,071 b -0,179 b

> 45 76 24,0 -0,141 0,402a 0,525a 0,289 a 1,711 1,342 -0,041 ab 0,416 a 0,413 a Education# xx x x ns ns ns ns xx Primary 20 6,3 -0,121bc 0,289a 0,374a 0,122 a 1,750 1,250 0,216 0,202 0,390 a

Secondary 89 28,1 -0,274b 0,215a 0,161a 0,389 a 1,663 1,281 0,124 0,167 0,313 a

University 147 46,4 0,180ac -0,059b -0,176b -0,143 b 1,674 1,442 -0,034 -0,123 -0,148 b

Post (University 61 19,2 0,005bc -0,267b 0,067ab -0,262 b 1,803 1,443 -0,171 -0,013 -0,228 b Income# xxx ns xx ns xx xx xx xx Zero 64 20,2 0,097b -0,169 -0,380 b -0,284 b 1,688 1,359 bc 0,104 a -0,305 a -0,197 b

< 1501 123 38,8 -0,278b 0,043 0,230 a 0,423 a 1,634 1,163 b 0,330 a 0,226 b 0,409 a 1501 2500 74 23,3 0,048b -0,005 -0,064 b -0,119 b 1,797 1,500 ac -0,230 b 0,037 b -0,121 b > 2500 56 17,7 0,437a 0,106 0,015 a -0,446 b 1,732 1,750 a -0,539 b -0,197 a -0,515 b Occupation# xxx xxx xxx Students 83 26,2 0,022 b -0,212 b -0,463 c -0,128 1,663 1,265 0,154 a -0,187 b -0,014 b

Unemployed 51 16,1 -0,526 c 0,337 a 0,835 a 0,439 1,784 0,980 0,190 a 0,724 a 0,800 a

Employee 35 11,0 -0,136 b 0,212 a 0,142 b 0,539 1,514 1,771 0,287 a -0,046 b 0,228 b

Employee with high educa- 108 34,1 0,051 b -0,221 b -0,063 b -0,162 1,750 1,407 -0,067 a -0,134 b -0,248 bc tion Employer 40 12,6 0,606 a 0,421 a -0,057 bc -0,329 1,700 1,750 -0,633 b -0,131 b -0,520 c # Same alphabet within each variable for each colon are not significantly different; ns =variable is non-significant; xxx =p<0.001 xx=p<0.01 x=p<0.05. Iacob, Kuada and Lawson 105

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Journal of Euromarketing, 23: 111 - 123, 2014 Copyright © IMDA Press ISSN: 1049-6483 print / 1528-6967 online

Do National Identity and Religiosity Antecede Customer Based Brand Equity in a Developing Multinational Country?

Selma Kadić-Maglajlić Maja Arslanagić Muris Čičič

ABSTRACT . The present study conceptually proposed and empirically tested the influence of national identity and religiosity on brand equity in the context of a selected country from South Eastern Europe, which is heterogeneous in terms of nationality and religion. The main purpose was to empirically investigate relationships between these concepts, and to compare models in terms of local and global brand equity. Empirical data were collected among citizens of Bosnia and Herzegovina. A total of 371 cases were used to assess overall fit of the proposed model and to test hypotheses using covariance-based structural equation modeling. The results support the proposed conceptual model, showing that national identity and religiosity play important role in terms of brand equity of the local brands. However, the situation is much different when it is about global brands. In those circumstances, religiosity and national identity do not significantly influence brand equity. Therefore, the study contributes to the existing literature reporting the findings on brand equity, with evidence from South Eastern Europe. Implications of the results are discussed, and recommendations for future research are made.

KEYWORDS. Brand equity, national identity, religiosity, Bosnia and Herzegovina

terms of nationality and religion. One of these INTRODUCTION is Bosnia-Herzegovina, a small country in the This paper is concerned with the brand Western Balkans. Its mix of nationalities, equity concept within countries that are religions, and different/similar languages heterogeneous in terms of nationality and creates an interesting field for specific religion. Whereas there are countries whose consumer attitudes and behavior towards local homogeneous populations have become mixed and international brands. in ethnic terms due to immigration and recent The region of the Western Balkans is demographic changes (including the majority usually portrayed as a turbulent area, with a of Western European countries and North history full of skirmishes, wars, and frequent America), and those that are mostly dominated changes to its political and geographic maps. by homogeneous population in terms of Even though this picture is a bit unjust nationality and religion (Eastern European towards historical facts, it is true with regard countries, Japan), some countries have a long to recent events and the dissolution of history and tradition of mixed populations in Yugoslavia at the end of the twentieth century.

Selma Kadić-Maglajlić, Ph.D. is an Assistant Professor of Marketing, Maja Arslanagić is Senior Teaching Assistant, Muris Čičič, Ph.D. is Professor of Marketing,School of Economics and Business, University of Sarajevo, Sarajevo, Bosnia and Herzegovina. Address correspondence to Dr. Selma Kadić-Maglajlić, School of Economics and Business, Universi- ty of Sarajevo, Trg oslobodjenja-Aliya Izetbegovic 1, 71000 Sarajevo, Bosnia Herzegovina. E-mail: Sel- [email protected] 111 112 JOURNAL OF EUROMARKETING

The current map of the region covers an area particular, have detected significant with a population of more than 20 million differences in the image of the former people, with eight independent countries, three Yugoslavia-era brands between their home dominant religions, and six ethnic groups. and foreign markets. Variations are linked to The large majority of the population uses the cultural context of newly (re)emerging languages that are nominally different, but states with high ethnocentrism, animosity, and mutually intelligible. uneasy political relationships. Transnational The region’s recent history and ethnic and brands, however, appear immune to much religious mix may explain the specific behav- consumer ethnocentrism. In addition, we iors and attitudes of customers. Of particular believe that different religions also play a role interest is the brand equity concept, which in those variations. Moreover, Gallup seemingly is applied differently according to International (2012) shows that religion plays the country of origin effect and the different an important role in social, cultural, and acceptance of brands coming from local family life in less developed countries, a and/or global companies. category within which most countries from the We share the already established belief region fall. Accordingly, we believe that the that Bosnia and Herzegovina (BH) is an region and topic are worthy of exploration, excellent setting for multinational since, in general, there has not been much (multiethnic) research (Vida et al., 2008). research on religiosity and national identity Currently, the country is comprised of two relating to brand equity. We also believe that entities (the Federation of Bosnia and the results could contribute to a better Herzegovina with 10 Cantons, and the understanding of brand equity by building on Republika Srpska), and one district (Brčko its antecedents with distinctions between District) and three constitutive ethnic groups: global and local brands, and by giving Bosniaks, Croats, and Serbs. The Federation guidelines in managing brands and brand of Bosnia and Herzegovina is dominated by equity within multiethnic countries. two ethnic groups, Bosniaks and Croats (who In this paper, we first examine the share the ethnicity and sense of nationality of theoretical background by analyzing research the neighboring state of Croatia), and two on national identity, religiosity, and customer- religions (Islam and Catholicism), while on based brand equity and by placing it into a the other hand, the Republika Srpska is context important for our research. We then dominated by Serbs (who share the ethnicity present the conceptual model of our research and sense of nationality of the neighboring and hypothesis development. In the third state of Serbia) and one religion (Eastern section, our research design and results are Orthodoxy). However, all three ethnic groups presented and discussed. Finally, we conclude and other minorities, as well as all three the paper with its potential implications, dominant religions, exist in both entities limitations, and recommendations for further (European Commission, 2012). Additionally, research. there are three official languages in use: Bosnian, Croatian, and Serbian, as well as THEORETICAL BACKGROUND AND both the Cyrillic and Latin script. Having in CONCEPTUALIZATION mind all mentioned diversities, we believe that BH can be taken as representation of the Customer-Based Brand Equity region. Some studies (e.g., Brečić et al., 2013) about brand preferences and brand We would dare to say that brand equity is equity in the region, in Croatia and Serbia in one of the most widely used marketing terms Maglajlić, Arslanagić and Čičič 113 of the past two decades. Due to the fact that overall customer-based brand equity, which is the art and science of branding became so a uni-dimensional construct, and we follow widely accepted in practice and in academia, the definition of Yoo and Donthu (2001): understanding of brand equity has increased. Consumers’ different responses be- Brand equity can be interpreted from two per- tween a focal brand and an unbranded spectives: the company-based perspective and product when both have the same level the customer-based perspective. The first per- of marketing stimuli and product at- spective observes brand(s) and brand equity tributes. The difference in consumer from a resource-based view, as intangible as- response may be attributed to the brand sets of the company. This stream also consid- name and demonstrates the effects of ers and analyzes customer value, customer the long-term marketing invested into lifetime value, customer equity, and their the brand. (p. 1) measurement within a firm (Aaker, 2009; Blattberg, Getz, & Thomas, 2001; Drèze & National Identity and Religiosity Bonfrer, 2009; Gupta, Lehmann, & Stuart, 2004; Gupta & Zeithaml, 2006; Leone et al., There are many factors that influence and 2006; Lindgreen, Beverland, & Farrelly, 2010; shape consumer values. This research focuses Simon & Sullivan, 1993). However, the focus on national identity and religiosity as determi- of our paper is on the second perspective, nants of values and, ultimately, of consumer which is analyzed in detail below. perceptions and behavior (Sood, 1995). Discussion of customer-based brand equi- Moreover, a recent study proved that there are ty was initiated with Keller’s (1993) seminal differences when consumers from different paper on the topic. Customer-based brand eq- nations and religions in multinational Balkan uity is conceptualized through brand countries observe brands (Breèiæ et al., 2013). knowledge, brand awareness, and brand im- National identity belongs to concepts that age. To date, there have been many studies are ambiguous and hard to define. It refers to following Keller’s discussion, which mainly “an individual’s identification with the nation- have tried to contribute toward building and state…It also refers to a person’s sense of defining brand equity and its antecedents and uniqueness, historical heritage, and pride at consequences (Atilgan et al., 2009; He & Li, the nation/country level” (Vida, Dmitrovic, & 2010; Huang & Sarigöllü, 2012; Round & Obadia, 2008, p.338). Some researchers even Roper, 2012; Yoo, Donthu, & Lee, 2000), link national identity with corporate identity measuring brand equity (Buil & de (Melewar, 2003). Chernatony, 2009; Cuneo, Lopez, and Yague, Religion and religiosity are both fostering 2012; Dolekoglu et al., 2008; Kuhn, Alpert, & and limiting factors in society today. We are Pope, 2008; Moradi & Zarei, 2012; Pinar, all witnesses that religion holds both the high- Girard, & Eser, 2012; Tong & Hawley, 2009; est values and behavioral norms, while at the Yoo & Donthu, 2001), and managing brand same time, it can be a source of discrimination equity (Anselmsson, Johansson, & Persson, and even a reason for unrest. There have been 2007; Besharat, 2010; Glynn, 2010; Kapferer, many attempts to define religion itself (Tylor, 1997). 1958; Horton, 1960; Spiro, 1966; Schiffman Customer-based brand equity could be de- & Kanuk, 2000), and a unique and accepted fined as a uni-dimensional or multi- definition still does not exist. In this research, dimensional construct. As this paper does not we will not attempt to search for this defini- analyze the inner structure of the customer- tion. We rather register religious orientation based brand equity construct, we focus on and focus on religious commitment. From the consumer behavior perspective, religion as an

114 JOURNAL OF EUROMARKETING aspect of culture greatly influences values, mark a group or a culture, and brand equity attitudes, and other behavioral outcomes should be built accordingly. Therefore, we (Delener, 1994). Hence, religion plays an im- propose hypotheses as follows: portant role in analyzing consumer behavior (Hirschman, 1983) and managing brands H1: National Identity has a significant ef- (Rice & Al-Mossawi, 2002). In this research fect on customer-based brand equity for local setting, we focus on the relationship between brands religious commitment and customer based H2a: Intrapersonal Religious Commitment brand equity. Religious commitment is de- has a significant effect on customer-based fined as “the degree to which a person adheres brand equity for local brands to his or her religious values, beliefs, and H2b: Interpersoonal Religious Commitment practices and uses them in daily living” has a significant effect on brand equity for (Worthington et al., 2003, p. 85). Although local brands this definition is used more for counseling and clinical purposes (Gartner, 1996; Figure 1. Conceptual Model Worthington, 1988), we regard it as applicable for analyzing differences in the perceptions of more and less religious consumers, as well as accounting for non-religious consumers (Vida et al., 2008). Religious commitment has two dimensions, intra-personal and inter-personal, and is in line with the notion that people may be intrinsically motivated by religion and gen- uinely committed to their faith, as well as ex- trinsically motivated and focused on the use of religion (Swimberghe, Sharma, & Flurry, 2011). On the one hand, national identity and re- On the other hand, when it comes to ligiosity are formed out of a set of values and brands that are not linked to any specific serve as a lens through which individuals per- group (i.e., global brands), all groups unite ceive themselves. On the other hand, custom- and grroup characteristics do not represent an er- based brand equity is basically a percep- important factor. he influence of religion is tion that a customer holds of a particular not part of our hypotheses, and rather serves brand. Therefore, we believe that national as a coontrol variable, as we believe that it will identity and religiosity must be interrelated have a significant influence only when the with consumer-based brand equity, especially model is tested for local brannd equity, while it in circumstances when it is about a local should be irrelevant for global brand equity. brand, which adds more significance to the brand itself. Therefore, we propose the fol- RESEARCH DESIGN lowing conceptual model to be tested as shown in Figure 1. Samplle and Dataa Collection We believe that national identity and relig- iosity antecede customer-based brand equity In order to test the proposed conceptual when it comes to brands that could be identi- model, data were collected through an Inter- fied as originating from a certain national or net-baased self-reported questionnaire built ethnic group. Hence, such brands are used to with Limesurvey (2010). Given that the ques- tionnaire included sensitive questions (i.e., Maglajlić, Arslanagić and Čičič 115 concerning nationality, religiosity) a snowball discarded. The rest of the data was imputed sample (Malhotra et al., 2011) was deemed using the expectation maximization method appropriate. suggested by Olinsky et al. (2003). The pro- After treating the data for outliers, as sug- cess yielded a total of 371 usable question- gested by Field (2005), the missing data were naires. The demographic characteristics of re- analyzed following the rule of thumb, and all spondents for the entire sample are given in cases with more than 10% missing data were Table 1.

Table 1. Demographic Characteristics of the Sample Gender % Monthly Income of household in % Female 60.7% BAM* 17.3 % Male 39.2% Less than 800,00 37.2 % From 801,00-1.600,00 18.6 % From 1.601,00-2.400,00 14.6 % From 2.401,00 – 3.600,00 7.3 % More than 3.601,00 Religion % Education % Catholic 28.0 % High school 53.9 % Orthodox 7.0 % Undergraduate degree 27.2 % Islam 49.3 % Master’s degree 8.9 % Other 9.4 % Ph.D. degree 4.3 % *The Currency Board keeps Konvertibilna Marka (BAM) pegged to the Euro at the exchange rate €1.00= BAM 1.95583 (aver- age).

Questionnaire Development portant for the selected country because Bos- nian, Croatian, and Serbian languages differ in In order to operationalize the constructs nuances only, which, however, serve as mark- used in this research, an extensive literature ers of ethnic, religious, social, and political review was conducted. We paid special atten- differentiation (Vida, Dmitrovic, & Obadia, tion to identify scales that are psychometrical- 2008). An early version of the questionnaire ly sound in the present cross-cultural contexts. in the local language was provided to two ac- Scales for the selected constructs were drawn ademics in the field of marketing. The lan- from the literature. All pre-established and guage of the research instrument was im- pre-tested scales used in this study were origi- proved based on their feedback. nally developed in a foreign lan- Items for the measurement of the In- guage(English). That is why the questionnaire trapersonal and Interpersonal Religious Com- was initially developed in English and after- mitment subscale were adopted from the Reli- wards translated into the Bosni- gious Commitment Inventory-10 (RCI-10) an/Croatian/Serbian language. As suggested scale (Worthington et al., 2012). We selected by Herche, Swenson, and Verbeke (1996), six RCI items that we thought to be appropri- improvement of scales transferability was ate and comprehensible for the present cultur- made through evaluation beyond standard al context. Three of these items concerned back-to-back translation. This method has Intrapersonal Religious Commitment, and been widely used in marketing literature three items concerned Interpersonal Religious (Jaramillo & Marshall, 2004). Special atten- Commitment. We used a five-point scale an- tion was given to the language of the ques- chored at 1 = “not at all true for me” and 5 = tionnaire. Language issues are extremely im- “totally true for me”. The national identity

116 JOURNAL OF EUROMARKETING construct was measured using selected items EFA, using principal axis factoring with from Keillor et al.’s (1996) NATID scale. We an Oblimin rotation in SPSS 20, was used for used the same National Identity questions as pretesting. Items with subscale factor load- Vida et al. (2008) in their study about ethno- ings below 0.4 (Hair et al., 2010) were ex- centrism in Bosnia and Herzegovina. In order cluded from further analysis. Furthermore, to measure brand equity, we adopted items of CFA, which is an appropriate analytical tech- overall customer based brand equity from Yoo nique to ensure the reliability and validity of and Donthum (2001). the constructs (Anderson & Gerbing, 1988), has been used. The CFA model consisted of Measurement and Structural Model Assess- observed variables that are hypothesized to ment measure one or more latent variables (Schu- Following the two-step approach proposed macker & Lomax, 2010). The CFA model by Anderson and Gerbing (1988), the reliabil- obtained appropriate model fit: χ2 (d.f.) = ity and validity of each construct for both 101.19 (59); p = .00005; RMSEA = 0.044; samples were evaluated. Scales analysis in- SRMS= 0.035, NNFI = 0.989; and CFI = cluded: item analysis (i.e., the analysis of in- 0.991. ter-item correlations and item-scale correla- In addition, convergent validity was as- tions), exploratory factor analysis (EFA) using sessed by examining the t-values of indicator SPSS 20, and confirmatory factor analysis loadings in the measurement model (Anderson (CFA) using LISREL 8.71 with a covariance & Gerbing, 1988). All the t-values of the matrix as input. loadings of measurement variables on respec- Before going into further analysis, the ob- tive latent variables were statistically signifi- tained data were tested for common method cant (as shown in Table 2), which therefore variance. Nevertheless, it is important to men- supports the convergent validity of the tion that prior to the research, several steps measures (Bagozzi & Yi, 1988). were taken in order to diminish potential Besides Cronbach's Alpha, Fornell and common method bias. Respondents were in- Larcker (1981) offered additional measures of structed that there were no correct or incorrect reliability, Construct Reliability (CR) and Av- answers, and reflected only their personal erage Variance Extracted (AVE), which are opinion. derived from the CFA results. In calculating In addition, the questionnaire design fol- CR and AVE, completely standardized solu- lowed the recommendations of Malhotra et al. tions of indicator loadings and error variances (2011) for reducing common method bias. are used as in the formulas presented in Equa- After obtaining the data, the widely used tech- tion 1 and Equation 2. nique (Podsakoff, MacKenzie, Podsakoff, & Lee, 2003) of Harman’s single factor test in Equation 1. Formula for Calculating CFA was applied, offering a poor model fit: Composite Reliability (CR) χ2 (d.f.) = 2479.54 (65); p = 0.000; Root ∑ Mean Square Error of Approximation ∑ ∑ (RMSEA) = 0.317; Non-Normed Ft Index Equation 2. Formula for Calculating (NNFI) = 0.577; and Comparative Fit Index Average Variance Extracted (AVE) (CFI) = 0.647. ∑ Maglajlić, Arslanagić and Čičič 117

Table 2. CFA Measurement Model Results

St. T- St. Devia- Factor Items CR AVE Alpha Mean loadings value tion A citizen of Bosnia and Herzegovina possesses certain cultural at- 4.44 tributes that people of other countries do not possess. 0.780 National Iden- Bosnia and Herzegovina has a strong historical heritage. 0.664 4.30 0.731 0.478 0.717 4.74 1.15 tity The citizens of Bosnia and Herzegovina are proud of their nationali- - ty. 0.520 My religious beliefs lie behind my whole approach to life. 0.881 19.64 Intrapersonal Religious beliefs influence all my dealings in life. 0.909 20.38 Religious 0.900 0.750 0.896 4.18 1.98 It is important to me to spend periods of time in private religious Commitment - thought and reflection. 0.804 I make financial contributions to my religious organization. 0.763 15.72 Interpersonal I enjoy working in the activities of my religious affiliation. 0.907 19.02 Religious 0.863 0.679 0.863 3.37 1.84 I keep well informed about my local religious group and have some Commitment - influence in its decisions. 0.795 It makes sense to buy X instead of any other brand, even if they are 46.19 the same. 0.969 Even if another brand has the same features as X, I would prefer to Brand Equity 51.02 buy X. 0.984 0.985 0.942 0.985 4.62 2.16 (local) If there is another brand as good as X, I prefer to buy X. 0.977 48.7 If another brand is not different from X in any way, it seems smarter - to purchase X. 0.951

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Where, Σ - the mathematical symbol for sum; Bentler, 1999). However, it is apparent that i - number of item; n - total number of both models showed much better fit when they items; - standardized factor loading; ei - er- were tested for local brands compared to the ror variance for a factor. fit of both models when tested for global To indicate reliable measurement, CR brands. In addition, the fact that the R2 statis- should be greater than 0.6 (Bagozzi & Yi, tic (i.e., the reduced form of multiple square 1988) or 0.7 (Steenkamp & Van Trijp, 1991), correlation as was produced in the LISREL while the AVE value has to be above the 0.5 output) showed a higher level of variance threshold (Fornell & Larcker, 1981). Follow- (0.012 for Model 1 for global brands com- ing the results presented in Table 2, it is evi- pared to 0.123 from Model 1 for local brands; dent that the CR values presented were above 0.018 for Model 2 for global brands compared the suggested threshold, suggesting acceptable to 0.133 from Model 2 for local brands) was validity and reliability. Inspection of the AVE explained in the models’ assessments for local values showed that one factor (National Iden- brands. Specifically, Models 1 and 2 using tity) had poor validity, since the AVE value is local brands explained a satisfactory 12.3% below the 0.5 threshold. We acknowledge this and 13.4% of variance, respectively, even as as a limitation of the study, but reserve it for we did not have the intention to aim for ex- further discussion for the sake of this paper. planatory power in the model, since the aim of The next step was to test the structural re- this research is to establish relationships in the lationships between the variables in the pro- context of antecedents of brand equity for lo- posed model. The goal of structural equation cal and global brands in Bosnia and Herze- modeling (SEM) is to combine path and factor govina. Indeed, comparing Models 1 and 2, analytic models in order to determine the ex- which were assessed in terms of local brands, tent to which the theoretical model is support- a better explanatory power was achieved with ed by sample date (Schumacker and Lomax, Model 2, which included religion as a control 2010). Hypotheses are tested using the maxi- variable. Therefore, for further discussion, we mum likelihood estimation method imple- use the Model 2 assessment for local brand mented through LISREL 8.71. Paths were (Last column in Table 3). assessed through standardized estimates, and Following the results obtained through the associated t-values are presented in Table SEM assessment (Model 2), our hypothesis 3. Given that all the hypothesized relation- H1 (i.e. National Identity has a significant ef- ships in the model were one-directional, the fect on brand equity for local brands) is con- conservative critical t-values of 1.282, 1.645, firmed (γ = 0.17; t = 1.72; p < 0.05), meaning and 2.325 were used for α = 0.10, α = 0.05, that we proved that national identity for BH and α = 0.01, respectively. inhabitants strongly influence brand equity of The first step was inspection of fit indi- the local brand. It is interesting to notice (fol- ces. We observed fit indices of Model 1 and lowing Models 1 and 2 for global brands) that Model 2, comparing the results for local and at the same time, national identity is irrelevant global brands. The chi-square (χ2) test was when consumers are asked about global significant for all models, while all other fit brands. heuristics (1<χ2/df <3, NNFI, GFI, CFI >0.9) In addition, we also proved that in the pre- showed that the models fit the data at an ap- sent cultural context, religion is still important propriate level. In addition, RMSEA values in different areas of life, even in consumption. that reflect the residual differences between The intrapersonal component of religion, the input and implied matrices were all lower which focuses on the individual’s belief or than 0.08, proving good model fit (Hu & personal religious experience, significantly Maglajlić, Arslanagić and Čičič 119 influences local brand equity (γ = 0.35; t = use it in their promotional activities in order to 2.77; p < 0.01). Therefore, companies in this bust the brand equity of particular target region should not forget this fact, and could groups. This also confirmed our H2a.

Table 3. Hypotheses Assessment through SEM

Global brand Local brand Model 1 Model 2 Model 1 Model 2 St.est (t-value) St.est (t-value) St.est (t-value) St.est (t-value) H1: National Identity  Brand Equity 0.07 (0.92) 0.10 (0.94) 0.69 (3.63***) 0.17 (1.72**) H2a: IntraReligiosity  Brand Equity -0.01 (-0.07) -0.01 (-0.07) 0.44 (2.66***) 0.35 (2.77***) H2b: InterReligiosity  Brand Equity 0.09 (0.66) 0.09 (0.60) -0.25 (-1.50*) -0.13 (-0.93) Control: Religion  Brand Equity - 0.01 (0.09) - 0.19 (1.87**) R2 0.012 0.018 0.123 0.138 Fit Indices χ2 (df), χ2/df 180.01 (59); 3.0 191.32 (68); 2.8 101.2 (59), 1.7 122.7 (68), 1.8 RMSEA; SRMR 0.074; 0.0412 0.070; 0.037 0.044 ; 0.034 0.047; 0,033 NNFI 0.962 0.956 0.989 0.986 GFI 0.930 0.931 0.960 0.955 CFI 0.971 0.971 0.991 0.989 Note: ***p<0.01 **p<0.05 *p<0.1 a=critical t-values are 1.282, 1.645 and 2.325 for α =0.1, α=0.05 and α=0.01 re- spectively

Interestingly, our model revealed that the be- guidance based on empirical evidence. The havioral or interpersonal component of reli- evidence supports the hypothesis that states gious commitment, which concerns the level the lack of influence of ethnicity and religion of activity in organized religious activities, on global brands. does not have a significant influence on brand On the other hand, local brand perceptions equity (γ = -0.13; t = -0.93; n.s.). This opens appear to be largely dependent on respond- two possible streams of discussion. First, ents’ cultural traits, which is one of the basic whether both components of religiosity influ- presumptions of this study. Building brand ence consumers’ perceptions in the same way equity in a local context is therefore an im- and why the internal one (intra-personal) is portant task for regional and local companies more important for brand evaluation than the and their managers. How to overcome preju- external one (inter-personal). Second, the in- dices stemming from ethnic and religious dif- ter-personal component turns out to be insig- ferences and stereotypes would be a task wor- nificant only when the religion dummy is in- thy of exploration. troduced in the model. This might lead us to As already stated, it is not completely the conclusion that there are differences, ac- safe to reach general conclusions based on this cording to religion, in demonstrating an exter- research. Indeed, the AVE value for national nal religious perspective. identity constructs in our study was less than ideal. The research is exploratory in nature. CONCLUSION Therefore, the research findings can serve as a pilot for broad analyses that could include The findings of this research are relevant to countries at a similar stage of development. A both brand managers of local brands and in- full analysis certainly requires a greater num- ternational brands in multiethnic and multicul- ber of respondents, and longitudinal research tural contexts. An important contribution of could be seen as additional benefit. In this this research would be to provide answers and respect, the paper could be used as a solid

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Journal of Euromarketing, 23: 124 - 143, 2014 Copyright © IMDA Press ISSN: 1049-6483 print / 1528-6967 online

Retailer Brand Image Building: Evidence from Two European Retailers

Boryana V. Dimitrova Bert Rosenbloom

ABSTRACT. In this paper, we show that the concept of retailer store image as a collection of functional attributes needs to be augmented by social and economic attributes in order to reflect the broader construct of retailer brand image. To illustrate our point, we provide an overview of the brand image building efforts of the two largest European retailers: the French retailer Carrefour SA and the British retailer Tesco PLC.

KEYWORDS. Retailer brand image, functional attributes, social attributes, economic attributes, Carrefour, Tesco

2004). Those retailers that are able to achieve INTRODUCTION an effective blend of functional components Retailer store image has been explored in might gain a competitive advantage over other numerous research studies for well over half a retailers if the store image better matches the century (Martineau, 1958; Kunkel & Berry, store choice evaluative criteria used by 1968; Kasulis & Lusch, 1981; Mazursky & consumers to select the stores in which they Jacoby, 1986; Ailawadi & Keller, 2004). shop (Grewal, Levy, Mehrotra, & Sharma, Much of this research has focused on various 1999; Grewal, Krishnan, Baker, & Borin, functional attributes such as merchandise 1998). assortment, physical facilities, layout, and The traditional view of retailer store image employee helpfulness as the components of as a conglomeration of functional store store image. Thus, the concept of retailer attributes projected into the marketplace by store image has been viewed in the literature the retailer to attract customers may be too essentially as the outcome of how retail narrow a view to capture the full meaning of managers manipulate or mix the various retailer store image in the second decade of functional components of store image in a the twenty-first century. A broader manner that would appeal to real and potential perspective that augments the traditional customers being targeted by the store (Kasulis functional components of store image may be & Lusch, 1981; Grewal, Levy, & Lehmann, needed to reflect not only the store image but

Boryana V. Dimitrova, Ph.D. is a Visiting Professor, Department of Marketing, College of Business and Economics, Lehigh University, Bethlehem, Pennsylvania, USA. Bert Rosenbloom, Ph.D. is Rauth Professor of Marketing Management, LeBow College of Business, Drexel University, Philadelphia, PennSylvania, USA. Address correspondence to Dr. Boryana V. Dimitrova, Department of Marketing, College of Business and Economics, Lehigh University, 621 Taylor Street, Bethlehem, PA 18015, USA. E-mail: bvd3@[email protected]

124 Dimitrova and Rosenbloom 125 also the overall “brand” associated with any 1968; Kasulis, Morgan, Griffith, & given retailer (Ailawadi & Keller, 2004; Burt Kenderdine, 1999). Retailer store image is & Davies, 2010; Sierra, Heiser, Williams, & affected not only by consumer perceptions of Taute, 2010; Grewal & Levy, 2007). This relevant retail store attributes, but also by the may be especially the case given the fact that importance consumers attach to these online and mobile shopping has changed the attributes and the interactions among these role of the physical store in making products attributes (James, Durand, & Dreves, 1976; available to consumers. Marks, 1976; Kasulis & Lusch, 1981). The purpose of this article is to show that Consumers are thus able to form an overall the concept of retailer store image as a collec- impression of a store based on their tion of functional attributes needs to be aug- perceptions of various store attributes mented by social and economic attributes to (Hartman & Spiro, 2005). In this sense, reflect the broader construct of retailer brand retailer store image can be conceived of as a image. To illustrate our point, we provide an set of perceptions linked to a store, as overview of the retailer brand image building reflected in the associations consumers hold in efforts of the two largest European retailers: memory about a particular store (Grewal et the French retailer Carrefour SA and the Brit- al., 1998). Moreover, retailer store image ish retailer Tesco PLC. Each retailer has been “integrates not only the perceptions and named the most valuable retail brand in its beliefs about a particular store, but also the respective country by Interbrand’s 2013 Best macro level of general schematic associations Retail Brands ranking. We show how these including the perceptions and beliefs of retailers built their brand images not only with general categories of retailers” (Hartman & functional attributes, but with social and Shapiro, 2005, p.1113). In other words, economic attributes as well. retailer store image is largely affected by the associations consumers hold about other In the next section, we review the relevant stores within the same retail category literature. We then discuss the functional, (Keaveney & Hunt, 1992; Louviere & social, and economic attributes of retailer Johnson, 1990). brand image and provide an overview of the The concept of retailer store image has brand image building efforts of Carrefour and gradually evolved into what has increasingly Tesco. We conclude with a comparison of the been referred to as retailer brand image brand image building efforts of Carrefour and (Ailawadi & Keller,2004; Burt & Tesco and provide suggestions for future Davies,2010; Sierra et al., 2010). Retailer research. brands are multi-sensory and retailer brand equity is largely affected by consumer FROM RETAILER STORE IMAGE TO experiences with a store (Ailawadi & Keller, RETAILER BRAND IMAGE 2004). Retailers can thus build their brand image by helping consumers form unique In his seminal and widely cited article, associations about a retailer’s service quality, Martineau (1958) defines retailer store image product assortment, pricing, and as the total conceptualized or expected merchandising, among other functional store reinforcement that a person associates with attributes. (Ailawadi & Keller, 2004). A shopping at a particular store. This definition store’s offerings and overall service level are points to the fact that retailer store image is thus closely linked to the retailer brand largely influenced by a consumer’s previous (Grewal et al., 1998, Ailawadi, & Keller, experience with a store (Kunkel & Berry, 2004). Although the store is a unique element

126 JOURNAL OF EUROMARKETING in retailer branding (Burt & Davies, 2010), Lundsten, 2002, Brennan & Lundsten, 2000). store image is just one aspect of retailer brand Moreover, modern retailers can facilitate the image. transfer of advanced retail technology and While people shop in order to purchase the managerial know-how to less efficiently products they need, shopping also fulfills operated retailers (Paswan et al., 2010; consumers’ higher-order needs such as a Brennan & Lundsten, 2002; Brennan & desire to socialize and entertain themselves Lundsten, 2000; Caves, 1974). However, (Tauber, 1972). The ability of a retailer to modern retailers might also hurt local provide opportunities for socialization and communities. Market entry of large-scale entertainment to its customers is thus an retailers can drive small retailers out of important attribute of retailer brand image business because small retailers lack the (Goldman, Krider, & Ramaswami, 1999; resources necessary to compete against large Baron, Harris, Leaver, & Oldfield 2001; retailers (Arnold & Fernie, 2000; Arnold & Zinkhan, Fontenelle, & Balazs, 1999). For Luthra, 2000). Wal-Mart, for example, has example, consumers might go to IKEA to great economic power. The retailer creates purchase furniture, appliances, or home jobs when it opens a store in a given area and accessories as well as to enjoy the famous helps improve consumers’ purchasing power Swedish meatballs and Swedish tapas offered because consumers can purchase products at in IKEA’s in-store eating facilities or relax in low prices. However, Wal-Mart’s market IKEA’s bistro/exit café after shopping. In entry strategy is seen as predatory by many addition, Tesco organizes in-store promotional consumers because it often decimates local and non-promotional events in order to to merchants in the community. Hence, Wal- entertain consumers while shopping. The Mart has developed an image as a retailer that British retailer also has in-store eating provides decent quality products at low prices, facilities in some of its large store formats in but at the same time a reputation for hurting order to let its customers relax after a long local retailers. shopping trip. Retailer brand image thus consists not Further, consumers, in addition to only of consumer perceptions of the functional government decision makers, in both attributes of a retailer, but also of consumer developing and developed countries are perceptions of social and economic attributes becoming concerned about the economic of a retailer as well. Thus, retailer brand impact of different types of retailers. “Mom- image is comprised of (1) functional and-pop” stores, for example, support the attributes, (2) social attributes, and (3) local community by providing employment to economic attributes (see Figure 1). a certain portion of the population and by developing close working relationships with Functional Retailer Brand Image Attributes local suppliers. Modern retail chains such as hypermarkets and supermarkets stimulate In their seminal article on retailer retail sales, create jobs, and pay higher branding, Ailawadi and Keller (2004) identify salaries. Modern retailers also utilize modern the following functional attributes of retailer retail technology and possess managerial brand image: (1) store access, (2) store know-how, which helps them improve the atmosphere, (3) price and promotion, (4) efficiency and effectiveness of their cross-category assortment, and (5) within- operations, thus contributing to the overall category brand/item assortment. economic development of a country (Paswan, Store access refers to the ease with which Pineda, & Ramirez, 2010, Brennan & consumers gain access to retail stores. When Dimitrova and Rosenbloom 127 choosing where to shop, consumers seek to aspects such as a store’s design, lighting, and optimize their total shopping costs. Efforts to layout and is thus perceived as a functional access the store are thus a key component in store attribute (Ailawadi & Keller, 2004). consumers’ overall shopping cost (Bell, Ho, & Ailawadi and Keller (2004) point to three Tang, 1998; Ailawadi & Keller, 2004). price and promotion areas that affect Store atmosphere refers to a store’s consumer perceptions of a retailer brand: (1) design, lighting, layout, music, smell, store price perceptions, (2) retailer pricing employee friendliness, and type of people who format, and (3) price promotion and store shop in the store (Baker, Parasuraman, switching. Average price levels, store price Grewal, & Voss, 2002; Kotler, 1973). variations over time, frequency and depth of Although store atmosphere is comprised of promotion, and a retailer’s positioning as intangible factors such as smell, music, Every Day Low Price (EDLP) or High-Low employee friendliness, type of people who Promotional Pricing (HILO) can all affect shop in a store, it also includes tangible retailer brand image.

Figure 1. Retailer Brand Image Attributes

Functional Attributes 1. Store access 2. Store atmosphere 3. Price and promotion 4. Cross-category assortment 5. Within-category brand/item assortment

Social Attributes 1. Familiarity with store owners and personnel 2. Interaction opportunities during and after shopping Retailer Brand 3. Entertainment opportunities during shopping Image 4. Embedment in the local community

Economic Attributes 1. Retailer contribution to local economy 2. Retailer contribution to overall economy 3. Retailer negative impact on local retailers

Cross-category assortment refers to the consumers are looking for one-stop shopping breadth of different products and services a convenience (Messinger & Narasimhan, 1997, retailer offers. Increasingly, time-constrained Pan & Zinkhan, 2006). Retailers that offer a

128 JOURNAL OF EUROMARKETING broad product assortment can not only attract customers. This is especially the case because consumers who have a high opportunity cost it has been shown that consumers who enjoy of time, but also consumers who might have visiting an online store are more likely to shopped in another store where certain explore the online store, examine new products are not available in the store they products, and respond to online store have actually decided to shop in (Ailawadi & promotions (Menon & Kahn, 2002). Keller, 2004). Retailers can hence create Enjoyable online shopping experience also customer value by offering convenience and leads to greater e-satisfaction and, ultimately, ease of shopping (Ailawadi & Keller, 2004). higher online store patronage and online store Within-category assortment refers to the loyalty (Evanschitzky, Iyer, Hessea, & depth of a retailer’s assortment in a given Ahlerta, 2004; Szymanski & Hise, 2000; product category. Consumers perceive greater Wang, Minor, & Wei, 2011). Thus, retailers utility when shopping in a store that offers a that can ensure a superior online shopping large number of brands, sizes, and flavors experience for their customers across multiple because consumers have more flexibility in channels can enhance their brand image their choices and are more likely to find the because consumers are more likely to form item they are looking for (Kahn & Wansink, strong, favorable, and unique brand 2004; McAlister & Pessemier, 1982; Kahn & associations about such retailers (Keller, Lehmann, 1991). 1993). With the growth of online shopping, we argue that a sixth attribute should be added to Social Retailer Brand Image Attributes a retailer’s functional attributes: online shopping experience. Consumers today Some consumers view shopping as a expect to shop where, when, and how they social activity and highly value the social want (Rosenbloom, 2012). Consumers now attributes of retailer brand image, which expect to be able to shop online using their consist of factors such as familiarity with store computers at home, as well as to shop on-the- owners and store personnel, interaction go using their smartphones and tablets. opportunities during and after shopping, Moreover, consumers want to be able to entertainment opportunities during shopping, purchase products online and return them in and a retailer’s embeddedness within the stores as well as being able to order products community (Goldman et al., 1999; Paswan et online and pick them up in stores (Keller, al., 2010; Tauber, 1972). 2013). Therefore, retailers that offer an For example, consumers might prefer integrated shopping experience are more shopping in small, “Mom-and-Pop” stores and likely to enjoy a favorable brand image traditional retail institutions such as open air (Keller, 2013). Many retailers today employ a markets because they have developed a multi-channel strategy that enables consumers personal relationship with store owners and to shop via traditional brick-and-mortar stores, personnel (D’Andrea, 2010; Zinkhan et al., using the Internet at home, or using their 1999). Personal relationships thus become mobile devices such as smartphones and essential for the exchange relationships tablets (Menon & Kahn, 2002; Grewal & (Zinkhan et al., 1999). Moreover, these Levy, 2007). So, retailers will increasingly consumers not only know the store owners need to dedicate part of their brand-building and personnel and, thus, feel loyal to them, efforts to improving online atmospherics and but also like interacting with other store service in order to better respond to the patrons (Goldman et al., 1999; Baron et al., changing needs and expectations of their 2001; Zinkhan et al., 1999). In other words, Dimitrova and Rosenbloom 129 these consumers view small stores as a social Consumers who hold favorable attitudes outlet because the shopping environment is towards the social attributes of a retailer’s conducive to social interaction (Goldman et brand are typically more likely to be loyal to a al., 1999). Zinkhan et al. (1999) argue that the given retailer because they derive a high level feira (street markets in Brazil) “represent foci of satisfaction when shopping there (Keller, of cultural resistance to the homogeneity of 1993). consumption patterns”, because the feira is a place for meetings that foster social Economic Retailer Brand Image Attributes relationships (p. 11). Hence, small stores and traditional retail institutions, especially in Retailer brand image also consists of developing countries, are an integral part of economic attributes. Small, “Mom-and-Pop” consumers’ lifestyles because they support stores, for example, contribute to the national cultural values. These stores are in development of the local economy by fact embedded in the local community, which supporting the local business district. Small often makes them the preferred shopping retailers also provide employment to certain outlet for consumers (Diaz, Lacayo, & segments of the population in many countries Salcedo, 2007; D’Andrea, Lopez-Aleman, & around the world. In Japan, for example, the Stengel, 2006; Paswan et al., 2010). government imposes strict retail sector In contrast, large, modern retailers such as regulations in order to protect small store supermarkets and hypermarkets often owners. In transition economies (TEs), or “manufacture” social attributes that are not an former communist nations, many inherent part of their operations. For example, entrepreneurs opened independently owned they may organize in-store events that provide stores at the beginning of the 1990s an opportunity for entertainment and immediately after the fall of the Iron Curtain. socialization with other store patrons during Such independently owned stores provided, the shopping trip. These large retailers also and still provide, employment to people in offer in-store eating facilities, the purpose of TEs. Moreover, small retailers tend to buy which is to let consumers socialize with locally, thus supporting local suppliers. family and friends after shopping (Goldman et Modern large scale retailers contribute to al., 1999). In addition, some modern retail the development of the overall economy. chains make an effort to become part of the These retailers help drive retail sales, create communities where they open stores by jobs, pay higher salaries than would be supporting local charities and organizations available from small retailers to store and by enhancing the lives of local consumers employees, utilize advanced retail technology, in a variety of ways. For example, in France, and possess managerial know-how which the French retailer Auchan provides support to enables them to improve the efficiency and local projects having the goal to empower effectiveness of their operations as well as youngsters, mainly those in hard conditions facilitate the transfer of advanced retail coming from urban environments and those technology and managerial know-how to less adjacent to the store, to attain their desires by efficiently operated retailers (Paswan et al., providing financial resources and professional 2010; Brennan & Lundsten, 2002; Brennan & experience that they need to bring their plans Lundsten, 2000; Caves, 1974). Further, to completion. In addition, Swedish retailer modern stores offer wide product assortments H&M donates clothes to aid organizations in and one-stop shopping convenience. So, the countries in which the retailer operates. consumers are willing to travel longer distances and buy in larger quantities. The

130 JOURNAL OF EUROMARKETING outcome is not only an increase in retail sales, small, indigenous retailers in towns and but also improved “economic health” when villages (Arnold & Luthra, 2000). measured in terms of sales taxes, real In sum, the economic attributes projected estate/property taxes, and household incomes by small, local retailers as well as large (Arnold & Luthra, 2000; Stone, 1995; Vance domestic and foreign retailers can affect the & Scott, 1994). In a study examining the retailers’ brand image both positively and economic effects of Wal-Mart store openings, negatively depending on how these attributes researchers found a positive effect of Wal- are perceived by consumers (Keller, 1993; Mart entry on sales-tax revenue, retail salaries, Keller, 2013). retail employment, and per capita income in We next provide an overview of two almost every country where the U.S. retailer European retailers, (1) Carrefour SA and (2) opens stores (Vance & Scott, 1994). Tesco PLC, and discuss their retailer brand Moreover, some retail chains try to support image building efforts and success heretofore. smaller retailers rather than undermine their We selected these two retailers because they existence. For example, since 2001, the are the two largest European retailers. In Spanish retailer Mercadona has launched a addition, each retailer has established program that aims to revitalize local town substantial international presence in Europe. markets by encouraging the coexistence of Moreover, in 2013 Interbrand named large retailers and traditional retailers and Carrefour the most valuable retail brand in promoting the development of traditional France and named Tesco the most valuable retail formats. Finally, modern retailers retail brand in the U.K. possess advanced retail technology and managerial know-how that enable them to CARREFOUR SA BRAND IMAGE more efficiently and effectively run their retail operations. Moreover, when foreign modern Carrefour SA is a French retailer. It is the retailers penetrate developing nations, they largest retailer in Europe and the second make possible the transfer of such advanced largest retailer in the world after Wal-Mart. In retail technology and managerial know-how to 2012, Carrefour generated net sales of indigenous retailers, thus stimulating US$99.52 billion and had 9994 stores innovation, operating efficiency, and overall worldwide. The retailer operates in 33 market productivity (Arnold & Luthra, 2000; countries worldwide. Carrefour operates four Caves, 1974). store formats: (1) hypermarkets, (2) At the same time, modern retailers might supermarkets, (3) convenience stores, and (4) have a negative impact on local retailers cash and carry stores. In its 2012 annual (Farhangmehr, Marques, & Silva, 2000; Jones report, Carrefour on page 8 states:

& Doucet, 2000; McGee, 1996). The opening Your lifestyle and the ways you shop of large retailers in a given area usually leads are changing. As a multi-format, to market exit by small retailers unable to multichannel and multi-local retailer, compete against large retailers that have Carrefour has all the resources to cater greater buying power and more resources than to your different needs – whether you small stores. Large retailers often “steal” live in an urban or rural environment, market share from small retailers (Arnold & are a private or a professional client, or Luthra, 2000; Seiders, Simonides, & Tigert, live in France or anywhere else in the 2000). Thus, the economic growth driven by world. To better address your needs, we large retailers may well be at the expense of are modernizing our stores so that you Dimitrova and Rosenbloom 131

can shop in total comfort and enjoy the customers’ immediate shopping needs, best possible service. especially when it comes to food. Therefore, the ease of access of each store type for Functional Attributes: Store Access consumers is largely determined by the

Carrefour hypermarkets are large stores current needs of the consumers. located in town centers, in the outskirts of cities, and in rural areas. Carrefour market Store Atmosphere supermarkets are smaller than hypermarkets and are located mainly in town centers. Carrefour stores have a friendly Carrefour convenience stores which operate atmosphere. Moreover, Carrefour’s goal is to under four banners (Carrefour city, Carrefour “make sure its customers have fun.” contact, Carrefour express, and Carrefour Carrefour has recognized that consumers look montagne) are smaller than Carrefour market for a new shopping experience and has started supermarkets and are located close to renovating its hypermarkets and launched the consumers’ homes. With its convenience Carrefour planet store in 2010. Carrefour stores, Carrefour aims to let its customers planet stores are divided up into three well- shop quickly “just around the corner. defined areas: Carrefour city convenience stores offer (1) discount for fast-moving consumer goods, mainly ready-to-eat meals and are designed (2) fresh food, and for customers on the move who are often in a (3) multi-specialist for non-food goods. hurry. Carrefour contact convenience stores Carrefour planet customers appreciate the are located at the entry to small towns and improved store atmosphere, circulation, and villages, or in their centers. These stores offer signage in these stores.

mainly food products and are designed to Price and Promotion satisfy last-minute purchases. Carrefour express convenience stores sell Carrefour prides itself on offering high mostly essential products and are located close quality products at the best prices and to consumers’ homes. Carrefour montagne ensuring the “best value for money.” Since convenience stores operate in ski resorts. August 2011, the French retailer has launched These stores offer a variety of products as well several promotional campaigns whose purpose as home delivery. Carrefour cash and carry is to guarantee low prices in its stores. stores are the largest Carrefour store format Carrefour launched its “Résponses Budget and target Carrefour’s professional customers. Famille” campaign (Solutions for the Family These stores are located in out-of-town areas. Budget) and reduced, then froze the prices of Carrefour offers a variety of store formats 1,000 products. designed to satisfy the needs of different The purpose of Carrefour’s “Garantie Prix consumer segments as well as the different le plus bas” campaign (Lowest Price needs of consumers at different times. While guarantee) is to reduce the price on more than hypermarkets and cash and carry stores might 500 of the most popular major-brand products have to be accessed by car, these two store in Carrefour hypermarkets. Moreover, types also allow for large basket purchases Carrefour promises its customers to reimburse during one shopping trip due to the variety of them with twice the difference in product food and non-food items offered. prices if they find the same product on sale at Carrefour supermarkets and convenience a lower price anywhere within a 15 km radius stores, on the other hand, can be easily of a given Carrefour store. accessed on foot and are designed to satisfy

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Cross-Category Assortment and Within- experience for its customers. In 2011, in the Category Brand/Item Assortment Carrefour Annual Report on page 24, it is written: “By building more bridges between In its hypermarkets, Carrefour offers food Carrefour’s stores and the Internet, Carrefour and non-food products as well as national is increasing the number of shopping options brands and Carrefour products. Product open to customers who are interested in speed, offerings in Carrefour hypermarkets meet the practicality and bargains.” requirements of customers’ varied lifestyles Alongside e-commerce, consumers can and different ways of shopping. Carrefour now choose from drive-in facilities and market supermarkets offer mainly food mobile applications to shop in Carrefour products. In fact, Carrefour states that “the stores. Carrefour drive-in is a system that variety of products on offer and the possibility enables customers to order food products of finding one’s favorite brands all help online and pick them up at their local develop customers’ loyalty to their Carrefour Carrefour store. Carrefour employees select market supermarket” (Carrefour annual report the products, prepare them, and help 2011, p. 18). As mentioned, Carrefour customers load them in their cars. Carrefour convenience stores offer a much narrower also offers iPhone and Android apps that are assortment of mostly food products designed designed to make shopping easier and keep to satisfy mostly consumers’ last-minute customers up-to-date about bargains. purchase needs. Similar to Carrefour Customers can use their smartphones to hypermarkets, Carrefour cash and carry stores browse shopping guides, receive information offer a wide variety of food and non-food about the Carrefour loyalty card, and shop products alongside national brands and online. With the mobiles apps Carrefour Carrefour products. customers can browse stores by aisle, search Carrefour has developed a number of its for a particular product by keyword or by own high quality private label products that scanning its barcode, look up their most recent cater to different consumer preferences and orders, and then add them directly to their needs. Carrefour Selection is a gourmet range shopping basket. whose products combine taste and culinary refinement at affordable prices. Carrefour Social Attributes also offers authentic products from French regions, Reflets de France, while Terre d’Italia Carrefour emphasizes the “human showcases traditional Italian products. experience” in its stores. The French retailer Carrefour Baby (0-36 months) and Carrefour carefully trains its in-store staff to ensure Kids (4-10 years old) offer high-quality personal attention and one-of-a-kind in-store nutritionally balanced food products for service for its customers. Carrefour also babies and kids, respectively. Carrefour’s “No organizes seasonal and festive events designed Gluten” range offers a selection of gluten-free to entertain consumers while shopping and, at products. The Carrefour Bio and Carrefour the same time, supplement Carrefour’s non- ECOplanet ranges feature products that do not food product campaigns (e.g., gardening and harm the environment. outdoor product campaigns). Carrefour also tries to integrate its stores Online Shopping Experience in the communities where it operates by developing “local solidarity.” The French Carrefour has invested substantial retailer strives to be “a partner in local life.” resources in providing an integrated shopping The 2012 Carrefour Annual on page 5 states: Dimitrova and Rosenbloom 133

As a multi-local retailer, we have day. It has been committed to being a responsibilities to the local community, leading employer and a responsible wherever we operate, with our stores company from the beginning. or our suppliers. Carrefour has to Therefore, Carrefour continually maintain close relationships with all carries out actions benefiting its parties. So we have to go to meet them employees, its customers and all the and listen to them. And, together, work stakeholders of its banners. every day on creating value for the benefit of all. Moreover, on its website Carrefour points out:

Carrefour thus holds meetings with local Everywhere it operates, the Carrefour consumers in order to better understand their Group demonstrates its commitment needs and enables store managers to tailor to local economic growth. Because product assortments to local consumer needs retail involves people, it always gives whenever possible. In fact, more than 75% of priority to recruiting people who live all Carrefour food products are sourced from locally, and to training its managers local suppliers. Carrefour also supports local and staff on site. Very often, the sport clubs and local associations and works Carrefour Group is the premier in partnership with local communities by private employer in the countries in offering food and emergency aid. For which it operates. This is obviously example, in Belgium, Spain, and France, the case in France, where the group Carrefour donated fresh products withdrawn was founded, but it also holds true in from the shelves to food banks. In addition, in countries such as Brazil, Argentina, the event of natural or industrial disasters, and Italy. At the same time, the Carrefour assists humanitarian organizations Group gives priority to local supply with relief efforts. In 2012 Carrefour Italy chains. So 75% of all its food encouraged its customers to help the victims products come from local suppliers in of the earthquake in Emilia-Romagna. the countries in which it operates.

Economic Attributes Thus, Carrefour strives to foster long- lasting relationships with local companies and One of Carrefour’s core priorities is to be help these companies adopt high-quality a dynamic player in employment and the local growth strategies. For example, in 2012 in economic fabric. In 2012, Carrefour Spain, Carrefour invited more than 720 small employed almost 350,000 people worldwide. and medium-sized enterprises to promote their Carrefour also supports youth employment, products in Carrefour stores. provides employment to people excluded from Carrefour also helps recruit and train the workforce, and helps its employees franchise candidates. In Carrefour 2012 develop their skills and careers. Carrefour Annual Report on page 11 is written: also tries to ensure working conditions that are beneficial to everyone. Moreover, in 2011 The baker from Poey-de-Lescar, a Carrefour Annual Report on page 44, it is village in the Pyrénées-Atlantiques written: department (France) wanted to meet the needs of people living locally Carrefour fulfills its role as a and so set up a new store combining responsible retailer each and every a Carrefour contact convenience store

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and his own bakery. Doing this gave a out-of-town hypermarkets selling both food boost to the local sales dynamic which and non-food items (the stores often have a went beyond the confines of the village. café); (2) Tesco Supercenters, large These future retailers learn the trade in supermarkets selling both food and non-food training stores or with employees. They items; (3) Tesco Metro, stores located mainly learn all about retail, sourcing, dealing in city centers and the inner city; (4) Tesco with fresh products, bread, as well as Express, neighborhood convenience shops management and the economic aspects selling primarily food items (these stores are of the company. Carrefour provides located in city centers as well as small them with support in choosing products residential areas and small towns); (5) One- that are appropriate for their catchment stop, convenience stores, the smallest Tesco area and in arranging the shelves. They stores with an average area of 142 sq. m.; and can take advantage of the Group’s (6) Tesco Homeplus, warehouse-style stores purchasing power and are given advice that sell a variety of non-food items. about setting sales prices that are As is evident, Tesco’s store formats differ adapted to local competition. not only in terms of the type of merchandise offered, but also in terms of ease of access for Finally, Carrefour adapts its supply chain consumers. For example, Tesco Metro, Tesco management (SCM) processes to local Express, and Tesco one-stop convenience markets in order to improve its supply chain stores are relatively easy to access by efficiency, given local infrastructure and consumers because these are smaller store technological developments in the area of formats usually located in city centers and the SCM (Cambra-Fierro & Ruiz-Benitez, 2011). inner city. Larger formats such as Tesco Carrefour is thus able to reduce its SCM costs Extra, Tesco Supercenters, and Tesco and ensure lower product prices for Homeplus, however, tend to be located in out- consumers. of-town areas. Although these store formats might be farther away from consumers’ homes TESCO PLC BRAND IMAGE and work, it might be easy for consumers who own cars to access these stores. In 2012 in Tesco is a British retailer and is the second Tesco’s Annual Report on page 27 is written: largest European retailer after Carrefour and “Our site research and property capabilities the world’s third largest retailer after Wal- enable us to identify and develop the best sites Mart and Carrefour. Tesco operates in 14 for our stores.” countries. In 2012, it generated sales of US$108.78 billion and had 6,224 stores Store Atmosphere worldwide. In the same year, Tesco generated 15% of its revenue and 14% of its profit from Tesco has recognized that customers its European operations (outside the U.K.). expect a warmer, friendlier store look and feel Tesco generated 66% of its revenue and 66% and has taken the necessary steps to improve of its profit from its U.K. operations. the environment in Tesco stores. Tesco notes:

Functional Attributes: Store Access We always want to provide our customers with the best shopping Tesco operates multiple store formats experience...Focusing on food first, we designed to cater to the needs of different are making a £1 bln (US$ 1.57 bln) consumer segments: (1) Tesco Extra, large, commitment this year to improve the Dimitrova and Rosenbloom 135

shopping trip, driving a strong pace of Cross-category Assortment and Within- improvement in the things that matter for Category Brand/Item Assortment customers – service, range, quality, price, availability and the store Tesco has experienced strong growth in environment. (2012 Tesco Annual food product sales, but in 2012, the retailer Report, p. 10) has also seen strong performance in general merchandise, clothing, and electrical products Tesco made substantial investments to in Europe. Tesco sells its own private label increase in-store staff, in-store personnel products that encompass a broad range of training, and purchasing equipment for key products in order to satisfy diverse customer departments such as produce and meat. The needs. In 2012, Tesco has further expanded U.K. retailer believes that by making such its private label products. It has launched important investments in its in-store Venture Brands in the UK and Europe, operations, it will ensure more staff in stores including Chokablok chocolate and ice cream, during busy times, greater staff expertise, and Carousel children’s toys, Parioli authentic enhanced service across the store. Tesco Italian ranges, and the Latham’s range of further states, “We are improving the look and premium pet food. Tesco has also taken feel of many of our fresh departments using efforts to differentiate its Gourmet sub-brand more engaging signage, stronger graphics, as well as Tesco’s Eat Well range in its U.S. warmer colors and better lighting” (2012 Fresh and Easy stores and Tesco’s Goodness Tesco Annual Report, p.10). range, a range of healthy and nutritious Tesco now uses wooden cladding and products for products. Tesco also plans to brighter signage to welcome customers in the apply “more personalization and localization store. The retailer is also using wooden in stores to help them tailor their ranges…for fixtures in its Bakery department and sleek their local area.” Finally, Tesco has re- shelving and lighting in its Health and Beauty launched its Tesco Value range as Everyday department. Value and has substantially improved the Tesco has also made its produce aisles quality of products in this range. more spacious and uses counters with more engaging signage, flat glass fronts and better Online Shopping Experience lighting to better show off meat, fish, cheese, and deli products. Tesco has made substantial investments in making “clicks & bricks” a reality for its Price and Promotions customers. The U.K. retailer plans to continue improving its online offer in order to adapt to In September 2011, Tesco launched The its customers’ changing needs. Its long-term Big Price Drop campaign, reducing the prices goal is to become a multi-channel retailer in of over 3,000 everyday products. Big Price all of its markets. Tesco further states: Drops target products which are bought week in, week out. We want to offer our customers Tesco recognizes that The Big Price Drop convenient options to shop with us is an important step in the journey, but that using…stores, computers and mobile there is more to do to get the blend right on devices…. Whether customers want to price, promotions, couponing, and loyalty. shop on the move using their smartphones, or take their time at home, we are innovating to help them

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shop however they want, with quick store customers relax and socialize after and easy apps and improved shopping. platforms. (2012 Tesco Annual Report, Tesco is also dedicated to serving its local p. 14) communities and, thus, tries to make its stores an integral part of the communities where they Tesco has also upgraded its Tesco Direct operate. In its 2012 Annual Report on page website, the retailer’s shopping website, in 22, the retailer states: “Our stores are order to better showcase its great quality important parts of local communities. We are product range and offer customers improved committed to being a good neighbor and functionality and ease of use. In addition, making a difference in the communities we “Click & Collect” is a key component of live and work in.” Tesco’s multi-channel strategy. “Click & Every year, Tesco donates at least 1% of Collect” allows customers to order online and pre-tax profit to local charities and good pick up groceries in stores. In addition, Tesco causes. Tesco has established the Tesco clothing online offers a virtual fitting room Charity Trust, which makes cash grants to that allows customers to create 3D digital local, national, and international charities. On versions of themselves from a photograph a local level, the Tesco Charity Trust supports uploaded on to a virtual fitting room page the needs of employees, customers, and (Tesco, February 29, 2012). communities around Tesco stores. Tesco U.K. also holds a community donation budget Social Attributes to help local organizations with their fundraising events. Through the donation Tesco organizes in-store promotional budget, Tesco aims to provide donations and events that aim to not only promote a specific sponsorship mainly to local charities and brand, but also to entertain customers. For organizations working with children’s example, for the launch of Call of Duty: Black education and welfare, elderly people, and Ops II, Tesco organized a series of midnight people with disabilities. Tesco has also been events in its stores (Tesco, November 9, involved in projects with local charities in 2012). During the events, Tesco’s flagship order to provide food to impoverished people Chesnutt Extra store hosted a monster truck for Christmas. The purpose of Tesco’s “Care kitted out with consoles which offered gamers for the Needy” program in turn is to donate the opportunity to compete for Black Ops daily essentials to elderly and infirm people. merchandise. Other stores did giveaways and Finally, in order to better cater to the provided food and drink for fans who were needs of its local consumers, Tesco strives to queuing. In 2012 for Valentine’s day, Tesco adapt its products to local tastes. In its 2012 launched a “Love is in the Aisles” campaign Annual Report, the British retailer points out: in one of its stores in Ireland (Tesco, February “Retailing is a local business. Customers love 9, 2012). “Love is in the Aisles” was like a local and regional products; we pride speed dating event, but with a twist. ourselves on having local people running our Participants were asked to go around the store operations; and we use local knowledge to and find products that best represent their source and to allocate space to the most personalities. Tesco also came up with other popular products” (p. 16). match-making games. The most compatible couple won a romantic dinner for two in one Economic Attributes of Dublin’s top restaurants. In addition, Tesco Extra stores have cafes whose purpose is to let Tesco states: Dimitrova and Rosenbloom 137

We have reinforced our commitment to economic attributes of retailer brand image be a good corporate citizen this year: (see Table 1 for a summary comparison of the as a retailer, an employer and a brand image building efforts of the two neighbor. We employ over half a retailers). million people worldwide, which allows us to make a real difference in the Functional Attributes communities where we operate. Our core business involves two vital roles in Regarding store access, Carrefour and the heart of the community: providing Tesco operate a number of store formats customers with safe, good quality, targeting different consumer needs as well as affordable, nutritious food and creating different consumer needs at different times. good jobs and careers. (2012 Tesco Smaller store formats can be easily accessed Annual Report, p. 7) by consumers because they are located in the inner city and, thus, satisfy mainly last-minute On the same page of the report Tesco also customer needs. Larger store formats, points out: “Our responsibility to our people however, are located in city outskirts and is to provide them with good jobs and careers. target mainly large basket shoppers who look In the last year, we have created thousands of for one-stop shopping convenience. jobs across our businesses…and have Carrefour and Tesco have also taken a continued our work in the employment of series of steps to improve their store young people, university graduates and the atmosphere by redesigning their stores in long-term unemployed.” Tesco is Europe’s order to make shopping more pleasant for biggest private sector employer (Wallop, consumers. Moreover, Carrefour prides itself 2011). In 2013 Tesco was also named one of on ensuring “friendly atmosphere” in its Britain’s Top Employers (Tesco, March 22, stores. 2013). Tesco is also dedicated not only to Regarding cross-category assortment and providing jobs, but also to helping its within-category brand/item assortment, employees develop their careers.In addition, Carrefour and Tesco offer a wide variety of Tesco uses state-of-the art distribution centers national brands and their own private label and advanced technology that contribute to the food and non-food product ranges. In terms efficiency of the retailer’s supply chain, which of private labels, it seems that Carrefour offers in turn allows the retailer to reduce its costs more private label ranges than Tesco, and lower product prices. Finally, Tesco especially in food, targeting different works closely with local suppliers to source consumer segments. the best local and regional products for its Regarding price and promotions, stores. Carrefour and Tesco try to offer “the best The British retailer has even established value for money.” Given the ongoing supplier academies in its Central European economic crisis worldwide affecting consumer markets in order to allow suppliers to present disposable income, Tesco and Carrefour have their products to Tesco’s buyers and, thus, launched promotional campaigns in order to support local supplier growth. stimulate in-store sales while enabling consumers to more easily manage their DISCUSSION budgets. Carrefour has launched the “Solutions for the Family Budget” and the Carrefour and Tesco have built their brand “Lowest Price Guarantee” promotional images around the functional, social, and campaigns while Tesco has launched the “Big

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Price Drop” promotional campaign. Lastly, on their smartphones using Carrefour’s and Carrefour and Tesco have realized the Tesco’s mobile apps. Carrefour has also importance of providing consumers with initiated its Carrefour drive program while outstanding online shopping experience Tesco its “Click & Collect” program. These alongside the opportunity to shop where, programs enable consumers to order products when, and how they want. online and pick them up in stores. Moreover, Carrefour and Tesco customers can thus Tesco online clothing features 3D virtual shop online on each retailer’s website or shop fitting rooms.

Table 1 Carrefour vs. Tesco Brand Image Attributes Comparison CARREFOUR TESCO

Functional Attributes Functional Attributes Store access Store access Different store formats located in Different store formats located in the inner city the inner city and out-of-town and out-of-town areas areas Store atmosphere Store atmosphere Emphasize friendly store Store design improvements atmosphere Store design improvements Price and promotions Price and promotions

Offers “The best value for Offers “The best value for money” money” “Solutions for the Family “The Big Price Drop” promotional campaign Budget” promotional campaign “Lowest Price Guarantee” promotional campaign Cross-category assortment and Cross-category assortment and within-category within-category brand/item brand/item assortment assortment Food and non food products Food and non food products National brands National brands Carrefour brand ranges Tesco brand ranges Online shopping experience Online shopping experience E-commerce Tesco Direct website upgrade Mobile apps Mobile apps Carrefour drive program “Click & Collect” program Tesco clothing online features 3D virtual fitting rooms Social Attributes Social Attributes Organizes seasonal and festive Organizes in-store events to entertain consumers events to entertain consumers Emphasizes the “human In-store eating facilities experience” in stores Dimitrova and Rosenbloom 139

Makes stores an integral part of Makes stores an integral part of the local community the local community Economic Attributes Economic Attributes Top private employer in most Europe’s biggest private sector employer countries in which it operates Top private employer in France Named one of Britain’s Top Employers in 2013 Local supplier support Local supplier support Recruitment and training of Supply chain management efficiency franchise candidates Supply chain management efficiency according to local market conditions

Social Attributes private employer in Europe and has been named one of Britain’s Top Employers in Carrefour and Tesco have also 2013. Carrefour and Tesco also emphasize successfully utilized the social retailer brand local sourcing of products for their stores, image attributes to build their brand images. thus supporting local suppliers and helping Both retailers organize events not only to local suppliers grow. Carrefour recruits and promote products in stores, but also to trains franchise candidates. This initiative entertain consumers. In addition, Carrefour has a positive economic impact on local emphasizes the “human experience” in its communities and the surrounding areas. stores. Tesco, on the other hand, does not Finally, Carrefour and Tesco also benefit seem to put as much emphasis on this aspect from advanced technology and state-of-the art of its social retailer brand image attributes, but distribution centers that help them improve one could argue that the British retailer has their supply chain efficiency. been more creative than Carrefour with its in- store events. Tesco also provides in-store CONCLUSION AND DIRECTIONS FOR eating facilities in some of its stores in order FUTURE RESEARCH to allow consumers to relax and socialize after shopping. Finally, Tesco and Carrefour strive In recent years, marketing scholars, as to make their stores an integral part of the well as retail practitioners, have realized that local community by supporting local charities building a strong retailer brand image that and organizations and adjusting their product transcends the traditional store image has assortments to local consumer tastes. become an imperative in the intensely competitive global retail environment. While Economic Attributes the main focus of research to date has been on retailers’ functional attributes as the main Carrefour and Tesco pride themselves on component of retailer brand image, we argue the fact that they help create jobs in the that retailer brand image is also comprised of communities where they operate and that they social and economic attributes. Using the two help their employees develop their careers. largest European retailers, the French Carrefour is the top private employer in most Carrefour SA and the British Tesco PLC, as countries in which it operates. It is, in fact, examples, we show how each retailer has the top private employer in its domestic developed and continues to develop its market, France. Tesco in turn is the top functional, social, and economic retailer brand

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image attributes in an effort to build a strong Baker, J., Parasuraman, A., Grewal, D. and retailer brand. Voss, G. B. (2002). The Influence of In the future, it is worth empirically Multiple Store Environment Cues on examining whether retailer brand image is Perceived Merchandise Value and indeed composed of functional, social, and Patronage Intentions. Journal of economic attributes. It would also be useful Marketing, 66(4), 120-41. to find out what the outcomes of a favorable Baron, S., Harris, K., Leaver, D. and Oldfield, retailer brand image are. For example, do B. M. (2001). Beyond convenience: The retailers that project a favorable image in the future for independent food and grocery minds of consumers as a result of their retailers in the UK. International Review functional, social, and economic attributes of Retail, Distribution & Consumer benefit from customer loyalty, higher sales, Research, 11(4), 395-414. and customer satisfaction? In addition, it Bell, D.R., Ho, T.-H. and Tang, C.S. (1998). would be interesting to examine how and why Determining where to shop: Fixed and some retailers are able to develop their variable costs of shopping. Journal of functional, social, and economic attributes in a Marketing Research (JMR), 35(3), 352-69. way that helps them improve their retailer Brennan, D.P. and Lundsten, L. (2000). brand image. Do factors such as retailer Impact of large discount store in small resources, retailer strategy, and retailer U.S. towns: Reasons for shopping and capabilities matter? Future research could retailer strategies. International Journal of examine whether functional, social, and Retail & Distribution Management, economic attributes contribute equally to 28(4/5), 155-61. building a favorable retailer brand image and, Brennan, D.P. and Lundsten, L. (2002). if no, why. Finally, it would be interesting to Impacts of large? International Journal of find out whether consumers put more weight Retail & Distribution Management, on some components of a retailer’s functional, 30(8/9), 394–406. social, and economic attributes than on others Burt, S. and Davies, K. (2010). From the retail when they form their perceptions about a brand to the retailer as a brand: Themes retailer’s brand image. and issues in retail branding research. International Journal of Retail and REFERENCES Distribution Management, 38(11/12), 865- 78. Ailawadi, K.L. and Keller, K.L. (2004). Cambra-Fierro, J. and Ruiz-Benitez, R. Understanding retail branding: Conceptual (2011). Notions for the successful insights and research priorities. Journal of management of the supply chain: learning Retailing, 80(3), 331-42. with Carrefour in Spain and Carrefour in Arnold, S. and Luthra, M. N. (2000). China. Supply Chain Management: An Marketentry effects of large format International Journal, 16(2), 148–54. retailers: A stakeholder analysis. Caves, R.E. (1974). Multinational firms, International Journal of Retail & Competition and productivity in host Distribution Management, 28(4/5), 139- country markets. Economica, 41(162), 54. 176–93. Arnold, S.J. and Fernie, J. (2000). Wal-Mart D'Andrea, G. (2010). Latin American retail: in Europe: Prospects for the UK. Where modernity blends with tradition. International Marketing Review, 17(4/5), International Review of Retail, 416-28. Dimitrova and Rosenbloom 141

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should be written in such a manner that those The Journal is published four times a year. outside the field can comprehend the expertise Papers are blind reviewed by at least two mem- and attitudes of those who work within it. bers of the Editorial Review Board. Book re- Hence, a major criterion is that the language views are special case study materials based on used should be as simple as possible without product/service, success and/or failure of Euro- altering in any way, form, or shape the quality pean companies in global markets and industries of the information to be communicated. Alt- shall also appear as regular items in the Journal hough not exhaustive, the following topics are of Euromarketing. illustrative of the subject areas to be covered in Prospective authors are requested to attempt the Journal: to restrict their submissions to approximately . Cross-National Consumer Segments in Eu- twenty-five double spaced pages including fig- rope ures, tables, and references. Authors should . Export behavior of European Firms submit their manuscripts electronically along . Marketing Strategies of European Multina- with a short abstract and a one-page executive tionals summary to either Editor-in-Chief Erdener . Marketing Implications of Strategic Allianc- Kaynak at [email protected] or Associate Editor es of European Firms Svetla Marinova at [email protected]. The . Markets and Marketing Systems of Europe- IMDA Press style guidelines should be used in an Countries preparing manuscripts. If in doubt, prospective . Marketing Practices of Europe Companies authors should either refer to the inside back . Public Sector Marketing in Europe cover of any IMDA Press journals or use The . Comparative Marketing Systems in Europe American Psychological Association Guide- . Diffusion of Innovations Among European lines. For more information and subscription to Nations the journal visit journals.sfu.ca/je/index. . Transfer of Marketing Technology and Re- php/euromarketing The American Psychological verse Technology Transfer in Europe Association style guidelines. For “Instructions . Buyer-Seller Interactions and Organizational for Authors” and for additional information, Buyer Behavior Issues in European Markets please contact the Editor-in-Chief. . Business Customs and Practices Among Eu- ropean Countries Erdener Kaynak, Ph.D. D. Sc. . Marketing Interaction/Interrelationships Be- Editor-in-Chief tween Europe and Other Trading Blocs Journal of Euromarketing . European Corporate Cultures The IMDA Press . Legal-Political Aspects of Marketing in Eu- P.O. Box 399 rope Hummelstown, Pennsylvania 17036 . Marketing Issues Pertaining to EU, EFTA, U.S.A Council of Europe, European Members of OECD, and Associate Members of EU Telephone: (717) 566-3054 (Journal) . Marketing Research in Europe (717) 948-6343 (Office) . Communication/Promotion/Advertising Fax: (717) 566-1191 (Journal) Strategies of European Firms (717) 948-6456 (Office) . Other Topics Directly Related to European Marketing

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Aims and Scope. The Journal of Euromarketing aims to meet the needs of academicians, practitioners, and public poli- cymakers in the discussion of marketing issues pertaining to Europe. It helps to increase our understanding of the strategic planning aspects of marketing in Europe and the marketing aspects of the trading relationship between European and for- eign firms. Today’s Europe is going to play an increasingly more important role in the global economy, so the unique position of the region is certain to provide fascinating reading material. The Journal of Euromarketing fosters a conceptu- al understanding of the European markets and marketing systems, provides analytical insights, and highlights the past, present, and future of European marketing. Manuscript Submissions. Authors are strongly encouraged to submit manuscripts electronically. If submitting a disk, it should be prepared using MS Word or WordPerfect and should be clearly labeled with the authors’ names, file name, and software program. Manuscripts should be submitted in triplicate to Dr. Erdener Kaynak, Editor, Journal of Euromarket- ing, School of Business Administration, Pennsylvania State University at Harrisburg, 777 West Harrisburg Pike, Mid- dletown, PA 17057 or by e-mail at [email protected] and [email protected] Each manuscript must be accompanied by a statement that it has not been published elsewhere and that it has not been submitted simultaneously for publication elsewhere. Authors are responsible for obtaining permission to reproduce copy- righted material from other sources and are required to sign an agreement for the transfer of copyright to the publisher. All accepted manuscripts, artwork, and photographs become the property of the publisher. All parts of the manuscript should be typewritten, double-spaced, with margins of at least one inch on the all sides. Num- ber manuscript pages consecutively throughout the paper. Authors should also supply a shortened version of the title suit- able for the running head, not exceeding 50 character spaces. Each article should be summarized in an abstract of not more than 100 words. Avoid abbreviations, diagrams, and reference to the text in the abstract. References. References, citations, and general style of manuscripts should be prepared accordance with the APA Publica- tion Manual, 4th ed. Cite in the text by author and date (ex: Smith, 1983) and include an alphabetical list at the end of the article. Examples: Journal: Tsai, M. & Wagner, N. N. (1978). Therapy groups for women sexually molested as children. Archives of Sexual Behavior, 7(6), 417-427. Book: Millman, M. (1980). Such a pretty face. New York: W. W. Norton. Contribution to a Book: Hartley, J. T., & Walsh, D. A. (1980). Contemporary issues in adult development of learning. In L. W. Poon (Ed.), Ageing in the 1980s (pp. 239-252). Washington, DC: American Psychological Association. Illustrations. Illustrations submitted (line drawings, halftones, photos, photomicrographs, etc.) should be clean originals or digital files. Digital files are recommended for highest quality reproduction and should follow these guidelines: 300dpi or higher; sized to fit on journal page; EPS, TIFF, PSD format only; and submitted as separate files, not embedded in text files. Color Illustrations. Color illustrations will be considered for publication; however the author will be required to bear the full cost involved in color art reproduction. Color art can be purchased for online only reproduction or for print + online reproduction. Color reprints can only be ordered if print + online reproduction costs are paid. Rates for color art reproduc- tion are: Online Only Reproduction: $225 for the first page of color; $100 per page for the next three pages of color. A maximum charge of $525 applies. Print + Online Reproduction: $900 for the first page of color; $450 per page for the next three pages of color. A custom quote will be provided for articles with more than four pages of color. Tables and Figures. Tables and figures (illustrations) should not be embedded in the text, but should be included as sepa- rated sheets or files. A short descriptive title should appear above each table with a clear legend and any footnotes suitably identified below. All units must be included. Figures should be completely labeled, taking into account necessary size reduction. Captions should be typed, double-spaced, on a separate sheet. Proofs. Page proofs are sent to the designated author using IMDA Press's Article Tracking System (ATS). They must be carefully checked and returned within 48 hours of receipt. Reprints and Issues. Reprints of individual articles are available for order at the time authors review page proofs. A dis- count on reprint is available to authors who order before print publication. Each contributing author will receive 1 com- plete issue in which the article publishes and a complimentary PDF. The file is for personal use only and may not be cop- ied and disseminated in any form without prior written permission from IMDA Press.