The Swedish Country of Origin Effect - The influence of the Swedish country image on brands promotion strategy Author: Amanda Karlsson & Elin Svensson Supervisor: Rosalina Torres Examiner: Susanne Sandberg Term: VT21 Subject: International Business Level: Bachelor Course code: 2FE51E Abstract The purpose of this thesis is to explore how the country image influences Swedish brands in their promotion strategy. The thesis will explore what underlying factors come to influence the country of origin effect in the brands promotion and which cues are used when communicating their origin with consumers. To address the purpose of the thesis, the following question will be answered: How does the country of origin influence Swedish brands in their promotion strategy? In regard to the research question and purpose, the theoretical framework includes previous studies related to different dimensions of country of origin and the effect it has on consumer affinity, different stereotypes regarding country image as well as different COO-strategies. To answer the research question, this thesis contains a qualitative research approach, with an inductive method and a multiple case study design. We interviewed 3 companies, within 3 different product categories which gave us valuable insights regarding how the Swedishness is communicated to consumers and how the Swedish country image is perceived internationally on different product categories. An analysis was made with the empirical findings together with the theoretical framework, with comparisons between the companies as well as pointing out differences and similarities between the case companies. The overall findings from this thesis is that Sweden holds a positive image internationally and that it is beneficial for companies to promote their Swedishness. The different companies also emphasize different cues in their promotion, to get a match between product category and country image, hence use the Swedishness in different ways. Key words Country of origin, Country of origin effect, Country image, COO dimensions, Consumer perceptions, COO-strategies, Promotion, Sweden, Swedishness, Brand, Stereotypes, Consumer affinity, Product category, Internationalization Acknowledgments We would like to express our appreciation to everyone who helped us and contributed to this thesis. A very special thanks to Debby Döss, Max Ghorbani and Anton Öberg for taking the time for an interview and giving us valuable answers for our research. We would also like to thank our supervisor Rosalina Torres for necessary feedback, criticism and insights that contributed to our thesis. Furthermore, we would like to thank our examiner Susanne Sandberg and our opponents for the advice and perspective which increased the quality of our thesis. Kalmar, May 24th, 2021 ____________________ ____________________ Amanda Karlsson Elin Svensson Table of contents 1 Introduction 1 1.1 BacKground 1 1.2 Problem Discussion 4 1.3 Research Question 6 1.4 Research Purpose 6 1.5 Delimitations 6 1.6 Disposition 7 1.7 Outline 8 2 Theoretical Framework 9 2.1 The Country of origin 9 2.1.1 Country of branding (COB) 10 2.1.2 Country of manufacturing (COM) 10 2.1.3 Country of design (COD) 11 2.2 COO and internationalization 11 2.3 The country image and Product category relationship 12 2.4 Stereotypes behind the Country of origin 14 2.5 Consumer affinity towards Country of origin 15 2.6 COO strategies 17 2.7 Conceptual FrameworK 18 3 Methodology 20 3.1 Research approach 20 3.1.1 Inductive vs. deductive 20 3.1.2 Quantitative vs. qualitative 21 3.2 Research Design 22 3.2.1 Research strategy 22 3.2.2 Case study 22 3.3 Country Selection 23 3.4 Sampling 23 3.5 Case companies 24 3.5.1 Morakniv 24 3.5.2 Himmelsö-Swedish Fika 24 3.5.3 Mackmyra 24 3.6 Data collection techniQues 25 3.6.1 Secondary data collection 25 3.6.2 Primary data collection 26 3.7 Interviews 26 3.7.1 Semi-structured interviews 26 3.7.2 Conduction of interviews 27 3.7.3 Operationalization 28 3.8 Quality of research 29 3.8.1 Reliability 29 3.8.2 Validity 29 3.9 Ethical considerations 30 3.10 Author’s contribution 31 4 Empirical findings 32 4.1 Respondents 32 4.2 The brand and COO 32 4.3 COO dimensions 34 4.4 Country image and product category relationship 36 4.5 Consumer affinity and stereotypes towards the COO 38 4.6 COO strategies 40 5 Analysis 42 5.1 The brand and COO 42 5.2 COO Dimensions 43 5.3 The country image and product category relationship 44 5.4 Consumer affinity and stereotypes towards the COO 45 5.4.1 Stereotypes behind the Country of origin 45 5.4.2 Consumer affinity towards Country of origin 46 5.5 COO strategies 47 6 Conclusion 50 6.1 Answering the research Question 50 6.2 Theoretical implications 52 6.3 Practical implication 52 6.4 Limitations 53 6.5 Suggestion for further research 53 7 References 55 Appendices Figures and Tables 61 Appendix 1: Interview guide 62 Abbreviations COO Country of Origin COE Country of Origin Effect COM Country of Manufacture COD Country of Design COA Country of Assemble COP Country of Parts 1 Introduction The introduction chapter will provide its reader with an outline of the background presenting the concept of the country of origin effect, followed by the problem discussion and research question. The purpose of this study followed by its limitations will also be given to provide a clear and thorough understanding of the thesis. 1.1 Background With continued internationalization, firms today have access to a substantially larger and more interconnected global market where they can attempt to increase their sales and revenues by exporting to other foreign markets. However, a more accessible market and increased trade across borders has also led to tougher competition as both firms and consumers now have access to goods beyond those normally offered in their home market. As a result, it becomes crucial for firms and their brands to gain competitive advantages on the global market, which comes down to being able to execute a well-made and reliant marketing plan (Hollensen 2014). To gain competitive advantage over competitors, firms can choose to tie their brand to other associations, by indirectly transferring or leveraging the brand by linking it to another entity such as the Country of origin (Keller & Swaminathan 2019). Roth & Romeo (1992, p.480) defined the country of origin as “the overall perception consumers form of the product from a particular country, based on their prior perception of the country's production and marketing strengths and weaknesses”. Today, brands can reach global consumers beyond their home market more easily, and this internationalization and wider market access has also led to the distinguishing of different purchasing behaviors amongst the firm's customers, which includes those influenced by the country of origin. Hence, the country of origin’s effect on consumers' purchasing behaviors around the world have made it important for brands to strategically implement it in their marketing plan when promoting their products abroad (Pegan, Vianelli, & De Luca, 2020). The concept of the country of origin (hereafter also COO) is also referred to as the Country of origin effect (COE), which indicates any type of influence a country has over consumers' perception of a product, which in turn can be both positive or negatively oriented. Therefore, the COO should not be dismissed when promoting products into new markets as it comes to play an important factor in building consumer attitudes towards foreign brands (Ghauri & Cateora 2006:Papadopoulos & Heslop 2002). Hence, the COO should be promoted when the opportunities speak in favor of it, as it will more likely lead to a positive outcome on consumers purchasing decisions. This is particularly prompted when the COO holds a positive country image, which can also guide customers when dealing with information overload where there are too many products on the market as this can help distinguish products 1(63) in favor of perceived quality and diminish possible perceived risks when consumers make their buying decisions. As a result, COO’s with a poor country image or that of low consumer familiarity may even be excluded from the buying decision (Papadopoulos & Heslop 2002). There is also the possibility of a country's image being so strong that it will come to overshadow beyond the actual product attributes in a product category, where a consumer's purchasing decision is solely based on the perceived quality of the COO over the quality of the actual product attributes (Horská et al. 2014). Customer perceptions of foreign products are based on the information that is currently known to them, both in terms of product attributes and the COO´s country image, these perceptions will also most likely come to vary between different markets and product categories. Hence, the COO effect is based on the consumers' underlying assumptions that will come to influence their buying decisions, consumers often make these country of origin bias purchase decisions unintentionally, unaware of the influence made by the COO (Horská et al. 2014). Lampert & Jaffe (1998) stated that “a country's image can both be viewed as an asset when it has a positive connotation and as a liability when it is associated with negative elements”. Thus, the COO may not always be a favorable characteristic to use in a marketing plan, and as previous research has shown, there is also the need for a favorable “match” between the country image and the product category to be able to avoid any type of negative spillover effect where an unfavorable match may end up hurting the brand or product image (Cristea et al. 2014).