The Effect of Perceived Country of Origin on Brand Attitude, Brand Trust and Purchase Intentions Master Thesis Student: Mariya Petrova Student Number: 10993150 Date of submission: 29.01.2016 Supervisors: Drs. ing. A.C.J. Meulemans Drs. F. Slisser Program: MSc. in Business Administration – Marketing Track University of Amsterdam Statement of originality This document is written by Mariya Petrova who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents. 2 Acknowledgements I would like to thank Drs. Meulemans for his time, guidance, expert advice and feedback throughout the process of writing this thesis. Furthermore, I would like to express my gratitude to all of the participants in my survey whose responses provided valuable insights and helped me conduct this research. Lastly, I am grateful to my friends and family for their immense support and involvement. 3 Abstract Recent research suggests that the country of origin effect is present regardless of consumers’ knowledge of the actual country of brand origin. Thus the concept of perceived country of origin emerged. The purpose of this thesis is to explore the effect of perceived country of origin on brand attitude, brand trust and purchase intentions. An online survey was conducted to answer the question to what extent the perception of a favorable country of origin, regardless of the actual country of brand origin, results in a positive effect on consumers’ attitude, trust and purchase intentions towards the brand. The questionnaire asked respondents to express their opinion on three brands of ice cream: Perry’s Ice Cream, Häagen-Dazs and Baskin-Robbins. A within-subjects design was used. All of these brands originate from the United States of America; however they employ different strategies concerning the usage of country of origin information. A repeated measures ANOVA was performed to compare the means of brand attitude, brand trust and purchase intentions across the three conditions of the perceived country of origin. The analysis showed that respondents had significantly higher attitude, trust and purchase intentions in the condition of positive image of the perceived country of origin. These results suggest that associating a brand with a favorable country, no matter the real country of origin, can lead to a higher attitude and trust towards that brand, as well as an increased likelihood to buy it. Regional differences were also found indicating that the effect of perceived country of origin varies among people from different geographical locations. Keywords: country of origin, perceived country of origin, brand evaluation, brand attitude, brand trust, purchase intentions, foreign branding 4 Table of Contents Acknowledgements .................................................................................................................... 3 Abstract ...................................................................................................................................... 4 1. Introduction ............................................................................................................................ 7 2. Literature review .................................................................................................................. 10 2.1 Defining Country of Origin ............................................................................................ 10 2.2 Country of Origin as a Brand Building Tool .................................................................. 11 2.3 Country of Origin and Product Categories ..................................................................... 12 2.4 Country of Origin Effect across Cultures ....................................................................... 13 2.5 Developed and Developing Countries ............................................................................ 15 2.6 Criticism on Country of Origin ...................................................................................... 17 2.7 Perceived Country of Origin ........................................................................................... 18 2.8 Brand Attitude ................................................................................................................ 19 2.9 Brand Trust ..................................................................................................................... 20 2.10 Purchase Intentions ....................................................................................................... 21 2.11 Conceptual Model and Hypotheses .............................................................................. 22 3. Research Methodology ......................................................................................................... 24 3.1 Research Design ............................................................................................................. 24 3.2 The Pretest ...................................................................................................................... 26 3.3 The Main Questionnaire ................................................................................................. 28 3.4 Measurement of the Dependent Variables ...................................................................... 29 4. Results .................................................................................................................................. 31 4.1 Sample Description ......................................................................................................... 31 4.2 Perceived Country of Origin ........................................................................................... 32 4.3 Scale Reliabilities ........................................................................................................... 34 4.4 Descriptive Statistics and Correlations ........................................................................... 36 4.5 Hypotheses Testing: Repeated Measures ANOVA ........................................................ 36 4.6 Hypotheses Testing: Mixed ANOVA ............................................................................. 41 5. Discussion, limitations and recommendations for future research ...................................... 46 6. Conclusion ............................................................................................................................ 50 References ................................................................................................................................ 53 Appendix 1: Pretest .................................................................................................................. 57 Appendix 2: Main Questionnaire ............................................................................................. 61 Appendix 3: Respondent Nationality ....................................................................................... 68 5 List of Figures Figure 1: Conceptual Model ..................................................................................................... 23 List of Tables Table 1: Brands chosen, actual and perceived COO and favorability of the perception ......... 28 Table 2: Respondents’ Nationality and Region ........................................................................ 32 Table 3: Perceived Country of Origin ...................................................................................... 34 Table 4: Reliability Statistics ................................................................................................... 35 Table 5: Means, Standard Deviations, Correlations ................................................................. 36 Table 6: Brand Attitude Pairwise Comparisons ....................................................................... 38 Table 7: Brand Trust Pairwise Comparisons ............................................................................ 39 Table 8: Purchase Intentions Pairwise Comparisons ............................................................... 40 6 1. Introduction The growth of international trade made a wide variety of foreign products available worldwide. Marketers are struggling to differentiate their products and build a long-lasting brand image. In a globalized world country of origin (COO) may be a way of differentiating a brand and a source of competitive advantage if consumers hold favorable associations towards the country. Moreover, the importance of COO is increasing due to the growing popularity of online purchases. Most Internet advertising messages rely on extrinsic cues such as price, brand name, and country of origin because intrinsic cues (physical characteristics) are difficult to assess online without actually seeing the product (Insch & McBride, 2004). COO is an important extrinsic cue, therefore its importance in consumer product evaluations is growing (Klein et al., 1998, in Insch and McBride, 2004). A wide body of research has investigated the effect of country of origin and country image on consumers' perceptions, product preferences and quality evaluations (Al-Sulaiti & Baker, 1998). Most researchers agree that COO positively influences these variables; however recent