Though it can be tricky to determine where products are actually made in an ever-more-global economy, geographical associations still carry considerable weight.
By: Tamer El Naggar
We live in a global economy, which means that products, services, brands and ideas can easily cross borders into foreign markets. While marketers are well aware of the potential, there are questions regarding how and to what extent the origin of a brand influences that brand’s success in an international context.
The origin of products has long been recognized as one of the significant factors that can influence consumer purchase decisions. When choosing what to buy, there are several possible reasons for considering product origin, including a lack of meaningful information about the product or confusion on the part of the consumer, which can result from the large number of brands and advertising with which we are bombarded daily.
Associating a brand with a country or nationality can trigger a whole set of images and preconceptions in consumers. In a vast and ever more competitive marketplace, consumers often find it challenging to make smart choices. For example, one might reasonably associate quality, reliability, performance and a steep price tag with German-made products, while the “made in China” label typically conveys a lower level of quality and affordability.
A country’s image produces a so-called “halo effect” that triggers specific images, characteristics and emotions in the minds of consumers that can produce a direct impact on the purchase decision. All these perceived associations are what create a product’s extended value, known as brand equity. Sometimes, of course, such preconceptions don’t accurately reflect reality; perhaps quality has declined in Germany and improved in China, for example.
So why do consumers resort to associations that can prove to be unreliable? In the absence of enough information and the resulting anxiety over buying decisions, familiar cues can provide a certain level of comfort. In psychology, a cue is defined as a feature or dimension that can be encoded and used to categorize a stimulus. People need and use cues when forming perceptions or beliefs about objects, which in turn influences their behavior with respect to those objects. Some cues might be extrinsic to the actual product itself, such as guarantees, warranties, brand reputation, promotional messages or country-of-origin perception.
In the context of a global economy, the very definition of the “origin” of products or services is becoming tricky. Even products with well-known origins are increasingly being produced outside their home countries. Multinational marketing has made country of origin a fundamentally different notion from brand origin, with the former referring to production location and the latter to the birthplace of the brand. So what are consumers to make of Japanese appliances assembled in China, German cars assembled in Latin America or Italian garments tailored in Egypt?
A recent survey in Egypt revealed that consumers remain influenced by the notion of a product’s origin. However, they tend to equate origin with brand rather than geography. Nearly three times as many respondents (35 percent) said brand origin was more important than production location (13 percent). Production location emerged as more relevant when consumers were considering large investments or purchasing durable goods, such as home appliances or cars, in which location reflected such factors as manufacturing excellence and reliability. The smaller the cost of buying a particular brand, the less consumers are concerned about production location. It is reasonable to wonder how accurately consumers identify brand origin, and the survey revealed they take their cues from a brand name’s characteristics, including language. Furthermore, the longer a brand has been present in a market, the more likely it is to establish a “localization” effect, in which it connects with consumers as if it were local.
Not surprisingly, advertisers and manufacturers try to capitalize on how origin influences consumer choice. Ads might contain the phrase “German engineering” even if the product is assembled in China or the label inside an Egyptian made suit might read “Italian fabrics.”
With the government goal to increase exports to LE 200 billion annually over the next four years, marketers would do well to consider what halo values are associated with Egypt. How would European, American, African or Arab consumers perceive Egyptian-made products?
What precedents exist for Egyptian brands succeeding in export markets and have we ever penetrated foreign consumers’ subconscious with distinct values and associations? What is really Egyptian?
Should we start with branding the country or depend on ambassador brands to lead the way? In a neighboring Arab country, I heard consumers complaining that early Egyptian ambassador brands were left in the hands of inexperienced agents and the result was lapses in availability and a failure to preserve brand image.
With all that Egypt shares with Arab markets in culture and geographical proximity, one might have thought that these markets would be immediate wins. Instead, with few exceptions, they seem to have been taken for granted and generally unleveraged. In attempting to increase exports, producers of Egyptian brands must recognize the responsibility that falls on their shoulders.
Many consumers want to be associated with making the right brand choices. What is right for consumers not only involves the desire for a more predictable brand experience, but the fulfillment of a desired self-image, which might reflect social status or product savvy.
In the previously mentioned survey, Egyptian consumers wrongly identified a well-known Egyptian apparel company as European. For them, wearing clothes that can pass as European meets the need to be perceived as classy and chic.
Conversely, I received some American visitors in Cairo recently who asked me where they could buy pure Egyptian cotton. I was happy to be reminded of this good example of national cues strongly established in the minds of my visitors, associating the fabric with superior comfort and quality. Ironically, after my moment of pride I was unable to say where Egyptian cotton is sold.
Consumers do care about the origin of brands. Values associated with a country and its products have a far-reaching effect. Egypt has begun to recognize the value of marketing itself, and we have examples including campaigns to increase tourism and investment.