Consequences of Country-of-Origin Misclassifications

Customers frequently use country-of-origin as a key decision factor when evaluating a new product.

As Balabanis and Diamantopoulos (2011) note, categorization theory underpins how customers react to new products, including how they perceive quality and desirability of the products. In categorization theory, customers apply an organizing structure to their product knowledge; in most cases, this involves developing categories by which they can mentally classify and differentiate products. This becomes critical when dealing with country-of-origin classifications because most people have developed robust mental categories related to countries and the products originating from countries, i.e. the quality of watches from Switzerland or automobiles from Germany.

As part of the categorization process, customers perform two mental activities: experience coding and inference licensing. During experience coding, customers don’t completely evaluate a new product from scratch; instead, they assign it to a category and then evaluate it based on their experiences with that category. During inference licensing, customers apply inferences about a new product’s attributes based on the value they place on the assigned category. So, if a customer is evaluating a refrigerator from Sweden, they will be using their mental references related to Sweden as well as their expectations about the category of refrigerators.

The country-of-origin category triggers a variety of mental evaluation processes, including cognitive, affective, and normative. When customers evaluate from a cognitive perspective, they infer attributes (durability or reliability) that are used to form an opinion about quality, i.e. Finland is known for making reliable telephone headsets, so Nokia is high quality (Balabanis et al, 2011). From an affective perspective, customers have emotional responses to a country-of-origin, such as the desirability of perfume from France. Finally, from a normative perspective, customers are frequently affected by exhortations to buy local or to boycott a particular country’s goods.

It should be noted, however, that if customers are unable to assign a country-of-origin classification, they often lose interest in the brand, since they have lost one of their key classification attributes. Without this attribute, the evaluation process feels incomplete and flawed; hence, the subsequent loss of interest.

Balabanis et al (2011) identified that if customers misclassify your product’s country-of-origin, the effect will depend on the:

  • Extent that the attributed country has a more positive or negative image than the country-of-origin
  • Extent that the brand name is a stronger driver than the country-of-origin perceptions

However, their research findings showed that:

  • Brands have far more to lose than gain if their product is misclassified
  • Classification to any country-of-origin is better than no classification

Therefore, marketing strategies should include strong country identifiers to take advantage of positive country-of-origin evaluations. In addition, strategies should include explicit category references to make it easier for consumers to place the product correctly in their mental category structures.

References:

Balabanis, G., Diamantopoulos, A. (2011), “Gains and Losses from the Misperception of Brand Origin: The Role of Brand Strength and Country-of-Origin Image,” Journal of International Marketing. 19 (2), pp. 95-116.

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