Understanding the effect of country equity on consumer-based brand equity: a foundation to country branding strategies

The notion “brand equity” has recently been extended to countries by researchers proposing the concept “country equity.” They suggest that countries, like brands, have equity, which affects consumers’ evaluative judgments of their products. Country equity is defined as the value that consumers associate with the name of a country. Despite the prolific research on both country of origin (COO) and brand equity over the past few decades, the extant marketing literature does not explain whether consumer-based equity of a brand is linked to the equity of its COO. Furthermore, whether this effect holds across different cultures is an important issue to be addressed. The purpose of this dissertation is four-fold. The first objective is to examine the effect of country equity on consumer-based brand equity and understand the mechanism that explains the process. In this context, seven variables are examined as the potential moderators of the country equity effect. The second goal is to examine whether the country equity effect holds across different cultures. The third objective is to contribute to our understanding of country equity and brand equity constructs by developing new and more comprehensive measures. The final objective is to introduce the relatively new concept “consumer mindfulness” to consumer behavior and international marketing literature and examine its role as the potential moderator of COO effect. This dissertation utilized survey method in order to test the structural soundness of the proposed model and 18 propositions that have been developed mainly based on associative network memory (ANM) model, cue evaluation theory, categorization theory and hierarchy of effects model. The data was collected from convenience samples of 509 college students in Turkey and the United States. Structural Equation Modeling (SEM) was used to test the proposed conceptual model and relationships among the constructs. From a managerial perspective, the results of this dissertation suggest that country equity represents an important part of the competitive advantage of firms in global markets. More specifically, it suggests that the mere association of products with a particular country significantly influences consumers’ brand image and quality perceptions, brand loyalty and willingness to pay a price premium. In this context, while firms with high country equity might achieve competitive advantage in the global markets and have strong bargaining power with channel members, firms with low country equity might face significant problems. Whether positive or negative, developed intentionally or by default, every country has equity. The strategic management of country equity and the recognition of its significance will be key to successful global marketing in the years ahead in which the global competition is expected to rise further. Considering the effect of country equity on consumer-based brand equity and the strategic role of country equity in global marketing, this research suggests that three key groups, namely, government, industry groups and individual firms should manage country equity and seek strategies to increase it in order to help firms from that country develop strong brand equity in the global markets, overcome entry barriers in foreign markets, have strong bargaining power with channel members, and be less vulnerable to fierce global competition.Ph. D.Includes bibliographical referencesIncludes vitaby Ahmet Bayrakta