An Exploratory Study into the Impact of Components of Brand Equity and Country of

Origin Effects on Purchase Intention

Nicholas J. Ashill

Ashish Sinha

ABSTRACT. Due to rapid globalization of markets and products, it is necessary for managers

and academics alike to understand the importance of the drivers of global brands. In this paper

we extend Keller’s (1998) conceptualization of brand equity to incorporate Country and Brand

Origin (CBO) and Country of Origin (COO) effects on purchase intention. A structural equation

modelling approach is used to test a conceptual model that hypothesizes relationships between

these variables for the product category of watches. The results show that the components of

brand equity through the effect of brand loyalty are three times more important than COO

effects. A direct recommendation of this study is that for this product category, marketing

managers can choose a country of manufacture for cost efficiencies regardless of the associations

that consumers have with that country.

KEYWORDS. Brand Equity, Country of Origin Effect, Purchase Intention

Nicholas J Ashill and Ashish Sinha are Senior Lecturers, School of Marketing and International
Business, Victoria University of Wellington, PO Box 600, Wellington, New Zealand (Email:
Nicholas.Ashill@vuw.ac.nz Ashish.Sinha@vuw.ac.nz).
INTRODUCTION

2
The last two decades have seen an increasing globalisation of the world economy. Advances in

communication and manufacturing technologies, free trade agreements and transport

have created an environment that has seen the development of global brands. This

process of globalization has made the study of Country of Origin (COO) effects an

important subject area for academic research. There have been numerous studies

examining the effects of Country of Origin (COO) on perceived product quality,

performance and other attributes (e.g., Bilkey and Nes 1982; Erickson, Johansson and

Chao 1984; Hong and Weyer 1989; Roth and Romeo 1992; Ahmed and d’ Astous 1995).

Other studies (Hulland and Chow 1994) have extended COO to include the concept of

Country of Design (COD), Country of Manufacture (COM) and Country of Brand Origin

(CBO).

3
 However, with the exception of a few studies (Haubl 1996; Thakor and Kohli 1996), little or

no research has sought to examine the effects of brand, in particular the components of

brand equity, and COO on purchase intention. While previous studies have examined the

relative importance of the components of brand equity (Sinha and Popkowski Lesczyc

2000) and the impact of COO effects (e.g., Haubl 1996) on purchase intention, none of

these studies have tried to understand the relative impact of these two variables on

purchase intention. For multinational companies that have operations in several countries,

understanding the relative impact of COO and Brand Equity effects is imperative. For a

product that has brand equity as a prime factor of success, the decision of global sourcing

and manufacturing will largely depend on supply side cost considerations. Contrary to

this, a product that has low brand equity may use COO effects to its advantage. For

example, an automobile manufacturer that has low brand equity might improve its quality

perceptions by having it designed in Japan. Hence, sourcing and manufacturing decisions

can have an effect on product quality perceptions as well as on a consumer’s decision to

purchase a product.

In this paper we develop and test a model of COO and the components of Brand Equity on

consumer purchase intention. Our study is intended to add to the extant body of knowledge in

two ways. First, while several empirical studies have been conducted in the COO and Brand

Equity literature, the psychological structure of the effects of these constructs on purchase

intention has not been empirically validated. We use a structural equation modelling approach to

test a conceptual model that hypothesizes relationship between these variables. Second,much of

the work in COO literature has been tested in United States. This study tests a COO based

association model in the Asia-Pacific region using data from New Zealand.

4
 This paper is organized into the following sections. First we review the extant literature and

present a conceptual model examining the relationships between COO, Brand Equity and

Consumer Purchase Intention. We then outline the research methodology. Finally, we discuss the

results, their theoretical and managerial implications, and suggest some areas for future research.

THE COO AND BRAND EQUITY LITERATURE

Country of Origin Effects

It is recognised that consumers, through familiarity with products from different countries,

develop country images (Erickson, Johansson and Chao 1984). It has also been suggested that

country images, in addition to influencing evaluations of existing products, may also be

transferable to new or unfamiliar products (Tse and Gorn 1993). Agarwal and Sikri (1996) report

on conceptualization of country image in two ways. Firstly it has been studied through

consumer’s overall perceptions (e.g., technology, prestige and price) of products in a given

country (Han and Terpstra 1988). Secondly, it has been defined as a set of generalized beliefs

about specific products, from a country on a set of attributes (Bilkey and Nes 1982). Hong and

Wyer (1989) suggest that COO may activate concepts and knowledge that affect the

interpretation of other available product information. It may also provide a heuristic basis for

inferring the quality of the product without considering other attribute information. Finally, they

discuss a third possible effect of COO where it is simply a feature of the product and is used in

much the same way as other more specific attributes to arrive at product evaluations.

Consumers use the COO cue to evaluate foreign products when they are not familiar with the

product’s intrinsic qualities (Lawrence, Marr and Prendergast 1992). Lampert and Jaffe (1998)

5
discuss the role of country image in the product/brand life cycle. A country’s image represents a

halo effect on a new product or brand, as consumers have no other attributes to judge until they

become familiar with the new product or brand. Okechuku (1994) found that COO was at least

in the top 3 key attributes of a product, and can be regarded more important than brand name and

price in attribute importance. Hong and Wyer (1989) found that a strong COO effect would

occur with product evaluation regardless of whether product information was received prior to or

after delivery of country cues to consumers.

Haubl (1996) in developing a COO model split consumer evaluations of countries into

cognitive (fact based) and affective (feelings and emotions) components and tested cross-national

applicability of the model to link effects of COO and brand name with consumer evaluations of

product. He used a ‘belief – attitude – behavioural intention’ (attitude) theory and information

processing theory to develop constructs to describe consumer evaluation (Bagozzi, Baumgartner

and Yi 1989; Ozanne, Bucks and Grewal 1992). An important finding of the study was that both

brand name and COO have a significant impact on consumer attitudes towards a new car.

Shimp, Saimee and Madden (1993) studied consumer cognitive structures regarding products

from a sample of 11 countries with the objective of exposing the depths of their thoughts

regarding products made in different countries. They found that cognitive categories of countries

are identifiable in relation to the memory-based representations consumers have when thinking

about the products made in these countries. Consumers would classify a country’s image based

on well-known products originating from that country. Some products have strong home country

associations. BMW and Mercedes Benz for example utilise home country (Germany)

associations when advertising their cars (Thakor and Kohli 1996).

Agarwahl and Sikri (1996) found that there was considerable association between beliefs held

for the most well known product category from a country and expectations for new products.

6
Thakor and Kohli (1996) discuss the difficulty in delineating brand image and country image

effects on development of consumer attitude on new products. This is particularly the case for

well-known products as most consumers already have a strong country image already associated

with the brand. For the present study, CBO (COO) will refer to the country, which consumers

most readily associate with the brand.

Customer Based Brand Equity

Customer based brand equity is defined as the differential effect that brand knowledge has on

consumer response to the marketing of that brand (Keller 1998). Brand knowledge is identified

as having two components: brand awareness and brand image.

Brand Awareness reflects the salience of the brand in the consumer’s mind (Aaker 1996).

Salience in turn relates to the strength of the brand node in memory, as can be seen in consumer’s

ability to identify a brand under different conditions (Rossiter and Percy 1987). Brand awareness

can be increased through the repetition of advertising using sight and sound and displaying the

distinctive brand name to build recognition.

Brand awareness is made up of brand recall and brand recognition (Aaker 1996). Brand recall

is the ability of the consumer to remember the name of the brand when given the product

category and is measured through free recall or prompted recall techniques where some

information is given to the respondent to see if they can recall the brands in a particular category.

Brand recognition is where the consumer is able to confirm that he/she has seen that brand

before.

Brand image is defined as “consumer perceptions of a brand as reflected by the associations

held in a consumer’s memory). Brand associations represent the other informational node linked

7
to the brand node in memory and contain the meaning of the brand for consumers” (Keller 1998,

p. 45). Brand image is made up of four components: types of brand associations, favourability of

brand associations, strength of brand associations and uniqueness of brand associations (Keller

1998).

As mentioned previously, while numerous studies have been conducted in the area of brand

equity and COO effects, little is known about the interplay of these two effects on purchase

intention. In addition, there is no conceptual framework (apart from that of Keller 1998) that tries

to relate these two constructs in one single model. Combining these two constructs in one single

model allows researchers to understand the relative importance of the sub-components of brand

equity, such as brand associations and brand awareness, and COO effects on purchase intention.

CONCEPTUAL MODEL

The central tenet of our model is from Activation Theory (Anderson 1983), which argues that

information is stored as nodes in a consumer’s memory. At any given time only a few bits of

information are activated in memory and these activated bits of information are used by an

individual who is making a purchase decision. Keller (1998) used this theory to propose the idea

of brand knowledge, in which a brand can be thought of as a node in a consumer’s mind. All

information, for example, brand and COO associations, pertaining to the brand is stored as

associative nodes to the brand node. A consumer making a decision to purchase a product would

first retrieve information related to brand and COO associations stored in memory, and then use

this information to make the purchase decision. Consistent with Keller’s (1998) formulation of

brand equity, we argue brand loyalty to be an outcome measure, and that both positive brand

associations and high brand awareness lead to higher levels of brand loyalty. Hence, we claim

8
that the evaluation of a product is mediated by the level of brand loyalty, which in turn is

dependent upon positive brand associations and brand awareness. Hence:

Proposition 1: Positive Brand Associations and higher levels of Brand Awareness will

increase Brand Loyalty.

Proposition 2: Brand Loyalty will positively influence a consumer’s evaluation of a

product.

Our conceptualizing of COO associations is similar to Thakor and Kohli (1996) who

differentiate between CBO and COO. CBO is the country from which a brand originates while

COO is the country in which the product is manufactured. For example, a Sony DVD player

manufactured in Malaysia, has Japan as its CBO and Malaysia as its COO. A product that is

manufactured in its country of brand origin is called a uni-national product. Bi-national products

are defined as products that originate in one country and are manufactured in another country.

Hence, in our model CBO and COO are two different concepts that vary dependent on the type

of product. Consistent with Haubl’s (1996) COO model, we split consumer evaluations of

countries into cognitive (fact based) and affective (feelings and emotions) components. Haubl

(1996) found that foreign production of automobiles was likely to have an impact not only on the

car buyer’s overall evaluation of a vehicle, but also on their perception of specific product

attributes (e.g. technical features) of the car. Therefore, we posit the following:

Proposition 3: A consumer’s evaluation of a product is influenced by the cognitive

component of COO effects.

We contend that the affective component of CBO effects is similar to brand loyalty that

captures the liking for a brand not dependent on tangible and intangible attributes possessed by a

brand. This is consistent with Haubl (1996) who found a positive impact of affective component

of COO on product evaluation. From the discussion above we propose the following:

9
 Proposition 4: A consumer’s evaluation of a product is influenced by the affective

component of CBO effects.

Brands from different countries have country specific intangible assets (Erickson, Jacobson

and Johansson 1992; Kim and Chung 1997). This country specific intangible asset might provide

consumers a reason to purchase a brand. We conceptualize this country specific intangible asset

to be in the form of affect. Simply speaking, this affect could be termed as “country loyalty”,

which we define as an individual’s predisposition to be loyal to brands that originate from a

particular country. We note, conceptually this idea is no different from measures of brand affect

that explain predisposition of an individual to purchase a brand based on his liking for this brand

over and above intangible and intangible attributes that the brand possesses (Aaker 1996). We

contend that brand loyalty may well be explained by the degree of affect that consumers have for

the CBO. Hence, the following is proposed:

Proposition 5: A consumer’s brand loyalty is influenced by the degree of positive affect

that a consumer has towards the CBO.

Table 1 provides a summarization of the above relationships. Figure 1 provides the structural

and measurement model tested in this study. Six constructs are specified, namely Brand Image,

Brand Awareness, Country of Brand Origin (CBO), Country of Origin (COO), Brand Loyalty

and Purchase Intention. One of the dependent variables is brand loyalty, and is hypothesized to

be influenced by brand image, brand awareness and the affect associated with the CBO. The

other structural equation has purchase intention as the dependent variable, while, the affect

associated with CBO, the perception of technical capabilities of both CBO and COO, and brand

loyalty, are the independent variables. In summary the model has six constructs, three of these

are latent and the other three are measures that are observables. There are four exogenous and

two endogenous variables implying two dependent and five independent variables. One of the

10
dependent variables, namely brand loyalty, is also an independent variable for the other structural

equation.

Insert Table 1 here

Insert Figure 1 here

RESEARCH METHOD

Study Design

The first part of the study investigated elicited responses pertaining to their attitudes towards a

certain set of brands, COOs and CBOs. The second part of the survey was a conjoint survey in

which COO, Brands and Price were manipulated. Price was used as a control variable with the

assumption that all things being equal respondents will prefer products that have lower prices

than those that have higher prices. For the purpose of this study the product category chosen was

that of watches. The two subject countries were Switzerland and Japan. These countries were

represented by the watch manufacturers Swatch and Olympic for Switzerland, and, Seiko and

Citizen for Japan. Four countries of manufacture were chosen and these were Switzerland, Japan,

China and Germany. Based on prior research it was assumed that China as a country of

manufacture would have a negative image (Khachaturian and Morganosky 1990) while Germany

would have a positive image. Three attributes namely, brand, COO and price were manipulated

and the respondents were asked to rate each of the products in terms of likelihood of purchase.

COO has 4 levels: Switzerland, Japan, China and Germany, Brand has 4 levels, namely, Swatch,

Olympic, Seiko and Citizen, while Price has two levels: $300 and $400. A full factorial design

would require respondents to evaluate 32 product profiles (4 × 4 × 2). In order to avoid

respondent fatigue a fractional factorial conjoint design requiring only 8 (2 3 design) product

11
profiles was used to keep the survey short. An important advantage of our study is that

respondents were exposed to both uni-national (products that have the same CBO and COO) as

well as bi-national (products that have different CBO and COO) products. For instance, subjects

were asked to evaluate Swatch watches that are manufactured not only in Switzerland (uni-

national product) but also in China (bi-national product). This is an important advantage of our

study as it allows us to disentangle the effect of CBO and COO. These two effects are

confounded in a bi-national or a uni-national product study.

Sample

To collect the data for the study, a total of 42 students were approached by an experienced

interviewer in the researchers’ University. The interviews were conducted over one day and at

different times of the day. Special efforts were made to ensure that the sample selection process

was not based on the interviewer’s judgements. The interviewer was instructed to draw a

systematic sample from students entering a student recreational area. Specifically a selection

rule was instituted by which every nth person was selected. Respondents were asked to complete

the questionnaire in a self-administered manner. It was felt that students would be a likely target

market for watches and have a good knowledge of the countries and manufacturers in the study.

Each student provided the research team with 8 responses, a total of 336 usable observations.

Measurement

12
 In designing the survey instrument, the relevant writings were canvassed (e.g., Haubl 1996;

Keller 1998; Sinha and Lesczyc 2000). Multiple item indicators were employed to

operationalize the three latent constructs depicted in Figure 1.

Brand Knowledge was conceptualized in terms of Brand Image and Brand Awareness. Brand

image is derived from the various associations that consumers have with the brand (Aaker 1996;

Keller 1998). Brand Image was measured by adapting the seven–item scale developed by Sinha

and Lesczyc (2000). Responses to the questionnaire items were elicited on a seven-point scale

ranging from “1 = very appropriate” to “7 = not appropriate at all.”

Brand Awareness was measured through Top of Mind (TOM). A brand obtains a TOM position

by establishing itself in the customer’s mind as representing the entire product category. To find

out which brand had the TOM position, the respondent was asked a free recall question

(Hutchinson 1983). The measure for brand loyalty was adapted from Keller (1998) and was

measured as the likelihood of purchase of a brand in the future.

For both CBO and COO, a set of items evaluating the product specific capabilities of the

country was used. CBO and COO had four items each. Responses to the questionnaire items

were elicited on seven-point scales ranging from “7 = completely” to “1 = not at all.” For COO,

respondents were asked to rate the degree to which they associate product attributes with each

country. The four attributes were:

1. Excellent Engineering and Precision

2. High Quality Standards and Control

3. Well Trained Workforce

4. Highly Motivated Workers

For CBO, respondents were asked to rate the degree to which they associate four attributes

with each CBO. The four attributes were:

13
 1. Nice

2. Friendly

3. Pleasant

4. Peaceful

Finally, purchase intention was operationalized as the likelihood that a respondent will buy a

particular product. Respondents were asked to rate each of the products in terms of likelihood of

purchase on a 9 point scale ranging from “1 = very likely to purchase” to “9 = very unlikely to

purchase.”

Table 2 provides an exploratory factor analysis of the seven variables, which shows that brand

image is a single factor latent variable as only factor 1 has an eigen-value greater than 1. In

addition, innovativeness has a very low correlation with brand image, and it is for this reason that

this item was dropped from the brand image scale. The refined scaled has a reliability cronbach

alpha score of .86. The other two scales that measure for COO and CBO were adapted from

Haubl (1996). Consistent with prior findings, these two have a cronbach alpha score of .89 and .

93 respectively. These results show that all three scales used in this study exceed the 0.70

benchmark recommended by Nunnally (1978).

Insert Table 2 here

FINDINGS

A simple regression was run to understand the preference that respondents have for different

COO (Table 3a). The results from the regression showed that Japan was the most preferred and

14
China the least preferred country for watch manufacturing. In addition, Japan and Switzerland

were the preferred COO over Germany and China.

Insert Table 3a here

A confirmatory factor analysis was estimated to verify the measurement model using AMOS

software. The maximum likelihood estimates for the measurement model are provided in Table

3b. The overall fit information for the measurement model is given as follows, χ 2 (N=336, 74) =

298.013, p < .001, GFI=.89, TLI=.92, TFI=.94. The global fit measures show that the

measurement model fits the data reasonably well. The multiple squared correlations show that

apart from peace and stylish all the other variables have values greater than 0.4.

Similarly, for the structural model the overall fit is as follows, χ 2 (N=336, 132) = 474.102, p

< .001, GFI=.87, TLI=.90, TFI=.91, indicating that the structural model adequately fits the data.

The path coefficient for the first structural equation that looks at the determinants of brand

loyalty shows that both components of brand equity, namely, brand awareness and brand

knowledge are positive and significant predictors of brand loyalty. This implies that positive

brand associations and higher levels of brand awareness will lead to higher brand loyalty. For the

same dependent variable, affect due to CBO is positive and has a significant effect at .05 level of

confidence. This is in accord with Proposition 1.

Insert Table 3b here

The results for the second equation examining determinants of purchase intention show that

the impact of brand loyalty and the cognitive component of COO are positive and significant.

15
These findings are consistent with Proposition 2 and 3. Lastly, the direct effect of CBO on

purchase intention is wrongly signed and also not significant. This shows that affect due to CBO

is not a significant predictor of purchase intention, and therefore is not consistent with

Proposition 4. Table 4 provides results for the structural equations, while Table 5 provides a

summary of the hypotheses. Note that price, which was incorporated as a control variable in the

model, had an expected negative but non-significant impact on purchase intention that implies

that the sample is invariant across two price levels.

Insert Table 4 here

Insert Table 5 here

A brief review of the standardized estimates provided in Table 4 shows that brand loyalty had

the maximum while price had the minimum impact on purchase intention. The relative

importance of brand loyalty was three times that of country of origin effects, thereby signifying

that maintenance of brand equity, and in turn that of brand loyalty, is much more important than

the impact of the country in which the product is being manufactured. The results also show that

improving a brand’s image and increasing brand awareness would have a much higher impact on

purchase intention. Given the price sensitive nature of the sample, it is also surprising to see that

this sample is invariant to price changes. Respondents are impacted more by brand loyalty rather

than price. Consistent with earlier findings (Roth and Romeo 1992) we contend and verify that

for the product in question, brand rather than COO has a much greater impact on purchase

intention. Hence, the results of this study show that a multi-attribute study in which several

attributes of a product are manipulated in a systematic fashion provides a much better

opportunity to tease out the effect of COO.

16
 MANAGERIAL IMPLICATIONS AND FUTURE RESEARCH DIRECTIONS

This study reveals that the strong effect components of brand equity have on purchase

intention could mitigate negative COO associations. It shows that for the watch product category

and for the brands investigated in this study there is an overarching effect of the brand name, in

the form of the components of brand equity, which is three times more important than the effect

of COO. Hence a direct recommendation of this study is that for this product category managers

can choose a country of manufacture for cost efficiencies regardless of the associations that

consumers have with that country. A simple analysis of Purchase Intention (Table 3a) has shown

that for the sample used in this study Japan is the most preferred and China is the least preferred

COO. This is consistent with the prior research that has shown China to have a negative image

while the more industrialized nation, such as Germany and USA, to have a more positive image

(Khachaturian and Morganosky 1990). The two countries, Japan and Switzerland that are

country of origin for a number of brands of watches, are preferred over countries that are less

known for watch manufacturing even when these products are manufactured in countries that are

highly industrialized, such as Germany. Therefore we can conclude that the respondents were

more likely to purchase watches that are manufactured in a country that has a reputation for

watch making. In light of these finding we can conclude that a uni-national product will always

be preferred over a bi-national product. While these finding regarding the choice of COO are

important, we note that the components of brand equity are three times more important than

COO. Hence, we conclude that from a managerial standpoint maintaining positive brand image

and higher levels of brand awareness is more important than the choice of COO.

17
Future Research Directions

Several areas of research have been left as avenues for future research. Firstly, while this study

verifies most of the hypothesized relationships, it needs to be extended to a broad range of

products. Secondly, the impact of COO on brand equity has not been studied in this paper. Future

research should proceed in that direction. While the direct impact of COO on purchase intention

is well documented in the literature the impact of COO on brand equity is still not well

understood. We contend that understanding the impact of COO on brand equity is much more

important than understanding the direct impact of COO on purchase intention. The changes in

brand equity have long-term ramifications that cannot be altered by simple changes in

manufacturing and sourcing decisions. Third, extension of the research into other countries

would also be helpful in cross-validating the results obtained here.

18
 REFERENCES

Aaker, David A. (1996). Building Strong Brands, New York: Free Press.

Agarwal, S. and S. Sikri (1996). “Country image: Consumer Evaluation of Product Category

Extensions,” International Marketing Review, 13 (4): 23-39.

Ahmed, Sadrudin A. and Alain d’ Astous (1995). “Comparison of Country of Origin effects on

household and organisational buyers’ product perceptions,” European Journal of

Marketing, 29 (3): 35-51.

Anderson, John R. (1983). The Architecture of Cognition, Cambridge: Harvard University Press.

Bagozzi, R. P., J. Baumgartner and Y. Yi (1989). “An Investigation of the Role of Intentions as

mediators of the Attitude-Behavior Relationship,” Journal of Economic Psychology, 10

(1): 35-63.

Bilkey, W. J. and E. Nes (1982). “Country of Origin Effects on Product Evaluations,” Journal of

International Business Studies, 13 (4): 131-141.

Erickson, G. M., J. K. Johansson and P. Chao (1984). “Image Variables in Multi-Attribute

Product Evaluations: Country of Origin Effects,” Journal of Consumer Research, 11 (3):

694-699.

Erickson, G. M., R. Jacobson and J. K. Johansson (1992). “Competition for Market Share in the

Presence of Strategic Invisible Assets: The US Automobile Market, 1971-1981,”

International Journal of Research in Marketing, 9 (1):23-38.

Han, C. M. and V. Terpstra (1988). “Country of Origin Effects for Uni-National and Bi-National

Products,” Journal of International Business Studies, 19 (2): 235-255.

Haubl, Gerald (1996). “A Cross-National Investigation of the Effects of Country of Origin and

Brand Name on the Evaluation of a new car,” International Marketing Review, 13 (5): 79-

97.

19
Hong, Sung-Tai and Robert S. Wyer Jnr. (1989). “Effects of Country of Origin and Product

Attribute Information on Product Evaluation: An Information Processing Perspective,”

Journal of Consumer Research, 16 (3): 175-187.

Hulland, J.S. and Y.H. Chow (1994). “The effect of Country of Brand and Brand Name on

product Evaluation and Consideration: A Cross country Comparison," Working paper,

University of Western Ontario, London.

Hutchinson, J. W. (1983). Expertise and the Structure of Free Recall: In R. P. Bagozzi and A. M.

Tybout, (eds.). Advances in Consumer Research, Vol 10, Ann Arbor, MI: Association of

Consumer Research: 585-589.

Keller, Kevin Lane (1998). Strategic Brand Management: Building, Measuring and Managing

Brand Equity, New Jersey: Prentice Hall.

Khachaturian, Janet L. and Michelle A. Morganosky (1990). “Quality Perception by Country of

Origin,” International Journal of Retail and Distribution, 18 (5): 21-31.

Kim, Chung Koo and Jeu Young Chung (1997). “Brand popularity, country image and market

share; An empirical study,” Journal of International Business Studies, 28 (2): 361-387.

Lampert, Shlomo I. and Eugene D. Jaffe (1998). “A Dynamic Approach to Country of Origin

Effect,” European Journal of Marketing, 32 (1): 1-15.

Lawrence, C., N. E. Marr and G. P. Prendergast (1992). “Country of Origin Stereotyping: A Case

Study in the New Zealand Motor Vehicle Industry,” Asia Pacific International Journal of

Marketing, 4 (1): 37-42.

Nunnally, J.C. (1978), Psychometric Theory, New York, NY: McGraw-Hill.

Okechuku, Chike (1994). “The Importance of Product Country of Origin: A Conjoint Analysis

of the United States, Canada, Germany and the Netherlands,” European Journal of

Marketing, 28 (4): 5-19.

20
Ozanne, J. L., M. Bucks and D. Grewal (1992). “A Study of Information Search Behaviour

During the Categorisation of New Products,” Journal of Consumer Research, 18 (1): 32-

47.

Rossiter, John and Larry Percy (1987). Advertising and Promotion Management, New York:

McGraw-Hill.

Roth, Martin S. and Jean B. Romeo (1992). “Matching Product Category and Country Image

Perceptions: A Framework for Managing Country-of-Origin Effects,” Journal of

International Business Studies, 23 (3): 477-498.

Shimp, T. A., S. Saimee and T. J. Madden (1993). “Countries and their Products: A Cognitive

Structure Perspective,” Journal of the Academy of Marketing Science, 21 (4): 323-330.

Sinha, Ashish and Peter Popkowski Lesczyc (2000). Measuring Customer Based Brand Equity:

A Survey Based Methodology Using Hierarchical Bayes Model. Paper presented at the

American Marketing Associations Conference, Chicago, US.

Tse, D. K. and G. J. Gorn (1993). “An Experiment on the Salience of Country of Origin in the

Era of Global Brands,” Journal of International Marketing, 1 (1): 57-76.

Thakor, Mrungank V. and Chiranjeev S. Kohli (1996). “Brand Origin: Conceptualisation and

Review, Journal of Consumer Marketing, 13 (3): 27-42.

21
TABLE 1. Summary of Hypothesized Relationships

Independent Variables Dependent Variable 1 Dependent Variable 2

Purchase Intention Brand Loyalty
Brand Image Proposition 1
Brand Loyalty Proposition 2
Brand Awareness Proposition 1
Affective Evaluation of Proposition 4 Proposition 5
CBO
Cognitive Evaluation of Proposition 3
COO

22
TABLE 2. Factor Analysis for the Items of Brand Image

Factors EigenValues Variance

Explained
1 3.86 55.20
2 0.96 13.8
3 0.70 10.02
4 0.54 7.71
5 0.41 5.83
6 0.33 4.71
7 0.20 2.82

Factor Scores for Items of Brand Image

ITEMS Factor Loadings

1 STYLISH 0.68
2 RELIABILITY 0.82
3 HIGH CLASS 0.80
4 PROUD 0.74
5 TRUST 0.79
6 QUALITY 0.89
7 INNOVATIVE 0.39

23
TABLE 3a. Preferred Country of Origin

Country Preference**
1 China -1.17
2 Germany -0.55
3 Switzerland 0.55
4 Japan 1.17

** Respondent preference for Country of Origin all significant at .05 level

TABLE 3b. Measurement Model

COO CBO BI Sq. Mutiple Corr.

Work 1.295 0.406
Qua 1.42 0.572
Eng 1.329 0.822
Mot 1** 0.329
Ple 1** 0.569
Peace 0.684 0.619
Fri 0.992 0.807
Nice 0.916 0.868
Proud 1.112 0.321
Trust 1.075 0.882
Quality 1.2 0.838
Sty 0.798 0.929
HC 1.291 0.837
Rel 1** 0.553

Maximum Likelihood Estimates using AMOS

COO – Cognitive Component of Country of Manufacturing

CBO – Affect Due to Country of Brand Origin
BI – Brand Image
** Parameters constrained for identification

24
TABLE 4. Structural Models for Brand Loyalty and Purchase Intention

Structural Model 1:- Brand Loyalty

Estimate S. Estimates
BL <-- CBO 0.154 0.102
BL <-- BI 1.138 -0.553
BL <-- BA 0.628 0.11

Structural Model 2:- Purchase Intention

PI <-- COO 0.233 0.105

PI <-- Price 0.054** -0.021
PI <-- BL 0.446 0.341
PI <-- CBO 0.132** -0.067

** -- Not Significant at .05 level

PI – Purchase Intention
BL – Brand Loyalty

25
TABLE 5. Summary of Tested Hypotheses

Independent Variables Dependent Variable 1 Dependent Variable 2

Purchase Intention Brand Loyalty
Brand Image P1 (Verified)
Brand Loyalty P2 (Verified)
Brand Awareness P1 (Verified)
Affective Evaluation of P4 (Rejected) P5 (Verified)
CBO
Cognitive Evaluation of P3 (Verified)
COO

26
FIGURE 1. Structural and Measurement Model

Brand Aware

1
e1 Proud

1 Res2
e2 Trust
1
1
e3 Quality
B Loyalty

1 BI
e4 Sty

1 1 Res
e6 HC
1
e7 1
Rel

Purchase Intention

1
e8 Nice

1
e9 Fri
CBO
1
e10 Peace
1
1
e11 Ple

1
e12 Eng
Price
1
e13 Qua
COO
1
e14 Work
1
1
e15 Mot

27