Country-of-

A dynamic approach to origin effect

country-of-origin effect
Shlomo I. Lampert and Eugene D. Jaffe
Graduate School of Business Administration, Bar-Ilan University, 61
Ramat-Gan, Israel Accepted January 1997

The objective of this paper is to propose a dynamic model of country-of-origin

(CO) effect. While there is no consensus definition of CO (Sauer et al., 1991), it is
generally understood to stand for the impact which generalizations and
perceptions about a country have on a person’s evaluations of the country’s
products and/or brands. Thus, it is posited that the image a person has about a
country and its product offerings influence buying intention. Therefore,
measurement of the CO construct is necessary so that marketing strategy and
production sourcing can be determined. In the sections that follow, we introduce
the concept of product image life cycle and a dynamic model of country image.

A brief literature review of CO

Some authors consider CO as an overall perception of a country (Nagashima,
1977; Wall and Heslop, 1986) without reference to product line. There is
evidence, however, that CO is contingent on a specific product line (Cattin et al.,
1982; Eroglu and Machleit, 1988; Gaedeke, 1973; Han and Terpstra, 1988;
Helsop et al., 1987; Wang, 1978) or that there is linkage between specific product
categories and country image dimensions (Roth and Romeo, 1992). Other
studies have found that CO is moderated by familiarity with a product
(Heimbach et al., 1989), product brand (Han and Terpstra, 1988; Seaton and
Vogel, 1985; Tse and Gorn, 1992; Witt and Rao, 1992) and use of product
information (Han and Terpstra, 1988; Hong and Wyer, 1989; Hong and Toner,
1989; Kieker and Duhan, 1992; Obermiller and Spangenberg, 1989).
While more recent CO research tends to be multi-variate, measuring the
effect of CO on consumer perception along with other marketing variables such
as price (Johannson and Nebenzahl, 1986; Seaton and Vogel, 1985) and
promotion (Ettenson et al., 1988; Head, 1988), most studies are univariate and
static. None of the existing research considers CO as a dynamic process, i.e. how
CO changes over time. The few longitudinal studies that measured changes in
CO over two or more time periods, e.g. Wood and Darling (1992), failed to
provide a theoretical explanation for the changes observed.

The effect of product image on perception

Our CO construct is based on an assumption that there are brand and country
images over and above the perceived attributes of products associated with a European Journal of Marketing,
Vol. 32 No. 1/2, 1998, pp. 61-78,
country or being sold under a specific brand name. We further propose that there © MCB University Press, 0309-0566
European are two-way interactions among these constructs that change over time. For
Journal of example, the image of Japanese-made products experienced a dramatic change
Marketing in the USA and western Europe. During the 1950s a “made in Japan” label
signified a cheap imitation of products made-in industrialized countries. Later,
32,1/2 Japanese manufacturers shifted production to knowledge-intensive products and
targeted income-elastic market segments as part of an overall marketing
62 strategy intended to improve image. Today, the “made in Japan” label stands for
high quality, excellent workmanship and innovative products. How similar
changes in image occur over time should be explained by a dynamic CO model.
Generally speaking, the more homogeneous and standardized products are in
a product category, the less is the effect of perceived product image on demand.
Alternatively, the higher the level of differentiation in a product category, the
more the perceived product image effects demand (Lampert and Jaffe, 1993). The
least effect of product image is likely to be for commodities and the highest effect
among high prestige consumer products. Figure 1 shows the effect of product
image on demand as a function of the level of product differentiation. The effect
of product image is measured by the ratio of two brands’ prices within the same
product category where the range of prices is an indication of the extent to which
people are willing to pay more for a given product type due to product
differentiation. It is important to note that these price ratios are much more due
to marketing than to economic variables. Pricing a high image brand of shampoo
at $1.50 per ounce and a low image one at 10 cents per ounce does not reflect a
production cost differential, but an added perceived value.
As shown in Figure 1, all consumer and industrial products are classified
into four levels of product differentiation: homogeneous, low differentiation,
medium differentiation and high differentiation. Homogeneous products are
those which most customers regard to be practically the same. In a consumers’
market, products like sugar and salt, or services like photocopying are
considered to be the same regardless of supplier. In the industrial market, goods
like silver, copper and raw materials are seen as being practically identical.
Ideally, in a perfect market these products should have identical prices.
However, market imperfections such as the lack of market information can lead
to small price differentials in products and services.
Low differentiation products are those which customers perceive to have
some added benefits, and are willing to pay more for them. In the consumer
market, an example is the price of gasoline where two adjacent gas stations may
have a price differential of 10 per cent for essentially the same octane gasoline.
In the industrial market, relatively standard insurance policies have over 20 per
cent price differentials.
Medium differentiation is typical for those products which the customer
perceives as being significantly different along certain features or dimensions
and is willing to pay considerably higher prices. In the consumer market,
examples are appliances and soft goods. In the industrial market, examples are
software packages performing similar functions which can range significantly
in price.
Product image effect Country-of-
origin effect
Market
price
ratio
of same
type
goods
63

1.70

1.30

1.10
1.00
Homogenous Low differentiation Medium High Product
goods goods differentiation differentiation differentiation
goods goods

Consumer Staples like: Gasoline, Vacuum cleaners, Cars,

goods sugar, tires, branded food items, radios,
salt, etc. toothpaste colour televisions clothing,
perfume,
watches

Figure 1.
Industrial
goods
Commodities
e.g. cotton,
Components
e.g.
Computers,
machinery
Customized
designed machinery,
Effect of product
metals, memory chips, special chemicals differentiation on
raw materials micro processors
e.g. steel ingots, product image
basic chemicals variability

High differentiation products are those for which the customer perceives very
large differences between brands or suppliers and is willing to pay a high
premium for that perceived difference. Highly differentiated consumer goods
include luxury products like perfume, designer clothing and high fashion
watches. In the industrial market, examples include custom designed
machinery, consulting services, interior design and the like. Here the price ratios
are not even bounded.
In summary, it is evident that there is a wide range of prices for similar type
products beyond the differences in real cost. However, as long as people are
European willing to pay for product differentiation, perceived or real, these prices
Journal of represent the value of a product independent of objective inputs.
Marketing It should be emphasized that the phenomena described in Figure 1 represent a
free market economy, in which competing products are available to all customers
32,1/2 at given, listed or posted prices at any given point in time, sold in retail outlets or
through other suppliers. Thus, the price differences may not be attributed to
64 situations where market inefficiencies are causing supply shortages where even
prices of commodities or standard goods may have high price variability.

The role of brand and country image in creating product image

When a brand is well established in a domestic market, its image is formed as
consumers become familiar with its attributes (Gaedeke, 1973; Heimbach et al.,
1989; Hong and Wyer, 1989; Nagashima, 1970; Schooler, 1971). A new market
entry may have an undefined brand image until it becomes known, unless it is
introduced under a family brand, like Heinz, IBM and Johnson and Johnson, where
all company products share a common brand name. When this is the case, the new
product’s image takes on the established family image (Bilkey and Nes, 1982).
Thus, when IBM introduced its personal computer it had immediate acceptance
due to its well established brand name in mainframes. In international marketing,
product image is affected by country of origin before brand name plays a role. The
country-of-origin effect on a new brand has a similar role to family branding
where the country-of-origin’s image is generalized to the new brand.
Country image may be an asset when it is positive and a liability when it is
negative. It has been established that the country-of-origin effect is product
specific (Cattin et al., 1982; Eroglu and Machleit, 1988; Gaedeke, 1973; Hans and
Terpstra, 1988; Heslop et al., 1987; Wang, 1978). Thus, perfume, fashions and
wine made in France have a positive image but cars, television and high
technology products have a less positive image. The same country image may
be shared by one or several types of product, but not by all product categories.
Furthermore, a given country’s products may have varying images across
countries. For example, Japanese-made technical products have a more positive
image in the USA than in Europe (Bilkey and Nes, 1982). This shows that the
country-of-origin effect is both product category specific and country specific.

The product image life cycle

Differences in CO occur over product categories and within categories, varying by
individual product and brand. Familiarity and experience with a country’s
products moderate CO. Three situations illustrate these differences. First, a
situation in which the individual has no experience with the product, but has a
general image about the country, which is projected to the specific product
category (Erickson et al., 1994; Johannson, 1989; Johannson et al., 1985). This type
of image is referred in the literature as a “halo effect”. Halo is defined as “the
tendency to rate individuals or institutions either too high or too low on the basis
of one outstanding trait (Chaplin, 1973). Krech et al. (1969) add:
 The so-called halo effect…generally refers to the fact that the favorableness (or unfavorableness) Country-of-
of one’s first impression of another very often leads us to attribute to him all manner of good (or
bad) traits. It is as if we tended to make first a broad evaluative judgment about a social object origin effect
and then a halo of specific traits compatible with that single, organizing judgment around it…”.
A country’s halo effect in international marketing refers to the rating of its
products based on perceived ability to produce a specific product category,
denoted here as IH (Figure 2) in which an individual attributes a certain quality or 65
trait to that product category.
A second situation occurs when an individual has tried a specific brand
originating from a given country. Product image is largely based on the
perceived benefits of that brand. While country image plays a minor role, if any,
the product image is determined largely through the salience of a specific brand,
denoted as IB, replacing the original IH.

“Early ‘“Late
majority” majority”

“Innovators” “Early
adopters” “Laggards”
2.5% 13.5% 34% 34% 16%
t
Market Time
entry Country A’s product type “adoption process”

Adoption
proportion Market potential
1.0
“Non-adopters”
IH

0.5 Unrealized
potential “Adopters”
IB, IF
IH

t
Market 0 Time
entry
Key Figure 2.
IH - Product image due to country A’s halo effect Cumulative adoption
process of country as
IB - Brand image of country A’s product (brand familiarity) product type and type
of image
IF - Country A’s product type image (product type familiarity)
European A third situation is when a consumer has experience with more than one brand
Journal of originating from the same country. In this case product image is based on
Marketing multibrand familiarity which is closer to the individual’s subjective evaluation
of the country’s products denoted as IF. In this case, IF represents the country
32,1/2 image. Note that a person may have a specific brand image – IB, and a country
image of IF at the same time.
66 Therefore, it is important to determine if an individual’s product image is
based on halo (IH), on a specific brand (IB), or multibrand familiarity (IF), each
representing a different cognitive state. This is particularly crucial when the
halo effect, IH, is dominant, i.e. during the pre-introduction stage. At this stage,
I H, determines the ease or difficulty of product entry to a new market in a
foreign country. The higher the familiarity with a country’s product category,
the more it is evaluated on the basis of its real and perceived value.
In presenting the product image life cycle (PILC) two different approaches will
be used. The first approach is based on a new product adoption process (Rogers,
1983), the other on the concept of form product life cycle (Polli and Cook, 1969).
Considering first the new product adoption process, initial export to a given
market can be viewed as being similar to a new product introduction in that
market. Figure 2 (top) shows the “adoption rate” of a product until it reaches its
full potential. Figure 2 (bottom) shows the cumulative “adoption process” of one
country’s product in another country, starting with market entry, and ending in
the realization of full market potential. Before market entry, the perceived image
of potential customers is given as IH, the country of origin halo effect. Once the
product has been introduced, those who tried one or more brands reach image
levels of IB and IF and are referred to as “adopters”. Non-buyers in the potential
market are referred to as “non-adopters” representing unrealized potential.
Once a product is successfully launched in a foreign market, the proportion
of potential customers having an IH image level shrinks as a function of time,
while customers having an IB and IF image increases. This means that more
people have an image based on actual experience and familiarity as a function
of time, while fewer people determine image based on halo.
Figure 3 presents a modified PILC. It starts with the pre-introduction stage
(rather than with the accepted introductory stage), and ends with the maturity
stage (rather than with the decline stage). The pre-introduction stage is identical
to the time before market entry as shown in Figure 3. At that time the only
existing product image is halo effect IH. During this period, a company in the
country-of-origin has to decide whether, or at least under what conditions, it can
start exporting to various countries. At this stage it has to first determine its
country image in potential target countries. Second, based on its product images
in the various countries, specific target markets may be selected. The
introduction stage is typified by the entry of a single brand, low sales volume,
but with increasing product awareness. The product image is still dominated by
IH, but the brand effect, IB, starts to become salient, replacing IH for those who
either bought or tried the brand.
 Country A’s Country-of-
product
type sales Market potential origin effect

Unrealized
potential
at time t 67
IB, IF
IH
IB, IF
IH
IB
t
Preintroduction Introduction t Growth Maturity Time

Key Figure 3.
IH - Image due to halo The product life cycle of
country as product type
IB - Image due to brand familiarity and its relationship to
product image
IF - Image due to product type familiarity

During the growth stage, market acceptance is high; however, competition

intensifies, as new brands of the country of origin enter the market, often catering
to the same market segment. Those who either buy or use a specific brand,
establish a brand image IB substituting the previous image held due to the
country’s halo effect IH. For those who bought or used several brands of a given
country, their initial country halo effect IH, shifts to both a brand image, IB, for
each specific brand as well as a country image based on multibrand familiarity IF.
Each brand has shared attributes, e.g. outstanding engineering for German
products, or prime design for Italian and French products. Among those who
have no experience with the country’s products, the halo effect, IH, remains salient.
During the maturity stage, sales growth slows, new product entries are
slightly differentiated, and use and experience result in higher familiarity with
the various brands. The proportion of people who have acquired brand image
IB, and multibrand familiarity, IF, reaches a plateau, while the proportion of
people remaining at the IH level decreases.
To sum up, the above discussion of a country’s PILC differentiates between two
populations: those who tried or used at least one brand, and those who did not
have any experience with the country’s products. It was further indicated that for
those who had experience with one brand, the country image for that product
category shifted from a halo effect IH to brand image IB, and for those experiencing
more than one brand, to multibrand familiarity IF. Those who did not have any
direct involvement with the country’s products were assumed to remain at IH.
European It should be noted that these concepts are relative rather than absolute. The
Journal of time span between pre-introduction to maturity takes years and even decades.
Marketing For more than 20 years, following their introduction, Japanese-made cars were
still at the growth stage in the USA. Also, the maturity stage itself may for all
32,1/2 practical purposes be unlimited in time. French perfume reached the maturity
stage in the US many years ago, and no end is in sight. Obviously, over such
68 long periods of time the number of brands offered to the market by a given
country and domestic competitors is constantly changing, and their relative
perceived image may change as well. Thus, for example, Japanese cars were
first perceived as low price-low quality, and some are now positioned as high
price-high quality. Thus, the IH, IB and the IF are not likely to stay constant over
time either in their absolute or in their relative perceived position, yet they are
relevant at any point in time for both evaluation and strategy implications.
At times, especially toward the end of the growth stage and during the
maturity stage, highly successful brands may become an entity in themselves
and are less influenced by their actual country-of-origin image. Customers may
still regard these brands as being “made in” the original country even when
production shifts to other countries. Examples include brands like Reebok,
Sony and Yves Saint Laurent which are produced in several countries, yet their
brand name is still associated with their original country of origin.
However, when a producing country has a low country image in a specific
product category, and customers are aware of the product’s origin, the country
image may tarnish the brand’s image. A good example of such a case is
reported by Johansson and Nebenzahl (1986), showing consumers’ willingness
to pay a higher price for a Volkswagen made in Germany than for the same car
made in Brazil and for well-known brands (e.g. GE and Sony) made in
developed, rather than developing nations (Nebenzahl and Jaffe, 1991).

Country product image dynamics – the single brand case

In considering a country’s product image dynamics, the single brand is discussed
first. The single brand case is fairly common, especially when the country or
industry of the country of origin is relatively small. An example is the Yugo
automobile, which is the only Yugoslavian durable good sold in the USA. Similarly,
Phillips is the only electronics company from The Netherlands which is known in
other countries. It is common for agricultural producers to use a single brand name
for their produce; thus thousands of orchard owners in Israel export citrus under
the brand name Jaffa, and hundreds of tomato growers sell their produce under the
brand name Carmel. This same analogy applies to Chiquita Bananas imported
into the USA from South America. In the single brand case, brand image is largely
a reflection of country image, i.e. IB0 = IH (Figure 4 left, bottom). For those with
brand experience, brand image IB, becomes salient, and the country product image
IF, becomes largely a reflection of brand image IB, (Figure 4 right, top). Since the
halo effect always precedes brand familiarity, the brand image reflected from the
country’s halo effect is denoted as IB0, and brand familiarity as IB1.
 IC Country-of-
Country origin effect
image

IF
Country A’s
image
reflected
from brand 69
familiarity

Country A’s IH IF = IB1

halo
effect
IB = IH

(t0) (t1)
IB
IB0 Brand IB1 Brand Figure 4.
image image Brand Image dynamics:
reflection based on image reflection of country and
of country A’s brand brand images
halo familiarity

A country’s product image over time is a dynamic process. The process starts
with the halo effect image, IH reflected on a country’s brand, resulting in IB = IH
(see Figure 5(a) and (b) arrow 1). Yet, often in reality the brand is either perceived
better or worse than expected. In Figure 5(a) brand performance is perceived to
be above initial expectations, i.e. IB ≥ IH. Thus the initial IB shifts to the level of
IB1 (arrow 2 in Figure 5(a)). The end result is that the country image becomes a
reflection of the higher brand image, and IF1 = IB1 (arrow 3 in Figure 5(a)),
indicating an improvement in the country’s product image. Figure 5(a) can be
also reached through a different scenario, which is likely to play an important
role in strategy formulation. A country’s brand image, IB, may actually be
perceived to be identical to its country-of-origin halo effect IH. However, as a
result of concerted effort to improve brand quality, an image level of IB1 may be
obtained. A case in point is the past effort made by Japanese companies and
recent ones by South Korean manufacturers to improve their images in the USA.
Figure 5(b) presents a case in which the halo effect IH was first reflected in the
brand image, IB, (arrow 1), yet, the brand did not meet expectations, i.e. IB ≤ IH.
The result is a shift in brand image from IB to IB1 ≥ IB, (arrow 2). The lower
brand image IB1 led to a lower country image IF1 = IB1 ≤ IH (arrow 3). Two cases
demonstrate these phenomena: the Yugoslav-made car Yugo, positioned in the
USA as the new Volkswagen, lost ground after initial sales. A similar case
happened in Israel to the Romanian-made Delta automobile, which initially sold
moderately well, but following consumer dissatisfaction, lost much of its sales,
as well as its initial favourable image.
European IC
Journal of Country
(a)
Marketing image
32,1/2 IF1
(t1)
70
IH
IB > IH
(t0)

2
IB
IB = IH IB1 Brand
image
(t0) (t1)

IC
(b)
Country
image

IH
(t0)
IF1 IB < IH
(t1)
1

Figure 5. 2
IB
Shifts in brand and IB1 IB = IH Brand
country image image
(t1) (t0)

It should be noted that there is a delayed effect until change in a brand’s quality
will affect its image. In order to shorten the period between a change in a
brand’s quality and its effect on country image, a substantial and prolonged
marketing communication effort will be needed, as the Japanese case indicates.
Country image dynamics – the multibrand case Country-of-
The more typical case in international marketing is that once a country origin effect
succeeds in penetrating a foreign market with one brand, more brands tend to
follow, often competing in the same market segment. Furthermore, each brand
must have some unique attributes to gain differential advantage. The first
question is how are these different brands reflected in country-of-origin image?
To answer this question, the concept of image crystallization is proposed. By 71
crystallization is meant the extent to which country image is formed into a
unified and consistent construct. The more unified and consistent the country
image across brands, the higher is its level of crystallization. The more diffused
and inconsistent the country image across brands, the lower its level of
crystallization. Thus, country image can be perceived as a summary construct,
similar to a single brand image as suggested by Han (1989) only when country
image is highly crystallized.
Country image crystallization becomes an issue only when several brands of
the same product category sell in a foreign market. This usually happens
during the growth and maturity stages of the country’s product image life cycle.
During the pre-introduction stage where only a halo effect exists, and during the
introduction stage, when usually only one brand is introduced, country image
possesses a high level of image crystallization. At these periods there are no
other entities to detract from such an image. Also, sales are either non-existent
during the pre-introduction stage, or are very low during the introduction stage.
However, the growth and maturity periods are the most significant ones in
terms of both sales level and duration. At these periods, multiple brands of the
same country of origin are competing with one another, and each tries to
establish itself as a separate entity in the customer’s mind. At this point, the
problem of country image crystallization arises.
Is it better for a country to have high or low image crystallization? The
answer to this question is not equivocal. When the initial country image is
positive, and new brands tend to reinforce it, a high level of crystallization is
obviously desired. This is achieved by maintaining one or more major
characteristics in common, while not sacrificing brand individuality. Successful
exporting countries have been able to do it. Thus, Japan is known for its
workmanship, France and Italy for their design, and Germany for its
engineering. Having a high level of crystallization simplifies customer choice,
and when crystallized image is high, the country’s brands are likely to be
appealing.
Figure 6(a) presents an hypothetical case in which after an initial halo effect
image IH at t0, three brands are introduced. At t1 each has established its own
image IB11, IB12, IB13, respectively, where the lower numerical subscript relates
to the time period t1 and the upper numerical subscripts represent the brand
numbers = 1, 2 and 3, respectively. IC represents the country image axis, and IB,
the brand image axis. In spite of the fact that each brand has its own
differentiated image their common characteristics are all reflected into a single,
European IC (a)
Journal of High country image crystalization
Marketing
32,1/2 IF1
(t1)
72 IH
(t0)

3 3
3
1
2 2 2
1B
IB IB11 IB12 IB13
(t0) (t1) (t1) (t1)

IC (b)

Low country image crystalization

Range
of IF1 IH
(t0)
3
3
1
3
3
Figure 6.
High versus low 2 2 2 2
1B
country image IB14 IB13 IB IB11 IB12
crystalization
(t1) (t1) (t0) (t1) (t1)

common country product image of IC = IF1. This is the case of high country
image crystallization, meaning that the country image comes across as a
summary construct (Crawford and Garland, 1988; Hong and Wyer, 1989;
Howard, 1989). Practically, one would expect that a highly crystallized image
will result in a perceptual map where the different brands will tend to cluster
together on common characteristics, as Johansson and Thorelli (1985) found to Country-of-
be true in the case of Japanese cars. origin effect
Figure 6(b) presents a hypothetical case in which after an initial halo effect
image of IH at time t0 four brands were introduced, and at time t1, each had
established its own image, IB11, IB12, IB13 and IB14, respectively, where the lower
numerical subscript relates to the time period t1, and the upper numerical values
represent brand numbers 1, 2, 3 and 4, respectively. Again, the IC axis represents 73
the country image level, and the IB axis represents brand image.
As can be seen in Figure 6(b), brands 1 and 2 are above the original image IB
reflected by the halo effect image IH. The other two brands, 3 and 4, have a lower
image than IB. Furthermore, as each brand has different attributes, they share
no common characteristics. As a result, each brand projects itself on the country
image axis, resulting in a highly diffused country image. IF1 is not a single
value, as it appears in Figure 6(a), but rather represents a wide range of values
consistent with the original brand variability. Obviously, this is a case where
customers do not have a unified image regarding that country’s brands,
requiring that each brand be judged by itself. A case in point is the image of
English made cars, where Rolls Royce, Bentley and Jaguar have a high image,
while Rover and MG have a moderate image.
It is very likely that a low image crystallization tends to reduce the country’s
market potential in the long run. However, low crystallization may be necessary
for a transient period, in moving from lower to higher country image. The new
brands have to break away from the initial low image to the higher one. It is
highly likely, that during the 15 years in which Japan’s image in the USA moved
from low to high quality, a period of low image crystallization was necessary.

The time dimension in brand and country image

We posited above that over time, more and more people replace the halo effect
image IH, by either a brand image IB, or a multiple brand image IF. Once this
happens, brand image IB, the single brand case, and the multibrand image IF,
the multibrand case, become the salient factors in the determination of country
image IC. Any change in country image is a function of the respective change in
the brand image IB, or the multiple brand IF .
For a perceptual change in a country’s product image to occur, three
conditions have to be met. First, there has to be an absolute or relative change in
IB or IF either through an active campaign to change them, or by default, due to
a change in the image of competing brands originating from other countries.
Second, the magnitude of the change has to be noticed by the market. Third, the
change has to be maintained over a substantial period of time to be perceived as
real. Only after these preconditions are met, is it likely to affect the country’s
product image.
Figure 7 shows that for the single brand case, a change in the country’s
product image, IC , is a function of a noticeable change in the brand image IB.
Even though IC is a reflection of IB, it is not an instantaneous, but rather a
delayed change, indicated by ∆t. Also, it is clear that a change can be in both
European
Journal of Ι
Marketing Image
32,1/2
IB (t)
74
IC (t + ∆t)
Figure 7.
Change in country ∆t ∆t
image (IC ) due to
change in brand image
(IB ) overtime t
Time

directions. It may move to a higher level image, like the Japanese car case – the
left side of the curves – or to a lower level, like the American car case – the right
side of the curves. (The intersection point between the curves does not have any
special meaning.) Thus for the single brand case: IB (t) = IC (t + ∆t).
The multiple brand case, where there is high image crystallization, behaves
in a very similar way to the single brand case. The only required change in
Figure 7 is to substitute IB(t) by IF (t).
Thus, IF (t) = IC (t + ∆t).
The only difference in the multibrand case, is that a change in the country
image IC is dependent on a consistent change in individual brands which has to
take place across all, or at least most brands.
Figure 8 presents the multibrand, low crystallization case, i.e. where a
change in individual brand images is not consistent, or there are no common
characteristics to unify them. In that case the range representing IF (t) moves to
either higher or lower levels of image, resulting in a similar change in the
country image after a time delay of ∆qt.

Ι
IF (t) IC (t)
Image

Brand
image
Figure 8. variability
The relationship
between low
∆t ∆t
crystalization
multibrand image (IF)
and country image (IC)
over time t
Time
The duration of ∆t depends on the relative marketing effort done by the specific Country-of-
country of origin in trying to improve its image. The higher the relative effort, origin effect
the shorter the ∆t, and vice versa. In many cases a decline in brand and country
image may be owing to relatively ineffective marketing strategy. This means
that a country is not likely to maintain product or brand images over time
unless effective marketing action is taken through a concerted effort by
manufacturers selling in the target market. 75
The boundaries of a country’s image within and across product
classes
As shown above, country image is generally known to be product category
specific. The question is, what is the span of influence that the country’s image
carries. In some cases country image is confined to a type of product within a
product category, at times it relates to a whole product category, or to multiple
product categories (Johansson and Papadopoulos, 1993). Thus, for example,
England has a strong country image in the USA for luxury cars, due to Rolls
Royce and Bentley. Yet, it has a weak image for other type cars. Similarly, Japan
has a very strong country image in medium level cars, but not for the high end
of the line. On the other hand, Japan has a strong image in cameras over the
whole range of camera types. Germany has a strong image on the full range of
cars from small economy cars – Volkswagen – to the most luxurious car –
Mercedes. Moreover, Germany, Japan, France, Italy and other countries have a
strong image in several product categories: Japan in cameras and consumer
electronics; Germany in cars, tools and machinery; France in wine, perfume and
clothing; Italy in furniture, shoes, and sports cars. Looking at these realities, a
positive (and possibly negative) country image can spill over from one product
class to another. However, such spill-overs are more likely to happen among
product categories sharing certain characteristics. Thus, Japan and Germany
have established their image in products having a high level of technology;
France is more associated with product categories relating to taste; Italy is more
regarded in product categories involving attractive product design.
Thus it seems that the boundaries for country image do not have to be
confined to a specific product category. Moreover, it appears that widening the
scope of these boundaries may be easier when certain commonalities are
shared. These phenomena are obviously very important for strategy
formulation at the country level, regarding industries that should be
encouraged to achieve the highest impact within a given time frame.

Research implications
The conceptual model of country-of-origin effect suggested here will hopefully
encourage others to further theory-driven research. There are ample research
implications from which propositions can be drawn and operationalized into
testable hypotheses. Some of the concepts that deserve immediate attention are
the assumptions about changes in image along a product life cycle and image
crystallization. These concepts have strong implications for marketing strategy.
European If indeed the effect of CO on brand image is moderated by stage in the product
Journal of life cycle, then marketing strategy will have to be adapted over time. Studies in
Marketing the composition of CO and its change over time should be incorporated into
longitudinal designs.
32,1/2
The effect of image crystallization needs to be tested. This concept has
implications both for export-intensive countries and for the production
76 sourcing strategy of multinational firms. Different marketing strategies are
called for depending on whether CO comes across as a halo effect or as a
summary construct. Another area of concern that may be addressed by image
crystallization is the standardization versus adaptation issue (Jain, 1989;
Szymanski et al., 1993) in international marketing. High crystallization of a
favourable brand image in a number of markets may allow the introduction and
global proliferation of a single brand, while low crystallization would require
the customization of brand names.
Another area of research which deserves attention is the role of country
image in trade theory. According to Porter (1990), most theories of international
trade are based on cost factors alone, without considering the influence of
marketing variables, such as those embedded in CO. We suggest that a model of
international trade may be developed using relative cost factors on the supply
side and country-of-origin effect operating on the demand side. Incorporating
CO explains how consumers evaluate imported products and suggests that the
CO cue, in addition to supply side conditions, affect buying intentions.
A further research subject concerns the policy implications of CO. Most
country-of-origin research has studied the implications of CO on the firm.
However, there are also important consequences for governments, especially
those of developing countries. For example, eastern European countries would
like to attract multinational corporations to produce or assemble global brands
for export. Such a step may – according to the theory outlined above – improve
their country image. In this case governments of developing countries would
encourage foreign investment for this purpose. On the other hand, governments
that wish to encourage the consumption of home products as substitutes for
imports would have to undertake a campaign to promote the image of domestic
made products. Research should be undertaken to classify the various CO
policy implications for government and how they may be successfully
operationalized.

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