'Country of Origin' makes big impact on buying habits

Pricing is not the only factor that influences a consumer's decision to purchase a product, the "Country of Origin" also has an impact on buying habits.

The "Country of Origin" effect is not a new notion for marketers. In fact, its roots go back to over a hundred years when the "Made in Germany" stamp was initiated by Britain in the late 1800s so that British people could easily spot German goods in the UK markets and avoid them. The attempt was to encourage Britons to buy goods made in the UK and not foreign products. However, over the years, as the popularity of German products grew, the stamp became synonymous with reliability, quality and perfection.

Fast forward 80 years to the swinging 60s and the "Country of Origin" effect was prominent once again, as Japanese technology was booming. Simply by sticking a "Made in Japan" label on a stereo, sales could increase by a third.

Today, to the world at large, brands such as Sony are seen to be inherently Japanese and the perception of Japan as technologically advanced, innovative and quality controlled has been largely driven by pioneering Japanese brands such as Sony.This is now a key driver in the success of many other Japanese electronics and automobile brands, such as Toyota.

Similarly, for many product categories, the link between the perception of an individual brand and the perception of the country of origin is intrinsic – whether deliberate, by chance or through the passage of time.

From a marketers' perspective, the country of origin is a tried and tested tool to create differentiation in the marketplace and create an enduring relationship with the target audience.

Olivier Auroy, General Manager, Landor, told Emirates Business: "First and foremost, consumers look at prices, especially in Dubai. We did a survey on what influences consumer choices and according to the people we met in Carrefour, Spinney's and Union Corp, pricing is the most important driver. Summer bargain, Ramadan promotions… Pricing is the biggest influencer.

"However, having said that, I would like to emphasise that destination branding is also very important, as it often influences consumer behaviour. Some countries have a strong brand image and drive positive reactions. Any products related to these countries will benefit from their positive connotations.

"For example, in the mind of the consumer a product from Japan equals quality, while a product from Germany symbolises reliability and a product from France means sophistication. Consumers will decide to buy the product with these connotations in mind. This is why destination branding is so important, as good destination branding will add value to all product and services coming from a particular country."

The relation grows more and more intimate as the world shrinks, and negative branding can hurt sales. A good example is the French protest against the Olympic flame in Paris. As a result, Chinese consumers organised demonstrations in front of Carrefour in Shanghai and decided to boycott all French products.

Giving another example of the impact of negative branding, Auroy said: "Take a look at what happened to China recently. The "toy story" sent really bad vibes all around the world. All of a sudden, all Chinese products were considered as low quality and dangerous. The political tensions with Tibet did not help either, as China became the villain and anything coming from that country was considered bad.

"A person working in a supermarket in Dubai explained to me what happened with the Fuji apple. In the middle of the toy story turmoil, consumers were reluctant to buy Chinese apples. Nevertheless, one of these apples was still selling well because it had a Japanese name: Fuji. The Japanese connotation of the brand name Fuji counteracted the negativity of the Chinese origin. As we can see, it is a complex equation."

Hermann Behrens, CEO of The Brand Union Middle East, agreed. "It is widely recognised that country of origin has an impact on the purchase decision and many studies have shown that consumers have a preference for products that originate from certain countries that they have existing perceptions of," he said.

"For example, Mercedes, BMW and Audi are all very different automobile brands but our perceptions of these centre around advanced technology, premium engineering, the perfect balance of art and science, precision and assurance – many of the values and attributes that are inherent in our perceptions of Brand Germany."

This is likewise with luxury Italian brands such as Armani, Gucci and Prada, again three very different luxury goods brands but each encapsulating an aura of style, elegance and sophistication, Behrens said.

They all have a unique Italian resonance that crosses cultures and while these brands leverage on the notion that Italy (Milan) is one of the style capitals of the world, Brand Italy capitalises on being the home of some of world's most premium fashion houses.

In many ways, Dubai is a good example of what globalisation is creating: a market where consumers are exposed to more nationalities of products. In that context destination branding is a key element.

Some countries will be more credible on some specific food products: German sausages, French cheese, Italian pasta, Swiss chocolate, Swedish roll-mops, Russian caviar, American ketchup and Japanese sushi. In many ways, these products are quite elaborate – elaboration means recipe, and recipe means culture and heritage. The positive connotation around a product is the result of a long history.

Explaining the point, Auroy said: "Let's take the example of two products: beef and mango. In Dubai, the choice is pretty straightforward. You can buy beef from Argentina, New Zealand, Australia and Pakistan. You have four categories of meat: low category, medium-low category, medium-high category and high category. The main importers can provide the supermarket with the four categories but they won't be credible in all four categories. Based on studies, the majority of consumers will easily buy a medium-low beef from New Zealand and will have difficulties to buy a high category beef from Pakistan.

"However, in the fruit department, a Pakistani mango will be more credible than an Australian mango. Nationality matters. You can measure it when it comes to grapes. Consumers are judging equally grapes from Chile, South Africa, USA and Italy, a reflection of what is happening on the wine market globally. All these nations are credible and they all communicate a positive image. In South Africa, if the grapes are branded Sultana or Ceres, it is even better."

So the million-dirham question is, where does the UAE stand in the eyes of consumers?

According to Auroy: "The UAE has the best standing in the Middle East for sure. In the eyes of the people from the Gulf, Levant or Pakistan, the UAE is seen as a benchmark and a place to come to make purchases.

"When it comes to products, there is not much on offer because there are untapped opportunities in the UAE. However, the UAE could be very credible for 4X4 cars, green energy, sun protection items, perfumes, etc.

"Abu Dhabi took the right direction with initiatives such as Masdar. It is a very good move and the best way to build a strong destination branding that could have a positive impact on future products development."

Matthew Laubscher, Executive Creative Director of The Brand Union Middle East, had this advice: "It makes the most sense to position brands based on their own vision and values and, perhaps where appropriate, to link to the country or city of origin. For example Audi, Mercedes and BMW all have different company values with the association to Germany being the common link. However, they could all exist without the country reference.

"Positive steps are being taken to create and control public perception, The Office of the Brand of Abu Dhabi is gradually and consistently positioning Abu Dhabi as the cultural hub of the Emirates and actively encouraging businesses and organisations to align with its values and ethos."

Duncan James, Strategy Director at The Brand Union Middle East. Said: "If a company's brand strategy aligns with that of the nation's then we have a number of ways and means to capitalise on the country of origin effect: from linking through the name, as many airlines and banks do, such as Emirates airline and the newly-launched FlyDubai."

Behrens concluded: "For businesses and organisations in the UAE, aligning your brand to the vision, values and growth of the nation (or city within it) is an exciting opportunity. However, it must be considered only as a part of greater strategic brand modeling to ensure real, long term sustainable brand success."

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