Nation Branding

Nation Branding

December 25, 2015

Nation branding has become increasingly popular over the past two decades. It is hard to not be exposed to campaigns such as “Dubai: The Jewel in the Desert,” “Incredible India,” “Malaysia: Truly Asia,” or “Sri Lanka: The Pearl of the Indian Ocean.”

Countries have launched these marketing initiatives because they have realized the importance of managing their nation’s image as a “brand”. Just like Coca Cola, Samsung, or Toyota aim to do with the advertising for their companies, national leaders hope the same for their country. The usual nation branding objectives are to increase awareness and knowledge of the country, create favorable associations about their country, build preference for the country, and persuade people to travel to that country.

This article focuses on another, more unusual but what I believe is more important, objective of nation branding – to increase consumers’ preference for products and brands from a particular country of origin. How to change the nation’s image as a producer of quality goods and services.

French luxury brand Chanel's Fragrance and Skincare counter at the Sydney City branch of Australian department store MYER in 2013. Attribution: Pear285 at English Wikipedia [CC0], via Wikimedia Commons

French luxury brand Chanel’s Fragrance and Skincare counter at the Sydney City branch of Australian department store MYER in 2013.
Attribution: Pear285 at English Wikipedia [CC0], via Wikimedia Commons

The country of origin of a brand elicits powerful consumer reactions. For example, consumers around the world perceive German products as “premium” and French brands as stylish, fashionable and elegant. This allows German cars and engineering products as well as French wines, cosmetics, and clothing to command a premium. Unfortunately, consumers, including those in their own country, perceive emerging market brands as being of inferior quality, cheap, and poor value for money. Hailing from China, India, or Vietnam decreases the brand preference and image. As one can imagine, executives of emerging market firms are frustrated about why do consumers care about their brand’s country of origin when these consumers could evaluate the product on its true merits and act accordingly. Unfortunately, most consumers are either unwilling (because the incentives are low) or unable (because they lack the capabilities to analyze information) to evaluate a brand on its true merits. Instead, they rely on informational shortcuts or “cues” that in their perception reveal something about the qualities of the product.

            The most important cue is the product’s brand name. Consumers understand that they reduce risk by purchasing a well-known, successful brand instead of an unknown brand. A second very important market cue is the brand’s country of origin. Country-of-origin image refers to the perceptions consumers have about products from the country associated with the brand. For example, Toyota, Volkswagen, and Hyundai represent Japanese, German, and Korean origins, even though they manufacture products beyond their own borders. In other words, when consumers are uncertain about product attributes, they rely on brand and country-of-origin perceptions to assess the product’s attribute levels and to increase confidence in its claims. The reduced uncertainty lowers information costs and the risk perceived by consumers, thus increasing the price premium the brands can extract. Recognizing this, countries such as South Korea and Taiwan have launched nation branding campaigns, not to attract tourists, but to increase their image with consumers around the world as a source for quality products.

In the 1980s, Taiwanese companies poured billions of dollars into new product development and innovation, but international customers still demanded discounts from Taiwanese contract manufacturers. Western consumers equated Taiwan to cheap labor and especially cheap electronics. In 1990, Taiwan’s Ministry of Economic Affairs (MOEA) launched a long-term ambitious campaign to create a new image for the “Made in Taiwan” badge. Using external consultants, officials came up with the unique positioning “Innovalue” for the Made in Taiwan label. Innovalue stood for the common brand essence of Taiwan’s companies: “we use innovation to create great value in leading edge products.” Over time, Taiwan has used different but related slogans such as “It’s very well made in Taiwan,” “Excellence, made in Taiwan,” “Taiwan: Your partner for innovalue.” Government involvement makes eminent as no individual company would have the resources to do this.

In the absence of nation branding campaigns by their government, brands from emerging markets need to think out of the box. In Brand Breakout: How Emerging Market Brands Will Go Global, co-authored with Professor Jan-Benedict Steenkamp, seven strategies are presented for emerging market firms to overcome their country of origin disadvantage with consumers.

 Yue Hwa Chinese Products Emporium 1st Pastry Fectival Taiwan pink flowers Sept-2012. By Argoamgomoa (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

Yue Hwa Chinese Products Emporium 1st Pastry Fectival Taiwan pink flowers Sept-2012.
By Argoamgomoa (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

  1. Choose a brand name that disguises the country of origin. Use, pronounce, or spell a brand name in a foreign language to trigger favorable foreign cultural stereotypes and influence product perceptions and attitudes. Nothing in the name of TCL, Lenovo, or ZTE suggests that these brands come from China. In fact, their names are so nondescriptive that they could be from any country. Emerging-market firms can go further by adopting foreign brand names. This strategy entails using, pronouncing, or spelling a brand name in a foreign language, such that the name triggers favorable foreign cultural stereotypes and influences product perceptions and attitudes. For example, fashion brand Stella Luna suggests Italy, but originates from China.
  2. Confront negative associations. Where there is lack of information, persistent media stereotypes, or overexposure of negative events and national figures, acknowledge existing perceptions and then challenge them. Give counterevidence. Poke fun at stereotypes. Ospop, the Chinese footwear-maker, combines humor and foreign beliefs about the poor working conditions in China. On the opening page of its website, Ospop presents a very different China:

China is a nation of industrious, optimistic people creating opportunities for themselves and for their future. Here in the Middle Kingdom and all across the globe, people rise each morning and leave home ready to put in a good day’s work for a fair wage. PROUDLY MADE IN CHINA.

  1. Focus on favorable “nuggets.” Consider whether there are credible items within the broader product category where your country of origin is a plus. China’s cookware company ASD realized that cookware from China does not have great credibility in the world markets. However, China is actually a credible source for products that are associated with the Chinese cuisine – rice cookers and woks, and this may provide a way to enter western markets. An alternative is to associate your brand with a cosmopolitan, dynamic, fashionable city in your country. China’s cosmetics brand Herborist instructed its overseas salespeople to emphasize that Herborist comes from Shanghai, not China. While Western perceptions of China revolve around such words as old, low quality, low trustworthiness, and unsafe. In contrast, Shanghai is associated with cosmopolitan, dynamic, fashionable, fresh-looking, and energetic.
  2. Offer extra guarantees and other types of warranty and services over and above industry norms (1) to reduce purchase risk as consumers can get redress in case the product malfunctions, and (2) to signal to the market that the company stands behind its brands and is committed to quality and consistent improvement. Hyundai has employed this strategy to overcome the considerable reluctance of US and European consumers to purchase its cars. Hyundai was the first in the industry to offer a 10-year/100,000 mile powertrain protection. Its “America’s Best Warranty” program earned consumers’ trust and much free publicity. In slightly more than a decade, Hyundai market share in the US increased fivefold from 1 percent in 1999 to 5.1 percent in 2011.
  3. Emphasize aesthetics and invest in design, since even the most naive consumer can readily observe and experience aesthetic qualities. Aesthetics are more fluid and increasingly important in consumer goods sectors where commoditization looms large. This is what China’s SAIC did to develop Roewe, one of the few indigenous Chinese luxury vehicle marques. Roewe vehicles are largely based on technology and design acquired from the defunct British carmarker MG Rover. For example, the Roewe 750, its first model, is very similar in design to the famous Rover 75. In one stroke, SAIC had solved its design challenge.
  4. Reverse manufacturing. Open a factory in your target market, hire its citizens to run manufacturing, and praise these people as essential to the quality of your brand. State-controlled company China Garments created China’s first luxury men’s apparel brand 社稷/Sorgere by combining Chinese aesthetics with European manufacturing quality. The brand name provides the best of two worlds – China and Italy, 社稷 (“Sheji”) means “nation” and “Sorgere” means “to rise.” The company wants to turn round the old thinking that China can only do processing. Instead, the CEO argues that China isn’t just a global manufacturing center and Italy a global design center. These roles can be mixed.
 Source: Taken by authors in the London subway


Source: Taken by authors in the London subway

7. Invest heavily in marketing. The previous strategies are less inexpensive and indirect means to overcome the country-of-origin disadvantage. The more expensive and straightforward way is to spend heavily on marketing to raise brand awareness and to create positive brand associations, regardless of the country of origin. ThaiBev’s flagship brand, Chang Beer’s  international expansion is focused on Western Europe and the US. It has been the official shirt sponsor of England’s Premier League club Everton since 2004. In 2012, Chang Beer signed three-year sponsorship deals with Spanish soccer giants Barcelona and Real Madrid for $16.5 million.

About the Author

Picture1Professor Nirmalya Kumar is the Professor of Marketing and Director of Aditya Birla India Centre at London Business School.

He has taught at Harvard Business School, IMD (Switzerland) and Northwestern University (Kellogg School of Management).

Nirmalya has written six books, five of which are published by Harvard Business Press: Marketing as Strategy (2004), Private Label Strategy (2007), Value Merchants (2007), India’s Global Powerhouses (2009), and India Inside (2012). Brand Breakout, his next book will be published in 2013.

Prof. Kumar has also worked with more than 50 Fortune 500 companies in 60 different countries.

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