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Report country of origin effect on brand personality for passenger cars

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Brand Personality of Cars.

Brand Personality of Cars.

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  • 1. Testing the Impact of Country of Origin Effect onBrand Personality for Passenger Cars, An empirical Investigation in Indian market. Group Members: Amit Kumar (06), Hussein H. Rassiwalla (20), Manish Kumar (87) GMP: 2010-20111|Page
  • 2. AbstractPurpose: To assess the country of origin (COO) effect on Indian consumer’s brand personalityperception of cars from Japan, South Korea & India. The perceived BRAND PERSONALITYvaries by country of origin of the car. We are trying to consider moderating factor as age groupof respondents. Respondents are grouped into three sub categories based on country of origin. Design/Methodology/ApproachA questionnaire is developed on brand personality scale, segregated into three portions, eachrepresenting cars from three different countries. Respondents in each panel will be exposed to acar with similar feature. The only difference being the country of origin: India, South Korea,Japan. Each panel were randomly assigned to one panel group. The subjects were administeredthe Brand personality scale.FindingsIndian cars are perceived to be simple while Japanese cars are perceived to be more stable,responsible, dynamic, innovative, aggressive and bold. Korean cars are perceived to be moreromantic.Research ImplicationsAn online questionnaire was administered to collect all the measures. This creates a limitation toverify the demographic profile of the respondent. The questionnaire administered depictedpictures of the popular car in a particular category of compact cars.All features affecting thebrand personality are captured through a brand personality scale , which is abridged version oforiginal David Akers scale. Sample size for each country is tried to be captured separately.Practical ImplicationsThe Research finding will help marketers to know brand personality of cars in context of COO.This will help them to Reposition from existing personality traits to new personality traits foundin the research paper.Originality/value - This is the first paper in the Indian context which examines the relationshipbetween the personality of a car based in the context of three major players in the Indian market.Keywords – Brand Personality, Country of origin effect, responsibility, activity, aggressiveness,simplicity & emotionality.Paper type – Research paper2|Page
  • 3. INTRODUCTIONProducts with foreign brand names are frequently associated with the country-of-origin (COO) ofthe brand. The promotion of such brands means, either emphasizing the COO as has been thecase with Hyundai Korea, Suzuki Japan or alternately, ignoring the COO depending on theperception of consumers in the foreign country market.Numerous firms have used positive associations with the COO to good advantage in themarketing of goods, as for example, the favorable association of Germany with beer, Swedenwith cars, and Japan with microelectronics. However, if the COO stereotype is negative, it canpose formidable barriers for marketers attempting to position their goods within a foreignmarket.In yet other cases, there are product categories to distinctively associated with COO image as inthe case of the car industry, where it has been more easy to market global brands such asMercedes, Audi, Toyota, Jaguar for which brand images have developed quite significantly fromtheir COO, and which do not use their national COO association in their promotion andmarketing strategies directly, but it is having a significant impact on mind of consumers.Definitions of the variables used in the project:Personality: According to Gordon Allport, personality is “the dynamic organization within theindividual of those psychophysical systems that determine his unique adjustments to hisenvironment”. For the purpose of our research, we are working with the same definition ofpersonality.Country of Origin: Country where goods shipped were produced. Usually the country of origin isthe same as the country of departure. Also called country of provenance.Responsibility- As enumerated by Geuens, Maggie; Weijters, Bert; De Wulf, Kristof (2008)responsibility encompasses the attributes of Down to earth, Stable and Responsible.Activity- Similarly Activity encompasses the attributes of Active, Dynamic, and InnovativeAggressiveness- Similarly Aggressiveness encompasses the attributes of Aggressive and BoldSimplicity- Similarly Simplicity encompasses the attributes of Ordinary and SimpleEmotionality- Similarly Emotionality encompasses the attributes of Romantic and Simple3|Page
  • 4. LITERATURE REVIEW:Concept of brand personality and its related dimensions seem very useful in assessing not only theoverall effect of the country of origin (COO) on the brand perceptions of consumers but providesadditional information about how and where these differences are perceived. The multi-dimensional scale gives important insight into where exactly the differences reside. Finally, theseresults suggest that in terms of brand building what actions can be taken.The world automobile market has historically been dominated by manufacturers based indeveloped countries. Developed country manufacturers first served their home markets, and thensought exports to, and foreign direct investment in, other developed country markets as well asdeveloping country markets. Consequently, published research in the area of country of origineffects regarding automobiles has usually been conducted using automobiles from developedcountries. However, in the last 20 years, automobiles from manufacturers in newly industrializedcountries such as South Korea and more recently from developing countries such as Brazil,Russia, India and China have increasingly become important players in the world automobilemarket.Learning’s from earlier research paper in US MarketThe United States automobile market has long been an attractive target for foreign automobilemanufacturers. European, Japanese, and more recently South Korean manufacturers are nowsignificant players in the US market. Most recently, for example Indian and Chinese automotivemanufacturers have begun to take aim at developed country automobile markets and they havemade no secret of their intentions to compete in the global automobile market. In the case ofChina, according to the International Organization of Motor Vehicle Manufacturers (OICA),China produced over 8.8 million cars and commercial vehicles in 2007 (OICA, 2008), a 22percent increase over 2006. China has already overtaken Germany to become the third largestautomobile-manufacturing country in the world behind Japan and the United States. In 2007,there were over 310,000 Chinese cars exported worldwide (Kimes,2008). Moreover, they havealso undertaken foreign direct investments. For example, in 2005 Chinese Automotive companyNanjing Automobile Group acquired MG Rover. More recently, in 2009 Sichuan TengzhongHeavy Industrial Machinery acquired the Hummer division of General Motors.General Motors, Ford and Chrysler are currently producing cars in China in joint ventures withChinese manufacturers. It is increasingly likely that developing country automotivemanufacturers and most likely one or more Chinese manufacturers will soon enter the USautomobile market, especially in light of the recent problems that the US automotive industry isfacing. No matter what happens to the three US automotive companies, it is very likely and mostprobably only a matter of time before Chinese automotive manufacturers follow in the steps of4|Page
  • 5. the European, Japanese and South Korean car manufacturers before them and aggressively enterthe US market by either exporting or by building or buying their own production sites in theUSA In addition, as pressure on developed country manufacturers increases to reduce costs, theymight look to China as sources of inexpensive manufacturing and might increasinglymanufacture their cars in China and export them to developed countries. In spite of all this, littleis known about how developed country consumers will react to cars originating from ormanufactured in developing countries. The purpose of this research is to explore this issue. Akey question that arises is how consumers perceive the country of origin of a brand (COB) versusthe country of manufacturing (COM) of that same brand, and specifically where the differencesarise. Extensive research has been conducted addressing the country of origin effect (Dichter,1962; Bilkey and Nes, 1982; Botschen and Hemettsberger, 1998; Verlegh and Steenkamp, 1999).Some studies have focused on cars (Akaah and Yaprak, 1993; Karunaratna and Quester, 2007;Chinen et al., 2000; Johansson et al., 1985; Levin et al., 1993; Roth and Romeo, 1992; Stoltmanet al., 1991;) and very few on the differentiation between country of origin and country ofmanufacturing of a car brands (Chinen et al., 2000; Hamzaoui and Merunka, 2006; Srinivasan etal., 2004). We know of no study that investigates Indian context.The effects of the country of brand 165 consumers’ brand perceptions of developing anddeveloped country cars and analyzes the relationship between the country of origin of a brandand the country of manufacturing of that same brand. Moreover, little is also known about howconsumers’ brand perceptions vary. We investigate this issue by using the multi-dimensionalconstruct of brand personality (( A New Measure of Brand Personality, Maggie Geuens, BertWeijters,Kristof De Wulf) Dec 2008, UNIVERSITEIT, GENT ) as the dependent variable to capture thedifferences and similarities in consumers’ brand perceptions5|Page
  • 6. BRAND PERSONALITYBuilding a strong brand is the aspiration of both all automotive companies. To help understandthe many facets of a brand, we turn to the concept of brand personality. There are multiple scalesavailable to evaluate the personality of a brand. Prominent among them are: 1. Aakers (1996) multi-dimensional, and generalized measurement scale. The five dimensions of which are: (1) brand sincerity, (2) brand excitement, (3) brand competence, (4) brand sophistication, and (5) brand ruggedness. These dimensions are composed of 42 attributes 2. Geuens, Maggie; Weijters, Bert; De Wulf, Kristof (2008) personality scale which has the following dimension: (1) responsibility, (2) activity, (3) aggressiveness, (4) simplicity, and (5) emotionality. These dimensions are composed of 12 attributesAfter having evaluated both the scale in-depth we choose the Geuens, Maggie; Weijters, Bert;De Wulf, Kristof (2008) measurement scale for two main reasons. First, conceptualizingconsumers brand perception using the brand personality dimensions mentioned in this scaleallows us to capture a variety of different facets of an automobile product more accurately.Secondly, this scale is widely accepted as an appropriate method and tool of measurement in thefield of consumer marketing research.Figure below outlines the five brand personality dimensions and 12 measurement items. We usebrand personality as a dependent measure to capture the effects and variability of the country oforigin effect on consumers brand perception of automobiles from India, Japan and Korea.Specifically, it helps us assess the perceived similarities and differences in brand perception ofconsumers of automobiles manufactured from India, Japan and Korea.6|Page
  • 7. CONCEPUTAL MODEL AND HYPOTHESESAs mentioned, brand personality is a multi-dimensional construct with five dimensions,including 12 measurement items. The items are scored on a 5-point Likert-type scale. They aresummed within each dimension. The sums are divided by the number of items within a facet ordimension to form average scores that can theoretically range from 1 to 5. The dimensions willbe used to assess the similarities and differences in the brand perceptions of U.S. consumers toautomobiles manufactured in India, Japan and Korea. The following figure illustrates theresearch framework used.The following general hypothesis is assessed in this paper: HI: The perceived brand personality varies by country of origin of the car.Given that brand personality is conceptualized as a five dimensional construct, HI can besubdivided into micro-related predictions addressing each of the five dimensions of brandpersonality.7|Page
  • 8. The underlying hypotheses of our first hypothesis (HI) studied in this paper can be expressed asthe following: H2: The brand responsibility varies by country of origin of the car. H3: The brand activity varies by country of origin of the car. H4: The brand aggressiveness varies by country of origin of the H5: The brand simplicity varies by country of origin of the car. H6: The brand emotionality perception varies by country of origin of the car.The empirical study designed to examine the proposed hypotheses is described in the nextsection. No hypotheses were made in this paper regarding the impact of the country of origin onbrand awareness as it would be difficult to experimentally manipulate consumers ‘perceptionwith respect to brand awareness.RESEARCH DESIGN AND DATA COLLECTIONAn experiment is developed to test the hypotheses. Automobiles are selected because it is aproduct category in which we expect a significant country of origin effect. We have chosenIndian, Japanese and Korean cars because they are the most popular brand of cars available inIndia. We have chosen the compact car category for comparison because it most widely sold carsegment and is easily identified by the target group. In addition, Indian consumers areaccustomed to selecting from among both domestic and foreign manufactured automobiles.Similar to previous studies (Johansson et al. 1985; Hooly et al. 1988; Stoltman et al. 1991; Rothand Romeo 1992; Peris et al. 1993; Levin et al. 1993; Allred et al. 1999; Pereira et al. 2005),target respondents who participate in the study and are randomly assigned to one of threeexperimental treatment groups – Indian, Japanese or Korean origin cars.Subjects in all three groups are told are to rate the personality attributes of a car of either Indian,Japanese or Korean origin (depending on the panel to which they are assigned) on a 5 pointLikert scale ranging from Strongly Agree to Strongly Disagree.Research Instrument: Self-administered structured web questionnaire.8|Page
  • 9. Research Methodology:3 experimental panel groups  Each respondent was randomly assigned to one panel group  Respondents in each panel will be exposed to a compact car with similar features. The only difference being the country of origin: India, Korea or Japan. The cars chosen to provide as examples were Tata Indica & Vista for India; Maruti Suzuki Swift for Japan & Hyundai Santro for Korea. The selection was based on the sales of the brands i.e. the top performing cars in terms of annual sales in the compact car category for each of the country of origin was chosen.  The subject will be administered the Brand personality scaleSample size – Total 143  India Panel – 49 respondents  Japan Panel – 47 respondents  Korea Panel – 47 respondentsThe total number or respondents contacted were as follows  India – 200 respondents  Japan – 200 respondents  Korea – 250 respondentsTherefore the response rates were as follows  India – 24.5%  Japan – 23.5%  Korea – 18.8%Respondent Profile:  Prospective buyer (within next 6 months to 1 year)  Age group : 25-40 yrs  SEC A,B9|Page
  • 10. Centre of study: Pan IndiaMeasures  Demographic factors like Age  Intent to purchase car within the next 6 months to 1 year  Likert-type scale o 12 - item Brand Personality scale of Geuens, Maggie; Weijters, Bert; De Wulf, Kristof (2008)10 | P a g e
  • 11. ANALYSIS AND DISCUSSION OF RESULTSFirst we have examined the reliability of the questionnaire by applying Cronbach Alpha Test on thequestions. For our set of 15 questions, the overall Cronbach Alpha value was 0.773, which is fairly goodand it can be concluded that our set of questionnaire was reliable. For all the questions, the individualCronbach Alpha value was above 0.74 and this further lends strength to the above conclusion. The SPSSoutput table of Cronbach Alpha values is cited below. Scale Mean Scale Corrected Squared Cronbachs if Item Variance if Item-Total Multiple Alpha if Item Deleted Item Deleted Correlation Correlation DeletedPlease select your Age 32.79 43.519 .095 .100 .779Do you intend to purchase acar within the next 6 month to 33.66 46.213 -.260 .173 .7931 year?How do you perceive the 32.77 37.573 .479 .464 .751quality of cars of Indian origin?Down to earth 32.87 42.412 .127 .459 .781Stable 33.10 39.897 .486 .510 .754Responsible 32.97 39.992 .431 .459 .757Active 33.02 37.542 .646 .709 .739Dynamic 33.04 37.125 .581 .727 .742Innovative 32.83 37.183 .551 .654 .744Aggressive 32.53 36.645 .519 .678 .746Bold 32.41 36.947 .554 .555 .743Ordinary 32.10 41.827 .124 .570 .786Simple 32.55 42.883 .076 .508 .78611 | P a g e
  • 12. Romantic 32.24 35.197 .608 .531 .736Sentimental 32.39 38.634 .467 .453 .753 Cronbachs Alpha Based on StandardizedCronbachs Alpha Items N of Items .773 .750 15Next, the effect of country of origin on the brand personality was analyzed by MANOVA. Brand F P India Japan KoreaPersonality Mean SD Mean SD Mean SDDown to 2.241 .110 2.14 .866 2.09 .803 2.45 .996earthStable 3.161 .045 2.16 .746 1.81 .770 1.98 .531Responsible 3.664 .028 2.33 .875 1.91 .717 2.13 .612Active 8.073 .005 2.43 .935 1.94 .734 1.83 .637Dynamic 11.141 .005 2.51 1.023 1.94 .965 1.68 .594Innovative 11.620 .005 2.73 1.076 1.85 .908 2.17 .702Aggressive 10.523 .005 3.10 1.005 2.23 1.108 2.32 .958Bold 8.585 .005 3.14 1.000 2.45 .904 2.45 .951Ordinary 1.815 .167 2.76 1.090 3.15 1.063 3.06 1.051Simple 6.392 .002 2.16 .773 2.72 .994 2.74 .943Romantic 3.314 .039 3.18 1.253 2.72 1.057 2.64 1.031Sentimental .302 .740 2.76 .879 2.62 .922 2.72 .926Since, we are testing the effect of country of origin on brand personality parameters in the ConfidenceInterval of 95%, the rows highlighted in yellow in the above table fall outside the level of significance.This implies that the respondents don not perceive these personality traits as significantly different interms of country of origin.Also, it can be inferred that –  Indian cars are perceived to be simple.  Japanese cars are perceived to be more stable, responsible, dynamic, innovative, aggressive and bold.  Korean cars are perceived to be more romantic.12 | P a g e
  • 13. Also, since the WIlk’s Lambda value in the intercept is as low as 0.035, it means that the groups are wellseparated and their means are significantly different. Multivariate TestscEffect Value F Hypothesis df Error df Sig.Intercept Pillais Trace .965 2.996E2a 12.000 129.000 .000 Wilks Lambda .035 2.996E2a 12.000 129.000 .000 Hotellings Trace 27.866 2.996E2a 12.000 129.000 .000 Roys Largest Root 27.866 2.996E2a 12.000 129.000 .000Country Pillais Trace .455 3.192 24.000 260.000 .000 Wilks Lambda .595 3.183a 24.000 258.000 .000 Hotellings Trace .595 3.175 24.000 256.000 .000 Roys Largest Root .360 3.902b 12.000 130.000 .000a. Exact statisticb. The statistic is an upper bound on F that yields a lower bound on the significance level.c. Design: Intercept + CountryNext, we tested our hypotheses by clubbing these individual parameters into 5 separate traits on theBrand Personality Scale. The results are: Brand F p India Japan KoreaPersonality Mean SD Mean SD Mean SDResponsible 3.313 .039 3.313 .039 5.809 .251 6.553 .251Active 12.201 .000 7.673 .324 5.723 .330 5.681 .330Aggressive 11.633 .000 6.245 .256 4.681 .261 4.766 .261Simple 4.451 .013 4.918 .251 5.872 .256 5.809 .256Emotional 1.739 .179 5.939 .256 5.340 .261 5.362 .261Since we are testing the data in 95% Confidence Interval, The Emotional factor is not significant to therespondents. So, we reject our null hypothesis H6. Since, other personality factors are significant, we can13 | P a g e
  • 14. say that our null hypotheses H2, H3, H4, and H5 are supported by the data. The four multivariate testcriteri results for this analysis are reproduced in the table below: Multivariate TestscEffect Value F Hypothesis df Error df Sig.Intercept Pillais Trace .964 7.218E2a 5.000 136.000 .000 Wilks Lambda .036 7.218E2a 5.000 136.000 .000 Hotellings Trace 26.537 7.218E2a 5.000 136.000 .000 Roys Largest Root 26.537 7.218E2a 5.000 136.000 .000Country Pillais Trace .281 4.474 10.000 274.000 .000 Wilks Lambda .729 4.659a 10.000 272.000 .000 Hotellings Trace .359 4.843 10.000 270.000 .000 Roys Largest Root .317 8.690b 5.000 137.000 .000a. Exact statisticb. The statistic is an upper bound on F that yields a lower bound on the significance level.c. Design: Intercept + CountryThus, it can be inferred that –  Indian cars are perceived to be simple.  Japanese cars are perceived to be more responsible, active and aggressive.14 | P a g e
  • 15. IMPLICATIONSIn some sense, our results can be interpreted as prescriptive, suggesting areas of relativesimilarity and difference between Korean, Japanese, and Indian cars. Indian manufacturers ofcars and perhaps of other high involvement products as well, may wish to consider thedimensions by which their products differ significantly from Korean and Japanese products.They might consider developing product repositioning strategies that attempt to change Indianconsumers brand perceptions of their products to be moreSimilar to perceptions of Korean and Japanese products. For example, since our results suggestthat the Indian car is perceived as less dynamic, innovative & aggressive. Indian manufacturersmay wish to develop marketing strategies that attempt to address and change these perceptions.Given the impressive growth and development of world class manufacturing in emerging marketcountries like China and India, it is important to begin to understand the likely consumerperceptions of high involvement products originating from these countries. While this paperoffers an empirical glimpse of potential issues facing emerging market country car manufacturersfrom India. Marketers can infer from empirical data how they will compete with other majorAsian car manufacturing companies in south East Asia.Indian Cars considered in compact segment is perceived as ordinary.15 | P a g e
  • 16. LIMITATIONSThis study was done mostly on people in age bracket of 25-50 mostly IT professionals. This maygive the preferences of a certain segment only and the results may not be appropriate togeneralize the color preference of potential car buyers.Second , a consumer existing perception and awareness may dictate his responses. Third, in casethe respondent already owns a car or someone in his/her family owns one, and then this alsomight influence the choice he/she makes in buying the second car. The present questionnairedoes not address this factor and so it can be taken up for research in the future.The size of the sample is 143 respondents. This is a small number especially if we consider thatit comprised 3 panes. Thus, the results do not necessarily hold for the entire population and assuch there is further scope to carry out detailed studies with a much higher sample size.In summary, despite the above stated limitations the research provides new insights into theeffect of county of origin on the brand personality of cars. This finding finds its implications forthe marketers might consider product repositioning strategies that attempt to change or reinforceconsumer brand perception. Advertisers can also use the same to tailor their communication.FURTURE DIRECTIONSFuture research should make use of a broader respondent base as well as samples from differentdemographics to more fully understand consumers brand perception of cars from differentcountriesTherefore, further research should not only take into account a broader base of respondents from,but also different automotive manufacturers from different geographical regions such as EasternEurope and South America to assess the similarities and difference between consumer brandperception of automobiles. It would also be interesting to compare consumer perceptions of otheremerging market car manufacturing countries such as Malaysia or Brazil.Future research might also investigate the interaction between pre-knowledge of consumers ofother Chinese or Indian -made brands and products and how this influences the brand perceptionand purchasing behavior of consumers.16 | P a g e
  • 17. REFERENCES 1. Aaker, J. 1995. Dimensions of brand personality. Journal of of Marketing Research 34(3): 347-356. 2. Geuens, Maggie; Weijters, Bert; De Wulf, Kristof. International Journal of Research in Marketing, Jun2009, Vol. 26 Issue 2, p97-107, 11p; 3. Roth, M., and J. Romeo. 1992. Matching product category and country image perceptions: a framework for managing country-of-origin effects. Journal of International Business Studies 23(3): 477-49 4. Stoltman, J.J., Y.K. Lim, and F.W. Morgan. 1991. The effect of country of origin, product familiarity and ethnocentrism on the acceptance of foreign products. Marketing Theory and Applications, Academy of Marketing Winter Educators Conference, 82-89. 5. Strutton, D., L.E. Pelton, and J.R. Lumpkin. 1994. Internal and external country of origin stereotypes in the global marketplace: Effects and implications for the domestic promotion of US automobiles Journal of Global Marketing 7(3): 61-77. 6. Neelam Kinra, The effect of country-of-origin on foreign brand names in the Indian market Marketing Intelligence & Planning Vol. 24 No. 1, 2006 pp. 15-30 7. Marc Fetscherin & Mark Toncar Country of Origin Effect on U.S. Consumers Brand Personality Perception of Automobiles from China and India. Vol 17 Number 2, The Multinationa business review. 8. A New Measure of Brand Personality, Maggie Geuens, Bert Weijters, Kristof De Wulf Dec 2008, UNIVERSITEIT, GENT 9. Bilkey, W., and E. Nes. 1982. Country of Origin Effects on Product Evaluations. Journal of International Business Studies 8: 89-99. 10. Brodowsky, Glen H., Justin Tan, and Ofer Meilich. 2004. Managing country of origin choices: Competitive advantages and opportunities. International Business Review 13(6): 729-74817 | P a g e
  • 18. QUESTIONNAIREThis survey is part of our academic project in Market Research. Request 5 minutes of your timein responding to the survey. Thank you in advance. We are trying to find Country of origin effecton Brand Personality for Cars. Cars considered are mainly from Japanese / Korean/ Indianmarket.18 | P a g e