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© [2013]

Ahmet Bayraktar

ALL RIGHTS RESERVED

UNDERSTANDING THE EFFECT OF COUNTRY EQUITY ON CONSUMER-

BASED BRAND EQUITY: A FOUNDATION TO COUNTRY BRANDING

STRATEGIES

by

AHMET BAYRAKTAR

A dissertation submitted to the

Graduate School-Newark

Rutgers, The State University of New Jersey

in partial fulfillment of the requirements

for the degree of

Doctor of Philosophy

Graduate Program in Management

written under the direction of

Sengun Yeniyurt

and approved by

________________________

Sengun Yeniyurt

________________________

Lei Wang

________________________

Can Uslay

________________________

Goksel Yalcinkaya

Newark, New Jersey.

May, 2013

ii

ABSTRACT OF THE DISSERTATION

UNDERSTANDING THE EFFECT OF COUNTRY EQUITY ON CONSUMER-

BASED BRAND EQUITY: A FOUNDATION TO COUNTRY BRANDING

STRATEGIES

By AHMET BAYRAKTAR

Dissertation Director:

Sengun Yeniyurt

The notion “brand equity” has recently been extended to countries by researchers

proposing the concept “country equity.” They suggest that countries, like brands, have

equity, which affects consumers‟ evaluative judgments of their products. Country equity

is defined as the value that consumers associate with the name of a country. Despite the

prolific research on both country of origin (COO) and brand equity over the past few

decades, the extant marketing literature does not explain whether consumer-based equity

of a brand is linked to the equity of its COO. Furthermore, whether this effect holds

across different cultures is an important issue to be addressed.

The purpose of this dissertation is four-fold. The first objective is to examine the

effect of country equity on consumer-based brand equity and understand the mechanism

that explains the process. In this context, seven variables are examined as the potential

moderators of the country equity effect. The second goal is to examine whether the

country equity effect holds across different cultures. The third objective is to contribute to

our understanding of country equity and brand equity constructs by developing new and

iii

more comprehensive measures. The final objective is to introduce the relatively new

concept “consumer mindfulness” to consumer behavior and international marketing

literature and examine its role as the potential moderator of COO effect.

This dissertation utilized survey method in order to test the structural soundness of

the proposed model and 18 propositions that have been developed mainly based on

associative network memory (ANM) model, cue evaluation theory, categorization theory

and hierarchy of effects model. The data was collected from convenience samples of 509

college students in Turkey and the United States. Structural Equation Modeling (SEM)

was used to test the proposed conceptual model and relationships among the constructs.

From a managerial perspective, the results of this dissertation suggest that country

equity represents an important part of the competitive advantage of firms in global

markets. More specifically, it suggests that the mere association of products with a

particular country significantly influences consumers‟ brand image and quality

perceptions, brand loyalty and willingness to pay a price premium. In this context, while

firms with high country equity might achieve competitive advantage in the global

markets and have strong bargaining power with channel members, firms with low

country equity might face significant problems.

Whether positive or negative, developed intentionally or by default, every country

has equity. The strategic management of country equity and the recognition of its

significance will be key to successful global marketing in the years ahead in which the

global competition is expected to rise further. Considering the effect of country equity on

consumer-based brand equity and the strategic role of country equity in global marketing,

iv

this research suggests that three key groups, namely, government, industry groups and

individual firms should manage country equity and seek strategies to increase it in order

to help firms from that country develop strong brand equity in the global markets,

overcome entry barriers in foreign markets, have strong bargaining power with channel

members, and be less vulnerable to fierce global competition.

v

Acknowledgement

I would like to thank Dr. Sengun Yeniyurt, my advisor and committee chair. His ongoing

understanding, mentoring, and enthusiastic support were invaluable during my whole

doctoral pursuing process. It gives me a great pleasure to acknowledge here his

contributions to my academic life. His knowledgebase and critical mind motivated me to

achieve success in my doctoral education.

I would also like to convey my deepest gratitude to Dr. Can Uslay, Dr. Lei Wang and

Dr. Goksel Yalcinkaya for serving on my committee and for their exceptional

mentorship, encouragement and precious comments and feedbacks. I appreciate the

assistance provided by Sengun Yeniyurt, Can Uslay, Erich Toncre, Aparna Krishnan,

Sitki Gulten and Seyfullah Turkmen in the data collection. I would like to thank Goncalo

Filipe for his continuous help during my doctoral education. Finally, I would like to

convey my deepest gratitude to my sponsor, Turkish government.

This work is dedicated to my mother and father, Halime and Mehmet Bayraktar. I

convey my sincere appreciation to them for their never-ending prayers and support. Also,

many thanks to everyone else who stood by me.

vi

Table of Contents

Abstract …………………………………………………………………………………..iii

Acknowledgement ……………………………………………………………………….vi

List of Tables ……………………………………………………………………………..x

List of Figures ……………………………………………………………………………xi

Chapter 1 Introduction …………………………………………………………………...1

Chapter 2 Literature Review …………………………………………………………….6

2.1 Country of Origin Effect ……………………………………………………………...6

2.2 Conceptualization of Country of Origin …………………………………………….. 8

2.3 Country Equity .……………………………………………………………………….9

2.4 Consumer-based Brand Equity ……………………………………………………...22

2.5 The Proposed Model ………………………………………………………………...28

2.5.1 Associative Network Memory Model ……………………………….……….28

2.5.2 Cue Evaluation Theory ……………………………………………..………...30

2.5.3 Categorization Theory …………………………………………………….….32

2.5.4 Hierarchy of Effects Model …………………………………………………..35

2.6 Moderators ………………………………………………………………………..…37

2.6.1 Consumer Mindfulness …………………………………………..…………...37

2.6.2 Product Familiarity and Product Complexity ……………………..…….……41

2.6.3 Product Performance/Health Risk Level and Product Importance

and Value ……………………………………………………………………..43

vii

Chapter 3 Methodology …………………………………………………………….…..47

3.1 Research Method and Sample ……………………………………………………….47

3.2 Questionnaire Design ……………………………………….…………………….…49

3.3 Construct Measurement …………………………………..…………………………51

3.3.1 Attitude-based Country Equity ………………….……………………………51

3.3.2 Intention-based Country Equity ………………………………………………53

3.3.3 Attitude-based Brand Equity ……………..………………………………..…54

3.3.4 Intention-based Brand Equity ……………..………………………………….54

3.3.5 Consumer Mindfulness ………………….……………………………………56

3.3.6 Other Moderators ……………………….…………………………………….57

3.4. Measurement Reliability and Validity ……………………………………………...59

Chapter 4 Results ……………………………………………………………………….70

4.1 Main Effects ………………………………………………………………………....70

4.2 Moderation Effects …………………….………………………………………….…75

Chapter 5 Conclusion and Discussion ……...…………………………………………..79

5.1 Conclusion ………………………………….……………………………………….79

5.2 Discussion ………………………………………………………………………...…81

5.3. Future Research ……………………………………………………………….……91

Bibliography ……………………………………………………………………………95

viii

Appendix A ……………………………………………………………………………106

Appendix B …………………………………………………………………………....112

Appendix C ……………………………………………………………………………113

Appendix D ……………………………………………………………………………114

Appendix E ……………………………………………………………………………115

Appendix F ……………………………………………………………………………116

Appendix G ……………………………………………………………………………118

Curriculum Vitae ……………………………………………………………..………119

ix

List of Tables

Table 1: Overview of Literature on Country Equity …………………………………….12

Table 2: Overview of Studies Incorporating Mindfulness Concept

into Marketing Research ……………………………………………………….38

Table 3: Demographic Profile of the Sample ……………………………………...……47

Table 4: Scale for Attitude-based Country Equity ………………………………………52

Table 5: Scale for Intention-based Country Equity ……………………………………..53

Table 6: Scale for Attitude-based Brand Equity ……...……………………….…...……55

Table 7: Scale for Intention-based Brand Equity …………………………………..……56

Table 8: Scale for Consumer Mindfulness ………………………………………………57

Table 9: Items Included in the Scales for Other Moderators ……..……………………..58

Table 10: Variables Measurement ………………………………………………………61

Table 11: Measurement Model of Brand Equity ………………………..………………64

Table 12: Measurement Model of Country Equity ……………………………………...66

Table 13: Measurement Model of Consumer Mindfulness ………………………..……67

Table 14: Measurement Model of Other Constructs …………………………………….67

Table 15: Correlation Matrix ……………………………………………………………68

Table 16: Results of Moderation Effects ………………………………………………..76

x

List of Figures

Figure 1: Attitude-based and Intention-based Country Equity ………………….………19

Figure 2: Attitude-based and Intention-based Brand Equity ……………………………28

Figure 3: The Moderating Role of Consumer Mindfulness ………………………..……41

Figure 4: The Model of the Proposed Relationships ……………………………………45

Figure 5: Full Model (ALL DATA) …………………………………….…………….…71

Figure 6: Full Model (Turkey) ………………………………………….………….……73

Figure 7: Full Model (USA) …………………………………………………………….74

Figure 8: The Moderating Role of Product Health Risk Level ………….………………78

Figure 9: The Moderating Role of Product Performance Risk Level ………………...…78

1

Chapter 1

Introduction

For the past three decades, the effect of products‟ country of origin (COO) on consumer

behavior has been one of the most widely studied phenomena in marketing and consumer

behavior literature. Although Dichter (1962) was the first who argued that a product‟s

country of origin might have influence on its acceptance and success, Schooler (1965)

was the first who empirically tested the notion. He found that the “made in” labels

created significant differences in the evaluation of products that were identical in all other

aspects. There have been over 1.000 published studies, several books (e.g. Papadopoulos

and Heslop 1993) and meta-analyses (e.g. Bilkey and Nes 1982; Ozsomer and Cavusgil

1991; Baughn and Yaprak 1993; Verlegh and Steenkamp 1999; Pharr 2005) dedicated to

this stream of research. While some researchers have found that a product‟s COO

significantly affects consumer evaluations, others have found modest effect. Despite the

significant interest in COO, a few studies have examined its effect on consumer-based

brand equity (e.g. Pappu, et al., 2007).

Many studies in COO literature have examined the effect of country image on

consumers‟ product evaluations and judgments. Particularly, they examine how the

development level of a country influences consumers‟ quality perceptions of products

originated from or made in that country. That is, these studies have focused on “quality

perception” as the dependent or outcome variable. In these studies, origin information, an

extrinsic cue, has been regarded as a signal for product quality perceptions. However, the

effect of COO cannot be explained entirely by a quality signaling process (Verlegh and

2

Steenkamp, 1999; Sharma, 2011; Pharr, 2005). In addition to its role as a signal for

quality, this extrinsic cue has symbolic and emotional meanings to consumers (Verlegh

and Steenkamp, 1999; Li and Wyer, 1994; Hong and Wyer, 1989). Country of origin of a

product may sometimes serve as a way to reflect patriotism (Batra, et al., 2000; Sharma,

2011; Balabanis and Diamantopoulos, 2004; Lantz and Loeb, 1996; Jimenez and Martin,

2009), social status (Batra et al., 2000; Verlegh and Steenkamp, 1999), authenticity and

exoticness (Verlegh and Steenkamp, 1999). Furthermore, avoiding products from certain

country of origins reflect consumer animosity (Sharma, 2011; Pharr, 2005; Jimenez and

Martin, 2009). In addition, COO associates a product to a developed and rich country

imagery, with sensory, affective and ritual connotations (Askegaard and Ger, 1998).

Considering these findings, we can argue that using “consumer-based brand equity,” a

multi-dimensional construct, as a dependent measure or an outcome variable will

contribute more to our understanding of COO phenomenon.

In global marketing, perceptions about and attitudes toward particular countries often

extend to brands originated from these countries. Brand equity refers to the value

associated with a brand name, as reflected in the dimensions of brand awareness, brand

associations, perceived quality and brand loyalty (Pappu, et al., 2007). This notion has

recently been extended to countries by researchers proposing the concept “country

equity.” They suggest that countries, like brands, have equity, which affects consumers‟

evaluative judgments of their products. It is defined as the value that consumers associate

with the name of a country (Pappu and Quester, 2011). In another definition, country

equity is “the value-added brought forth by the association of a product or brand with a

given country name, as perceived by the individual consumer” (Zeugner-Roth et al.,

3

2008: p. 583). Country equity is a broad construct that also includes country image. The

deductions from COO and country equity literature suggest that examining the effect of

country equity, instead of country image, on consumer product evaluations will yield

better results and have more significant managerial and practical implications.

Despite the prolific research on both COO and brand equity over the past few

decades, the extant marketing literature does not explain whether consumer-based equity

of a brand is linked to the equity of its country-of-origin. Furthermore, whether this effect

holds across different cultures is an important issue to be addressed. Therefore, this study

examines the effect of country equity on consumer-based brand equity, and the

mechanism that explains the process. Furthermore, it examines whether this effect holds

across different cultures.

Research argues that three key groups, namely, government, industry groups and

individual firms, play significant role in managing country equity (Papadopoulos and

Heslop, 2002). These three groups employ “country branding strategies” in order to

achieve a variety of objectives, including enhancing country brand image and

repositioning country brands (Pappu and Quester, 2010). The findings of this study have

significant implications for these three groups. Determining the dimensions of country

equity and brand equity constructs and the relationships between them as well as the

factors that influence the process will be useful for these groups to develop better

strategies and to improve the equity of their brands. In other words, determining how

country equity influences consumer-based brand equity will be of significance for these

groups in order to manage “country branding activities.”

4

This study suggests that the strategic management of country equity and the

recognition of its significance will be the key to successful global marketing and

corporate strategies in the years ahead. In other words, country equity will be a valuable

tool for differentiating brands in the global marketplace. In today‟s business world, the

nature of the hyper-competitive global marketplace and the easiness of product imitation

with new technologies are gradually forcing firms, industry groups and governments to

consider their country equity and develop strategies to manage it successfully. While

competing firms from other countries can imitate products, services, technologies and

processes, they cannot copy well-managed country branding strategies and country

equity. Understanding the effect of country equity on brand equity and the mechanism

that explains the process can help firms, industry groups and governments control and

manage their country equity and use it strategically to increase the equity of their brands.

Therefore, this study contributes to our understanding of the factors influencing brand

equity in the international context.

The purpose of this dissertation is four-fold. The first objective is to examine the

effect of country equity on consumer-based brand equity and understand the mechanism

that explains the process. In this context, seven variables that were expected to moderate

the country equity effect have been examined. These variables are consumer mindfulness,

product familiarity, product complexity, product health/performance risk level, product

importance and perceived product value. The second goal is to examine whether this

effect holds across different cultures. The third objective is to contribute to our

understanding of country equity and brand equity constructs by developing new and more

5

comprehensive measures. The final objective is to introduce the relatively new concept,

“consumer mindfulness,” and examine its role as a moderator of COO effect.

6

Chapter 2

Literature Review

2.1 Country of Origin Effect

Consumers‟ evaluative judgments of products are based on their evaluation of intrinsic

(e.g. design, color and shape) and extrinsic (e.g. price, brand name and country of origin)

product cues (Manrai et al., 1998; Klenosky et al., 1996). A large number of studies have

shown that extrinsic cues act as signals for product quality. In many COO studies, origin

information, an extrinsic cue, has been regarded as a signal for product quality

perceptions. However, the effect of COO cannot be explained entirely by a quality

signaling process (Verlegh and Steenkamp, 1999; Sharma, 2011; Pharr, 2005). In

addition to its role as a signal for quality, this extrinsic cue has symbolic and emotional

meanings to consumers (Verlegh and Steenkamp, 1999; Li and Wyer, 1994; Hong and

Wyer, 1989). Whichever role it plays, COO has been found to influence consumer

evaluations and preferences significantly (Han, 1989; Sharma, 2011; Srinivasan et al.,

2004; Johansson et al., 1985; Ettenson et al., 1988; Insch and McBride, 1998; Chowdhury

and Ahmed, 2009). Furthermore, it is an important source of brand equity (Hamzaoui et

al., 2011; Pappu and Quester, 2010; Yasin et al., 2007).

Based on the discussion above, country of origin has three aspects: cognitive

(Obermiller and Spangenberg, 1989; Verlegh and Steenkamp, 1999; Klenosky et al.,

1996; Srinivasan et al., 2004), affective (Batra et al., 2000; Sharma, 2011; Obermiller and

Spangenberg, 1989; Hong and Wyer, 1989; Balabanis and Diamantopoulos, 2004; Lantz

and Loeb, 1996) and normative aspects (Verlegh and Steenkamp, 1999; Sharma, 2011;

7

Pharr, 2011; Jimenez and Martin, 2009). As a cognitive cue, COO influences consumer

product evaluations through “halo effect” and “summary construct.” Under the halo

effect, consumers make inferences about the quality of products based on their perception

about the origins of products (Manrai et al., 1998; Jimenez and Martin, 2010; Han, 1989).

Under the summary construct, country image becomes a construct that summarizes

consumers‟ beliefs about product attributes and directly influences their perceptions of

brands. Affective aspects of COO refer to its symbolic and emotional meanings.

Specifically, COO may link a brand to status (Sharma, 2011; Batra et al., 2000),

authenticity, exoticness and a sense of national identity and pride (Sharma, 2011;

Balabanis and Diamantopoulos, 2004; Lantz and Loeb, 1996). Normative aspects of COO

refer to the fact that preference of brands from a certain country may be perceived as an

endorsement of its policies, practices and actions (Sharma, 2011). Therefore, animosity

toward a particular country may lead consumers to develop negative attitudes toward the

brands from that country or to punish that country by boycotting its products (Klein et al.,

1998; Yuksel and Mryteza, 2009; Sandikci and Ekici, 2009). Similarly, ethnocentrism

(Jimenez and Martin, 2010; Balabanis and Diamantopoulos, 2004; Klein et al., 1998),

consumer affinity (Oberecker et al. 2008) and home country bias (Zeugner-Roth et al.,

2008) may influence consumers‟ evaluations and judgments.

Based on the extant literature, the antecedents of COO effect can be classified as

“internal” and “external” antecedents. Internal antecedents refer to measurable

characteristic dispositions within individuals such as beliefs or “psychographic

dimensions” (Pharr, 2005: p. 35) that explain variance in COO influence. In other words,

part of the variance in COO influence stems from certain traits within consumers. The

8

followings are the internal COO antecedents derived from the relevant literature:

ethnocentrism, domestic country bias, consumer animosity, materialism,

individualism/collectivism, country stereotypes, value consciousness and conservatism.

External antecedents refer to structural dimensions or features of the target country to

explain variance in COO influence. In other words, some part of variance in COO effect

stems from certain structural features of the target country, a source outside consumers.

The external COO antecedents derived from the extant literature are as follows: macro

country image, micro country image, country image, economic development,

technological development, political development, country loyalty and perceived quality

of country brands.

2.2 Conceptualization of Country of Origin

The conceptualization of country of origin in the extant literature varies across studies.

While most studies define COO as the country where the product is actually made, some

other studies define it as the country to which the brand is perceived to belong by its

target consumers. The former has been termed in different ways such as COO (Li et al.,

1993; Li et al., 1994; Irwin et al., 1993; Li and Wyer, 1994; Ettesson et al., 1988),

branded product of origin (Aurier and Fort, 2007), product origin (Cattin et al., 1982; Lee

et al., 2009), country of manufacture (Hamzaoui-Essoussi et al., 2011), country of

assembly (Chao, 1993; Jun and Choi, 2007; Insch and McBride, 2004; Chowdhury and

Ahmed, 2009; Paul, 1993), and manufacturing country (Srinivasan et al., 2004).

Similarly, the latter has been termed in various ways such as COO (Erickson et al., 1984;

Jimenez and Martin 2010; Johansson, et al. 1985; Han 1989; Zeugner-Roth, et al. 2008),

9

brand origin (Thakor and Kohli, 1996; Lee et al., 2009; Hamzaoui-Essoussi et al., 2011;

Thakor and Lavack, 2003; Kim and Chung, 1997; Shukla, 2011), branding country

(Srinivasan et al., 2004), country of brand headquarters (Chen, 2004; Madden, 2003),

country of brand (Lee and Bae, 1999), and country of brand origin (Yasin et al., 2007). In

addition to these two conceptualizations of country of origin, other definitions can be

seen in the extant literature such as country of parts (Chowdhury and Biswas, 2011;

Chowdhury and Ahmed, 2009; Insch and McBride, 2004; Chao, 1993), which refers to

the country where the parts of a product come from, and country of corporate ownership

(Thakor and Lavack, 2003), which refers to the nationality of those that own the product.

Finally, country of design (Chao, 1993; Jun and Choi, 2007; Insch and McBride, 2004;

Chowdhury and Ahmed, 2009; Chowdhury and Biswas, 2011) refers to the country

where the product is originally designed. On the other hand, in many studies (e.g. Batra et

al., 2000; Auger et al., 2010; Pappu et al., 2007; Sharma, 2011; Baldauf et al., 2009;

Balabanis and Diamantopoulos, 2004), the conceptualization of COO is not clear. In

other words, which form of origin definition the authors refer to is not evident in a great

number of COO studies. In this dissertation, COO is defined as the country where the

product is actually made.

2.3 Country Equity

The term brand equity refers to the value associated with a brand name, as reflected in the

dimensions of: brand awareness, brand associations, perceived quality and brand loyalty

(Pappu et al., 2007). This notion has been extended to countries by researchers proposing

the concept “country equity.” Research suggests that country equity is the value that

consumers associate with the name of a country (Pappu and Quester, 2010). In the

10

literature, different terms have been used to refer to country equity. For example,

Maheswaran and Chen (2006) use the term “nation equity” to refer to this concept.

Similarly, Jun and Choi (2007) use the term “country brand” to represent a country‟s

equity. Finally, Zeugner-Roth et al. (2008) approach the notion of country equity from

individual consumer perspective and use the term “country brand equity” to refer to it.

They define country equity as “the value-added brought forth by the association of a

product or brand with a given country name, as perceived by the individual consumer” (p.

583).

The main logic behind the country equity construct is that a country is like a

corporation that manufactures many different products, and enjoys various equity profiles

in different product categories across different markets. The name of a country can often

act in similar way as the name of a brand (Anholt, 2002) and hence, add to or subtract

from the perceived value of a product (Aaker, 1991; Keller, 1993). For example, products

made in Japan or the USA are generally evaluated much more favorably by consumers

than products made in Hungary or Malaysia, due to the high reputation of the former

countries as manufacturer of products in certain categories. Consequently, it can be

considered that countries whose names generate positive associations also include

positive country equity (Zeugner-Roth et al., 2008).

Country equity is of significant importance not only for entering foreign markets

(Shimp, Samiee and Madden, 1993) but also for attracting tourists, foreign direct

investment (FDI) and even talented people (Kotler and Gertner, 2002). In this respect, the

literature review suggests that country equity can be viewed from three perspectives.

First, countries can engage in improving their image as a tourist destination (Kotler and

11

Gertner, 2002). Second, countries can attempt to improve their image as an attractive FDI

location (Papadopoulos and Heslop, 2002). Third, countries can develop an image in

foreign markets as manufacturers of quality products or producers of favorable brands

(Shimp et al., 1993). The present study adopts the third perspective.

In an extensive literature review on COO, country branding and place branding,

seventeen studies mentioning or referring to the construct of country equity have been

detected. As can be seen in Table 1, five of these studies do not contain a conceptual

definition of country equity, and only three of them propose potential dimensions of

country equity. Furthermore, only two of these studies contain concrete scale of country

equity and only one of them examines the effect of country equity.

A comparison of different conceptualizations of country equity demonstrated in Table

1 reveals that thirteen of the studies (e.g. Shimp et al., 1993) refer to country equity at the

consumer level, meaning that they are mainly interested in the differential effect of the

COO as a non-physical product attribute on consumer behavior. An example for such a

conceptualization is given by Iversen and Hem (2001, p. 141) who define country equity

as “commercial value that a country possesses due to positive or negative product related

associations and affect in a given target market.” On the other hand, four studies (e.g.

Papadopoulos, 2004; Kotler and Gertner (2002) refer to country equity at the country

level and conceptualize it in terms of general assets and liabilities that a country has

(Zeugner-Roth et al., 2008). An example for such a conceptualization is provided by

Papadopoulos (2004, p. 43), who defines country equity as “the real and/or perceived

assets and liabilities that are associated with a place (country) and distinguish it from

others.” In another conceptualization at the country level, country equity is “the value

12

Table 1: Overview of Literature on Country Equity

Author

Definition

Conceptu

alization

Level

Dimensions

Scale

Shimp, Samiee and Madden

(1993, p. 328)

“Country equity serves to disentangle the equity

contained in a brand […] from that contained in the

country with which the brand is associated”

Consumer

Level

n.a.

No

Kim (1995) n.a. Consumer

Level

n.a. No

Thakor and Katsanis (1997) n.a. Consumer

Level

n.a. No

Pappu and Quester (2001,

p. 2)

“The value endowed by the name of the country on to a

product”

Consumer

Level

Country Awareness,

Country

Associations,

Country Loyalty,

Perceived Quality

No

Iversen and Hem (2001, p.

141)

“Commercial value that a country possess due to positive

or negative product related associations and affect in a

given target market”

Consumer

Level

n.a.

No

Kotler and Gertner (2002) n.a. Country

Level

n.a. No

Papadopoulos and Heslop

(2002, p. 295)

“The value that may be embedded in perceptions by

various target markets about the country, and the ways in

which these perceptions may be used to advance its

interests and those of its constituents”

Country

Level

n.a.

No

Kleppe, Iversen and

Stensaker (2002, 62)

“That portion of consumer affect toward a brand or

product that is derived purely from the product‟s

associations with a particular country.”

Consumer

Level

n.a.

No

Papadopoulos and Heslop

(2003, p. 427)

“A set of country assets and liabilities linked to a

country, its name and symbols, that add to or subtract

from the value provided by the country‟s outputs to its

various internal and external publics.”

Country

Level

n.a.

No

13

Author

Definition

Conceptu

alization

Level

Dimensions

Scale

Papadopoulos (2004, p. 43)

“The real and/or perceived assets and liabilities that are

associated with a place (country) and distinguish it from

others.”

Country

Level

n.a.

No

Viosca, Bergiel and

Balsmeier (2005)

“The emotional value resulting from consumers‟

association of a brand with a country.”

Consumer

Level

n.a. No

Jaffe and Nebenzahl (2006) n.a. Consumer

Level

n.a. No

Maheswaran and Chen

(2006, p. 375)

“Like brands, countries also have equity associated with

them, termed „nation equity,‟ that goes beyond product

perceptions and may also have an emotional component.”

Consumer

Level

n.a.

No

Pappu, Quester and

Cooskey (2007, p. 728)

“Brands from the same country share images or

associations, which is referred to as country equity”

Consumer

Level

n.a.

No

Jun and Choi (2007) n.a. Consumer

Level

n.a. No

Zeugner-Roth,

Diamantopoulos and

Montesinos (2008, p. 583)

“The value-added brought forth by the association of a

product or brand with a given country name, as perceived

by the individual consumer.”

Consumer

Level

Country brand

loyalty, perceived

country brand

quality, country

brand awareness/

associations

Yes

Pappu and Quester (2010,

p. 279)

“The value endowed by the name of the country onto

products from that country.”

Consumer

Level

Country awareness,

macro country

image, micro

country image,

perceived quality,

country loyalty

Yes

14

that may be embedded in perceptions by various target markets about the country, and the

ways in which these perceptions may be used to advance its interests and those of its

constituents” (Papadopoulos and Heslop, 2002, p. 295).

This study approaches the notion of country equity from the individual consumer

perspective and defines it as the perceptual value derived from the associations of a

brand with a particular country name. Therefore, country equity is consumer-based

equity and may vary across different consumers. While brand equity is the value

associated with a particular brand name (Pappu et al., 2007), country equity is the value

shared by the brands in a specific industry from a particular country (Zeugner-Roth et al.,

2008). These arguments suggest that even new or unknown brands may benefit from

positive country equity, since the association with a country with high consumer-based

equity might increase their consumer-based brand equity. Furthermore, while a country

has high equity in certain industries, it might have low equity in others.

The extant literature suggests that country equity is a multi-dimensional construct

(Zeugner-Roth et al., 2008; Pappu and Quester, 2010; Iversen and Hem, 2001). Table 1

demonstrates that only three studies have proposed the potential dimensions of country

equity. While Pappu and Quester (2001; 2010) propose that country awareness, country

associations (macro country image and micro country image), perceived quality and

country loyalty are the dimensions of country equity, Zeugner-Roth et al. (2008) suggest

that it is a three-dimensional construct comprising country awareness-associations,

perceived country brand quality and country brand loyalty. Different from Pappu and

Quester (2001; 2010), Zeugner-Roth et al. (2008) combine country awareness and

country associations into a single dimension.

15

The only studies that have provided scale of country equity are those by Zeugner-

Roth et al. (2008) and Pappu and Quester (2010). The country equity constructs in both

studies are mainly adapted from Aaker‟s (1991), Keller‟s (1993) and Yoo and Donthu‟s

(2001) brand equity measures. Both studies approach the country equity construct from

an attitudinal perspective rather than intentional or behavioral. Different from the extant

literature, this study approaches the country equity construct from both attitudinal and

intentional perspectives. In other words, in this study, country equity is based on

consumer attitudes and intentions.

From an attitudinal perspective, country equity has four dimensions: country

awareness, country associations (macro country image and micro country image) and

perceived quality (at the country level). Although Zeugner-Roth et al. (2008), who

adapted Yoo and Donthu‟s (2001) consumer-based brand equity scale for country brand

equity measurement, combine awareness and associations, this study treats them as

distinct dimensions in line with Pappu and Quester‟s study (2010). Research findings

from both the brand equity literature (e.g. Pappu and Quester, 2006; Pappu et al., 2005)

and country equity literature (Pappu and Quester, 2010) suggest that awareness and

associations are separate dimensions of brand equity and country equity. Furthermore,

although Pappu and Quester (2010) consider “country loyalty” an attitudinal dimension,

this study considers it an intentional dimension of country equity.

In addition to country loyalty dimension, “willingness to pay (WTP) a price

premium” is considered another intentional dimension of country equity. The extant

literature on brand equity (e.g. Koschate-Fischer, Diamantopoulos and Oldenkotte, 2012;

Netemeyer et al., 2004) suggests that “willingness to pay a price premium” is a

16

dimension of brand equity. Applying this logic to country equity construct, this study

suggests that willingness to pay a price premium is a dimension of country equity from

an intentional perspective. To sum up, in this study, country equity consists of two sub-

constructs: attitude-based country equity and intention-based country equity. Attitude-

based country equity has four dimensions: country awareness, macro country image,

micro country image and perceived quality (at the country level). Intention-based country

equity has two dimensions: country loyalty and WTP a price premium (at the country

level).

The first dimension of attitude-based country equity construct is country awareness.

The primary requirement of the existence of country equity is the consumers‟ awareness

of the country. Without any awareness of the country, consumers are unable to have

quality perceptions, country associations or loyalty toward the country. Pappu and

Quester (2010) define country awareness as “consumers‟ ability to recognize or recall

that the country is a producer of certain product category” (Pappu and Quester, 2010, p.

280). According to the definition, country awareness does not involve only the

knowledge of the country. It also requires consumers‟ ability to recall the name of the

country when the product category is mentioned. Therefore, consumers would have high

country awareness, when the link between the country node and certain product category

node is strong in their memory. Research suggests that consumers‟ country image beliefs

are generalized at product category level (Agarwal and Sikri, 1996) and that a products‟

COO information often activates a product category level knowledge in consumers‟

minds (Hong and Wyer, 1990). Therefore, strong product category-country associations

indicate high country awareness.

17

The second dimension of attitude-based country equity is country associations.

Country associations refer to the associations linked to a particular country‟s products

(Zeugner-Roth et al., 2008). In other words, they refer to “descriptive, inferential and

informational beliefs one holds in memory about a particular country, both at the product

and the country level” (Pappu and Quester, 2010, p. 280). This definition suggests that

country associations include macro and micro country image dimensions (Pappu et al.,

2007). While macro country image is defined as “the total of all descriptive, inferential

and informational beliefs one has about a particular country” (Martin and Eroglu, 1993,

p. 193), micro country image is defined as “the total beliefs one has about the products of

a given country” (Pappu et al., 2007, p. 727). Research suggests that consumers have

memory-based associations towards countries at both country (macro) and product

category (micro) levels (Pappu and Quester, 2010). Therefore, in line with Pappu and

Quester‟s study (2010), this study considers “country associations” two-dimensional,

comprising macro and micro country images. For example, at the macro level, consumers

may have associations such as “developed economy” or “developed technology” towards

America whereas at the micro level, consumers may consider that American cars are

“high on prestige value, but low on economy.”

Another dimension of attitude-based country equity is perceived quality at the

country level. It refers to “consumers‟ subjective evaluations about the overall excellence

or superiority of a particular country‟s products” (Zeugner-Roth et al., 2008, p. 583).

Therefore, it is the perception of quality, rather than the actual quality, of products from a

particular country. This conceptualization of perceived quality is similar to Aaker‟s

(1991) definition of perceived brand quality. Consumers have different quality

18

perceptions of products from different countries. For example, consumers might have

better quality perceptions of products from the US or Japan than those from Malaysia or

Vietnam, in a given product category. These arguments suggest that even if a product has

low actual quality, it may benefit from its country-of-origin‟s high perceived quality.

The first dimension of intention-based country equity is country loyalty. It refers to

consumers‟ intention to be loyal to the brands of a particular country (Zeugner-Roth et

al., 2008). In another definition, country loyalty is “the tendency to be loyal to a focal

country as demonstrated by the intention to buy products from the country as a primary

choice,” (Pappu and Quester, 2010, p. 280). This conceptualization is similar to Aaker‟s

(1991) and Yoo and Donthu‟s (2001) conceptualization of brand loyalty. Given the

attitude-intention-behavior sequence (Warshaw and Davis, 1985; Barry, 1987), and the

cause-and-effect relationship in this sequence, it is considered that consumers‟ loyalty

intention is influenced by their attitude towards the country, which is reflected by the

dimensions of country awareness, country image and quality perceptions. Then, loyalty

intention might turn to an actual loyalty behavior. Since this study examines individuals‟

loyalty intention, not their actual behavior, it conceptualizes country loyalty as the

dimension of intention-based country equity.

The second dimension of intention-based country equity is willingness to pay (WTP)

a price premium. Netemeyer et al. (2004) define WTP as “the amount a customer is

willing to pay for his/her preferred brand over comparable/lesser brands of the same

package size/quantity” (p. 211). According to Aaker (1996), it is one of the strongest

indicators of brand loyalty and may be the most reasonable summary measure of overall

brand equity. Applying this concept to country equity, this study defines WTP a price

19

premium (at the country level) as the amount a customer is willing to pay for brands from

a particular country over comparable brands of the same package size/quantity from

another country. Figure 1 demonstrates the attitude-based and intention-based country

equity sub-constructs developed in this study.

Figure 1: Attitude-based and Intention-based Country Equity

________________________________________________________________________

Attitude-based Country Equity Intention-based Country Equity

________________________________________________________________________

Understanding country equity measurement and determining its effect on brand

equity is important for several reasons. Measuring and managing brand equity has

received considerable interest from researchers (e.g. Aaker, 1991, 1996; Keller, 1993,

2003; Farquhar, 1989) and been considered essential for effective brand building (Aaker,

1991; Keller, 1993; Yoo and Donthu, 2001). High brand equity can help firms have

strong bargaining power with channel members and high customer loyalty. Furthermore,

it can help firms attain the ability to launch brand extensions and enter foreign markets

easily (Shimp, Samiee and Madden, 1993; Kotler and Gertner, 2002; Aaker, 1991).

Similarly, the management of country equity of a brand could reap considerable benefits

Country awareness

Micro country image

Macro country image

Perceived quality

Country Loyalty

Willingness to Pay a

Price Premium

20

for the firm because of its potential effects on consumer preferences (Zeugner-Roth et al.,

2008) and on brand equity.

Many countries tend to offer more than one product category in international markets.

It would be helpful for the exporters in these countries to develop a better understanding

of their country equity and its potential effect on brand equity and consumer preferences.

High country equity may help firms to overcome entry barriers in foreign markets and

have strong bargaining power with channel members. In addition, high equity of a

country may increase the ability of firms from that country to launch brand extensions in

foreign markets. Furthermore, high equity of a country may increase the power of brands

from that country relative to competition in international markets. Brands with higher

equity are less vulnerable to competition and competitive marketing actions in the global

markets. Similarly, brands originated from countries with higher equity may be less

vulnerable to strong global competition. For these reasons, understanding and managing

country equity is of vital importance for firms in global markets.

In addition, the management of country equity of a brand can benefit the nation as a

whole since country equity may be transferable to other brands originating from that

country (Kleppe et al., 2002; Pappu and Quester, 2010). For example, the brand equity of

Honda, which consumers generally associate with Japan, is likely to be affected by

Japan‟s own equity. This equity may also be transferable to other new brands from Japan.

This suggests that high country equity can increase export volume of a country and help

the firms from that country create strong brands with lasting brand value in the

international markets. Furthermore, not only can brands be associated with certain

countries, but also countries can become brands themselves (Viosca, et al., 2005). Any

21

nation can be perceived as a brand as it can be perceived as contemporary and historical

associations that have meaning for marketing. The identities of some brands are bound up

with their national affiliation. For example, brands of Swiss chocolate, French perfume

and Japanese electronics are instantly meaningful partly because their countries function

as a brand (O‟Shaughnessy and O‟Shaughnessy, 2000).

Due to the significant effect of country name on consumer evaluations, governments

and industry groups in some countries employ “country branding strategies” in order to

increase the image of their country as a brand. The idea of country branding has received

broad acceptance and been practiced at the national and regional levels (Viosca et al.,

2005). These country branding efforts help increase the consumer-based equity of nations

which in turn helps the firms from these nations have competitive advantage in global

markets. For these reasons, understanding and managing country equity is crucial for

government and industry groups in a country.

To sum up, three key groups, namely, government, industry groups and individual

firms, play significant role in managing country equity (Papadopoulos and Heslop, 2002).

In many countries, these three groups employ “country branding strategies” in order to

achieve a variety of objectives, including enhancing country brand image and

repositioning country brands (Pappu and Quester, 2010). Therefore, understanding

country equity –its nature, mechanism and dimensions- and its potential effect on brand

equity is expected to have significant implications for these three groups. Determining

the dimensions of country equity, and how they influence the dimensions of brand equity

will be useful for these groups to develop better country branding strategies and to

improve the equity of their brands.

22

2.4 Consumer-Based Brand Equity

Brand equity has drawn widespread attention from both practitioners and researchers

since 1980s. It has been considered as the added value that a brand name endows upon a

product as a result of the firm's marketing efforts. Furthermore, it has been viewed as an

index of measuring the effectiveness of branding strategies (Lin and Kao, 2004). The

general view is that brand equity is the outcomes of marketing efforts that accrue to a

product given its brand name compared with those that would accrue if the same product

does not have the brand name (Aaker, 1991; Farquhar, 1989; Lassar, Mittal and Sharma,

1995; Keller, 2003). It provides value to firms and customers (Aaker, 1991; Keller, 1993;

Washburn and Plank, 2002).

Brand equity has been conceptualized from both marketing and financial

perspectives. This study conceptualizes brand equity from marketing or consumer

perspective, in accordance with Aaker (1991), Keller (1993) and Yoo and Donthu (2001).

From a marketing perspective, researchers (e.g. Yoo and Donthu, 2001; Pappu et al.,

2007) have measured brand equity based on consumer perceptions and called it

“consumer/customer-based brand equity.” Aaker (1991) defines brand equity as “a set of

brand assets and liabilities linked to a brand, its name and symbol, that add to or subtract

from the value provided by a product or service to a firm and/or to that firm‟s customers”

(p. 15). In this context, assets or liabilities must be linked to the name and/or symbol of

the brand in order for them to underlie brand equity. Focusing on the perceptual

components of brand equity, similar to Yoo and Donthu (2001), Pappu, et al. (2007)

define consumer-based brand equity as “the value consumers associated with a brand, as

reflected in the dimensions of: brand awareness, brand associations, perceived quality

23

and brand loyalty” (p. 728). According to this definition, brand equity assets and

liabilities will differ across consumers and add or subtract value for them.

The extant literature suggests that country equity is a multi-dimensional construct

(Aaker, 1991, Keller, 1993; Yoo and Donthu, 2001; Kamakura and Russell, 1993; Pitta

and Katsanis, 1995). In his book “Managing Brand equity,” Aaker (1991) argues that

brand equity has five dimensions: brand awareness, brand associations, perceived quality,

brand loyalty and other proprietary brand assets. While the first four dimensions reflect

customers‟ perceptions and reactions to the brand and marketing efforts, the last

dimension represents patents, trademarks and channel relationships. Therefore, “other

proprietary brand assets” dimension is not relevant to the consumer-based brand equity

measure. Considering this view, Yoo and Donthu (2001) focus on the first four

dimensions that comprise the construct of consumer-based brand equity. Many

researchers (e.g. Pappu et. al., 2007; Washburn and Plank, 2002) have adopted Yoo and

Donthu‟s (2001) measurement using brand awareness, perceived quality, brand

associations (brand image) and brand loyalty as the dimensions of consumer-based brand

equity construct. In addition, other dimensions such as willingness to pay a price

premium (Aaker, 1996; Netemeyer et al., 2004), uniqueness and perceived value for the

cost (Netemeyer et al., 2004) can be found in the literature.

Researchers have approached the brand equity construct from different perspectives.

Attitudinal, intentional, behavioral or mixed perspectives have widely been used by

researchers. Different from the extant literature, this study approaches the brand equity

construct from both attitudinal and intentional perspectives and develops two sub-

constructs, namely, attitude-based brand equity and intention-based brand equity.

24

From an attitudinal perspective, brand equity has three dimensions: brand awareness,

brand image and perceived quality. Although Yoo and Donthu (2001) combine brand

awareness and brand associations (brand image), this study treats them as distinct

dimensions in line with Aaker‟s study (1996). As noted earlier, awareness and

associations are separate dimensions of brand equity and country equity (Pappu and

Quester, 2006; Pappu et al., 2005; Pappu and Quester, 2010). This study uses the term

“brand image” instead of “brand associations.” The reason for such a use is to avoid any

possible conflict in the meaning of the dimension. As mentioned before, COO is also a

brand association. In other words, brands can be associated to certain COOs. By terming

the dimension as “brand image,” this study clarifies that this dimension does not include

“COO associations.” After all, the operationalization of brand associations in the

literature does not include COO associations. In addition, attitude-based country equity is

conceptualized as a four-dimensional construct consisting of country awareness, macro

country image, micro country image and brand quality. By using the same term “image”

for the brand equity dimension, this study ensures the consistency across the two

constructs.

Although many researchers (e.g. Pappu et. al., 2007) consider “brand loyalty” an

attitudinal dimension, this study considers it as an intentional dimension of brand equity.

In this respect, its conceptualization accentuates consumer intentions to be loyal to a

brand. In addition to brand loyalty dimension, “willingness to pay (WTP) a price

premium” is considered another intentional dimension of brand equity. The extant

literature on brand equity (e.g. Koschate-Fischer, Diamantopoulos and Oldenkotte, 2012;

Netemeyer et al., 2004) suggests that “willingness to pay a price premium” is a

25

dimension of brand equity. To sum up, in this study, brand equity consists of two sub-

constructs: attitude-based brand equity and intention-based brand equity. Attitude-based

brand equity has three dimensions: brand awareness, brand image and perceived quality.

Intention-based brand equity has two dimensions: brand loyalty and WTP.

The first dimension of attitude-based brand equity construct is brand awareness.

Brand awareness is a significant and sometimes undervalued dimension of brand equity.

It refers to “the ability of a potential buyer to recognize or recall that a brand is a member

of a certain product category” (Aaker, 1991, p. 61). It is considered as the degree to

which consumers think of a brand when a product category is mentioned or the degree to

which consumers think of a product category when a brand is mentioned. The definition

of brand equity suggests a link between product class and brand. Therefore, brand

awareness does not involve only the knowledge of the brand name. Research suggests

that brand awareness can affect consumer perceptions and attitudes (Aaker, 1991, 1996;

Keller, 1993; Kamakura and Russell, 1993; Pitta and Katsanis, 1995). It can be a driver

of brand choice and loyalty (Aaker, 1996; Keller, 1993). Furthermore, it can increase

consumer trust and even taste of a product (Lin and Kao, 2004; Aaker, 1996). Keller

(1993) argues that brand awareness consists of two sub-dimensions: brand recall and

brand recognition. On the other hand, Aaker (1996) suggests that it consists of six sub-

dimensions: recognition, recall, top-of-mind, brand dominance, brand knowledge and

brand opinion.

The second dimension of attitude-based brand equity construct is brand image (brand

associations). Aaker (1991, p. 109) defines brand associations (brand image) as “anything

linked in memory to a brand.” In another definition, brand image is “the other

26

informational nodes linked to the brand node in memory and contain the meaning of the

brand for consumers” (Keller, p. 3). These associations have a level of strength and the

link between the associations and brand will be stronger when it is based on more

experiences and exposures (Aaker, 1991; Keller, 1993; Yoo and Donthu, 2001). In other

words, the more experiences or the more messages associated with a brand, the stronger

the brand image (Lin and Kao, 2004). These associations can be positive or negative.

The third dimension of attitude-based brand equity construct is perceived quality.

Perceived quality is defined as “the consumer‟s judgment about a product‟s overall

excellence or superiority” (Zeithaml, 1988, p. 3). Therefore, it is based on consumers‟

subjective evaluations of product quality, not the actual quality of the product. The

importance of perceived quality in consumers‟ product evaluations and judgments has

been increasingly recognized by researchers and marketers (Lin and Kao, 2004). Various

factors such as brand name, country of origin, price and store image can act as quality

signaling cues and significantly affect perceived quality of products (Uslay and

Bayraktar, 2013). Perceived quality has been considered a core dimension of brand equity

construct because it is associated with the willingness to pay a price premium and brand

preference (Netemeyer et al., 2004).

The first dimension of intention-based brand equity construct is brand loyalty.

Previous research has focused on either behavioral or perceptual aspects of brand loyalty.

From behavioral perspective, brand loyalty is “the degree to which a buying unit, such as

a household, concentrates its purchases over time on a particular brand within a product

category” (Lin and Kao, 2004, p. 38). From perceptual perspective, brand loyalty refers

to “the tendency to be loyal to a focal brand, which is demonstrated by the intention to

27

buy the brand as a primary choice” (Yoo and Donthu, 2001, p. 3). While the

conceptualization of brand loyalty based on behavioral perspective emphasizes

consumer‟s actual loyalty as reflected in brand preference, the conceptualization based on

perceptual perspective focuses on consumer‟s intention to be loyal to the brand. This

study adopts the second approach and considers brand loyalty as an intention-based

dimension of brand equity. Brand loyalty is affected by a variety of factors such as first-

time purchase experience, price premium, perceived quality, brand image and

competitors‟ promotional events (Biel, 1993; Lin and Kao, 2004).

The second dimension of intention-based brand equity construct is willingness to pay

(WTP) a price premium (at the brand level). WTP a price premium is defined as “the

amount a customer is willing to pay for his/her preferred brand over comparable/lesser

brands of the same package size/quantity” (Netemeyer et al., 2004, p. 211). The

definition suggests that the price premium is conceptualized with respect to a competitor

or set of competitors that must be clearly specified (Aaker, 1996). For example, a

consumer may be willing to pay 10% more for Toyota than for Honda. Similarly, a

consumer may be willing to pay 30% more to shop at Versace rather than at Perry Ellis.

This is called “price premiums” associated with the brand. The price premium can be

high or low and positive or negative depending on the brands involved in the comparison.

WTP a price premium may be the most reasonable summary measure of overall brand

equity (Aaker, 1996).

Figure 2 demonstrates the attitude-based and intention-based brand equity sub-

constructs developed in this study.

28

Figure 2: Attitude-based and Intention-based Brand Equity

________________________________________________________________________

Attitude-based Brand Equity Intention-based Brand Equity

________________________________________________________________________

2.5 The Proposed Model

This section will introduce the hypotheses and theoretical background of the proposed

relationships. The hypothesized relationships in this dissertation are mainly based on

associative network memory (ANM) model, cue evaluation theory, categorization theory

and hierarchy of effects model.

2.5.1 Associative Network Memory Model

Associative network memory (ANM) model provides a strong basis for explaining

country equity and brand equity constructs and the relationships between them. While

Aaker (1991) and Keller (1993) used ANM model to explain the notion of brand equity,

Pappu and Quester (2010) utilized this model to explain the notion of country equity.

This study will also elucidate the relationships between these two constructs using ANM

model.

Brand awareness

Brand Image

Perceived quality

Brand Loyalty

Willingness to Pay a

Price Premium

29

The ANM model aims at explaining the nature of human intelligence and how

people think. It suggests that human semantic memory consists of networks, and each

network is composed of several nodes (Anderson, 1976). These nodes are stored

information in memory and linked to each other in some way (Keller, 1993). For

example, if a country (e.g. Germany) is a node in memory, there could be other nodes

(e.g. engineering) that are linked to this country node and serve as associations (Pappu

and Quester, 2010). The activation of a node in memory leads to the activation of other

linked nodes. This spreading activation process determines the extent of retrieval in

memory. In addition, the links among nodes vary in strength (Keller, 1993). Therefore,

the strength of link between the activated node and all linked nodes determines the extent

of the spreading activation process and the related information that can be retrieved from

memory. For example, a consumer may develop strong associations in his/her memory

between “Japan” and “reliability” nodes. This consumer might readily recall the

association “reliability” whenever he/she thinks of “Japan.” In other words, whenever

he/she thinks of “Japan” the “reliability” node will be activated depending on the strength

of the association. Therefore, whenever he/she considers a Japanese car, say Honda,

he/she will think of “reliability.” In other words, the “reliability” node will be indirectly

connected to Honda. Thus, this positive association will increase consumer-based brand

equity of Honda. This equity will be generated for all Japanese cars. Furthermore, the

link between nodes can be unidirectional or bi-directional. In this context, when the

consumer considers the “reliability” node, he/she might consider the “Japan” and

“Honda” nodes. Conversely, if a country is linked to negative associations (e.g.

backwardness, poverty, hostility) in consumer memory, the brand names from this

30

country could be tarnished. Thus, the negative associations will decrease consumer-based

equity of these brands. Certainly, all of the above claims are based on the assumption that

consumers have the country of origin knowledge of the brands.

2.5.2 Cue Evaluation Theory

“Cue Evaluation Theory” suggests that consumers evaluate products based on intrinsic

(e.g. design, quality and shape) and extrinsic (e.g. price, brand name and country of

origin) product cues (Manrai et al., 1998; Klenosky et al., 1996). The literature suggests

that extrinsic product cues serve as indicators of quality and affect consumers‟ perception

of overall brand image. A large number of studies (e.g. Han, 1989; Wall, Liefeld and

Heslop, 1991; Insch and McBride, 2004) have shown that country of origin of a product

is an extrinsic cue –an intangible product attribute- that is distinct from a physical product

characteristic and that significantly influences consumers‟ product evaluations. This

extrinsic cue influences individuals‟ evaluations of brand personality and thus brand

image (Thakor and Kohli, 1996). Cue evaluation theory suggests that COO of a product

serves as an indicator of quality particularly when consumers face with a lack of

information or ambiguous information about the product quality (Auger et al., 2010).

Previous research has mostly attempted to explain COO effect through quality

signaling process, ignoring the other aspects of this extrinsic product cue. From an

information processing or cognitive perspective, origin information is used as an

intangible product attribute that serves as an indicator of product quality. This view

suggests that origin information influences consumer product evaluations through “halo”

and “summary” effects (Sharma, 2011). “Halo effect” suggests that consumers make

31

inferences about the quality of products or services based on the overall image they have

about their COOs. On the other hand, “summary effect” argues that consumers make

abstractions of the product information into a country image, which influences their

evaluative judgments.

Another stream of research considers COO cue from affective perspective and argues

that COO information also has symbolic and emotional meanings (Verlegh and

Steenkamp, 1999; Li and Wyer, 1994; Hong and Wyer, 1989). It may sometimes serve as

a way to reflect patriotism (Batra et al., 2000; Sharma, 2011; Balabanis and

Diamantopoulos, 2004; Lantz and Loeb, 1996; Jimenez and Martin, 2009), social status

(Batra et al., 2000; Verlegh and Steenkamp, 1999), authenticity and exoticness (Verlegh

and Steenkamp, 1999). Furthermore, avoiding products from certain country of origins

reflect consumer animosity (Sharma, 2011; Pharr, 2005; Jimenez and Martin, 2009). In

addition, COO associates a product to developed and rich country imagery, with sensory,

affective and ritual connotations (Askegaard and Ger, 1998).

Finally, it has been argued that COO information has normative meanings. In this

context, preference of products or services from a certain country may reflect the

endorsement of its policies, practices and actions (Sharma, 2011). Therefore, consumers

attempt to punish some countries by boycotting the products originated from these

countries.

The above discussion shows that COO cue can be viewed from three perspectives.

From cognitive perspective, COO cue is considered as a signal for product quality. From

affective perspective, COO cue has symbolic and emotional meanings for consumers.

32

Finally, from normative perspective, COO cue is linked to social and personal norms.

Considering these arguments, this study proposes that country equity significantly affects

consumer-based brand equity and that this effect reflects the abovementioned three

perspectives.

Previous research mostly focused on one of the above perspectives. For example,

while some studies (e.g. Wall et al., 1991; Chandrasen and Paliwoda, 2009; Cordell,

1992; Manrai, Lascu and Manrai, 1998) examined the effect of development level of

COO on consumer quality perceptions or product evaluations, others (e.g. Roth and

Romeo, 1992; Chao, Wuhrer and Werani, 2005; Zeugner-Roth et al., 2008) examined the

effect of country image on perceived quality or consumer preferences. Furthermore,

while some studies (e.g. Sharma, 2011) examined how consumer animosity influences

consumer preferences or evaluations, others (e.g. Batra et al., 2000; Lantz and Loeb,

1996; Balabanis and Diamantopoulos, 2004; Verlegh, 2007) examined how ethnocentric

tendencies affect consumer evaluation of products. All of these examples show that the

researchers considered one of the above perspectives. This study argues that examining

the effect country equity on consumer-based brand equity will reflect the three

perspectives and yield more comprehensive and better results.

2.5.3 Categorization Theory

Since categorization theory plays a significant role in consumer behavior and country of

origin forms an important category for consumers, this study utilizes categorization

theory to underpin the propositions. Smith (1995, p. 27) simply defines categorization as

“the mental act of coming to think of some object as an instance of the category.”

33

Categorization describes “the characteristic manner in which individuals organize and

structure perceptual inputs deriving from the external environment” (Block et al., 1981, p.

770).

Categorization theory suggests that consumers generally structure their knowledge of

specific product alternatives in categories and that they utilize category structures to

organize and differentiate brands (Balabanis and Diamantopoulos, 2011). Therefore,

consumers code their experiences and then use them to make inferences. This coding

activity reduces individuals‟ need for perceptual processes, storage space in their minds

and reasoning processes (Smith, 1995). The deduction from this categorizing activity is

that consumers can reduce mental efforts and economize cognitive resources by

classifying brands into categories according to COOs and applying organized prior

knowledge about the categories to evaluate products (Maheswaran, 1994). In this context,

categorization is the activity of making inferences about an object (brand) from the

category to which it belongs (COO). The label of a category (e.g. Japan) serves as a

signal (Balabanis and Diamantopoulos, 2011) so that all members of the category (e.g.

Honda, Toyota, etc.) are likely to share some similar features (e.g. reliability, economy).

According to categorization theory, attitudes towards an object are directly related to

attitudes towards the category (Chowdhury and Ahmed, 2009). Therefore, when

consumers recall a country name to which they associate positive features, they will infer

positive attitudes towards the brands from that country. This inference can affect not only

the quality perceptions of brands, but also consumer purchase decisions and overall brand

image (Chowdhury and Ahmed, 2009).

34

Similar to the discussion about cue evaluation theory, category-based information

processing of COO can influence consumer evaluations and judgments through three

processes: cognitive, affective and normative processes (Balabanis and Diamantopoulos,

2011). From a cognitive process perspective, consumers make inferences about the

features of a brand from its category (COO). These attributes are then used to constitute

quality perceptions. From an affective process perspective, category membership can

activate emotional responses that might override cognitive evaluations. In this context, a

consumer may negatively evaluate a brand due to his/her negative attitudes towards its

category (COO) even if the brand is a superior one. Finally, from a normative process

perspective, category membership can be related to social norms and activate normative

pressures. In this context, a consumer may reject buying from certain categories (COOs)

due to normative pressures stemming from some social norms. Admittedly, these

discussions are based on the assumption that consumers are able to categorize the brands

to COOs correctly.

The above discussions suggest that significant part of consumer-based equity of a

brand in the international marketplace will be explained by the equity of its COO. In

addition, the ways through which category-based information processing of COO can

influence consumer evaluations and judgments suggest that using broader independent

and dependent variables will yield more comprehensive and better results. Therefore,

examining the effect of country equity on consumer-based brand equity is expected to

reflect the outcomes of cognitive, affective and normative processes.

35

2.5.4 Hierarchy of Effects Model

The proposed relationships among sub-constructs of country equity and consumer-based

brand equity are also based on hierarchy of effects model. The model has been used in

the advertising literature for more than a century. The traditional hierarchy framework

suggests that consumers respond to marketing messages in a very ordered way (Yoo, Kim

and Stout, 2004). According to the model, consumers follow seven steps in a purchase

decision, beginning with unawareness of product or service existence to the actual

purchase (Barry, 1987). These steps suggest a causal relationship from cognition to

affect, and from affect to conation.

While cognition is defined as "a system of beliefs structured into some kind of

semantic network" (Holbrook and Batra, 1987), affect is viewed as feelings and emotions

that have physiological components (Barry and Howard, 1990). On the other hand,

conation has been considered as “either intentions to perform a behavior or the

performance of the actual behavior” (Yoo, Kim and Stout, 2004, p. 50). This cognition-

affect-conation sequence points out attitude-intention-behavior sequence. Attitude is

considered a major determinant of a consumer‟s intention to perform purchase behavior

(Warshaw and Davis, 1985). Intention is a significant dimension of the hierarchy of

effects model because of the presumed amount of inertia that exists between the attitude

change and actual behavior (Barry, 1987).

Given the attitude-intention-behavior sequence and the discussion about country

equity and consumer-based brand equity constructs, causal relationships can be expected

between the sub-constructs of country equity and consumer-based brand equity. In this

36

context, while attitude-based country equity is expected to affect intention-based country

equity significantly and positively, attitude-based brand equity is likely to affect

intention-based brand equity significantly and positively. In addition, given the proposed

relationship between country equity and consumer-based brand equity constructs, it can

be argued that attitude-based country equity will affect attitude-based brand equity

significantly and positively. Furthermore, intention-based country equity is expected to

affect intention-based brand equity significantly and positively. This study does not

expect a significant relationship between intention-based country equity and attitude-

based brand equity due to the hierarchy of effects model. Moreover, it does not expect a

direct relationship between attitude-based country equity and intention-based brand

equity.

The above considerations lead to the following hypotheses:

H1: There is a positive relationship between “attitude-based country equity” and

“intention-based country equity.”

H2: There is a positive relationship between “attitude-based country equity” and

“attitude-based brand equity.”

H3: There is a positive relationship between “intention-based country equity” and

“intention-based brand equity.”

H4: There is a positive relationship between “attitude-based brand equity” and

“intention-based brand equity.”

37

2.6 Moderators

This section introduces the factors that are expected to moderate the relationships

between country equity and consumer-based brand equity. The proposed moderators are

consumer mindfulness, product familiarity, product complexity, product health risk level,

product performance risk level, product importance and product value.

2.6.1 Consumer Mindfulness

As noted earlier, consumers are influenced by both intrinsic (e.g. quality, design) and

extrinsic (e.g. country of origin, brand name, price) product cues when evaluating

products. Research (e.g. Thakor and Lavack, 2003; Hamzaoui-Essoussi, Merunka and

Bartikowski, 2011; Chowdhury and Biswas, 2011) suggests that COO, an extrinsic

product cue, serves as indicators of quality and affects consumers‟ overall brand

evaluations. However, this stream of research generally assumes that consumers are faced

with a lack of information or ambiguous information about product quality and use

heuristics or peripheral route when evaluating products. In other words, the researchers

assume that consumers utilize COO information as a signal for product quality due to

their limited knowledge about products or brands.

This study proposes the “consumer mindfulness” concept as a moderator of COO

effect. It is one of a few studies that incorporate the mindfulness concept, a topic

examined in social psychology, into international marketing research. To the best of the

author‟s knowledge, Table 2 presents the studies that incorporate the mindfulness concept

into marketing research. This study introduces consumer mindfulness as a moderator of

38

Table 2: Overview of Studies Incorporating Mindfulness Concept into Marketing

Research

Authors The Scope of the Study

Bjurstrom

(2012)

The paper presents a holistic picture of Eastern and Western views of

mindfulness in relation to quality management research and practice.

Dong and

Brunel

(2006)

This study is a working paper that offers a definition of consumer

mindfulness, discussing how mindfulness can be helpful in

conducting consumer research. It also presents the result of a study

where mindfulness is considered a persuasive agent.

Liozu et al.,

2012

The paper examines how managerial and collective mindfulness

influence the adoption of value-based pricing approach. It attempts to

answer the research question by conducting interviews with 44

managers of small to medium size US industrial firms.

Malhotra,

Lee and

Uslay (2012)

The paper integrates three distinctive stream of research in marketing

orientation, quality orientation and organizational mindfulness. It

demonstrates how to facilitate the implementation of mindful

marketing by integrating marketing and organizational research on

mindfulness with market and quality orientations.

Ndubisi

(2012)

Based on the mindfulness theory, the paper examines the effects of

service reliability, pre-emptive conflict handling, and customer

orientation on customer satisfaction and loyalty in healthcare service

delivery in Malaysia.

Owusu-

Frimpong

and

Nwankwo

(2012)

The paper connects mindfulness with service quality and applies the

resultant framework to the analysis of strategic perspectives and

philosophical orientations of SMEs in Ghana towards service quality

management.

Roger (2011)

The paper examines the role of mindfulness in a brand manager's self-

direction of his/her professional experience, and analyzes the effects of

experience of brand management, general marketing, general

management and financial analysis on the person's self-perceived

mastery of the brand management role.

Valentine,

Godkin and

Varca (2009)

The paper examines the relationships among mindfulness, role conflict

and organizational ethics in an education-based healthcare institution.

Van de Veer

et al. (2001)

The paper examines whether mindful attention increases

responsiveness to hunger cues and whether it matters where this

attention is directed. It utilizes three experiments to answer the research

questions.

39

COO effect, based on cue evaluation theory, elaboration likelihood model, and

mindfulness literature.

Mindfulness refers to “a state of conscious awareness characterized by active

distinction drawing that leaves the individual open to novelty and sensitive to both

context and perspective” (Langer, 1992, p. 291). In another definition, mindfulness is “a

frame of mind in which an individual maintains a continuous attention to detail” (Hales et

al., 2011, p. 571). It involves efforts “to focus one‟s attention on the concrete aspects of

one‟s behavior, thereby eliminating the abstract, deliberative, high-level self-thoughts

that can interfere with enacting automatic and complex behaviors” (Leary et al., 2006, p.

1827).

Mindfulness captures a quality of consciousness characterized by clarity and

vividness of present experience and functioning, and stands in contrast to the mindless

states of habitual or automatic functioning (Brown and Ryan, 2003). Thus, it plays a

significant role in preventing individuals from engaging in automatic thoughts, habits and

unhealthy behaviors, and fostering behavioral regulation and self-control (Ryan and Deci,

2000).

The literature review suggests that a mindful individual has the following main

characteristics: greater sensitivity to his/her environment, greater attention to details,

more openness to new information, greater skills in cognitive categorization, advanced

awareness of multiple perspectives in problem solving (Langer, 1989), greater attention

to the participation in the ongoing process of living (Gunaratana, 2002), a more receptive

attention to and awareness of current events, realities and experiences (Brown, et al.,

40

2007a, 2007b), greater interest and concern for life (Neff, 2003), greater empathy for

others (Beitel et al., 2005), better self-control, self-awareness and self-regulatory

capacity, greater attentional and concentrative capacity (Brown et al., 2007a), greater

capacity as an observer (Baer, 2007), greater ability to respond flexibly to contextual cues

(Argote, 2006), greater awareness, acceptance and understanding of one‟s emotions and

greater ability to repair negative moods (Leary and Tate, 2007). Therefore, “individuals

who are mindfully engaged in a task are both motivated and able to explore a wider

variety of perspectives, make more relevant and precise distinctions about phenomena in

their environments, enabling them to adapt to shifts in those environments” (Ndubisi,

2011, p. 538).

Applying this concept to consumer behavior in an international context, this study

proposes that mindful consumers will have high motivation and involvement in their

decision making and pay greater attention to product features and details. Therefore,

instead of using heuristics and peripheral route, they will utilize central route. As a

conclusion of this process, they will use COO information as one of the product attributes

rather than the primary product attribute or an attitude determining cue. In this case, COO

information will have less effect on consumers‟ evaluative judgments. Figure 3

summarizes how consumer mindfulness influences COO effect.

The above considerations lead to the following hypotheses:

H5: Consumer mindfulness negatively moderates the relationship between attitude-

based country equity and attitude-based brand equity. The effect of attitude-based

41

country equity on attitude-based brand equity will be weaker for highly mindful

consumers.

H6: Consumer mindfulness negatively moderates the relationship between intention-

based country equity and intention-based brand equity. The effect of intention-based

country equity on intention-based brand equity will be weaker for highly mindful

consumers.

Figure 3: The Moderating Role of Consumer Mindfulness

________________________________________________________________________

____________________________________________________________________

2.6.2 Product Familiarity and Product Complexity

Research suggests that intrinsic product cues have a more powerful effect on consumer

quality judgments than do extrinsic cues and that consumers use extrinsic product cues

more often when intrinsic cues are not available (Batra et al., 2000). However, extrinsic

cues are more important than intrinsic cues when consumers feel less able to judge the

product‟s origin-free quality (Han, 1989; Insch and McBride, 2004; Batra et al., 2000). In

this situation, consumers feel more uncertain about which brands to choose from the

product category. The uncertainty may result from consumers‟ unfamiliarity with the

High

Consumer

Mindfulness

Low Consumer

Mindfulness

The use of COO

information as one of the

product attributes,

Low COO effect

High Motivation,

High Involvement,

Greater Attention to Details,

The Use of Central Route

Low Motivation,

Low Involvement,

Less Attention to Details,

The Use of Peripheral Route

The use of COO

information as a primary

product attribute,

High COO effect

42

product category, the lack of information to judge the product or the complexity of the

product category. Since COO information is an extrinsic cue, consumers will use it more

as an attitude determining cue when they are less familiar with the product category.

Similarly, they will use COO information more as an attitude determining cue when the

product is too complex to make judgments. In other words, when familiarity with a

product is limited or when the product complexity is high, consumers will resort to COO

information in order to evaluate the product (Maheswaran, 1994). These expectations are

supported by previous research on COO (e.g. Han, 1989; Insch and McBride, 2004; Batra

et al., 2004; Li and Wyer, 1994). Since COO information will be used more, the effect of

country equity on consumer-based brand equity will be stronger under the

abovementioned situations. These considerations lead to the following hypotheses:

H7: Product familiarity negatively moderates the relationship between attitude-based

country equity and attitude-based brand equity. The effect of attitude-based country

equity on attitude-based brand equity will be weaker when the product familiarity is

high.

H8: Product familiarity negatively moderates the relationship between intention-

based country equity and intention-based brand equity. The effect of intention-based

country equity on intention-based brand equity will be weaker when the product

familiarity is high.

H9: Product complexity positively moderates the relationship between attitude-based

country equity and attitude-based brand equity. The effect of attitude-based country

43

equity on attitude-based brand equity will be greater when the product complexity is

high.

H10: Product complexity positively moderates the relationship between intention-

based country equity and intention-based brand equity. The effect of intention-based

country equity on intention-based brand equity will be greater when the product

complexity is high.

2.6.3 Product Performance/Health Risk Level and Product Importance and Value

Previous research suggests that when the product‟s performance/health risk level is high

consumers base their judgments on COO information more (Hampton, 1977; Cordell,

1992; Biley and Nes, 1982). Furthermore, previous research shows that consumers use

COO information more when the product is important for consumers or when the

product‟s perceived value is high (Li and Wyer, 1994; Pharr, 2005; Ahmed and d‟Astous,

1996). This study proposes that when the risk level of the product category is high or

when the product is important for consumers, brands originated from countries with high

equity will be evaluated more positively. Furthermore, it proposes that when the

product‟s perceived value is high, brands originated from countries with high equity will

be evaluated more positively. Therefore, product risk level, product‟s perceived

importance and value will moderate the relationship between country equity and

consumer-based brand equity. These considerations lead to the following hypotheses:

H11: Product health risk level positively moderates the relationship between attitude-

based country equity and attitude-based brand equity. The effect of attitude-based

44

country equity on attitude-based brand equity will be greater when the product health

risk level is high.

H12: Product health risk level positively moderates the relationship between

intention-based country equity and intention-based brand equity. The effect of

intention-based country equity on intention-based brand equity will be greater when

the product health risk level is high.

H13: Product performance risk level positively moderates the relationship between

attitude-based country equity and attitude-based brand equity. The effect of attitude-

based country equity on attitude-based brand equity will be greater when the product

performance risk level is high.

H14: Product performance risk level positively moderates the relationship between

intention-based country equity and intention-based brand equity. The effect of

intention-based country equity on intention-based brand equity will be greater when

the product performance risk level is high.

H15: Perceived product importance positively moderates the relationship between

attitude-based country equity and attitude-based brand equity. The effect of attitude-

based country equity on attitude-based brand equity will be greater when the

perceived product importance is high.

H16: Perceived product importance positively moderates the relationship between

intention-based country equity and intention-based brand equity. The effect of

45

Figure 4: The Model of the Proposed Relationships

* Moderators: Consumer mindfulness, product familiarity (negative moderation), product complexity, product

performance/health risk level and perceived product importance and value (positive moderation).

Attitude-based

Country Equity

Country

awareness

Micro country

image

Macro country

image

Perceived quality

Intention-based

Country Equity

Country

Loyalty

Willingness to

pay a price

premium

Moderators *

Willingness to

pay a price

premium

Brand Loyalty

Intention-based

Brand Equity

Attitude-based

Brand Equity

Brand awareness

Brand Image

Perceived quality

Country

Loyalty

46

intention-based country equity on intention-based brand equity will be greater when

the perceived product importance is high.

H17: Perceived product value positively moderates the relationship between attitude-

based country equity and attitude-based brand equity. The effect of attitude-based

country equity on attitude-based brand equity will be greater when the perceived

product value is high.

H18: Perceived product value positively moderates the relationship between

intention-based country equity and intention-based brand equity. The effect of

intention-based country equity on intention-based brand equity will be greater when

the perceived product value is high.

Figure 4 illustrates the model of the hypothesized relationships.

47

Chapter 3

Methodology

3.1 Research Method and Sample

Since individuals‟ beliefs, attitudes and perceptions are retroactive in nature, survey

methodology is appropriate for examining existing information from participants. Due to

the advantages of survey method and the nature of the research questions, a self-

administered survey questionnaire was developed and utilized to collect data for the

purposes of testing the structural soundness of the proposed model and the above-

mentioned propositions.

The data was collected from convenience samples of undergraduate business and

MBA students in Turkey and the US. A meta-analysis on COO effect conducted by

Verlegh and Steenkamp (1999) showed no significant difference between student and

non-student samples. In addition, the literature review demonstrates that early studies

(e.g. Han 1989; Erickson et al. 1984; Ettenson et al. 1988; Li and Wyer 1994; Johansson

et al. 1985) were mostly conducted in developed countries, particularly in the US and the

UK. This is one of the biggest concerns about the generalizability of COO effect. It is

evident that consumers in developed and developing countries differ in their response to

COO information. Although not sufficient, some recent studies (e.g. Klenosky et al.

1996; Jun and Choi 2007; Chowdhury and Ahmed 2009; Yasin et al. 2007; Chowdhury

and Biswas 2011) have used samples from developing countries. Furthermore, some

researchers (e.g. Insch and McBride, 2004; Shukla, 2011; Sharma, 2011; Auger et al.,

2011) have used samples from both developed and developing countries, making

48

comparison between consumers from these countries. Using samples from Turkey, a

developing country, and the US, a developed country, was expected to yield more

generalizable results, and allow determining whether the model holds across different

cultures.

Table 3: Demographic Profile of the Sample

________________________________________________________________________

Demographic Characteristics Sample (n)

Gender (n=509)

Male 268

Female 240

Missing 1

Age (n=509)

17-21 327

22-26 142

27-31 25

32-36 6

37-42 6

Missing 3

Marital Status (n=509)

Single 478

Married 30

Missing 1

Nationality (n=509)

American 177

Turkish 258

Chinese 26

Indian 13

Korean 7

Other 28

____________________________________________________________________

The sample was composed of 509 undergraduate business and MBA students, 255

from Turkey and 254 from the US. While 268 of the participants were male, 240 of them

49

were female. One participant did not specify his/her gender. The age of the participants

ranged from 17 to 42. However, 64% of the participants were between the ages of 17 and

21. Table 3 demonstrates the demographic profile of the participants.

3.2 Questionnaire Design

A review of the literature and a pilot study provided the input for identifying the items to

be included in the self-administered survey questionnaire. Three product categories were

included in the study: LCD televisions, sport shoes and chocolates. It was assumed that

many respondents had used products from these categories, and were able to evaluate

them. The selection of televisions and sport shoes as the product categories is in line with

the previous COO studies (e.g. Pappu et al., 2007; Yasin et al., 2007; Sharma, 2011). The

inclusion of chocolates as the third product category was considered significant due to the

distinctive features of the product category and its omission from the previous research.

Furthermore, as a product category, LCD televisions, sport shoes and chocolates were

expected to vary in terms of the moderating variables in the study, namely product

category familiarity, product complexity, product performance/health risk level, product

importance and perceived product value.

Japan, South Korea and India as the producers of Sony LCD televisions and Adidas

sport shoes; and Belgium, Malaysia and Vietnam as the producers of Snickers chocolates

were included in the study, following the results of the pilot study. The pilot study

showed that respondents held a higher equity of Japan than of South Korea and India in

television and sport shoes categories. The results of the pilot study also indicated that

respondents held a higher equity of South Korea than of India. In chocolates product

50

category, respondents held a higher equity of Belgium than of Malaysia and Vietnam;

and a higher equity of Malaysia than of Vietnam.

The study used a within-subject design. A meta-analysis conducted by Peterson and

Jolibert (1995) suggests that COO effect sizes are not significantly influenced by the type

of research design used, whether a within- or between-subjects design. Three versions of

the questionnaire, one for each product category, were developed. The only difference

among the three versions was the product category.

The questionnaire consisted of two parts. The first part started with a general

introduction about the content of the survey and instructions for filling out. The

introduction was followed by the descriptions of three products in one of the three

categories. The first version of the questionnaire described three forms of an actual LCD

television brand (Sony), presenting multiple-cues (e.g. price, features, COO information)

about each product. The only difference among the three products was the COO

information conveyed through “made in …” phrase. These COOs were Japan, South

Korea and India. Other information about the products was the same. Similarly, the

second version of the questionnaire described three forms of sport shoes brand (Adidas),

presenting multiple-cues (e.g. price, features, COO information) about each product. The

only difference among the three sport shoes was their COOs. These COOs were Japan,

South Korea and India. Other information about the sport shoes was the same. The last

version of the questionnaire described three forms of chocolate brand (Snickers),

presenting multiple-cues (e.g. price, features, COO information) about each product. The

only difference among the three chocolates was their COOs. These COOs were Belgium,

Malaysia and Vietnam. Other information about the chocolates was the same. The second

51

part started with the measurement of attitude-based and intention-based brand equity of

each product and attitude-based and intention-based equity of each country, respectively.

Next, it measured consumer mindfulness, product familiarity, perceived product

complexity, product (performance/health) risk level and product importance and value.

Finally, it included demographical questions (age, gender, income, place of birth). One

form of the survey questionnaire is presented in Appendix A.

3.3 Construct Measurement

The variables of interest in this dissertation were measured using scales established by

previous researchers and those developed in this study. A Likert-type scale of 1 to 7 was

adopted for all construct measures, using the anchors “strongly disagree” (1) and

“strongly agree” (7). Eleven primary constructs were under investigation: attitude-based

country equity, intention-based country equity, attitude-based brand equity, intention-

based brand equity, consumer mindfulness, product familiarity, product complexity,

product performance risk level, product health risk level, perceived product importance

and perceived product value.

3.3.1 Attitude-based Country Equity

Attitude-based country equity construct consists of four dimensions: country awareness,

macro country image, micro country image and perceived quality. The measures for these

dimensions were developed by Pappu and Quester (2010). The country awareness

dimension captures consumers‟ ability to recall the country when a certain product

category is mentioned. The macro country image dimension captures consumers‟ country

level associations. These associations are not related to a certain product category. They

52

Table 4: Scale for Attitude-based Country Equity

________________________________________________________________________

Country Awareness

1. Sport shoes (televisions/chocolates) made in country X are advertised widely.

2. I can recognize sport shoes (television/chocolate) brand names from country

X.

Macro Country Image

3. Country X has a high level of industrialization.

4. Country X has a highly developed economy.

5. People in country X are highly literate

6. Country X has a free-market system.

7. Country X is a democratic country.

Micro Country Image

8. Sport shoes (televisions/chocolates) made in this country have quality

workmanship (“quality ingredients” for chocolates).

9. Sport shoes (televisions/chocolates) made in this country are innovative

(“delicious” for chocolates).

10. Sport shoes (televisions/chocolates) made in this country are dependable.

11. I trust this country as a producer of sport shoes (televisions/chocolates).

Perceived Quality (at the country level)

12. Sport shoes (televisions/chocolates) made in this country are of very good

quality.

13. Sport shoes (televisions/chocolates) made in this country have excellent

features (“are healthy” for chocolates).

14. Sport shoes (televisions/chocolates) made in this country are of consistent

quality.

15. Sport shoes (televisions/chocolates) made in this country are very reliable.

________________________________________________________________________

reflect a country‟s economic, political and technological aspects. On the other hand, the

micro country image dimension captures consumers‟ product level associations towards a

country (Pappu and Quester, 2010). Therefore, these associations are related to a certain

53

product category and may not hold for other categories. Finally, perceived quality

captures consumers‟ perception of quality of products from a certain country. Table 4

illustrates the scale for attitude-based country equity construct, indicating the measures

for each dimension separately.

Table 5: Scale for Intention-based Country Equity

________________________________________________________________________

Country Loyalty

1. Country X would be my preferred choice for sport shoes

(televisions/chocolates).

2. I will not buy sport shoes (televisions/chocolates) made in other countries, if I

can buy the same product made in country X.

3. I (would) consider myself loyal to buying sport shoes (televisions/chocolates)

from country X.

4. Country X would be my first choice for sport shoes (televisions/chocolates).

Willingness to Pay a Price Premium (at the country level)

5. I am willing to pay a higher price for sport shoes (televisions/chocolates) from

country X than sport shoes (televisions/chocolates) from other countries.

6. The price of sport shoes (televisions/chocolates) from country X would have

to go up a bit before I would switch to sport shoes (televisions/chocolates)

from another country.

7. I am willing to pay a lot more for running sport shoes (LCD televisions/candy

bars) from country X than running sport shoes (LCD televisions/candy bars)

from other countries.

________________________________________________________________________

3.3.2 Intention-based Country Equity

Intention-based country equity construct consists of two dimensions: country loyalty and

willingness to pay a price premium (at the country level). The measures for country

loyalty dimension were developed by Pappu and Quester (2010). This dimension captures

54

consumers‟ intention to be loyal to products from a country in a given product category.

The measures for the dimension of “willingness to pay a price premium” have been

adapted from Netemeyer et al. (2004). This dimension captures consumers‟ willingness

to pay a price premium for the products from a country in a given product category.

Therefore, both country loyalty and willingness to pay a price premium are category

specific. Table 5 illustrates the scale for intention-based country equity construct,

indicating the measures for each dimension of it separately.

3.3.3 Attitude-based Brand Equity

Attitude-based brand equity construct consists of three dimensions: brand awareness,

brand image and perceived quality. The measures for these dimensions have been

empirically tested (Agarwal and Rao, 1996; MacKay, 2001) and used in a number of

studies (e.g. Yoo and Donthu, 2001; Pappu et al., 2007). Since the brand names of the

products from three country of origins were the same and could not be manipulated,

brand awareness was expected to be the same across the three products. A seven-point

rating scale was used for all items. Table 6 demonstrates the scale for attitude-based

brand equity construct, indicating the measures for each dimension separately.

3.3.4 Intention-based Brand Equity

Intention-based brand equity construct consists of two dimensions: brand loyalty and

willingness to pay a price premium (at the product level). Previously developed scales

were utilized to measure brand loyalty (Yoo, Donthu and Lee, 2000; Yoo and Donthu,

2001; Pappu et al., 2007) and willingness to pay a price premium (Netemeyer et al.,

2004). A seven-point rating scale was used for all items in the scale. Table 7

55

demonstrates the scale for intention-based brand equity construct, indicating the measures

for each dimension separately.

Table 6: Scale for Attitude-based Brand Equity

________________________________________________________________________

Brand Awareness

1. I am aware of the brand ________ (brand name) in sport shoes

(television/chocolate) category.

Brand Image

2. I associate product X to sincerity.

3. I associate product X to excitement

4. I associate product X to competence

5. I associate product X to sophistication

6. I associate product X to ruggedness

7. I like the company that makes product X.

8. I (would) feel proud to own products from the company that makes product X.

9. I trust the company that makes product X.

Perceived Quality (at the product level)

10. Product X is of very good quality.

11. Product X is reliable.

12. Product X has excellent features (“taste” for chocolates).

13. Product X is durable (“healthy” for chocolates).

14. Product X offers consistent quality.

________________________________________________________________________

56

Table 7: Scale for Intention-based Brand Equity

________________________________________________________________________

Brand Loyalty

1. Product X would be my preferred choice.

2. I (would) consider myself loyal to product X.

3. Product X would be my first choice.

Willingness to Pay a Price Premium (at the product level)

4. The price of product X would have to go up a bit before I would switch to

another brand of sport shoes (television/chocolate).

5. I am willing to pay a higher price for product X than other sport shoes

(television/chocolate) brands.

6. I am willing to pay a lot more for product X than other brands in this category

of sport shoes (televisions/chocolates).

________________________________________________________________________

3.3.5 Consumer Mindfulness

Several scales have been developed and used to measure individual mindfulness,

including the Five Factor Mindfulness Questionnaire (FFMQ; e.g. Baer et al., 2006), the

Kentucky Inventory of Mindfulness Skills (KIMS; e.g. Baer et al., 2004), and the

Mindful Attention Awareness Scale (MAAS; e.g. Brown and Ryan, 2003; Carlson and

Brown, 2005; Christopher and Gilbert, 2010). These scales represent a robust measure of

the operationalization of mindfulness and capture the components of attention/awareness,

non-judgment/acceptance and present moment focus (Christopher and Gilbert, 2010).

Among these scales, the MAAS appears to be the most widely adopted one so far.

Developed by Brown and Ryan (2003), the MAAS is a 15-item scale designed to

measure the level of individual mindfulness, namely, open or receptive awareness of and

attention to what is taking place at the moment. The items in the MAAS scale measure

57

“mindlessness.” This is considered a more robust way to test mindfulness level, since the

statements that reflect mindlessness are likely to be more accessible to most individuals,

given that “mindless states are much more common than mindful states” (Brown and

Ryan, 2003, p. 826). This study adopted 9 items from the MAAS. A seven-point rating

scale was utilized for all items in the scale. Table 8 illustrates the items used to measure

consumer mindfulness.

Table 8: Scale for Consumer Mindfulness

________________________________________________________________________

1. I break or spill things because of carelessness, not paying attention, or

thinking of something else.

2. I find it difficult to stay focused on what is happening in the present.

3. I tend to walk quickly to get where I am going without paying attention to

what I experience along the way.

4. I tend not to notice feelings of physical tension or discomfort until they really

grab my attention.

5. I forget a person‟s name almost as soon as I have been told it for the first time.

6. I do jobs or tasks automatically, without being aware of what I‟m doing.

7. I find myself listening to someone with one ear, doing something else at the

same time.

8. I find myself preoccupied with the future or the past.

9. I find myself doing things without paying attention.

________________________________________________________________________

3.3.6 Other Moderators

The items in the scales for other moderators were drawn to the maximum extent possible

from scales that had previously validated. The scales for product category familiarity and

product health/performance risk level were adapted from Batra et al. (2000). The items

included in the scales for product complexity, product importance and perceived product

58

value were checked for their relevance by several scholars in the marketing department.

A seven-point rating scale was used for all items in the scales. Table 9 illustrates the

items included in the scales.

Table 9: Items Included in the Scales for Other Moderators

________________________________________________________________________

Product Category Familiarity

1. I am very familiar with sport shoes (televisions/chocolates).

2. I know a lot about sport shoes (televisions/chocolates).

Product Health Risk Level

1. It would be risky for my health if I make a mistake in choosing sport shoes

(television/chocolate).

2. A poor choice of sport shoes (television/chocolate) would be a threat for my

health.

Product Performance Risk Level

1. It would be risky for running/walking (display/flavor) performance if I make a

mistake in choosing sport shoes (televisions/chocolates).

2. A poor choice of sport shoes (television/chocolate) would pose a threat in

terms of running/walking (display/flavor) performance.

Product Complexity

1. In my opinion, sport shoes (television/chocolate) are very complex products.

2. If I had to purchase sport shoes (television/chocolate) today, I would need

assistance in order to understand the technical features of the sport shoes

(television/chocolate).

Product Importance

1. The decision of which sport shoes (television/chocolate) to purchase is very

important to me.

2. I (would) pay very much attention to select which sport shoes

(television/chocolate) to buy.

3. Sport shoes (television/chocolate) is one of the most important products in a

person‟s life.

59

(Table 9 continued)

Perceived Product Value

1. The money I (would) spend on my sport shoes (televisions/chocolates) is a

significant amount in my budget.

2. Sport shoes (televisions/chocolates) provide a high level of utility to people.

3. The sport shoes (television/chocolate) a person selects tells something about

him/her.

4. The sport shoes (television/chocolate) one uses (“eats” for chocolate) can

contribute to his/her social status.

5. The brand of sport shoes (television/chocolate) one has (“eats” for chocolate)

can make an impression on me.

________________________________________________________________________

3.5 Measurement Reliability and Validity

Structural equation modeling (SEM), using EQS 6.1 statistics software, was utilized to

test the proposed conceptual model and the hypothesized relationships among the

constructs. SEM is suitable for the purposes of this research, since it enables the

examination of relationships among latent constructs in a holistic manner and since it

adopts a confirmatory factor analysis (CFA) of the data, explicitly estimating the

measurement error by providing the fit of the conceptual model. The analysis procedure

in this study consists of three main stages. First, all the factors were assessed in terms of

reliability and validity. Second, a structural path analysis was conducted to test the

structural model and the related research hypotheses. Third, the structural path model was

reexamined to test the potential moderators and the related hypotheses.

A three-step approach, as outlined by Churchill (1979) and Anderson (1987), was

employed to assess the validity and reliability of the measures. First, Cronbach‟s alpha

coefficients were computed with STATA 12 statistics software in order to assess the

60

reliability of each scale. Coefficient alphas were evaluated relative to the minimum .70

level recommended by Nunnally (1978). The only coefficient alpha that did not meet the

criteria set forth in the literature was the one for the product complexity scale (α = .64),

which is still acceptable. All other alphas exceeded the minimum criteria, with the lowest

coefficient being .86 for consumer mindfulness scale, indicating adequate reliability for

the measures employed in the study.

Second, a confirmatory factor analysis (CFA) with EQS 6.1 statistics software was

performed to test the convergent validity and the entire measurement of the factors

included in the structural model. The measurement model that included all constructs was

fitted by the elliptical reweighted least squares (ERLS) procedure of the EQS statistics

software. The elliptical distributions are not constrained by the normality assumptions

and their use is recommended when these assumptions are not met (Browne, 1984).

ERLS performs as well as ML with normal data and better than ML with non-normal

data (Yeniyurt, Henke and Cavusgil, 2012).

Results of the CFA strongly confirmed the structure of the constructs developed in

this study. The chi-squared statistic of the model was slightly greater than the

recommended minimum level (χ² = 15012.244, p < .001, df = 1960). Considering the

large number of cases in the study, which is 1527, the chi-squared value can be

acceptable. The goodness of fit measures were higher than the usually accepted cut-off

value. The comparative-fit index (CFI) was equal to .947. The Bentler-Bonett Normed Fit

Index (NFI) was equal to .939 and the mean root square error of approximation

(RMSEA) was equal to .069.

61

Table 10: Variables Measurement ______________________________________________________________________________________

Construct Code Item

______________________________________________________________________________________

Attitude-based Brand Equity ABBE

ABE1 I associate product X to sincerity.

ABE2 I associate product X to excitement.

ABE3 I associate product X to competence.

ABE4 I associate product X to sophistication.

ABE5 I associate product X to ruggedness.

ABE6 I like the company that makes product X.

ABE7 I (would) feel proud to own products from the company that

makes product X.

ABE8 I trust the company that makes product X.

ABE9 Product X is of very good quality.

ABE10 Product X is reliable.

ABE11 Product X has excellent features (“taste” for chocolates).

ABE12 Product X is durable (“healthy” for chocolates).

ABE13 Product X offers consistent quality.

Intention-based Brand Equity IBBE

IBE1 Product X would be my preferred choice.

IBE2 I (would) consider myself loyal to product X.

IBE3 Product X would be my first choice.

IBE4 The price of product X would have to go up a bit before I

would switch to another brand of sport shoes

(television/chocolate).

IBE5 I am willing to pay a higher price for product X than other

sport shoes (television/chocolate) brands.

IBE6 I am willing to pay a lot more for product X than other brands

in this category of sport shoes (televisions/chocolates).

Attitude-based Country Equity ABCE

ACE1 Sport shoes (televisions/chocolates) made in country X are

advertised widely.

ACE2 I can recognize sport shoes (television/chocolate) brand

names from country X.

ACE3 Country X has a high level of industrialization.

ACE4 Country X has a highly developed economy.

ACE5 People in country X are highly literate.

ACE6 Country X has a free-market system.

ACE7 Country X is a democratic country.

ACE8 Sport shoes (televisions/chocolates) made in this country have

quality workmanship (“quality ingredients” for chocolates).

ACE9 Sport shoes (televisions/chocolates) made in this country are

innovative (“delicious” for chocolates).

ACE10 Sport shoes (televisions/chocolates) made in this country are

dependable.

62

(Table 10 continued)

ACE11 I trust this country as a producer of sport shoes

(televisions/chocolates).

ACE12 Sport shoes (televisions/chocolates) made in this country are

of very good quality.

ACE13 Sport shoes (televisions/chocolates) made in this country have

excellent features (“are healthy” for chocolates).

ACE14 Sport shoes (televisions/chocolates) made in this country are

of consistent quality.

ACE15 Sport shoes (televisions/chocolates) made in this country are

very reliable.

Intention-based Country Equity IBCE

ICE1 Country X would be my preferred choice for sport shoes

(televisions/chocolates).

ICE2 I will not buy sport shoes (televisions/chocolates) made in

other countries, if I can buy the same product made in country

X.

ICE3 I (would) consider myself loyal to buying sport shoes

(televisions/chocolates) from country X.

ICE4 Country X would be my first choice for sport shoes

(televisions/chocolates).

ICE5 I am willing to pay a higher price for sport shoes

(televisions/chocolates) from country X than sport shoes

(televisions/chocolates) from other countries.

ICE6 The price of sport shoes (televisions/chocolates) from country

X would have to go up a bit before I would switch to sport

shoes (televisions/chocolates) from another country.

ICE7 I am willing to pay a lot more for running sport shoes (LCD

televisions/candy bars) from country X than running sport

shoes (LCD televisions/candy bars) from other countries.

Consumer Mindfulness CM1 I break or spill things because of carelessness, not paying

attention, or thinking of something else.

CM2 I find it difficult to stay focused on what is happening in the

present.

CM3 I tend to walk quickly to get where I am going without

paying attention to what I experience along the way.

CM5 I forget a person‟s name almost as soon as I have been told it

for the first time.

CM6 I do jobs or tasks automatically, without being aware of what

I‟m doing.

CM7 I find myself listening to someone with one ear, doing

something else at the same time.

CM8 I find myself preoccupied with the future or the past.

CM9 I find myself doing things without paying attention.

Product Familiarity PF1 I am very familiar with sport shoes (televisions/chocolates).

PF2 I know a lot about sport shoes (televisions/chocolates).

Product Health Risk Level PHR1 It would be risky for my health if I make a mistake in

choosing sport shoes (television/chocolate).

63

(Table 10 continued)

PHR2 A poor choice of sport shoes (television/chocolate) would be a

threat for my health.

Product Performance Risk Level PPR1 It would be risky for running/walking (display/flavor)

performance if I make a mistake in choosing sport shoes

(televisions/chocolates).

PPR2 A poor choice of sport shoes (television/chocolate) would

pose a threat in terms of running/walking (display/flavor)

performance.

Product Complexity PC1 In my opinion, sport shoes (television/chocolate) are very

complex products.

PC2 If I had to purchase sport shoes (television/chocolate) today, I

would need assistance in order to understand the technical

features of the sport shoes (television/chocolate).

Product Importance PI1 The decision of which sport shoes (television/chocolate) to

purchase is very important to me.

PI2 I (would) pay very much attention to select which sport shoes

(television/chocolate) to buy.

PI3 Sport shoes (television/chocolate) is one of the most important

products in a person‟s life.

Product Value PV1 The money I (would) spend on my sport shoes

(televisions/chocolates) is a significant amount in my budget.

PV2 Sport shoes (televisions/chocolates) provide a high level of

utility to people.

PV3 The sport shoes (television/chocolate) a person selects tells

something about him/her.

PV4 The sport shoes (television/chocolate) one uses (“eats” for

chocolate) can contribute to his/her social status.

PV5 The brand of sport shoes (television/chocolate) one has (“eats”

for chocolate) can make an impression on me.

______________________________________________________________________________________

Table 10 displays the scales finally employed in the study along with the codes for

the items. All items loaded on their respective constructs and were statistically significant

except for two items. The item “brand awareness” in attitude-based brand equity

construct was discarded because of its low correlation with the scale. Indeed, the low

correlation results from the structure of the study. Since the structure of the study did not

allow for the manipulation of brand awareness, this item did not correlate with the other

items in attitude-based brand equity scale. As noted earlier, brand awareness was not

64

expected to vary across the three versions of the products included in the study. In

addition, the item “I tend not to notice feelings of physical tension or discomfort until

they really grab my attention” was discarded because of its low correlation with the

consumer mindfulness scale.

Table 11: Measurement Model of Brand Equity ______________________________________________________________________________________

Factor Standardized Loading t Value a α

______________________________________________________________________________________

Attitude-based Brand Equity ABBE .9301

ABE1 .645 22.575

ABE2 .586 20.111

ABE3 .661 23.301

ABE4 .622 21.604

ABE5 .551 18.704

ABE6 .749 27.353

ABE7 .767 28.289

ABE8 .815 30.787

ABE9 .819 30.982

ABE10 .833 31.753

ABE11 .716 25.773

ABE12 .670 23.682

ABE13 .770 28.450

Intention-based Brand Equity IBBE .8971

IBE1 .860 33.076

IBE2 .745 26.972

IBE3 .867 33.485

IBE4 .707 25.155

IBE5 .759 27.667

IBE6 .716 25.574

______________________________________________________________________________

Goodness-of-fit statistics: CHI-SQUARE = 15012.244, df = 1960, p < .001, NFI = .939, NNFI = .944,

CFI = .947, RMSEA = .069 a t values from the unstandardized solution

65

Table 11 demonstrates the factor loadings, t statistics and the reliability coefficients

for the brand equity constructs, and shows that all the items loaded upon their

hypothesized factors in a statistically significant manner (p < .001), with the smallest

standardized coefficient of .551, indicating that the scales possess convergent validity. As

noted earlier, the item “brand awareness” (ABE14) was discarded because of its low

correlation with the scale. Appendix B indicates the brand equity items along with their

means and standard deviations for the data derived from Turkey and the US separately.

Table 12 demonstrates the factor loadings, t statistics and the reliability coefficients

for the country equity constructs. As shown in the table, all the items loaded upon their

hypothesized factors in a statistically significant manner (p < .001) and the standardized β

values are above .5, with the smallest standardized coefficient of .654, indicating that the

scale has convergent validity. Appendix C indicates the country equity items along with

their means and standard deviations for the data derived from Turkey and the US

separately.

Table 13 indicates the factor loadings, t statistics and the reliability coefficient for

the consumer mindfulness construct. The table shows that all the items loaded upon their

hypothesized factor in a statistically significant manner (p < .001) and the standardized β

values are above .5, with the smallest standardized coefficient of .530, indicating

convergent validity. As noted earlier, the item CM4 was discarded because of its low

correlation with the scale.

Similarly, Table 14 shows the factor loadings, t statistics and the reliability

coefficients for the other constructs, namely, product familiarity, product health risk

66

level, product performance risk level, product complexity, product importance and

product value. The table demonstrates that all the items loaded upon their hypothesized

factors in a statistically significant manner (p < .001) and the standardized β values are

above .5, indicating convergent validity. Table 15 provides the inter-factor correlations.

Besides, appendix D, E and F show the standardized coefficients and R-squares for all the

factors in the study and appendix G shows the mean value of each construct.

Table 12: Measurement Model of Country Equity ______________________________________________________________________________________

Factor Standardized Loading t Value a α

______________________________________________________________________________________

Attitude-based Country Equity ABCE .9648

ACE1 .771 28.737

ACE2 .702 25.407

ACE3 .756 27.971

ACE4 .762 28.310

ACE5 .768 28.574

ACE6 .689 24.807

ACE7 .654 23.240

ACE8 .894 35.654

ACE9 .851 33.041

ACE10 .870 34.150

ACE11 .878 34.672

ACE12 .908 36.535

ACE13 .777 29.053

ACE14 .882 34.881

ACE15 .872 34.270

Intention-based Country Equity IBCE .9328

ICE1 .793 29.634

ICE2 .801 30.080

ICE3 .746 27.232

ICE4 .856 33.113

ICE5 .861 34.615

ICE6 .837 32.024

ICE7 .862 33.475

______________________________________________________________________________

Goodness-of-fit statistics: CHI-SQUARE = 15012.244, df = 1960, p < .001, NFI = .939, NNFI = .944,

CFI = .947, RMSEA = .069 a t values from the unstandardized solution

67

Table 13: Measurement Model of Consumer Mindfulness ______________________________________________________________________________________

Factor Standardized Loading t Value a α = .8585

______________________________________________________________________________________

CM1 .586 19.522

CM2 .738 26.077

CM3 .581 19.318

CM5 .634 21.481

CM6 .735 25.949

CM7 .710 24.769

CM8 .530 17.347

CM9 .815 17.347

______________________________________________________________________________________

a t values from the unstandardized solution

Table 14: Measurement Model of Other Constructs ______________________________________________________________________________________

Factor Standardized Loading t Value a α

______________________________________________________________________________________

Product Familiarity .8830

PF1 .929 30.214

PF2 .871 28.314

Product Health Risk Level .9321

PHR1 .925 36.258

PHR2 .965 38.650

Product Performance Risk Level .9380

PPR1 .974 39.444

PPR2 .916 35.934

Product Complexity .6371

PC1 .687 21.698

PC2 .709 22.342

Product Importance .8605

PI1 .880 33.672

PI2 .848 31.924

PI3 .776 28.180

Product Value .8590

PV1 .704 24.575

PV2 .722 25.392

PV3 .749 26.682

PV4 .767 27.546

PV5 .778 28.097

______________________________________________________________________________________

a t values from the unstandardized solution

68

Table 15: Correlation Matrix

________________________________________________________________________

ABBE IBBE ABCE IBCE CM PF PHR PPR PC PI PV

-------------------------------------------------------------------------------------------------------------------------------- ABBE 1.0000

IBBE 0.7269 1.0000

ABCE 0.7001 0.5648 1.0000

IBCE 0.6228 0.6875 0.7638 1.0000

CM -0.0941 -0.0844 -0.0200 -0.0674 1.0000

PF 0.0022 -0.0487 0.0365 0.0079 0.2464 1.0000

PHR -0.1097 0.0369 -0.1066 -0.0203 -0.1694 -0.0865 1.0000

PPR -0.0195 0.0809 -0.0337 0.0436 -0.2015 -0.0547 0.6262 1.0000

PC 0.1084 0.1522 0.0029 0.0727 -0.3947 -0.3425 0.3158 0.4086 1.0000

PI 0.0157 0.1494 -0.0181 0.0905 -0.2026 0.0631 0.5435 0.5756 0.4220 1.0000

PV 0.1611 0.2636 0.0250 0.1560 -0.4065 -0.0649 0.3602 0.3993 0.4873 0.6812 1.0000

____________________________________________________________________________________________________________

As the third step in the reliability and validity assessment, the discriminant validity

was examined using the procedure recommended by Anderson (1987) and Bagozzi,

Youjae, and Lynn (1991). This procedure required analyzing all possible pairs of

constructs in a series of two-factor CFA models using EQS statistics software (Yeniyurt

et al., 2012). Each pair of constructs was included in CFAs estimated by constraining the

correlation between factors to one and then releasing this constraint. Next, a chi-square

difference test was conducted on the nested models to assess whether the chi-square

values were significantly lower for the unconstrained models. In all cases, the critical

value of 3.84 was exceeded, which shows that the measures included in the study have

discriminant validity.

Finally, a multi-group CFA was performed to assess the cross-cultural equivalence

of the measurement model. The dataset was divided into two groups based on the country

where the survey was conducted. A constrained two group CFA indicated that, according

69

to the chi-squared difference statistic, there were no statistically significant differences in

the factor structure and item loadings across the two groups.

70

Chapter 4

Results

4.1 Main Effects

This research examined the proposed structural model by a path analysis using EQS. It

applied the ERLS procedure within the EQS program to the variance-covariance matrix

of the factors. No anomalies or special problems were encountered, and the program

converged properly. Figure 5 indicates the parameter estimates and fit statistics of the

structural model.

The chi-squared statistic of the path model was slightly greater than the

recommended minimum level (χ² = 8725.756, p < .001, df = 774). Considering the large

number of cases in the study, which is 1527, the chi-squared value can be acceptable.

Since the chi-square should not be used alone to evaluate model fit, other fit indices were

also examined. The analysis shows that the Beniler-Bonett normed fit index (NFI) is

.955, the non-normed fit index (NNFI) is .956, the comparative fit index (CFI) is .959,

and Bollen's fit index (IFI) is .959. In addition, the standardized residuals are small, and

all parameter estimates are in the expected direction. The high fit indices and the

theoretically consistent parameter estimates suggest that the structural path model fits the

data well. Thus, it is concluded that the coefficients of the path model adequately

represent the relationships between the country equity and brand equity sub-constructs.

Next, the estimates of the path coefficients were used to test the hypothesized

relationships between country equity and brand equity sub-constructs. The path

coefficients in Figure 5 indicate that intention-based country equity is influenced

71

Figure 5: Full Model (ALL DATA)

ABCE

ACE1E21

ACE2E22

ACE3E23

ACE4E24

ACE5E25

ACE6E26

ACE7E27

ACE8E28

ACE9E29

ACE10E30

ACE11E31

ACE12E32

ACE13E33

ACE14E34

ACE15E35

IBCE D3

ICE1 E36

ICE2 E37

ICE3 E38

ICE4 E39

ICE5 E40

ICE6 E41

ICE7 E42

ABBE

D2

ABE1

E2

ABE2

E3

ABE3

E4

ABE4

E5

ABE5

E6

ABE6

E7

ABE7

E8

ABE8

E9

ABE9

E10

ABE10

E11

ABE11

E12

ABE12

E13

ABE13

E14

IBBE D1

IBE1 E15

IBE2 E16

IBE3 E17

IBE4 E18

IBE5 E19

IBE6 E20

.767

.692

.759

.765

.769

.693

.659

.897

.858

.875

.883

.909

.785

.884

.877

.792

.808

.802

.753

.864

.866

.806

.831

.742

.653 .580 .674 .620 .540 .754 .766 .816 .831 .841 .724 .689 .784

.366

.557

.871

.745

.878

.683

.742

.709

72

positively and significantly by attitude-based country equity (t = 22.068, p < .05). Thus,

H1 is supported. In addition, attitude-based brand equity is influenced positively and

significantly by attitude-based country equity (t = 17.743, p < .05). Therefore, H2 is

supported. Besides, intention-based brand equity is influenced positively and

significantly by intention-based country equity (t = 11.775, p < .05) and by attitude-based

brand equity (t = 14.996, p < .05). Thus, H3 and H4 are supported.

The structural path model was also analyzed based on the data obtained from Turkey

and the US separately. Figure 6 indicates the path coefficients based on the data obtained

from Turkey. The structural path model fits the data well (χ² = 6167.376, p < .001, df =

774, NFI = .948, NNFI = .951, CFI = .954, IFI = .954). The model demonstrates that

intention-based country equity is influenced positively and significantly by attitude-based

country equity (t = 19.285, p < .05). Furthermore, attitude-based brand equity is

influenced positively and significantly by attitude-based country equity (t = 13.987, p <

.05). Finally, intention-based brand equity is influenced positively and significantly by

intention-based country equity (t = 9.875, p < .05) and by attitude-based brand equity (t =

11.794, p < .05). On the other hand, figure 7 indicates the path coefficients based on the

data obtained from the USA. The structural path model fits the data well (χ² = 5317.407,

p < .001, df = 774, NFI = .936, NNFI = .942, CFI = .945, IFI = .945). The model shows

that intention-based country equity is influenced positively and significantly by attitude-

based country equity (t = 12.783, p < .05). In addition, attitude-based brand equity is

influenced positively and significantly by attitude-based country equity (t = 10.955, p <

.05). Finally, intention-based brand equity is influenced positively and significantly by

intention-based country equity (t = 7.641, p < .05) and by attitude-based brand equity

73

Figure 6: Full Model (Turkey)

ABCE

ACE1E21

ACE2E22

ACE3E23

ACE4E24

ACE5E25

ACE6E26

ACE7E27

ACE8E28

ACE9E29

ACE10E30

ACE11E31

ACE12E32

ACE13E33

ACE14E34

ACE15E35

IBCE D3

ICE1 E36

ICE2 E37

ICE3 E38

ICE4 E39

ICE5 E40

ICE6 E41

ICE7 E42

ABBE

D2

ABE1

E2

ABE2

E3

ABE3

E4

ABE4

E5

ABE5

E6

ABE6

E7

ABE7

E8

ABE8

E9

ABE9

E10

ABE10

E11

ABE11

E12

ABE12

E13

ABE13

E14

IBBE D1

IBE1 E15

IBE2 E16

IBE3 E17

IBE4 E18

IBE5 E19

IBE6 E20

.796

.719

.809

.809

.811

.774

.769

.900

.863

.889

.892

.899

.844

.884

.872

.859

.888

.866

.801

.905

.840

.768

.790

.779

.698 .585 .679 .633 .711 .735 .773 .820 .829 .851 .732 .831 .824

.399

.574

.889

.772

.895

.688

.746

.740

74

Figure 7: Full Model (USA)

ABCE

ACE1E21

ACE2E22

ACE3E23

ACE4E24

ACE5E25

ACE6E26

ACE7E27

ACE8E28

ACE9E29

ACE10E30

ACE11E31

ACE12E32

ACE13E33

ACE14E34

ACE15E35

IBCE D3

ICE1 E36

ICE2 E37

ICE3 E38

ICE4 E39

ICE5 E40

ICE6 E41

ICE7 E42

ABBE

D2

ABE1

E2

ABE2

E3

ABE3

E4

ABE4

E5

ABE5

E6

ABE6

E7

ABE7

E8

ABE8

E9

ABE9

E10

ABE10

E11

ABE11

E12

ABE12

E13

ABE13

E14

IBBE D1

IBE1 E15

IBE2 E16

IBE3 E17

IBE4 E18

IBE5 E19

IBE6 E20

.740

.680

.678

.716

.715

.600

.539

.889

.848

.853

.867

.920

.701

.877

.879

.683

.695

.720

.787

.811

.893

.849

.880

.669

.568 .537 .676 .618 .359 .746 .724 .791 .822 .815 .671 .593 .703

.320

.571

.847

.794

.852

.662

.730

.686

75

(t = 10.409, p < .05). The two structural models show that the effect of country equity on

consumer-based brand equity is slightly higher for the Turkish sample than for the

American sample.

4.2 Moderation Effects

The moderation effects were examined by applying a multi-group analysis, which is

called a split-group approach, where the initial sample is divided into two sub-groups on

the basis of cut-off values of each individual moderator. For each potential moderating

variable, the sample was divided into two groups (low and high) based on their respective

median. The two structural path models were subsequently estimated for each

hypothesized moderation effect. One of these models was a constrained model, where the

path affected by the moderating variable was fixed to 1, and the other one was a

constrain-released model, where all paths of the structural model were allowed to be

freely estimated. A significant chi-square difference (∆χ²(1) > 3.84 for p < .05) between

these two models implies that the moderating variable has a significant effect on the

proposed relationship. The outcomes of these analyses are presented in Table 16.

The results show that consumer mindfulness, product familiarity, product

complexity, product importance and value have no moderation effect on the relationships

between country equity and brand equity, thus leading to a rejection of H5, H6, H7, H8,

H9, H10, H15, H16, H17, and H18. The results also indicate that the effect of attitude-based

country equity on attitude-based brand equity is significantly moderated by product

health risk level. In other words, the effect of attitude-based country equity on attitude-

based brand equity is stronger for products that have high health risk level (β = .566, t =

76

16.11, p < .05) than products that have low health risk level (β = .403, t = 10.22, p < .05).

Thus, H11 is supported. However, product health risk level has no moderating effect on

the relationship between intention-based country equity and intention-based brand equity,

which fails to support H12. In support of H13, the results demonstrate that product

performance risk level significantly moderates the relationship between attitude-based

country equity and attitude-based brand equity. In other words, the effect of attitude-

based country equity on attitude-based brand equity is stronger for products that have

high performance risk level (β = .569, t = 15.44, p < .05) than products that have low

performance risk level (β = .419, t = 9.82, p < .05). However, it does not significantly

moderate the relationship between intention-based country equity and intention-based

brand equity, thus leading to the rejection of H14. Figure 8 and Figure 9 demonstrate the

significant moderation effects.

Table 16: Results of Moderation Effects

________________________________________________________________________

Consumer Mindfulness as a Moderator

------------------------------------------------------------------------------------------------------------

Main Effect High Consumer Low Consumer

Mindfulness Mindfulness

ABCE ABBE .523 .523

IBCE IBBE .369 .369

________________________________________________________________________

Product Familiarity as a Moderator

------------------------------------------------------------------------------------------------------------

Main Effect High Product Low Product

Familiarity Familiarity

ABCE ABBE .532 .532

IBCE IBBE .390 .390

________________________________________________________________________

77

(Table 16 Continued)

Product Health Risk Level as a Moderator

------------------------------------------------------------------------------------------------------------

Main Effect High Product Low Product

Health Risk Health Risk

ABCE ABBE .566 .403

IBCE IBBE .345 .345

________________________________________________________________________

Product Performance Risk Level as a Moderator

------------------------------------------------------------------------------------------------------------

Main Effect High Product Low Product

Performance Risk Performance Risk

ABCE ABBE .569 .419

IBCE IBBE .357 .357

________________________________________________________________________

Product Complexity as a Moderator

------------------------------------------------------------------------------------------------------------

Main Effect High Product Low Product

Complexity Complexity

ABCE ABBE .519 .519

IBCE IBBE .366 .366

________________________________________________________________________

Product Importance as a Moderator

-----------------------------------------------------------------------------------------------------------

Main Effect High Product Low Product

Importance Importance

ABCE ABBE .547 .547

IBCE IBBE .364 .364

________________________________________________________________________

Product Value as a Moderator

------------------------------------------------------------------------------------------------------------

Main Effect High Product Low Product

Importance Importance

ABCE ABBE .493 .493

IBCE IBBE .335 .335

________________________________________________________________________

Notes: * The unstandardized β values are presented.

** P < .05

78

Figure 8: The Moderating Role of Product Health Risk Level

________________________________________________________________________

.860

.566* .403** .345

.835

______________________________________________________________________________

* High Product Health Risk Level

** Low Product Health Risk Level

Figure 9: The Moderating Role of Product Performance Risk Level

________________________________________________________________________

.840

.569* .419** .357

.862

______________________________________________________________________________

* High Product Performance Risk Level

** Low Product Performance Risk Level

Intention-

based Country

Equity

Attitude-

based Brand

Equity

Attitude-

based Country

Equity

Intention-

based Brand

Equity

Product

Health Risk

Level

Attitude-

based Country

Equity

Intention-

based Brand

Equity

Intention-

based Country

Equity

Attitude-

based Brand

Equity

Product

Performance

Risk Level

79

Chapter 5

Conclusion and Discussion

5.1 Conclusion

Despite the prolific research on both COO and brand equity over the past few decades,

the extant marketing literature does not explain whether consumer-based equity of a

brand is linked to the equity of its COO. This dissertation sought to explain whether

consumer-based brand equity was influenced by country equity, which was

conceptualized as the perceptual value derived from the associations of a brand with a

particular country name. Furthermore, it attempted to explain whether this effect was

moderated by consumer mindfulness, which was defined as “a receptive attention to and

awareness of present events and experience” (Brown et al., 2007a, p. 212). In addition to

consumer mindfulness concept, other factors, namely, product familiarity, product

complexity, product health/performance risk level, product importance, and product value

were examined as potential moderators of country equity effect.

Different from the extant research, this dissertation approached the country equity

and brand equity constructs from both attitudinal and intentional perspectives. It

developed attitude-based and intention-based sub-constructs for both country equity and

brand equity constructs. While attitude-based country equity was conceptualized as a

four-dimensional construct consisting of country awareness, macro country image, micro

country image and perceived quality (at the country level), intention-based country equity

was conceptualized as a two-dimensional construct consisting of country loyalty and

WTP a price premium (at the country level). On the other hand, while attitude-based

80

brand equity was conceptualized as a three-dimensional construct consisting of brand

awareness, brand image and perceived quality (at the brand level), intention-based brand

equity was conceptualized as a two-dimensional construct consisting of brand loyalty and

WTP a price premium (at the brand level). The measure for each construct was shown to

be highly valid and reliable and thus sufficiently sound for use in substantive empirical

research.

This research has overcome certain generalizability problems existent in previous

COO studies. First, early studies were mostly conducted in developed countries,

particularly in the US and UK. This was one of the biggest concerns about the

generalizability of COO effect. It is not surprising that consumers in developed and

developing countries differ in their response to COO information. This study used

samples from both developed and developing country.

Second, previous research mostly utilized COO information as the single product cue

in their study, which leads to the overestimation of the COO effect. Consumers evaluate

products and services based on both the intrinsic and extrinsic product cues. Therefore,

presenting COO information to the subjects as the only cue would lead them to base their

judgments on only this extrinsic cue, and make assumptions about other product cues.

This study used multiple-cues in the study in order to avoid a potential overestimation

problem.

Third, previous research mostly selected televisions and cars as the product category.

The use of expensive and luxury products in research might increase participants‟

involvement level and the importance of evaluations, leading them to pay more attention

81

to COO information in their evaluations. Thus, this might generate an overestimated

COO effect. This study selected televisions, sport shoes and chocolates as the product

categories, which might increase the generalizability of COO effect.

Previous COO research mostly focused on the development level of the country as

the independent variable. In this context, based on pilot studies, the researchers selected

different countries that varied according to development level, particularly economic

development level. Participants evaluated the quality of different brands coming from

these countries. That is, these studies focused on “quality perception” as the dependent

variable. On the other hand, some researchers focused on the effect of country image on

consumer product evaluations or quality perceptions. In other words, the emphasis was

on country image, which also includes the development level of a country. As noted

earlier, the effect of COO cannot be explained entirely by a quality signaling process. In

addition to its role as a signal for quality, COO cue has symbolic and emotional meanings

to consumers. The results of this study justify a higher order construct, country equity,

which also includes country image. Therefore, this study suggests that countries should

enhance not only their country image, but also other country equity dimensions such as

country awareness and quality perceptions.

5.2 Discussion

The results demonstrated that COO equity significantly influenced consumer-based brand

equity. More specifically, there was a positive relationship between “attitude-based

country equity” and “attitude-based brand equity.” Furthermore, there was a positive

relationship between “intention-based country equity” and “intention-based brand

82

equity.” In addition to these relationships between country equity and brand equity sub-

constructs, the results also showed a positive relationship between “attitude-based

country equity” and “intention-based country equity” and between “attitude-based brand

equity” and “intention-based brand equity.” Revealing the effect of country equity on

consumer-based brand equity serves to disentangle the equity endowed by the brand

name from that endowed by the country name with which the brand is associated.

The results indicated that product health risk level and product performance risk

level moderated the relationship between “attitude-based country equity” and “attitude-

based brand equity.” However, these factors do not moderate the relationship between

“intention-based country equity” and “intention-based brand equity.” In addition,

consumer mindfulness, product familiarity, product complexity, product importance and

product value have no moderating effect on the relationships between country equity and

brand equity.

The results of the examination of the potential moderators are surprising considering

the previous findings in COO studies. As noted earlier, previous research found that

product familiarity, product complexity, product importance and product value

significantly moderated the COO effect. Indeed, the results of this study concerning the

potential moderators justify the examination of higher-order constructs, country equity

and brand equity, as the independent and dependent variables. As mentioned before,

previous COO research mostly focused on the development level of the country and

country image as the independent variable, and quality perceptions as the dependent

variable. In these cases, product familiarity, product complexity, product importance and

product value significantly moderates the COO effect, since the COO effect is only

83

explained by quality signaling process. The symbolic and emotional meanings to

consumers are not in effect. Thus, even if a consumer develops negative attitudes or

animosity towards a country, he/she can evaluate the quality of products from that

country positively. More specifically, if the product complexity, product importance and

value are low to the consumer, he or she may ignore the COO of the product. Similarly, if

the consumer is familiar to the product category, he or she may ignore the COO

information. The consumer may ignore the origin information in all these cases, because

the focus is on brand quality. However, when the focus point is broadened and we

consider the higher-order constructs the consumer will probably pay attention to the COO

information even if the product complexity, product importance and value are low to

him/her. As an example, consider the purchase of printer papers. In this case, the product

complexity, product importance and value are relatively low and consumers‟ product

familiarity is high. Therefore, a consumer may not take into account the COO

information, because he/she ignores the quality of the papers or does not worry about it.

This leads to the low effect of COO cue. In other words, when the emphasis is on quality

signaling process, product familiarity, product complexity, product importance and

product value will probably moderate the COO effect. On the other hand, if we broaden

the scope of the emphasis, and take into account the symbolic and emotional meanings

through higher-order constructs, country equity and brand equity, these factors may not

moderate the COO effect. The consumer may negatively evaluate the image of the

product, if it is originated from a country towards which he/she develops negative attitude

or animosity. Similarly, he/she may not develop brand loyalty or may be unwilling to pay

a price premium to the product. Therefore, the negative COO equity will influence the

84

consumer-based brand equity of the printer papers, although the product complexity,

product importance and product value are low and familiarity is high. Thus, these factors

will not moderate the relationship between country equity and brand equity.

The lack of moderation effect of consumer mindfulness concept might result from the

omission of the adaptation of its measurement to consumer behavior context. As noted

earlier, this study utilized the MAAS scale developed by Brown and Ryan (2003) that has

been the most widely used measurement of mindfulness in social psychology and related

research area. The adaptation of this scale to consumer behavior context might reveal the

proposed relationships. In this context, based on the related literature, consumer

mindfulness might be a multi-dimensional construct consisting of awareness, attention,

motivation, concentration, involvement, need for cognition, openness to novelty, self-

regulation and self-control dimensions.

We proposed that since consumers low on mindfulness used heuristics and peripheral

route and utilized COO information as the primary product attribute or an attitude

determining cue, their product evaluations would be highly influenced by the country

equity of the products. This proposition can also be extended to other extrinsic product

cues such as brand name, price, store image and advertising. That is, consumers low on

mindfulness might utilize extrinsic product cues more than intrinsic product cues, and

base their judgments on extrinsic cues.

From a managerial perspective, the results of this dissertation suggest that country

equity represents an important part of the competitive advantage of firms in global

markets. More specifically, it suggests that the mere association of products with a

85

particular country significantly influences consumers‟ brand awareness, brand image,

quality perceptions, brand loyalty and willingness to pay a price premium. In this context,

while firms with high country equity might achieve competitive advantage in the global

markets and have strong bargaining power with channel members, firms with low

country equity might face significant problems. This argument has several managerial

implications. If a firm with high country equity suffers from low brand equity in the

global markets, it can overcome this problem by emphasizing its association with its

country-of-origin. This emphasis can be conveyed to consumers through any marketing

communication channel such as advertising or packaging. On the other hand, if a firm

with low country equity suffers from low brand equity in the global markets, it might

overcome this problem by getting associated with a country with positive country equity.

The use of a foreign-sounding brand name (e.g. Established in New York, the brand

Häagen-Dazs is a Scandinavian-sounding ice cream brand, but is originally American),

the acquisition of a foreign brand (e.g. the acquisition of Grunding by the Turkish firm

Beko) or the formation of strategic alliances with firms from countries with positive

country equity (e.g. Richtek, a Taiwan fables IC design firm, is working with Intel, an

American firm, to develop next-generation power-management chips) are the examples

of strategies to overcome this problem. Finally, if a firm with high brand equity suffers

from being located in a country with low equity, it can overcome this problem by

choosing a different country of assembly with high equity and thus concealing the actual

product origin.

The findings also suggest that country equity is important to consumers regardless of

the level of consumer product familiarity, product complexity, product importance and

86

product value. In other words, the COO equity of products is of significant importance

regardless of the product types and characteristics. These findings suggest that the

marketers of all kinds of products should pay attention to country equity phenomenon

and consider the potential effects of COO information on consumer behavior. Therefore,

not only the marketers of products that are valuable and important to consumers, but also

the marketers of everyday products that are ordinary to consumers should engage in

managing the country equity effect, and take it into account when developing their

marketing mix strategies.

The results indicate that country equity is particularly important when the perception

of product health and performance risk level is high in the target market. In these cases,

consumers utilize COO information more, and thus country equity has stronger effect on

their decision making. This research suggests that marketers should carefully examine

and consider consumers‟ perception of product health and performance risk level in their

target market before developing their marketing mix. If the product health and

performance risk levels are high in the target market, firms with high country equity

should attempt to emphasize their COO in order to increase the equity of their brands,

whereas firms with low country equity should find ways to deal with the negative country

equity effect.

This study suggests that country equity is of vital importance for entering foreign

markets. High country equity may help firms to overcome entry barriers in foreign

markets and have strong bargaining power with channel members. Furthermore, it may

improve the ability of firms from that country to launch brand extensions in foreign

markets. In addition, it may increase the power of brands from that country relative to

87

competition in international markets. Brands originated from countries with higher equity

may be less vulnerable to strong global competition.

According to the literature, the external globalization drivers can be classified into

four categories: market, cost, government and competition drivers (Uslay, Yeniyurt and

Lee, 2013; Ananthram and Pearson, 2008; Morrison, 1990; Levitt, 1983; Yip et al.,

1997). Considering its significant effect on consumer-based brand equity, this research

introduces country equity as the fifth external globalization driver that enables the

extension of an industry‟s scope beyond its national boundaries.

High country equity provides a firm the opportunity to enjoy the high value that

consumers in the global markets associate with the name of the country in the relevant

product category. As an example, consider a local Japanese firm in electronics industry.

Since Japan has high country equity in electronics category, this local firm possesses the

opportunity to enjoy the value that consumers in the global markets associate with Japan

by developing global strategies and getting to global. Therefore, high country equity is a

significant external driver that encourages firms‟ global expansion and use of global

strategy. Furthermore, it significantly influences firms‟ performance in global markets.

Global firms with higher country equity will likely to achieve higher global market

performance. Therefore, high country equity is an external pulling force that provides

important opportunities and advantages in the global marketplace.

This dissertation suggests that high country equity is of vital importance for SMEs‟

internationalization and market performance in the global markets. Country equity is the

value shared by the brands from a particular country. In this context, even new or

88

unknown brands may benefit from positive country equity, since the association with a

country with high consumer-based equity might increase their consumer-based brand

equity. More specifically, even if it is a new or unknown brand in the global markets, a

brand can increase consumers‟ perception of brand image and brand quality and thus

develop brand loyalty and willingness to pay a price premium due to its association with

a country with high equity. Therefore, SMEs from developed countries or SMEs from

countries with strong image in the related product category can enjoy the value that

consumers in the global markets associate with their country of origins. In conclusion,

high country equity not only encourages their internationalization, but also helps them

achieve strong competitive advantage in the global markets.

Whether positive or negative, developed intentionally or by default, every country

has equity. The strategic management of country equity and the recognition of its

significance will be key to successful global marketing in the years ahead in which the

global competition is expected to rise further. Considering the effect of country equity on

consumer-based brand equity and the strategic role of country equity in global marketing,

this research suggests that three key groups, namely, government, industry groups and

individual firms should manage country equity and seek strategies to increase it in order

to help firms from that country develop strong brand equity in the global markets,

overcome entry barriers in foreign markets, have strong bargaining power with channel

members, and be less vulnerable to fierce global competition. In other words, these three

key groups should employ country branding strategies in order to enhance country brand

image and reposition the country brands in the global markets. More specifically, the

three key groups should develop strategies to increase country awareness, improve macro

89

and micro country image and perceived quality of country brands and thus enhance

consumers‟ country loyalty and WTP a price premium for country brands. The distinctive

measures of country equity developed in this study can enable managers from these key

groups to better understand, measure, track and manage country equity.

This research suggests that government, industry groups and individual firms should

work together to generate country awareness in certain industries. In other words, they

should engage in activities to increase consumers‟ ability to recognize or recall that the

country is a producer of certain product categories. The first step in a well-established

country equity management program might be determining the product/service categories

in which the country can compete and introduce strong brands into global markets. After

choosing the industries, the country should utilize marketing communication channels

and try to appear with these selected product/service categories.

Second, government, industry groups and individual firms should spend efforts and

develop strategies to enhance macro country image, which is “the total of all descriptive,

inferential and informational beliefs one has about a particular country” (Martin and

Eroglu 1993: p. 193). These efforts may include certain initiatives to influence

consumers‟ perception of country‟s social, political, economical and technological

conditions. For example, the government of a country may use communications

professionals on their behalf in foreign nations to receive favorable press coverage. In

addition, they may engage in public diplomacy, in which they seek to communicate to

foreign nationals directly to influence individuals‟ perception about the country.

Furthermore, the country may attempt to appear in the movies positively. All of these

efforts may emphasize labor skills, industrialization, safety, environment, natural

90

resources and political stability in the country. These attempts may lead a large number

of individuals to change their opinions about the country intentionally or subliminally.

Third, government, industry groups and individual firms should work together to

increase micro country image, which is the total beliefs one has about the products of a

country in a given product category. These three groups should act and speak in a

coordinated and repetitive way about themselves in order to differentiate themselves from

other countries in certain product categories. Influencing consumers‟ perception of micro

image of a country requires well-developed positioning strategies at the country level. To

enhance a country‟s micro image, it may be easier to generate new positive associations

than to deny the previous negative ones.

Fourth, the three key groups should attempt to influence consumers‟ quality

perceptions of country brands. This may be the hardest part of country branding

strategies. The dimensions of macro country image such as political, technological and

economical conditions of the country and the dimensions of micro country image such as

workmanship, innovation, and prestige are all external to the products. However, quality

is an internal product cue. Therefore, it may be more difficult to influence consumers‟

perception of product quality than consumers‟ perception of macro and micro country

image. In this context, influencing consumers‟ country awareness may be the easiest part

of country branding program.

The results of this study demonstrate that there is a positive relationship between

attitude-based country equity, which consists of country awareness, macro and micro

country image and perceived quality, and intention-based country equity, which consists

91

of country loyalty and WTP a price premium. Therefore, government, industry groups

and individual firms can enhance intention-based country equity by managing attitude-

based country equity successfully. More specifically, they can enhance consumers‟

country loyalty and WTP a price premium by increasing country awareness and

improving consumers‟ perception of macro and micro country image and product quality

at the country level.

In conclusion, the management of country equity could reap considerable benefits

for the firms from that country and the nation as a whole because of the significant effect

of country equity on consumer-based brand equity. Moreover, the management of

country equity can be applicable not only to countries low on equity, but also to countries

high on equity. This study offered valuable tools and suggestions for governments,

industry groups and individual firms to understand, measure, track and manage country

equity in order for them to succeed in the global markets. Furthermore, the measures

developed in this study can help a manufacturer identify manufacturing countries with

high equity. By locating the manufacturing countries with positive equity and moving the

production facilities to one of these countries, a firm may increase consumer-based equity

of its brands in the global markets.

5.3 Future Research

A couple of new research attempts can contribute to our understanding of country equity

notion and its effects on brands‟ success in the global markets, and of implications for

country branding strategies. First, future research should examine the relationships

among the dimensions of country equity and consumer-based brand equity. Although this

92

study examined the relationships among the sub-constructs of country equity and brand

equity, it did not study the relationships among the dimensions of these sub-constructs. A

study in this direction can reveal the relative importance of each dimension and their

comparative effects on consumer product evaluations. Such research attempt may have

significant implications for country branding strategies. It may reveal which dimension of

country equity is of more significance for country branding programs.

Second, future research should address whether the effect of country equity on

consumer-based brand equity is significant for other product categories and whether this

effect holds across various cultures. This research examined three product categories,

namely, television, sport shoes and chocolates. The strength of country equity effect

might vary depending on the product category. By including different product categories

and conducting the study in various countries with different cultures, future researchers

can obtain more generalizable results. Furthermore, they can analyze whether culture

moderates the effect of country equity on consumer-based brand equity. In addition, the

employment of student samples, while perfectly acceptable for theory testing in COO

studies, places limitations on the generalizability of findings. Therefore, future research

should employ non-student samples for further generalization of the results.

Third, future research should examine the effect of country equity on consumer-based

brand equity by utilizing different conceptualization of country-of-origin. As noted

earlier, this study conceptualizes COO as “product origin,” which refers to the country

where the products are actually made. Future research may focus on brand origin, design

origin, parts origin or ownership origin. Moreover, future researchers may include more

than one origin information and introduce multi-national products. Such research attempt

93

may point out the issue of “brand origin recognition accuracy.” Due to the increase in the

number of multi-national products, it has become difficult for consumers to recall the true

product, brand, design, ownership and parts origin of products. Instead, they may identify

certain brands to particular countries, which influence their evaluations and judgments.

Therefore, future researchers may develop a new and more comprehensive COO concept

that will refer to a country with which a brand is identified. Furthermore, even if the

country where a product is produced or the country where the headquarters of the brand

are located has changed, consumers may continue to identify the brand with its former

origin. Therefore, the introduction of the concept “core origin” of a product may help

improve our understanding of COO influence and have significant managerial

implications.

Fourth, future research should analyze the strategies or the instruments for managing

or influencing country equity. Particularly, future research should examine how to deal

with negative country equity and eliminate its effect on consumer-based brand equity.

More specifically, researchers should study the strategies or the instruments that will

increase country awareness and that will enhance consumers‟ perception of macro and

micro country image and product quality at the country level. Researchers should also

address how to enhance consumers‟ country loyalty and WTP a price premium at the

country level. This stream of research will be of significant importance particularly for

underdeveloped or developing countries most of which suffer from negative country

equity.

Finally, further research is needed to examine the role of consumer mindfulness in

consumers‟ product evaluations and judgments. Future research should examine whether

94

the potential moderating effect is applicable to extrinsic product cues such as COO, price,

brand name, store image, social product attributes and advertising. Moreover, the

potential role of mindfulness in consumers‟ use of intrinsic product cues merits distinct

attention by future researchers. In addition, a new and more comprehensive consumer

mindfulness scale can be developed. As noted earlier, this study adopted previously

developed and commonly used the MAAS scale. Adapting this scale to consumer

behavior context, future researchers can develop a multi-dimensional mindfulness scale.

Based on the literature on mindfulness, such scale might include awareness, attention,

motivation, concentration, involvement, need for cognition, openness to novelty, self-

regulation and self-control dimensions.

95

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Appendix A: Survey Questionnaire (Form A)

Dear Participant,

Thank you for participating in the survey. This study examines a popular issue in

international marketing. The findings of this study are expected to help both researchers

and managers understand a significant topic and fill a gap in international marketing and

consumer behavior literature. The information you provide will be used to understand the

subject matter and to answer the research questions. Your answers will be put together

with others‟ anonymously.

INSTRUCTIONS FOR COMPLETING THE QUESTIONNAIRE

Please, read the descriptions of the three products first. The questions in section 1 are

related to your opinions about these products. The questions in section 2, 3 and 4 are not

related to the product descriptions. Please, respond to each question using the seven point

scale where 1 = Strongly Disagree, and 7 = Strongly Agree. Please, write the number you

choose in each column to indicate how much you agree with that statement.

PRODUCT DESCRIPTIONS

Product 1: SONY LCD TV

- Bravia BX520 Series

- 55-inch HDTV

- 1080p Resolution

- 120Hz technology for smooth

motion

- Made in Japan

- Price: $1,398.00

Product 2: SONY LCD TV

- Bravia BX520 Series

- 55-inch HDTV

- 1080p Resolution

- 120Hz technology for smooth

motion

- Made in South Korea

- Price: $1,398.00

Product 3: SONY LCD TV

- Bravia BX520 Series

- 55-inch HDTV

- 1080p Resolution

- 120Hz technology for smooth motion

- Made in India

- Price: $1,398.00

107

SECTION 1

The following questions are intended to measure your opinions about the three products

described above. Please use the seven-point scale to indicate how much you agree with

below statements. The terms “this product / this television” in the below statements refer

to the product corresponding to related column.

1 2 3 4 5 6 7

Strongly

Disagree

Disagree Neutral Agree Strongly

Agree

Product 1

(Sony TV

made in

Japan)

Product 2

(Sony TV

made in

South

Korea)

Product 3

(Sony TV

made in

India)

a. I associate this product to sincerity.

b. I associate this product to excitement.

c. I associate this product to competence.

d. I associate this product to sophistication.

e. I associate this product to ruggedness.

f. I like the company which makes this television.

g. I (would) feel proud to own products from the

company that makes this television.

h. I trust the company that makes this television.

i. This television is of very good quality.

j. This television is reliable.

k. This television has excellent features.

l. This television is durable.

m. This television offers consistent quality.

n. This television would be my preferred choice.

o. I (would) consider myself loyal to this television.

p. This television would be my first choice.

q. The price of this television would have to go up a

bit before I would switch to another brand of tv.

108

r. I am willing to pay a higher price for this

television than other tv brands.

s. I am willing to pay a lot more for this television

than other LCD television brands.

t. I am aware of the brand Sony in television category.

(Please, mark one of the boxes.)

SECTION 2

The following questions are intended to measure your opinions about and perceptions of

Japan, South Korea and India. The questions are not related to the products described

above. The term “this country” in the below statements refers to the country

corresponding to related column.

1 2 3 4 5 6 7

Strongly

Disagree

Disagree Neutral Agree Strongly

Agree

Japan South

Korea

India

a. Televisions made in this country are advertised widely.

b. I can recognize television brand names from this

country.

c. This country has a high level of industrialization.

d. This country has a highly developed economy.

e. People in this country are highly literate.

f. This country has a free-market system.

g. This country is a democratic country.

h. Televisions made in this country have quality

workmanship.

i. Televisions made in this country are innovative.

j. Televisions made in this country are dependable.

k. I trust this country as a producer of televisions.

l. Televisions made in this country are of very good

quality.

m. Televisions made in this country have excellent

features.

1 2 3 4 5 6 7

109

n. Televisions made in this country are of consistent

quality.

o. Televisions made in this country are very reliable.

p. This country would be my preferred choice for

televisions.

q. I will not buy a television made in other countries, if I

can buy the same product made in this country.

r. I (would) consider myself loyal to buying televisions

from this country.

s. This country would be my first choice for televisions.

t. I am willing to pay a higher price for televisions from

this country than televisions from other countries.

u. The price of televisions from this country would have to

go up a bit before I would switch to TVs from another

country.

v. I am willing to pay a lot more for LCD televisions from

this country than LCD televisions from other countries.

SECTION 3

The following questions are intended to measure your opinions about several issues.

Please, indicate how much you agree with the following statements.

1 2 3 4 5 6 7

Strongly

Disagree

Disagree Neutral Agree Strongly

Agree

a. I break or spill things because of carelessness, not paying attention,

or thinking of something else.

b. I find it difficult to stay focused on what is happening in the

present.

c. I tend to walk quickly to get where I am going without paying

attention to what I experience along the way.

d. I tend not to notice feelings of physical tension or discomfort until

they really grab my attention.

e. I forget a person‟s name almost as soon as I have been told it for the

first time.

110

f. I do jobs or tasks automatically, without being aware of what I‟m

doing.

g. I find myself listening to someone with one ear, doing something

else at the same time.

h. I find myself preoccupied with the future or the past.

i. I find myself doing things without paying attention.

j. I am very familiar with televisions.

k. I know a lot about televisions.

l. It would be risky for my health if I make a mistake in choosing a

television.

m. A poor choice of television would be a threat for my health.

n. It would be risky for display performance if I make a mistake in

choosing a television brand.

o. A poor choice of television would pose a threat in terms of display

performance.

p. In my opinion, televisions are very complex products.

q. If I had to purchase a television today, I would need assistance in

order to understand the technical features of the tv.

r. The decision of which television to purchase is very important to

me.

s. I (would) pay very much attention to select which television to buy.

t. Television is one of the most important products in a person‟s life.

u. The money I (would) spend on my television is a significant

amount in my budget.

v. Televisions provide a high level of utility to people.

w. The television a person selects tells something about him/her.

x. The television one uses can contribute to his/her social status.

y. The brand of television one has can make an impression on me.

111

SECTION 4

Please, answer the following demographical questions.

a. What is your age in years? _________

b. What is your gender? □ Male □ Female

c. What is your marital status? □ Single □ Married

d. What is your annual income in U.S. dollars?

□ Less than $10.000 □ $10.000 – $25.000 □ 26.000 – 50.000 □ Over $50.000

e. What is your family‟s annual income in U.S. dollars?

□ Less than $15.000 □ $15.000 – $40.000 □ 41.000 – 60.000 □ Over $60.000

f. What is your country of citizenship? ______________

g. What is your ethnicity?

□ American □ African American □ Chinese □ Mexican □ Japanese □ Other

_____________________________________________________________

This is the end of the survey. Thank you very much for your help. If you have any further

questions about this study, please contact Ahmet Bayraktar at

ahmetbay@pegasus.rutgers.edu.

112

Appendix B: Brand Equity Items and their Means (Standard Deviations)

_________________________________________________________________________________________________________________________________________________________

Turkey USA

Attitude-based Brand Equity

ABE1: I associate product X to sincerity. 3.8710 (1.7666) 4.2334 (1.4670)

ABE2: I associate product X to excitement. 3.7309 (1.8431) 4.2524 (1.5539)

ABE3: I associate product X to competence. 4.4383 (1.7972) 4.5848 (1.5202)

ABE4: I associate product X to sophistication. 4.0804 (1.7824) 4.1832 (1.6560)

ABE5: I associate product X to ruggedness. 4.4813 (1.7974) 4.3596 (1.6890)

ABE6: I like the company that makes product X. 3.9834 (1.9075) 4.9118 (1.4433)

ABE7: I (would) feel proud to own products from the company that makes product X. 3.6449 (1.9547) 4.5739 (1.5064)

ABE8: I trust the company that makes product X. 3.9917 (1.9105) 4.8467 (1.5026)

ABE9: Product X is of very good quality. 4.3454 (1.7524) 4.8738 (1.4110)

ABE10: Product X is reliable. 4.1983 (1.7138) 4.8928 (1.3626)

ABE11: Product X has excellent features (“taste” for chocolates). 4.2663 (1.7484) 4.9701 (1.3008)

ABE12: Product X is durable (“healthy” for chocolates). 4.2094 (1.7886) 4.0244 (1.8071)

ABE13: Product X offers consistent quality. 4.3620 (1.8221) 4.8969 (1.3920)

Intention-based Brand Equity

IBE1: Product X would be my preferred choice. 3.7379 (1.9356) 3.9837 (1.7515)

IBE2: I (would) consider myself loyal to product X. 4.1956 (1.9534) 3.4885 (1.7462)

IBE3: Product X would be my first choice. 3.5756 (1.9770) 3.6079 (1.8414)

IBE4: The price of product X would have to go up a bit before I would

switch to another brand of sport shoes (television/chocolate). 3.2039 (1.9561) 3.6594 (1.7552)

IBE5: I am willing to pay a higher price for product X than other sport

shoes (television/chocolate) brands. 2.9140 (1.8711) 3.1479 (1.7627)

IBE6: I am willing to pay a lot more for product X than other brands in

this category of sport shoes (televisions/chocolates). 3.1581 (2.0180) 2.7883 (1.6976)

113

Appendix C: Country Equity Items and their Means (Standard Deviations)

_________________________________________________________________________________________________________________________________________________________

Turkey USA

Attitude-based Country Equity

ACE1: Sport shoes (televisions/chocolates) made in country X are advertised widely. 3.7947 (2.1310) 3.9145 (1.8866)

ACE2: I can recognize sport shoes (television/chocolate) brand names from country X. 3.2386 (2.0238) 3.2497 (2.0397)

ACE3: Country X has a high level of industrialization. 4.3842 (1.9905) 4.8195 (1.6037)

ACE4: Country X has a highly developed economy. 4.4411 (2.0041) 4.5346 (1.7490)

ACE5: People in country X are highly literate. 4.5562 (1.9902) 4.7178 (1.6621)

ACE6: Country X has a free-market system. 4.4452 (1.8341) 4.4206 (1.6015)

ACE7: Country X is a democratic country. 4.3870 (1.8578) 4.3338 (1.7739)

ACE8: Sport shoes (televisions/chocolates) made in this country have quality workmanship

(“quality ingredients” for chocolates). 4.0291 (1.9424) 4.5251 (1.5896)

ACE9: Sport shoes (televisions/chocolates) made in this country are innovative

(“delicious” for chocolates). 4.0499 (1.9236) 4.4138 (1.6087)

ACE10: Sport shoes (televisions/chocolates) made in this country are dependable. 4.0485 (1.9117) 4.4179 (1.5601)

ACE11: I trust this country as a producer of sport shoes (televisions/chocolates). 3.8669 (1.9000) 4.4138 (1.7110)

ACE12: Sport shoes (televisions/chocolates) made in this country are of very good quality. 3.9140 (1.8651) 4.4532 (1.5994)

ACE13: Sport shoes (televisions/chocolates) made in this country have excellent features

(“are healthy” for chocolates). 3.6727 (1.8366) 3.9213 (1.6760)

ACE14: Sport shoes (televisions/chocolates) made in this country are of consistent quality. 3.9667 (1.8919) 4.4559 (1.5255)

ACE15: Sport shoes (televisions/chocolates) made in this country are very reliable. 3.7434 (1.8987) 4.3853 (1.5440)

Intention-based Country Equity

ICE1: Country X would be my preferred choice for sport shoes (televisions/chocolates). 3.4327 (2.0114) 3.8901 (1.8990)

ICE2: I will not buy sport shoes (televisions/chocolates) made in other countries, if I can

buy the same product made in country X. 3.0028 (1.9025) 3.2415 (1.8427)

ICE3: I (would) consider myself loyal to buying sport shoes (televisions/chocolates) from country X. 3.6144 (2.0999) 2.8915 (1.7544)

ICE4: Country X would be my first choice for sport shoes (televisions/chocolates). 3.1498 (1.9853) 3.2917 (1.9246)

ICE5: I am willing to pay a higher price for sport shoes (televisions/chocolates) from country X than

sport shoes (televisions/chocolates) from other countries. 2.5492 (1.8784) 2.9037 (1.7998)

ICE6: The price of sport shoes (televisions/chocolates) from country X would have to go up a bit before

I would switch to sport shoes (televisions/chocolates) from another country. 2.6158 (1.9093) 3.0529 (1.8559)

ICE7: I am willing to pay a lot more for running sport shoes (LCD televisions/candy bars) from country X

than running sport shoes (LCD televisions/candy bars) from other countries. 2.6824 (1.9756) 2.7110 (1.7544)

114

Appendix D: The Standardized Coefficients for the Full Model (USA)

_______________________________________________________________________

STANDARDIZED SOLUTION: R-SQUARED

Attitude-based Brand Equity

ABE1 =V4 = .570 F1 + .822 E2 .324

ABE2 =V5 = .537*F1 + .844 E3 .288

ABE3 =V6 = .676*F1 + .737 E4 .457

ABE4 =V7 = .618*F1 + .786 E5 .382

ABE5 =V8 = .359*F1 + .933 E6 .129

ABE6 =V9 = .746*F1 + .666 E7 .556

ABE7 =V10 = .724*F1 + .690 E8 .524

ABE8 =V11 = .791*F1 + .612 E9 .626

ABE9 =V12 = .822*F1 + .570 E10 .675

ABE10 =V13 = .815*F1 + .579 E11 .665

ABE11 =V14 = .671*F1 + .741 E12 .450

ABE12 =V15 = .593*F1 + .805 E13 .351

ABE13 =V16 = .703*F1 + .711 E14 .495

Intention-based Brand Equity

IBE1 =V17 = .847 F2 + .532 E15 .717

IBE2 =V18 = .794*F2 + .607 E16 .631

IBE3 =V19 = .852*F2 + .523 E17 .727

IBE4 =V20 = .662*F2 + .750 E18 .438

IBE5 =V21 = .730*F2 + .684 E19 .533

IBE6 =V22 = .686*F2 + .727 E20 .471

Attitude-based Country Equity

ACE1 =V25 = .740 F3 + .673 E21 .547

ACE2 =V26 = .680*F3 + .734 E22 .462

ACE3 =V27 = .678*F3 + .735 E23 .460

ACE4 =V28 = .716*F3 + .698 E24 .513

ACE5 =V29 = .715*F3 + .700 E25 .511

ACE6 =V30 = .600*F3 + .800 E26 .360

ACE7 =V31 = .539*F3 + .842 E27 .291

ACE8 =V32 = .889*F3 + .458 E28 .790

ACE9 =V33 = .848*F3 + .530 E29 .719

ACE10 =V34 = .853*F3 + .521 E30 .728

ACE11 =V35 = .867*F3 + .498 E31 .752

ACE12 =V36 = .920*F3 + .393 E32 .846

ACE13 =V37 = .701*F3 + .714 E33 .491

ACE14 =V38 = .877*F3 + .481 E34 .768

ACE15 =V39 = .879*F3 + .476 E35 .773

Intention-based Country Equity

ICE1 =V40 = .695 F4 + .719 E36 .482

ICE2 =V41 = .720*F4 + .694 E37 .518

ICE3 =V42 = .787*F4 + .616 E38 .620

ICE4 =V43 = .811*F4 + .586 E39 .657

ICE5 =V44 = .893*F4 + .451 E40 .797

ICE6 =V45 = .849*F4 + .528 E41 .721

ICE7 =V46 = .880*F4 + .475 E42 .775

________________________________________________________________________

115

Appendix E: The Standardized Coefficients for the Full Model (Turkey)

________________________________________________________________________

STANDARDIZED SOLUTION: R-SQUARED

Attitude-based Brand Equity

ABE1 =V4 = .697 F1 + .717 E2 .486

ABE2 =V5 = .583*F1 + .812 E3 .340

ABE3 =V6 = .678*F1 + .735 E4 .459

ABE4 =V7 = .631*F1 + .776 E5 .398

ABE5 =V8 = .712*F1 + .702 E6 .507

ABE6 =V9 = .734*F1 + .680 E7 .538

ABE7 =V10 = .770*F1 + .637 E8 .594

ABE8 =V11 = .818*F1 + .575 E9 .669

ABE9 =V12 = .829*F1 + .559 E10 .688

ABE10 =V13 = .850*F1 + .527 E11 .723

ABE11 =V14 = .732*F1 + .681 E12 .536

ABE12 =V15 = .832*F1 + .555 E13 .692

ABE13 =V16 = .826*F1 + .564 E14 .682

Intention-based Brand Equity

IBE1 =V17 = .884 F2 + .467 E15 .782

IBE2 =V18 = .767*F2 + .642 E16 .588

IBE3 =V19 = .894*F2 + .448 E17 .799

IBE4 =V20 = .694*F2 + .720 E18 .482

IBE5 =V21 = .754*F2 + .657 E19 .568

IBE6 =V22 = .746*F2 + .666 E20 .557

Attitude-based Country Equity

ACE1 =V25 = .796 F3 + .605 E21 .633

ACE2 =V26 = .719*F3 + .695 E22 .517

ACE3 =V27 = .809*F3 + .587 E23 .655

ACE4 =V28 = .809*F3 + .588 E24 .654

ACE5 =V29 = .811*F3 + .584 E25 .658

ACE6 =V30 = .774*F3 + .633 E26 .599

ACE7 =V31 = .769*F3 + .640 E27 .591

ACE8 =V32 = .900*F3 + .436 E28 .810

ACE9 =V33 = .863*F3 + .506 E29 .744

ACE10 =V34 = .888*F3 + .459 E30 .789

ACE11 =V35 = .892*F3 + .452 E31 .795

ACE12 =V36 = .899*F3 + .438 E32 .808

ACE13 =V37 = .844*F3 + .536 E33 .713

ACE14 =V38 = .885*F3 + .466 E34 .783

ACE15 =V39 = .872*F3 + .489 E35 .761

Intention-based Country Equity

ICE1 =V40 = .891 F4 + .455 E36 .793

ICE2 =V41 = .865*F4 + .502 E37 .748

ICE3 =V42 = .801*F4 + .599 E38 .642

ICE4 =V43 = .905*F4 + .426 E39 .819

ICE5 =V44 = .837*F4 + .547 E40 .701

ICE6 =V45 = .765*F4 + .644 E41 .585

ICE7 =V46 = .788*F4 + .616 E42 .621

________________________________________________________________________

116

Appendix F: The Standardized Coefficients for the Full Model (All Data)

________________________________________________________________________

STANDARDIZED SOLUTION: R-SQUARED

Attitude-based Brand Equity

ABE1 =V4 = .645*F1 + .764 E2 .416

ABE2 =V5 = .586*F1 + .810 E3 .344

ABE3 =V6 = .661*F1 + .750 E4 .437

ABE4 =V7 = .622*F1 + .783 E5 .387

ABE5 =V8 = .551*F1 + .834 E6 .304

ABE6 =V9 = .749*F1 + .663 E7 .560

ABE7 =V10 = .767*F1 + .641 E8 .589

ABE8 =V11 = .815*F1 + .579 E9 .664

ABE9 =V12 = .819*F1 + .574 E10 .670

ABE10 =V13 = .833*F1 + .554 E11 .693

ABE11 =V14 = .716*F1 + .698 E12 .512

ABE12 =V15 = .670*F1 + .742 E13 .449

ABE13 =V16 = .770*F1 + .637 E14 .594

Intention-based Brand Equity

IBE1 =V17 = .860*F2 + .510 E15 .740

IBE2 =V18 = .745*F2 + .667 E16 .555

IBE3 =V19 = .867*F2 + .498 E17 .752

IBE4 =V20 = .707*F2 + .707 E18 .500

IBE5 =V21 = .759*F2 + .651 E19 .576

IBE6 =V22 = .716*F2 + .698 E20 .512

Attitude-based Country Equity

ACE1 =V25 = .771*F3 + .637 E21 .594

ACE2 =V26 = .702*F3 + .712 E22 .493

ACE3 =V27 = .756*F3 + .655 E23 .571

ACE4 =V28 = .762*F3 + .647 E24 .581

ACE5 =V29 = .768*F3 + .641 E25 .589

ACE6 =V30 = .689*F3 + .724 E26 .475

ACE7 =V31 = .654*F3 + .756 E27 .428

ACE8 =V32 = .894*F3 + .447 E28 .800

ACE9 =V33 = .851*F3 + .526 E29 .724

ACE10 =V34 = .870*F3 + .494 E30 .756

ACE11 =V35 = .878*F3 + .478 E31 .771

ACE12 =V36 = .908*F3 + .418 E32 .825

ACE13 =V37 = .777*F3 + .629 E33 .604

ACE14 =V38 = .882*F3 + .472 E34 .777

ACE15 =V39 = .872*F3 + .490 E35 .760

Intention-based Country Equity

ICE1 =V40 = .793*F4 + .609 E36 .629

ICE2 =V41 = .801*F4 + .598 E37 .642

ICE3 =V42 = .746*F4 + .666 E38 .556

ICE4 =V43 = .856*F4 + .517 E39 .733

ICE5 =V44 = .881*F4 + .472 E40 .777

ICE6 =V45 = .837*F4 + .547 E41 .701

ICE7 =V46 = .862*F4 + .506 E42 .744

Consumer Mindfulness

117

CM1 =V47 = .586*F5 + .810 E43 .344

CM2 =V48 = .738*F5 + .675 E44 .545

CM3 =V49 = .581*F5 + .814 E45 .338

CM5 =V51 = .634*F5 + .773 E47 .402

CM6 =V52 = .735*F5 + .678 E48 .541

CM7 =V53 = .710*F5 + .704 E49 .504

CM8 =V54 = .530*F5 + .848 E50 .281

CM9 =V55 = .815*F5 + .579 E51 .664

Product Familiarity

PF1 =V56 = .929*F6 + .369 E52 .864

PF2 =V57 = .871*F6 + .491 E53 .759

Product Health Risk Level

PHR1 =V58 = .925*F7 + .381 E54 .855

PHR2 =V59 = .965*F7 + .263 E55 .931

Product Performance Risk Level

PPR1 =V60 = .974*F8 + .228 E56 .948

PPR2 =V61 = .916*F8 + .402 E57 .838

Product Complexity

PC1 =V62 = .687*F9 + .726 E58 .472

PC2 =V63 = .709*F9 + .705 E59 .502

Product Importance

PI1 =V64 = .880*F10 + .475 E60 .774

PI2 =V65 = .848*F10 + .530 E61 .719

PI3 =V66 = .776*F10 + .631 E62 .602

Product Value

PV1 =V67 = .704*F11 + .710 E63 .496

PV2 =V68 = .722*F11 + .692 E64 .521

PV3 =V69 = .749*F11 + .662 E65 .562

PV4 =V70 = .767*F11 + .641 E66 .589

PV5 =V71 = .778*F11 + .628 E67 .606

________________________________________________________________________

118

Appendix G: Factor Means

________________________________________________________________________

Variable Obs. Unique Mean Min Max Label

----------------------------------------------------------------------------------------------------- ----------------------------

ABBE 1525 94 4.344592 1 7 Attitude-based Brand Equity

IBBE 1525 42 3.453891 1 7 Intention-based Brand Equity

ABCE 1527 112 4.17334 1 7 Attitude-based Country Equity

IBCE 1527 45 3.063975 1 7 Intention-based Country Equity

CM 1527 48 4.136788 1 7 Consumer Mindfulness

PF 1524 13 3.533465 1 7 Product Familiarity

PHR 1524 13 3.894685 1 7 Product Health Risk Level

PPR 1527 13 4.679764 1 7 Product Performance Risk Level

PC 1527 13 4.061886 1 7 Product Complexity

PI 1527 21 4.191879 1 7 Product Importance

PV 1524 34 3.854298 1 7 Product Value

______________________________________________________________________________________

119

Curriculum Vitae

Ahmet Bayraktar

1982 Born in Rize, Turkey

2000-2004 B.S. in Business Administration

Trakya University, Edirne, Turkey

2005-2007 MBA

Trakya University, Edirne, Turkey

2005-2007 Lecturer

Trakya University, Havsa Community College

2008-2009 Language Education in ELS Language School

Houston, TX

2009-2013 PhD in Management

Rutgers, The State University of New Jersey, U.S.A.