Seriously, I thought Haier was German brand! Detrimental effects of country of origin misclassification on bottomline

When you read the below paragraph taken from John Players website, what country do you think the brand is from?

 

“John Players is a fashion brand targeted to the youth fashion segment since December 2002. It aims to be the No. 1 fashion brand for youth for clothing and accessories. The company has proven competencies in understanding consumer insights, brand building, and design capabilities. John Players offers a complete and vibrant wardrobe of Casual, Party and, Work wear, and Suits & Jackets, incorporating the most contemporary trends, an exciting mix of colors, playful styling, trendy textures, and comfortable fits.”

 

Having read the above paragraph, do you think John Players is from a Western developed market such as the USA or the UK? If so, how do you feel about purchasing it?

Hold that thought for a moment!

Now, let me tell you the truth. John Players is actually a brand from ‘India’. How do you feel about the brand now? Have your purchase intentions for John Players remained the same?

Country of origin misclassification effect in general

Our research would suggest your intentions have probably changed on hearing the truth. You feel discontent and you don’t like it. Brands across the world have used ways to disguise their countries of origin for years. But now, in our digitally driven world, consumers are finding out. And they don’t like it. Many companies, originating from countries with relatively weak images, attempt to disguise their brand origin or even attempt to deliberately associate their brand with a country that has a strong image to generate positive equity. For example, Qingdao Electroplating Company from China adopted the German-sounding name Haier Group in the early 1990s and leather goods brand Hidesign suppresses its Indian roots by naming its sub-brands Doris, Madonna, and Sybil, among others. As a result, research shows that consumers are misidentifying the country of brand origin nearly half the time for local brands and as high as 88% of the time for overseas brands.

Our Research on Country of Origin Misclassification

In a recent study, we examined changes in purchase intentions and brand judgements, when people become aware that they have misclassified a brand’s origin and are informed of the correct origin.

Our study shows that ‘post misclassification awareness’ can have dire consequences for a company’s bottomline. We find that the mere awareness of brand origin misclassification can automatically trigger something called cognitive dissonance – a state of mental discomfort due to simultaneous exposure of contradictory information – which in turn affects purchase intentions. We find that if people identified the brand to be from a country they particularly have high regard for, and then they realise that the real brand origin happens to be one they have a lower affinity for, their purchase intentions and brand judgements change, becoming significantly negative. Furthermore, the higher the affinity felt towards the misclassified brand origin, the greater the reduction in purchase intentions. Thus, even though they liked the brand, just knowing that they mistook the brand origin puts people off in engaging with the brand and purchasing it.

In an opposite scenario to the above, one would assume that if the revealed brand origin happens to be a high affinity country, an individual will be positively inclined to purchase the brand. However, we find counterintuitive results. Even if, people show high affinity with the revealed brand origin than to the misclassified brand origin, their purchase intentions decrease. For example, in the John Players scenario, if you identified the brand to be from the UK and then you found that it is from India, and you happen to have high affinity towards India than the UK, your purchase intentions for this specific brand would decrease still. This surprising finding shows the need to stay true to the brand’s origin – because, put simply, consumers don’t like being tricked – it’s enough to put them off buying at all.

Is there an expertise or knowledge effect?

We further examined this phenomenon among people who claim to have higher product knowledge of fashion and luxury (experts) versus those who do not (novices). One would logically assume that experts possess a rich knowledge schema and so when informed that they have misclassified the brand origin, they will adjust their knowledge schema accordingly. However, we find that experts overall decrease their purchase intentions significantly more than novices after misclassification. They like being tricked even less! With experts abandoning the brand, this could lead to significant brand damage in today’s social media centric consumer behaviour.

We find a further twist in this story when examining expert and novices’ reactions to different levels of affinity towards misclassified brand origin. Novices with high affinity towards a misclassified brand origin significantly decrease their overall brand judgments after they become aware of the misclassification compared with experts. This means that once novices become aware that they have misclassified a brand origin they form negative brand judgements, which will obviously reflect in their purchase intentions too. Moreover, as mentioned earlier, experts decide against purchasing the brand post misclassification awareness.

Thus, a brand stands to lose a lot if it happens to build its strategy on misinforming or hiding its brand origin once people become aware of reality. Don’t they say, reality bites!

You can download a pre-print version of our research for FREE here: On Researchgate

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