International Marketing Review

Brand Name and Country of Origin Effects in the Emerging Market Economies of
Russia, Poland and Hungary
Richard Ettenson
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To cite this document:
Richard Ettenson, (1993),"Brand Name and Country of Origin Effects in the Emerging Market
Economies of Russia, Poland and Hungary", International Marketing Review, Vol. 10 Iss 5 pp.
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 International
Marketing Brand Name and Country of
Review
10,5
Origin Effects in the Emerging
Market Economies of Russia,
14
Submitted April 1993
Poland and Hungary
Revised June 1993 Richard Ettenson
Revised July 1993
Accepted November Bond University, Australia
1993
The globalization of the world's economy continues to expose consumers to a
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wider range of "foreign" products than ever before. This trend, coupled with the
dramatic reforms sweeping the economic landscapes of Russia and Eastern
Europe, suggests that consumers in former Socialist countries are becoming
more active participants in the global marketplace. Other than their keen desire
for the availability of goods, little is known (by Western standards) about these
consumers' marketplace behaviour (Kaynak and Samli, 1986; Shama, 1992). In
a centrally-planned command economy, minimal emphasis is placed on
understanding the needs and wants of individual consumers beyond those
needs considered essential. In fact, classical Marxist economic literature treats
consumption as a "leak" in the all-important cycle of production (Kostecki,
1985). Consequently, little information is available to guide the strategic
positioning of products and services in Russia and Eastern Europe.
The purpose of this study is to explore the effect of brand name and country
of origin information on the decision behaviour of Russian, Polish and
Hungarian consumers. These issues are important to international marketers
for several reasons:
(1) The reshaping of Russia, Poland and Hungary makes each country
increasingly attractive to Western firms for market opportunities and
strategic investment;
(2) Because the collapse of Communist-led regimes has dramatically altered
trade relations between former Cold War adversaries, branding and

International Marketing Review,
Vol. 10 No. 5, 1993, pp. 14-36.
MCB University Press, 0365-1335
The author recognizes the significant professional contributions of Elena Vetrova and Alec
Kuznetzov (Russian Academy of Sciences), Roman Glowacki (University of Warsaw), Agnes
Nagy (Hungarian Academy of Sciences), and Imre Hercegh (Arthur Andersen & Co, Budapest).
The author is also grateful to Jim Friday for his assistance throughout this research, and to Hildy
Saizow, Merrill Leffler, Gary Gaeth, Gerald Albaurn, Jacob Naor, and Les Johnson for their
comments on earlier drafts of this article. This research was carried out while the author was on
the faculty of the University of Maryland, College Park (USA). Financial support from the
following University of Maryland offices is also acknowledged: The Graduate School; The Office
of International Services; and The Office of International Affairs. Computer time was provided by
the University of Maryland Computer Science Center.
 product sourcing take on strategic importance as Western firms consider Emerging
expansion of their marketing and/or manufacturing operations to Market
Eastern Europe and Russia; Economies
(3) Understanding the value to former Socialist consumers of both brand
name and the "made in" concept will enable Western firms to market and
invest more effectively in these emerging economies;
15
(4) This information will also provide Russian/East European managers
with strategic insight into how best to compete in their home markets
with the increased penetration of Western goods.

Background
The Economic Systems of Russia, Poland and Hungary
In the absence of empirical evidence to suggest otherwise, Western marketers
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have in the past often viewed the countries of Eastern Europe and the former
Soviet republics as a homogeneous economic entity. This perception was
widespread for several reasons. First, each East European economy had a
common ideological foundation in Socialism. Second, for almost half a century
an "us versus them" mentality has shaped Western and Eastern decision
makers. Like Western trading pacts (the European Community) and military
alliances (NATO), the collectivism of the Eastern Bloc's economies (COMECON)
and its military alliances (the Warsaw Pact) have contributed to sharpening
divisions. Third, and more current, are myriad reports in the West of a
depressing "post-Communist plight" among former Eastern Bloc nations. The
collapse of Communist-led regimes in 1989 exacerbated in those countries such
phenomena as falling living standards, unemployment, and widespread
economic hardship and deprivation. Consequently, among Westerners, there is
likely to be a heightened sensitivity to the wide and growing disparity in
economic conditions between East and West (Kraljic, 1990).
From a marketing and business perspective, however, it is important to
recognize the differences that distinguished the economies of former Eastern
Bloc nations. These differences continue to be important for understanding the
current marketplace behaviour of consumers in the countries under
consideration here. Two approaches to understanding such differences have
been proposed, by Samli (1986), and more recently by Kraljic (1990). Samli
(1986) developed a conceptual framework for classifying the macro economic
systems of different countries based on the extent to which a given system is a
centralized, command-style economy (dominated by vertical linkages), or a
demand-style, market economy (dominated by horizontal linkages). Between
these two extremes are three systems which, according to Samli, distinguish
former Socialist economies. The first system is directive, where the market
operates with direct planning based on strict central authority the former
USSR is an example. The second is a mixed-middle system, where a planned
economy operates with central "indirect levers" and is tied closely to national
economic development - Poland is the example here. The third and least
 International restrictive system Samli (1986) refers to as integrative. Here, enterprises and
Marketing co-operatives operate independently within a market constrained only by
Review national economic development plans, such as in the former Yugoslavia.
10,5 Hungary has components of both the mixed-middle and integrative systems,
and its economy is thought to be situated between Poland and Yugoslavia.
Kraljic's (1990) framework focuses on each country's "chances of success" in
16 the post-Communist era. According to Kraljic, two factors distinguish former
East European countries. The first is economic development potential, which
includes factors such as industry structure, infrastructure, workforce skills,
and resources. The second factor, readiness and ability to accept change,
considers each country's experience with, and scope of, reforms as well as
commitment to change by the people and the leadership. According to Kraljic,
Hungary and Russia each have considerable economic development potential
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(Hungary because of its infrastructure, Russia because of its resources), while

Poland falls somewhat below average on this factor. On the other hand,
Hungary and Poland are considered superior to Russia in their readiness and
ability to institute economic and political reforms.
The Samli and Kraljic frameworks suggest that important differences did
exist among former Eastern Bloc economies (also, see Shama, 1992). These
differences persist today and influence the scope and pace of reforms in each
country. As a result, the marketplace behaviour of former Socialist consumers
should vary by country (Shama, 1992). Samli (1986) argues further that an
inverse relationship exists between a country's level of economic centralization
and experience in the use of basic Western marketing techniques. Less
authoritarian economies (e.g. Hungary, and to some extent Poland), show
greater sophistication in the use of branding, product positioning, and market
research than the more restrictive economies (e.g. the former USSR).
Consequently, there is reason to expect differences in the present day decision
behaviour of Russian, Polish and Hungarian consumers. Specifically,
Hungarian and Polish consumers are more likely to be similar in their decision
making when compared to their Russian counterparts.
Joint Ventures and Bi-National Product Marketing
Economic restructuring in Russia, Poland and Hungary have increased the
attractiveness of each country in terms of both market opportunities and
strategic investment. Faced at home with stagnant markets and increased
labour costs, many Western firms are cultivating marketing and/or
manufacturing (i.e. transplant) alliances with Russian and Eastern European
partners. These agreements, often in the form of joint ventures, provide
Western firms with access to both an untapped market of over 300 million
consumers and a low wage, highly skilled workforce. For Russian, Polish and
Hungarian firms, these international relationships will enable them to exchange
technology with Western companies, share the risk of producing and marketing
goods, and provide possibilities for greater penetration in both domestic (East
European) and international markets.
 One direct consequence of joint ventures in Eastern Europe is the emergence Emerging
in the region of bi-national productsproducts manufactured in one country Market
and branded by a firm from another country (Han and Terpstra, 1988; Economies
Johansson and Nebenzahl, 1986). Examples include American brand Levis
jeans made in Hungary, as well as Hungarian-made automobiles bearing the
German brand Opel. Bi-national product marketing no doubt provides Western
and Eastern partners with new domestic and international opportunities. From 17
the consumer's perspective, however, a new factor has been introduced into the
marketplace. Bi-national products blur place of manufacture and the product's
brand name. As a result, clear distinctions can no longer be made between
domestic and imported goods.
The success of bi-national product marketing in the former Socialist
countries ultimately depends on the willingness of consumers to purchase
products co-produced through joint ventures and/or manufactured in
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transplant facilities. Prior to entering a strategic alliance, the partners should

weigh carefully the manner in which consumers in the target market(s) use
brand name and country of origin information. This is particularly important
since these extrinsic properties are not related directly to product performance
but instead are used by consumers to infer product quality (Olson, 1973). While
there is considerable evidence to suggest that brand name and country of origin
(and in some cases, the interaction between them) play a significant role in the
product evaluations of Western consumers (Aaker and Keller, 1990; Bilkey and
Nes, 1982; Han and Terpstra, 1988; Johansson and Nebenzahl, 1986; Rao and
Monroe, 1989), little is known about how Russian, Polish and Hungarian
consumers use these extrinsic cues. To the extent that bi-national products
manufactured in Russia, Poland and Hungary will be sold domestically, there is
a critical need among Western practitioners and researchers to understand the
manner in which consumers in these countries evaluate domestic and imported
goods.

Brand Name and Country of Origin Effects

In the West, the strategic significance of branding is well established. Brand
name is among the more important assets owned by a firm (Aaker, 1991; Aaker
and Keller, 1990), and may contribute significantly to the success or failure of
new products (Zaltman and Walendorf, 1979). A brand's "equity" is thought to
enhance the value of a product beyond its intrinsic (functional) purpose, and
adds value to the firm, the trade, or the consumer (Chay, 1990; Farquhar, 1989).
Brand equity is particularly important in the international arena where the
branding decision is more complex than domestic branding (Onkvisit and
Shaw, 1989) and where consumers' familiarity with "global" brands is not often
studied or well understood (Rosen, et al.,1988).
The growing number of strategic alliances between Western and Eastern
partners, coupled with the increased flow of goods from West to East, suggests
that Western firms should consider the value their brand adds to products
purchased by consumers in the former East European trading bloc.
 International Unfortunately, virtually no information exists concerning the manner in which
Marketing these consumers use brand name information and the value it possesses in the
Review evaluation of products and services. There is some information, however,
concerning the extent of familiarity with Western brands among former
10,5 Eastern Bloc consumers.
In a commercial survey (Landor Associates, 1990), Russian, Polish and
18 Hungarian consumers were asked to rate their familiarity with and attitude
towards 400 popular global brands from Japan, Western Europe and the US.
The results show that the "top ten" global brands in each of the three countries
are dominated by consumer electronics (the product category utilized in this
investigation), as well as automobiles, soft drinks, and athletic shoes. In
addition, the results showed differences among the countries in consumers'
familiarity with brands. The Hungarians showed the most brand awareness,
recognizing over 250 of the 400 global brands. The Poles were familiar with 175
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brand names, while the Russians recognized only 100. While these results do
not identify the specific value of brand name, they do suggest that this cue
should play a significant role in the decision making of consumers from all three
countries; Hungarian consumers are likely to place the most emphasis on this
information cue, followed in order by the Poles and Russians[l].
Increased globalization of today's business environment has also led to a
renewed interest in the effect of a product's country of origin on consumer
decision making (see Papadopoulos and Heslop, 1992). The results from
research with Western consumers generally support the conclusion that
stereotyped images about other countries influence the evaluation of and
preference for products from these countries (Cordell, 1992; Papadopoulos et al.,
1990; Tse and Gorn, 1993; Wang and Lamb, 1983; also, see Bilkey and Nes,
1982). Research has also shown that "nationalism" can affect the evaluation and
selection of imported and domestic products. Consumers from a wide range of
countries have been found to evaluate their own domestic products more
favourably than do foreigners (Bannister and Saunders, 1978; Baumgartner and
Jolibert, 1977; Darling and Kraft, 1977; Gaedeke, 1973; Han, 1988; Papadopoulos
et al.,1990). However, it is not known if these findings hold in Eastern Europe
and Russia, where domestic goods are often characterized as inferior in quality.
If consumers in Eastern Europe's nascent markets do not evaluate domestic
goods favourably, which countries' products (and brands) are most desired? For
the reasons discussed above, there presently exist few answers to this question.
The present study is an attempt to provide international marketers and
academics with initial insight into the role that brand name and country of
origin play in the decision behaviour of Russian, Polish and Hungarian
consumers.

Method
Overview
This study utilizes conjoint analysis to assess consumer decision behaviour in
Russia, Poland and Hungary in a single product category, colour televisions.
 The conjoint method is based on the assumption that consumer decision Emerging
making involves the evaluation and combination of information on multiple Market
product attributes (Green and Srinivason, 1990). This investigation is believed Economies
to be the first to employ conjoint techniques in the emerging market economies
of Russia and Eastern Europe.

The Product Category 19

To provide a realistic product bundle, seven intrinsic and extrinsic attributes
(including brand name and country of origin) were experimentally manipulated
in conjoint profiles describing colour televisions. The study of decision making
for consumer electronics/colour televisions is appropriate here for a number of
reasons. First, in order to make valid comparisons across national borders, it is
necessary to study constructs that are "functionally equivalent" across cultures
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(Bhalla and Lin, 1987). The evaluation and selection of consumer

electronics/televisions is potentially global in nature, particularly in
industrialized countries, and can be considered functionally equivalent across
the national borders considered here. Second, there continues to be great
demand for consumer electronics in general, and televisions in particular, in
Russia, Poland, and Hungary (Shama, 1992). Third, previous studies with
Western consumers have reported effects for both brand name (Rao and
Monroe, 1989) and country of origin in this product category (Bilkey and Nes,
1982; Dornhoff et al.,1974; Han, 1989; Kaynak and Cavusgil, 1983). Fourth, the
focus on televisions allowed the use of "prototypical" brand names (Aaker and
Keller, 1990) which are obviously associated with Russian, Polish, Hungarian
and foreign firms (e.g. Record/Russia, Helios/Poland, Videoton/Hungary,
Sony/Japan, General Electric/USA). Finally, the evaluation and selection of a
television is considered a "high involvement" decision (Engel et al., 1990). In
addition to brand name and country of origin, an array of potentially relevant
intrinsic and extrinsic attributes can be used to create realistic conjoint profiles.
Therefore, insight will also be gleaned on the overall decision strategies (i.e. the
relative importance of a range of attributes) employed by former Socialist
consumers.

Attributes and Attribute Levels

Participants in each country evaluated a series of conjoint profiles which
described colour televisions based on seven attributes: brand name (BN),
country of origin (CO), speaker type, price, length of warranty, tuner type, and
type of remote control (if any). The seven attributes and their corresponding
levels are shown in Table I. In developing the conjoint profiles, extensive
consultation was made with Russian, Polish and Hungarian colleagues to
ensure that: (1) the attributes described in a comprehensive manner the factors
that are likely to affect the decision behaviour of their domestic consumers
when evaluating and selecting televisions; and (2) the attribute levels represent
the range of values likely to be encountered in their respective television
 International
1. Brand name (The brand name of the television is ....)
Marketing 1. General Electric
Review 2. Sony
10,5 3. Philips
4. Record
20 5. Helios
6. Videoton
2. Country of origin (The television is made in ....)
1. the USA
2. Japan
3. West Germany
4. the Soviet Union
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5. Poland
6. Hungary
3. Type of speaker (The television is equipped with ....)
1. one mono speaker
2. two stereo speakers
3. two mono speakers
4. Price (The price of the television is... .)b
1. 525 roubles; 3,300,000 zloty; 35,300 forints
2. 750 roubles; 4,100,000 zloty; 49,500 forints
3. 645 roubles; 3,750,000 zloty; 41,700 forints
5. Warranty (The television has a ... warranty.)
1. 12 month (1 year)
2. 24 month (2 year)
3. 18 month (1 and l/2 year)
6. Type of tuner (The television is equipped with a....)
1. rotary dial for tuning
2. soft touch push button tuner
3. soft touch push button tunerc
7. Remote control (The television is ....)
1. not equipped with remote control
2. equipped with remote control for on/off, station tuning, and volume
3. equipped with remote control for on/off only
a
For attributes 3-7, levels No. 1 and 2 were used in the 27 design.
b
Table I. Price was expressed in the appropriate monetary units for the respective countries.
The Seven Television Tor attributes 3-7, the "3" level was different from other levels and was held constant in
Attributes and Their the 6 x 6 design. The one exception was attribute No. 6, tuner type.
Corresponding Levelsa

markets[2]. Pilot-testing confirmed that the attributes and levels were

appropriate for consumers in each of these markets and that their combinations
would, in general, represent realistic television descriptions[3].
 Experimental Designs Emerging
Two separate but related experimental designs were merged to create a set of Market
conjoint television profiles. In the first design, the seven attributes were each Economies
varied at two levels in a 27 fractional factorial consisting of 16 profiles (Hahn
and Shapiro, 1966; plan 7b); this design also permitted estimates of a subset of
possible two-way interactions[4]. The purpose of this first design, which was
analysed at the individual-subject level, was to determine the relative 21
importance of each attribute in the decision making of Russian, Polish and
Hungarian consumers. Each of the 16 profiles was fully replicated, permitting
estimates of error for use in individual-subject analyses of variance (ANOVA).
Thus, the 27 design had a total of 32 profiles.
The second experimental design was a 6 x 6 full factorial with BN and CO
varied at six levels each, thereby creating an additional 36 profiles. The five
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remaining attributes were also presented in the television descriptions with

their levels held constant across profiles (see Table I). The purpose of the 6 x 6
design, which was analysed at the aggregate level, was to provide more specific
information on the relative value of additional brand names and additional
countries of origin in Russian, Polish and Hungarian consumers' decision
making.
Once development of the two designs was complete, the conjoint profiles were
randomly merged to create 68 television descriptions. One practice profile, not
included in either design, was the first profile evaluated by participants. This
familiarized them with the task and brought the total to 69 profiles.
Participants
Convenience samples of Russian (n=92), Polish (n=95) and Hungarian
consumers (n=128) were obtained in June and July 1990 by colleagues in each
country. By conventional research standards the size of the samples may seem
limited.. However, smaller samples are suitable here because a majority of
analyses are performed at the individual-subject level. These samples were
recruited from a range of factories, institutes and offices in the Moscow,
Warsaw and Budapest vicinities, respectively. While not representing the
Russian, Polish or Hungarian populations as a whole, each group is likely to
provide early indications as to the likely decision behaviour of former Socialist
consumers in the midst of rapid economic changes. Moreover, the use of urban
consumers is appropriate here since they are more likely to be exposed to and
familiar with imported goods. Administration of the research was conducted
"on site" by colleagues in each country; schedules were pre-arranged so
participants could complete the task at their place of work[5].
The Research Instrument
The research instrument consisted of three parts: (1) task instructions; (2) the
conjoint profiles; and (3) a post-experiment questionnaire. In the task
instructions, participants were told to imagine they were evaluating and
selecting a colour television for their family or household. They would be
 International Colour Television HBS
Marketing
1. The brand name of the television is General Electric.
Review
10,5 2. The television is made in Poland.
3. The television is equipped with one mono speaker.
22 4. The price of the television is 4,100,000 zloty.
5. The television has a 24 month (2 year) warranty.
6. The television is equipped with rotary dial for tuning.
7. The television is not equipped with remote control.

Based on the above information, how likely is it that you would purchase this television?
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Table II.
Sample Television Not at all likely Very likely
Profile

presented with a series of televisions displayed in a large popular consumer

electronics store that had a wide selection and a good reputation. Participants
were also informed that some of the brands to be presented e.g. General
Electric (for all three samples), Record (for the non-Russian samples), Helios (for
the non-Polish samples); and Videoton (for the non-Hungarian samples)may
not be familiar to them. It was explained that these were, respectively,
American, Russian, Polish and Hungarian manufacturers of consumer
electronics. They were also informed that some of the televisions presented
might be the result of a joint venture or co-production by companies from
different countries.
After indicating whether the task instructions were clear and well
understood, participants considered the conjoint television descriptions one at a
time and indicated their likelihood of purchasing each by placing a slash along
an unmarked 70mm continuum with ends marked "Not at all Likely" (scored 0)
and "Very Likely" (scored 70). A sample television profile from the Polish
version of the task appears in Table II. Upon finishing their evaluations of the
conjoint profiles, participants completed the post-experiment questionnaire
which collected demographic data as well as information on purchase and
ownership patterns for consumer electronics and televisions. On average,
participants completed the entire task in 35 minutes.
The research instrument was translated into Russian, Polish and Hungarian
by expatriates from each country working as instructors at the Foreign
Language Institute (FLI) in Washington, DC. A second different expatriate from
each country working at the FLI back-translated these materials to ensure
"linguistic equivalence" (Bhalla and Lin, 1987) between the Russian, Polish and
Hungarian versions of the task.
 Emerging
Russia Poland Hungary
n=88 n=77 n=113 Market
Economies
Age 35.5 43.6 47.4
Gender % % %
Male 61 49 46
Female 39 51 54 23
Education
1 flow) 9 2 9
2 5 30 50
3 7 9 21
4 65 59 20
5 (high) 14 - -
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Income
1 flow) 19 0 23
2 21 7 18
3 11 27 16
4 21 29 18
5 7 23 14
6 8 15 11
7 (high) 12 - -
Previously purchased
TV 65 91 92
Currently own
colour TV 84 66 80
Intend to buy TV in
two years
Definitely 45 30 60
Possibly 32 21 21
No 13 44 5
Undecided 10 5 16
Interest in
consumer electronics
None at all 21 5 13
Less than average 21 42 27
Average 45 45 55
More than average 13 6 5
Extreme interest 1 2 0
Knowledge of
consumer electronics
None 9 4 1
Less than average 24 23 17
Average 47 56 60
More than average 14 13 21 Table III.
Considerable 6 2 1 Selected Demographics
for the Three Samples
 International Results
Marketing Demographics of the Three Samples
Review Selected demographics for each sample, purchase and ownership information,
and each group's knowledge of and interest in consumer electronics, are shown
10,5 in Table III. Some differences in demographics are noted across the samples.
The Russian sample included more males and is younger than the other two
24 groups, whereas the Hungarians showed somewhat lower levels of education.
Of particular relevance here is the fact that a majority of participants from each
country have experience with the evaluation and selection of televisions and
currently own at least one colour model. Moreover, a majority of participants
from each country report that they "definitely" or "possibly" intend to purchase
a colour television in the next two years. These data suggest that this decision
is relevant to the purchase behaviour of each sample. Each group also reported
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a wide range of knowledge of and interest in consumer electronics; an "average"

response was the mode in each of these categories.

The 27 Fractional Factorial Design

Judgemental consistency. Pearson R correlations were computed between each
participants' responses on the 16 replicated profiles in the 27 design to assess
how well former Socialist consumers responded to this relatively new and
unfamiliar research task (subjects were unaware that the 16 profiles were
repeated). For the Russians, the average test-retest correlation was 0.69
(p<0.05), for the Poles 0.64, (p<0.05), and Hungarians 0.64 0x0.05). These high
degrees of judgemental consistency are typical for conjoint studies and
provides assurance that the task was meaningful and that respondents took
their participation seriously.
Significance of the seven attributes. To identify the attributes with
statistically significant main effects (p <0.05), an individual-subject analysis of
variance (ANOVA) was performed on the evaluations of the 88 Russians, 77
Poles, and 113 Hungarians who provided usable responses to the conjoint task.
The attributes that were significant most frequently in the decision making of
the Russian sample were CO, BN, and remote control. CO had a significant effect
on the decision making of 75 per cent of the Russians (66 of 88), followed by BN
at 51 per cent and remote control at 50 per cent. Significance was observed less
frequently for the four remaining attributes. Speaker type was significant for 25
per cent of the Russians, price 22 per cent, warranty 22 per cent, and tuner type
20 per cent.
For the Polish sample, the attributes that were significant most frequently in
the individual-subject ANOVAs were CO, speaker type, BN, and remote control.
CO was significant for 69 per cent of this group (53 of 77), followed by speaker
type at 45 per cent, brand name at 43 per cent and remote control at 40 per cent.
For the three remaining attributes, significance occurred less frequently. Price
had a significant effect on the decision making of 18 per cent of the Poles,
warranty 8 per cent, and tuner type 4 per cent.
 For the Hungarian consumers, remote control, speaker type, and CO were Emerging
significant most frequently. Individual-subject ANOVAs revealed that remote Market
control was significant for 78 per cent of this group (88 of 113), followed by Economies
speaker type at just over 50 per cent and CO at 33 per cent. Price had a
significant effect for 25 per cent of the Hungarian sample, BN 23 per cent, tuner
type 22 per cent, and warranty 10 per cent.
Marginal utility analysis. Each attribute was varied at two levels. Thus, the 25
preferred level (i.e. the level receiving a significantly higher marginal utility (p
<0.05)) could be determined for those attributes showing main effects in each
participant's decision making. The analysis of marginal utilities reveals a
striking pattern among all three groups - those participants with a significant
effect for BN and/or CO have a unanimous or near unanimous preference for the
"foreign" television. Each of the 45 Russians with a significant effect for BN, 94
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per cent of Poles (31 of 33), and 88 per cent of Hungarians (23 of 26) preferred the
US brand General Electric over their own domestic brand (Record, Helios and
Videoton, respectively). Similarly, all 66 Russians with a significant effect for
CO, 92 per cent of Poles (49 of 53), and 95 per cent of Hungarians (35 of 37) prefer
US-made televisions over those made domestically.
The marginal utilities for the five remaining attributes revealed a consistent
and logical preference for those attribute levels that intuitively were most
desirable (see attribute levels Nos 1 and 2 in Table I). Russian, Polish and
Hungarian consumers all showed a unanimous preference for the presence of
remote control, while near unanimity was found for two stereo speakers, a 24-
month warranty, soft-touch push button tuner, and a lower price. These results
further confirm the overall validity of the conjoint task.
Relative importance of the seven attributes. The frequency of an attribute's
statistical significance at the individual-subject level must be qualified by the
relative magnitude of its effect. Therefore, Hays' (1973) omega squared (w2), a
 International measure of explained variance, was used to determine the relative importance
Marketing of the seven attributes for each participant. The individual-subject w2 values
Review were then aggregated and averaged for each group. This "hierarchy of effects"
for Russian, Polish and Hungarian consumers is presented in Figure 1.
10,5 As can be seen, similarities exist between the use of the attributes by the
Russian and Polish consumers. For participants in both groups, CO was by far
26 the most important attribute, accounting for the largest amount of explained
variance (32 per cent for the Russians and 26 per cent for the Poles). Remote
control was next most important, accounting for 11 per cent of the explained
variance in the decision making of both groups. BN explained 8 per cent and 7
per cent of the variance in the decision making of the Russians and Poles,
respectively. For the Polish consumers, speaker type also had an impact on their
decision making, explaining 10 per cent of the variance in this group's decision
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making.
The Hungarian consumers used a decision strategy different from their
Russian and Polish counterparts. Remote control was the most important
attribute for the Hungarians (accounting for 30 per cent of the explained
variance in this group's decision making). This was followed by speaker type
with 11 per cent explained variance. BN and CO were found to be in the next tier
of importance, explaining only 4 per cent and 5 per cent of the variance in this
group's decision making. It should also be noted that several attributes had a
minimal impact on the decision making of consumers from all three countries.
These include price, warranty, and tuner type.
BN x CO interaction. The fractional design permitted individual-subject
estimates of several two-way interactions. Of particular interest here was to
determine if the value of a particular brand (e.g. Helios, General Electric (for
Polish participants)) varied as a function of its place of manufacture (e.g.
Poland, USA). The results from the individual-subject ANOVAs show that 29
per cent of Poles (22 of 77), and 27 per cent of both Russians (24 of 88) and
Hungarians (30 of 113) had a significant BN x CO interaction. The w2 results for
each of the three groups indicate that on average less than 3 per cent of the
explained variance in participants' decision making is accounted for by the
interaction between the television's BN and CO. Apparently, the fact that an
American brand (General Electric) was made domestically, or that a domestic
brand was made in the USA, had relatively little impact on the decision making
processes of Russian, Polish and Hungarian consumers. Independent of the
product's brand name, participants in each country preferred those televisions
made in the USA.

The 6 x 6 Factorial Design

To assess more specifically the effect of different brand names and countries of
origin on Russian, Polish and Hungarian consumers' decision making, an
aggregate-level ANOVA was performed on each group's evaluations of the
conjoint profiles in the 6 x 6 factorial design. This analysis revealed that BN and
CO each had a significant effect (p <0.05) on the decision making of consumers
 from all three countries. The BN x CO interaction also was statistically Emerging
significant for the Russian and Hungarian consumers (p <0.05), and marginally Market
significant for the Poles (p <0.11). This suggests that when other product Economies
information is held constant, the evaluation of brand names varied as a function
of their place of manufacture.
Brand name effects. For each group, post-hoc Scheffe tests were conducted to
identify those brands that were evaluated differently from each other. Results 27
for the Russian, Polish and Hungarian consumers are presented visually in
Figures 2, 3 and 4, respectively. (The solid lines above the ratings identify those
brand evaluations that were not statistically different (p > 0.05.) Consumers
from all three countries tend to group Western brands together and similarly
associate domestic and East European ones. Except for the Hungarians (who
perceive Sony as best), no significant differences were found among the three
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Western brands. For each group, the respective domestic brand (Record, Helios
or Videoton) received a significantly lower evaluation compared to the ratings
for the three Western brands; the domestic brand also was not evaluated
differently from brand names associated with firms from other former Socialist
 International
Marketing
Review
10,5

28
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nations. This is interesting in that nationalism might be expected to give

domestic brands a competitive advantage and, consequently, more favourable
ratings.
Country of origin effects. The post-hoc Scheffe tests conducted on each
group's ratings of the different countries of origin (see Figures 5, 6 and 7) show
a general preference for televisions manufactured in the three Western
countries Japan, West Germany and the USA. (As before, the solid lines
identify those ratings that were not significantly different). Domestic-made
televisions are evaluated less favourably by consumers from each group. For
the Poles, Russian-made televisions are evaluated below those made in Poland
or Hungary, while Hungarian's view Polish- and Russian-made televisions as
inferior to domestically produced ones. Only the Russians view their own
domestic product as being in the same tier of preference with those made in
Hungary and Poland.
BN x CO interaction. The interaction between brand name and country of
origin for Russian, Polish and Hungarian consumers is displayed visually in
Figures 8, 9 and 10, respectively. For all three groups, placement of Western
 Emerging
Market
Economies

29
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brands on domestic-made televisions resulted in some marginal improvement in

the product's image over televisions that are 100 per cent domestic (in both BN
and CO). However, this improvement is considerably less prominent than the
favourable effect for all Western-made televisions, regardless of brand name.

Discussion
This cross-national investigation provides a systematic "'first glimpse" of
Russian, Polish and Hungarian consumers' decision making for imported and
domestic products. Three major findings emerge with implications for Western
and East European marketers and researchers. First, differences were found in
the use of country of origin among these former Socialist consumers. Second,
brand name played less of a role in their decision making than was expected.
Third, the interaction between brand name and country of origin played a
relatively minor role in each group's decision making. This research also sheds
some light on potential differences between the decision behaviour of
consumers from the former East European trading bloc and the extant findings
 International from related research with Western consumers. Thus, this study contributes to
Marketing the development of a new body of knowledge concerning consumer behaviour
Review in these emerging market economies.
10,5

30
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 Country of origin played a dominant role in the decision behaviour of the Emerging
Russian and Polish consumers. This is consistent with previous research which Market
found significant effects for this extrinsic cue in the product evaluations of
Western consumers (Dornhoff et al.,1974; Festervand et al.,1985; Hastak and Economies
Hong, 1991; Tse and Gorn, 1993; Wang and Lamb, 1983; also, see Bilkey and
Nes, 1982). These results also provide Western marketers/researchers with
empirical evidence that consumers in at least two East European markets place 31
considerable emphasis on a product's place of manufacture. In contrast,
Hungarian consumers were more "functional" in their decision strategy, with a
focus on two intrinsic attributes - remote control and speaker type. Hungarian
consumers, however, did not ignore place of manufacture. Individual-subject
analyses showed that country of origin had a significant effect on the decision
making of over one-third of this group. Likewise, the aggregate-level analysis
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showed a significant effect for this cue. However, the managerial relevance of
this result must be qualified by the magnitude of its effect. Relative to the
television's intrinsic properties, the importance of country of origin for the
Hungarian's (as indicated by thew2analysis) was minimal.
These results provide empirical support for the notion that consumer
behaviour in the former East Bloc varies by country (Samli 1986; Shama, 1992).
Consistent with Samli's (1986) framework for classifying macro-economic
systems, differences were found between Russian and Hungarian consumers.
However, Polish consumers were expected to be more like the Hungarians in
their decision behaviour. In fact, the Russians and the Poles showed
considerable similarities in their use of country of origin as well as other
attributes. Thus, while some differences among the groups in this study were in
the expected direction, others were not.
An important similarity is also noted among the Russian, Polish and
Hungarian consumers. Contrary to much previous research with Western
consumers, none of the three groups preferred their own "domestically-
produced" goods. It was clear from the individual-subject analyses that
participants from each country preferred televisions made in the USA. In the
aggregate analysis, evaluations of domestically-made televisions were much
less favourable than those made in Japan, the USA or West Germany.
Nonetheless, some degree of nationalism was also noted in the decision
making of two groupsthe Hungarian and Polish consumers. Although in the
second tier of preference below those from the West, domestically-made
televisions were evaluated significantly higher by the Hungarians than those
made in Poland and the Soviet Union. Polish consumers evaluated domestically-
made televisions more highly than those made in either Hungary or the USSR
(although only the difference with the USSR was significant). The Russians, on
the other hand, showed no preference for domestically-made televisions over
those made in Poland or Hungary. These results suggest that domestic firms in
Hungary and Poland may, at present, enjoy a competitive advantage relative to
imports from some former COMECON nations. Any advantage, however, will
erode rather quickly as Hungary and Poland (and even Russia for that matter)
 International open their markets and products from the European Community (EC), Japan
Marketing and the US become more prevalent. As trade realignment occurs, Russian/East
Review European firms must react swiftly and strategically to minimize loss of market
share. (Several strategies are suggested below.)
10,5 A second result was that brand name was not among the more important
attributes used by Russian, Polish and Hungarian consumers in the evaluation
32 of domestic and imported televisions. The relatively small effect for brand name
was unexpected (see Landor Associates, 1990). Conventional marketing
wisdom might suggest that consumers who have long been denied access to
Western goods may focus on a well known global brand because of its status or
prestige or as a way to reduce risk in purchase decisions. While participants
from all three countries preferred Western brands, the presence of other relevant
product information appears to mitigate any brand name effect. This result is
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consistent with Tse and Gorn (1993) who found a diminished effect among
Western consumers for brand name relative to a product's place of manufacture.
In tandem, the first two findings in this study show that consumers in Russia,
Poland (and Hungary, to a lesser extent) have a keen preference for products
imported from the West, but are less concerned with the brand names
associated with those imports. This leads to the third discussion point.
Given the secondary role played by brand name, it is not surprising that the
interaction between this attribute and country of origin (albeit significant in the
aggregate analysis) played a relatively minor role in the decision making of all
three groups. In Western markets, established brand names enjoy the
competitive advantages of instant recognition and prestige and it is thought
they can enhance the value of a product beyond its functional purpose (Chay
1990; Farquhar 1989). The same may be true, but to a limited extent, in the
emerging markets of Eastern Europe. Placing well known Western brands (i.e.
Sony, Philips and General Electric) on televisions made in Russia, Poland and
Hungary improved the perceived value of "domestic" products and influenced
the decision behaviour of consumers from each country. However, this
improvement was marginal and not sufficient to overcome the value of
Western-made televisions independent of brand. In short, the less favourable
image of the "Made in USSR/Poland/Hungary" label appears to counteract any
potential advantage of leveraging Western brands in Eastern Europe.
Implications
The results from this investigation have implications for Western firms
contemplating expansion of their marketing and/or manufacturing operations
to Russia and/or Eastern Europe. First, the results support the view that
consumers in former Socialist countries represent different marketing
opportunities for Western firms and that each country should be analysed and
approached separately (Samli 1986; Shama, 1992). Although tentative and
specific to our samples, the results suggest that advertising and promotion
which emphasizes a product's intrinsic properties (i.e. functional benefits) is
more likely to be successful in Hungary than in the other two countries. In
 contrast, consumers in Russia and Poland may respond more favourably to Emerging
promotions based on extrinsic attributes, in particular, country of origin. Market
A second implication is that Western firms need to consider carefully the Economies
marketplace/consumer consequences of any strategic investment in East
European manufacturing operations. This is especially true if products from
such facilities are intended for Russian, Polish or Hungarian markets. While an
alignment of manufacturing capabilities with Eastern partners may enable 33
Western firms to reduce labour and production costs, it is less clear whether this
strategy will also lead to an increased leverage in global markets, particularly
in Eastern Europe. The results here suggest that the manufacture and
marketing of foreign-branded bi-national products in the emerging markets of
Eastern Europe will yield limited success (at least in the short term). For the
foreseeable future, domestically-produced products are likely to receive lower
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evaluations from Russian, Polish and Hungarian consumers compared to

Western-made goods regardless of brand name. This may be viewed as good
news for Western firms who are attempting to penetrate the region with
imports whose brand name is not yet familiar.
Russian, Polish and Hungarian firms, on the other hand, appear to be at a
competitive disadvantage regardless of how they brand their goods. There are,
however, long-term strategies that Russian, Polish and Hungarian firms can
employ to improve their competitive position and regain an imminent loss of
share among domestic consumers. By far the single most important objective is
to increase the perceived quality of domestically-made products. While this is
not likely to be achieved in the short-run, over time this goal may not be
insurmountable, particularly as Western technology is transferred and
incorporated into the design, assembly, and marketing of domestically-made
products. Another possibility is that, over time, an established affiliation with a
foreign firm, particularly one of high prestige (e.g. Sony, Philips, General
Electric), may increase the perceived quality of domestically-made products.
This too is a long-term approach and will occur only when Russian, Polish and
Hungarian consumers perceive a demonstrable improvement in domestic
product quality. Flashy advertising and clever marketing will do little to offset
decades of dissatisfaction with poorly designed and poorly made goods. If
significant and sustainable improvements in quality are achieved, Russian,
Polish and Hungarian firms may begin to enjoy an advantage in their home
markets. This would result from "nationalistic" tendencies among former
Socialist consumers, and their pride and satisfaction when purchasing top
quality domestic goods.

Limitations and Future Research

The results from this investigation must be qualified in terms of several
limitations which, in turn, identify opportunities for future consumer-based
research in Russia and Eastern Europe. First, this study represents only a
"snapshot" of Russian, Polish and Hungarian consumers' decision behaviour at
a time when their economic and political systems are undergoing major
 International restructuring. While this concern is problematic for any study of consumer
Marketing behaviour in this era of transition, decades of Socialism are likely to have a
Review pervasive effect on consumers' marketplace behaviour in all three countries. Thus,
this study is useful in providing an historical account, or benchmark, of consumer
10,5 decision making in the nascent markets of Russia, Poland and Hungary. An
important extension of this study is the development and implementation of
34 longitudinal measures to track changes in attitudes towards and perceptions of
domestic and foreign goods. Also, as the evolution towards free markets
continues, a new class of consumers in each country is likely to emerge (Shama,
1992). They will be more affluent, more discriminating, and more sophisticated in
their evaluation and selection of products and services. It will thus become
necessary to identify and measure variables for purposes of market segmentation.
A second limitation is that the samples were limited in both size and scope - one
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major city in each country. Larger and more representative samples would lend
greater generalizability to the results. As the infrastructure improves in each
country for conducting market research, Western and East European researchers
may be able to employ more sophisticated sampling methods (e.g. random
probability sampling, quota sampling) and recruit consumers whose
demographics, lifestyles, and/or ownership patterns apply to particular research
needs. This will be especially important as firms attempt to understand the
decision behaviour of specific target markets.
A third caveat is that the present study examined East European consumers'
decision making for one productcolour televisions. The extent to which the
results here generalize to other consumer electronics, or other product categories,
is not known. Similarly, only select brand names and countries of origin were
investigated here. Future studies may include brands (and associated countries) of
firms who are aggressively seeking to penetrate the region's emerging economies.
These would include additional firms from the EC as well as those from South
Korea and Taiwan. As Western firms introduce their products into the region it
will also be necessary to identify strategies for managing brand names in Eastern
Europe and Russia (see Aaker, 1991).
A final consideration is the increasing complexity with which MNEs are
expanding their international operations. Many firms are now employing multi-
country input to the design, sourcing, and manufacture of a single product (Hastak
and Hong, 1991). Future studies may address this trend by examining the separate
effects of a product's country of design, country of assembly, and source country of
a product's key components on consumers' decision making. The research
technique employed here, conjoint analysis, is ideally suited to investigate this
issue since these variables can easily be included as separate attributes in the
research design of future studies.
Notes
1. Sony was among the top ten brand names in all three countries, while Philips was among
the top ten in Poland and Hungary (Landor Associates, 1990). Both brands are included
for study in the present investigation (see Method section).
 2. An additional attribute which was likely to affect consumers' evaluation and selection of Emerging
televisions was screen size. However, after consultation with Russian, Polish and
Hungarian colleagues it was decided to hold this factor constant in the task instructions Market
due to its extremely high correlation with price (larger screens demand a higher price, Economies
smaller screens a lower price). This increased the face validity of the task to participants.
3. In the 27 design, consumers from each country evaluated domestic-made televisions and
a domestic brand relative to US-made televisions and a US brand (General Electric)
because US electronics in general, and General Electric products in particular, are likely 35
to be available soon in these markets.
4. The use of a fractional factorial design enabled the investigators to address the major
research objectives (i.e., model attribute use) without including all possible combinations
of attribute levels (128 profiles). Varying each attribute at two levels enabled us to avoid
the upward importance bias in attributes with a greater number of levels (Wittink, et al.,
1989).
5. The author was present as an observer to ensure the quality and integrity of the research
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administration.
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