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Country of origin effect

Building Sectorial Brands


Associate Professor
Alin Valentin Angheluță
Dean
Bucharest Business School
@ASE Bucharest, Romania
My research & business interests
 Phd thesis – connection between destination branding and country
branding
 I taught International Marketing @ Romanian-Canadian MBA and
@ Romanian-French MBA (INDE)
 I taught Tourism Marketing for FNTM - www.intreprinzatorturism.ro
 I am a strategy & marketing consultant for several entrepreneurial
companies – e.g. the biggest exporter of honey in Romania
Present situation – market size,
exports (2016)

Population (mil.) 60.6 45 19.7 3.7 3.5 2.9

GDP (bln.$) 1850 93 187 14 6.7 10.5

GDP per capita (PPP) 38160 $ 8272 $ 23626 $ 9997 $ 5334 $ 8818 $

www.TRADEMAP.org
Exports – products 461.5 37.8 63.6 2.1 2 1.8
(bln.$)
Exports – services 101.4 12.4 19.8 3.4 1 1.6
(bln.$)

Nation Brand Value 2034 68 175 n/a n/a n/a


(bln.$) www.BrandFinance.com
Exports - by products and by
destinations
 https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/ita/all/show/20
16
/
 https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/ukr/all/show/20
15/
 https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/rou/all/show/2
016
/
 https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/geo/all/show/2
016
/
 https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/mda/all/show/
2016
/
Successful exports strategy ?
 Diversification of product categories
 Focus on value added products
 Focus on branded products, not on commodities / raw materials
 Target multiple markets / countries
 Reduce market dependency
 Target countries that are geographically or culturally close to you
 Capitalize on the country brand image, the sectorial brand image, the
geographic indication
Country of Origin Effect &
Consumer Behavior
The influence that branding and labelling (about the country-source of
the product) have on consumer behaviour – perceptions, attitudes,
buying intentions.

Country brand images usually have an impact on the image of the


products from that country.

When consumers lack additional info, their product knowledge is limited,


or their involvement level is low, COO represents an important decisional
criterium.
COO – branding pyramid
 Country brand
(stereotypes, + & - )
 Sectorial brands
(sectors, industries, product categories associated with the country – examples: robots from Japan,
watches from Switzerland, fashion from Italy etc.)
 Corporate Brands
(multinational companies, their presence on the global markets)
 Product / Service Brands
(successful brands with international presence)
 Geographical Indications (for agricultural products) –
 Protected designation of origin (PDO)
 Protected geographical indication (PGI)
 Traditional specialities guaranteed (TSG)
Country brand – Anholt’s
Hexagon
Anholt-GfK Nation Brand Index
2017 - results
Brand Finance study, 2017

Top 100 countries after NATION BRAND VALUE


Bloom Consulting - model of
country brand
Future Brand study – Country
Brand Index
Country of Origin Effect &
Consumer Behavior
Country of brand, Country of design
vs.
Country of manufacturing, Country of assembly

Perception matters !
e.g. Iphone = US brand, made in China by Foxconn
The halo effect – we may suppose all French wines are nice/good

For some products or sectors, the brand image of the country which is associated with the
product is more important for the consumers (e.g. luxury goods, cars, technology etc.).
COO – Future Brand study

1. COO is a driver of consumer choice


2. The definition of COO is getting sharper – based on a combination of
factors from heritage, to design and physical manufacturing.
Authenthicity is key
3. The strongest COO are clear in consumers’ minds
4. A COO’s reputation is stronger when it excels in multiple categories
5. Country brand strength does not mean origin strength
6. Successful brands contribute to COO strength
Sectorial brands
Why countries should invest in
sectorial brands?
 Each country has its own export strategy, focusing on several product categories and on
different markets
 Developing a sectorial brand takes years and needs investments, government and
public support

 New Zealand has invested in developing the brand “Manuka Honey”, which is
supported by the national image (100% pure NZ) - New Zealand’s manuka honey is the
most expensive in the world and receives a significant premium over other suppliers.
Manuka honey – a brand of New
Zealand
 Active manuka honey has scientifically proven health giving properties which are driving global demand
across a range of outlets, from pharmacies through to hospitals. Manuka is the “perfect product” - sweet,
natural, guilt-free, convenient, health giving and scientifically proven – wrapped in the clean imagery of
New Zealand and packaged in a wide range of forms.
 The activity in manuka honey is unique to NZ, creating a highly defensible barrier to competition (and it is
not economic to farm manuka trees).
 Manuka is the “perfect product” - sweet, natural, guilt-free, convenient, health giving and scientifically
proven – wrapped in the clean imagery of New Zealand and packaged in a wide range of forms.
 Manuka is a scalable platform with the potential for a full range of product line extensions. Once developed,
strong brands can be leveraged into food, beverages, nutraceuticals and the health & beauty care
 The on-going international success of manuka honey is driving the growth of the total New Zealand honey
industry. Also, it is used to advertise for FDI to New Zealand.
2016

206.1 mil. $

increased 40 times
in 17 years
2016
NZ – 21.4 $/kg
China – 2.1 $/kg

Price for NZ honey–


10 times higher !!!

Bulk honey accounted for


only 560 tonnes (6%) of
export volume, down
from a peak of 3799
tonnes (51 %) in 2009
Potential for our countries ?
 Honey exports in 2016 & average prices per unit
 IT – 38,2 mil. $ / 4,89 $
 UA – 108 mil. $ / 1,89 $
 RO – 41,5 mil. $ / 4,00 $
 GE – 0,02 mil. $
 MD – 8,8 mil. $ / 2,80 $
 AR – n/a
 My customers
- a group of companies that has 25% share of Romanian honey exports (conventional and organic-bio);
 nowadays they export in bulk (300 Kg barrels) to Germany, UK etc.
 I helped them to finance a new production line, to create their own brand and to attack the retail
market with smaller packages
Potential for our countries?
Find the product!
 Wine exports – value / prices per unit

 Italy – 6222 mil.$ / 2,99 $


 Georgia – 113,5 mil.$ / 3$
 Moldova – 108 mil.$ / 0,8 $
 Romania – 22,7 mil.$ / 1,76 $
 Ukraine – 17,2 mil.$ / 0,5 $
 Armenia – 6,2 mil. $ / 1,96 $
COO & product / services brands
 COO influence Brand Equity (awareness, perceived quality, loyalty, brand
associations, buying intentions)

 Brands either brag with their country of origin,


they display it, or they hide it

 COO – it may be different in developed vs emerging markets, in traditional


vs new markets

 E.g. Adrem Invest acquiring http://www.mtag-switzerland.com/


Role of the government in COO

 Care about the country brand image, have a strategy, communicate


 Develop sectorial brands, in line with the country image
 Encourage some value added sectors
 Support SMEs for exporting and internationalization
 market research, intellectual property, legal support, training, access to
finance
 Public recognition for companies that have international success -
(e.g. International Enterprise Singapore)
Role of the business sector
 Focus on the competitive sectors of your country’s economy
 Don’t focus just on your company or your brand, and on winning in
front of competitors
 What if you could cooperate in order to develop the sectorial brand?
 Imagine you have one of the 10 guesthouses in a village – wouldn’t it
be easier to first build the destination image, together with your
competitors, in order to increase the number of tourists coming to
that village?