Introduction

Building strong brands has become a marketing priority for many organizations
today because it yields a number of advantages. Strong brands help the firm
establish an identity in the market place (Aaker, 1996), less vulnerability to
competitive actions, larger margins, greater intermediary co-operation and
support and brand extension opportunities (Delgado-Ballester and MunueraAleman, 2005). In Measuring g the overall value of a brand, marketing
researchers and practitioners have begun to examine the concept of brand
equity (Aaker, 1991; Baldinger, 1990; Keller, 1993) which has been referred to
the tremendous value that the brand name brings to the producers, retailers and
consumers of the brand. The equity of a brand is the result of consumers
perception of it which is influenced by many factors. Brand equity cannot be
fully understood without carefully examining its sources, that is, the
contributing factors to the formation of brand equity in the consumers mind.
Most of the brand equity research focuses on the marketing mix variables such
as advertising, distribution, price and product quality as the contributing factors
(Cobb-Walgren et al., 1995; Yoo et al., 2000). However, not much attention is
given to the non marketing mix factors. In the process of buying, consumers are
not only concern about the quality and price of a product but also other factors
such as the brands country-of-origin. Many consumers use country-of-origin
stereotypes to evaluate products for example, Japanese electronics are
reliable, German cars are excellent, Italian pizza aresuperb. Many
consumers believe that a Made in . . . label means a product is superior or
inferior depending ontheir perception of the country. Brands from countries
that have a favorable image generally find that their brands are readily accepted
than those from countries with less favourable image. Since country of origin
could be one of the influencing factors in determining consumers choice, the

purpose of this study is to explore the effects of brands country-of-origin image

on the formation of brand equity. To accomplish this goal, the brand equity of
household electrical appliances particularly television, refrigerator and airconditioner, in the Malaysian market is examined.
To address this objective, this paper is organized as follows. We begin by
presenting the theoretical framework that depicts the linkages between the
variables of interest. Consequently, we present a definition of the constructs
under study, and discuss the manner in which brands country-of-origin image
contributes to the development of brand equity. Subsequently, the data
collection procedures and variable measures are discussed. The study
hypotheses are then presented based on the results of the exploratory factor
analysis. Finally, we discuss the results of regression analysis and its
implications for managerial practice and some suggestions for future research
are given.
Theoretical framework
The conceptual framework of brand equity that guides this study appears in
Figure 1. This framework is built upon the conceptual framework for brand
equity presented by Yoo et al. (2000) by incorporating country-of-origin image
as the antecedent of brand equity. In this model, the country-of origin image is
treated as the independent variable, the dimensions of brand equity as the
mediating variables and brand equity as the dependent variable. The brand
equity construct shows how individual dimensions of brand equity are related to
the brand equity. The antecedent of brand equity is related to brand equity
through the mediation of the dimensions of brand equity. Therefore, to create, to
manage, and to exploit brand equity, the relationship between the dimensions of
brand equity and brand equity, and the relationships between the antecedents
and brand equity dimensions must be determined.

Figure 1
Brand equity
Brand equity refers to the tremendous value inherent in a well known brand
name. It appears when consumers willingly pay more for the same level of
quality due to the attractiveness of the name attached to the product (Bello and
Holbrook, 1995). In the marketing literature, brand equity is referred to the
intangible brand properties. Brand equity arose from customer brand-name
awareness, brand loyalty, perceived brand quality and favourable brand
symbolisms and associations that provide a platform for a competitive
advantage and future earning streams (Aaker, 1991). The equity that the strong
brand possesses can give the company a loyal consumer franchise that could
bring substantial returns to the firm. Similarly, the 1989 Marketing Science
Institute defines brand equity as:
. . . the value that is added by the name and rewarded in the market with better
profit margins or market shares. It can be viewed by customers and channel
members as both a financial asset and as a set of favourable associations and
behaviours.
From these definitions, brand equity can be said as the value incrementality due
to brand name. Although the classic definition of brand equity refers to the
added value of the brand endowed by its name, recent writings about brand

equity have expanded its definition to include a broad set of attributes that drive
customer choice (e.g. Yoo et al., 2000; Rust et al., 2001).
Regardless of its definitions, brand equity actually represents a products
position in the minds of consumers in the marketplace. It is precisely the wellestablished representation and meaningfulness of the brand in the minds of
consumers that provides equity for the brand name. Therefore, what the
consumers think of a particular brand determines the value it has to its owner.
As suggested by Kim (1990), a brand is the totality of thoughts, feelings,
sensations, and associations it evokes. Therefore, a brand is said to have equity
if it has the ability to influence the behaviour of those who behold the brand,
routinizing their preference, attitude and purchase behavior. Thus, for the
purpose of this study brand equity is defined as the consumers favouritism
towards the focal brand in terms of their preference, purchase intention and
choice among brands in a product category, that offers the same level of product
benefits as perceived by the consumers. The consumers preference, intention
to purchase, and brand choice to a brand indicate the consumers favourable
responses to the marketing mix elements of the brand in comparison with other
brands. Since customer-based brand equity occurs when the consumer is
familiar with the brand and holds some favourable, strong, unique brand
associations in memory (Keller, 1993), preference, purchase intention and
choice behaviour of a brand indicates the existence of brand equity.
Brand equity dimensions and brand equity
The marketing literature contains empirical research on the linkages between
each of the dimensions of brand equity (brand awareness, brand loyalty,
perceived quality, brand associations) and brand equity. The value of a brand or
brand equity is largely created by brand loyalty. Aaker (1996) has contemplated
that to a greater extent, the equity of a brand depends on the number of people

who purchase it regularly. The regular buyers have considerable value because
they represent a revenue stream for the firm. Thus, the concept of brand loyalty
is a vital component of brand equity. It has been found to have a positive and
direct role in affecting brand equity (Atilgan et al., 2005). If customers are loyal
to a brand even in the face of competitors brands with superior features, it
means that the brand has a substantial value to the customers.
The equity of a brand is partly measured in terms of the awareness it evokes.
The role of brand awareness in brand equity depends on the level of awareness
that is achieved. The higher the level of awareness the more dominant is the
brand, which will increase the probability of the brand being considered in
many purchase situations. Therefore, raising the level of awareness increases
the likelihood that the brand will be in the consideration set (Nedungadi, 1990)
which will influence consumers decision making. Past researches have shown
that brand awareness is a dominant choice tactic among consumers (e.g. CobbWalgren et al., 1995; DSouza and Rao, 1995; Reynolds and Olson, 1995). If
the awareness of brands is high among consumers, it means the brand is familiar
and reputable. Studies show that consumers who recognize a brand name are
more likely to buy that brand because familiar products are normally preferred
to those that are less familiar (Hoyer, 1990; Macdonald and Sharp, 2000).
Purchase decisions that are in favor of the brand helps in building brand equity.
Consumers perceived quality of a brand is due to their perception process
involved in the decision-making process. High perceived quality occurs when
consumers recognize the differentiation and superiority of the brand relative to
competitors brands. This will influence their purchase decisions and would
drive them to choose the brand rather than competitors brands. This implies
that high perceived quality would influence consumers choice, which will
consequently lead to an increase in brand equity. To the marketer, high
perceived quality could support a premium price, which in turn can create a

greater profit margin for the firm that can be reinvested in brand equity (Yoo et
al., 2000). Aaker (1991) also suggest that perceived quality is an association that
is usually central to brand equity.
Brand equity is largely supported by the associations that consumers make with
a brand, which contributes, to a specific brand image. Brand associations are
complicated and connected to one another, and consist of multiple ideas,
episodes, instances, and facts that establish a solid network of brand knowledge
(Yoo et al., 2000). It is formed as a result of the consumers brand belief, which
can be created by the marketer, formed by the consumer himself through direct
experience with the product, and/or formed by the consumer through inferences
based on existing associations (Aaker, 1991). Consumers favorable brand
beliefs will influence their purchase intentions and choice of the brand. These
behavioural responses have implications on brand equity. In the context of
products such as electrical appliances, brand associations would represent the
functional and experiential attributes offered by the specific brand. The
intangible qualities that consumers associate the brand with, such as
innovativeness, distinctiveness, dynamism and prestige are also considered as
brand associations. The combination of tangible and intangible attributes creates
a brand identity, that is a unique set of brand associations that the brand
strategist aspires to create or maintain, which drives brand associations (Aaker,
1996). Therefore, the identity of the specific brand may impact brand
associations and ultimately brand equity.
Brands country-of-origin image and brand equity
Information-processing theory posits that consumers use product cues to form
beliefs and evaluations about a product, which in turn influence their purchase
behaviors. Generally, the country-of-origin is considered as an extrinsic product
cue (Bilkey and Nes, 1982; Cordell, 1992; Erickson et al., 1984; Han and

Terpstra, 1988; Hong and Wyer, 1989, 1990; Thorelli et al., 1989). Consumers
are known to develop stereotypical beliefs about products from particular
countries and the attributes of those products. Therefore the country of- origin
image has the power to arouse importers and consumers belief about product
attributes, and to influence evaluations of products and brands (Srikatanyoo and
Gnoth, 2002). The country of origin denotes the home country for a company or
the country that consumers infer from brand name (Han and Terpstra, 1988).
One of the first conceptualizations of the country-of-origin phenomenon was
that of Nagashima (1970). He defined the image that consumers associate with a
given country-of-origin as:
. . . the picture, the reputation, the stereotype that businessmen and consumers
attach to products of a specific country. This image is created by variables such
as representative products, national characteristics, economic and political
background, history, and traditions (Nagashima, 1970).
Some other researchers view country image as consumers general perceptions
about the quality of products made in a particular country (Han and Terpstra,
1988; Parameswaran and Yaprak, 1987) while some others view it as the
defined beliefs about a countrys industrialization and national quality
standard (Srikatanyoo and Gnoth, 2002).
In the existing literature, there is a proliferation of studies to document countryof-origin perspectives. From these studies, marketers and consumer behavior
researchers generally accept that a products or brands country-of-origin is an
important influencing factor in consumer decision-making (Khachaturian and
Morganosky, 1990; Knight, 1999; Piron, 2000). Most of the previous studies
suggest that country-of origin information which is indicated by the Made in . .
. label serves several purposes in consumer decision-making. It act as a salient
attribute in consumer product evaluation (Johansson, 1989), stimulates

consumers interest in the product (Hong and Wyer, 1989), affect behavioral
intentions through social norms (Fishbein and Ajzen, 1975) and influences
buyer behavior through affective processes as in the case of consumers
patriotic feelings about their own country (Han and Terpstra, 1988). The overall
evaluation of products is influenced by country stereotyping, that is, the image
that consumers have about a certain country will influence their perceptions of
products from that country (Bilkey and Nes, 1982). Since consumers
perception of a particular country-of-origin influence their evaluation of
products from that country, this will influence their preference, purchase
intention and choice of a particular brand. Obviously, this has implications on
the brands equity.
Data collection
The data for this study were gathered through mail questionnaires that were
distributed across tri city. The questionnaires were to be responded by the
people who had some knowledge about the respective brands and who reported
their consumption experience with one of the considered brands.
The reason for choosing the brands of car is that people generally have prior
knowledge about this sector and they also have some knowledge about the
country of origin of the brands considered. Besides, consumers are familiar
with these product categories and the brands that they are using are relevant to
the research subjects resulting in high knowledge and experience.
Relevance with the product categories and brands of their choice enables the
respondents to provide more reliable and valid responses to the questionnaire.
Respondents were assigned the questionnaire that contained every question
twice, one for each brand of cars.
The samples in this study are restricted to adults of age 18 and above and
employed. Two-stage probability cluster sampling was employed, where groups

of heterogeneous members of the population were identified. To choose the

sample for this study, probability random sampling was used. Since the
respondents were captured at their workplaces, the organizations were randomly
chosen from the telephone directory of business clients for the state of Selangor
and Federal Territory issued by Telekom Malaysia. The study sample was then
drawn from the selected organizations based on the listing of employees of the
organization concerned. The data collection instrument is a structured
questionnaire which contains three parts: Part I consists of statement items to
measure variable country-of-origin image. Part II consistsof items measuring
dimensions of brand equity: brand loyalty, brand awareness, perceived quality
and brand associations and dependent variable brand equity, and Part III
includes some questions on demographic and socio-economic characteristics of
the subjects. There are three versions of questionnaires which differ in only the
product category being tested television, refrigerator and air-conditioner. A
respondent completes one questionnaire only.
Profile of respondents
The profile of respondents is shown in Table I. As mentioned earlier, the total
respondents for this study are 501. The study sample comprises respondents
who vary on such characteristics as gender, age, marital status, education level,
job position, household income ethnicity and living area. Such a difference is a
natural reflection of the true consumer population of Malaysia as shown in the
Population and Housing Census of Malaysia, 2000 issued by the Department
of Statistics. Moreover, the samples were selected through cluster sampling
method, a kind of probability sampling, where the whole elements in
representative organizations were randomly selected. The respondents comprise
of working male and female adults. In terms of gender, the sample indicates a
somewhat balance between the males and females. Majority of them (53.85) are
above the age of 32 and married (72.9 percent) With respect to ethnic groups,

majority areMalays, followed by Chinese and Indians. A total of 3.8 percent

belong to other races which include Eurasian, Singhalese, the bumiputras of
Malaysia such as Kadazan, Bajau, Bidayuh and Melanau. The breakdown of the
study sample in terms of ethnic groups could be considered representative of the
population of Malaysia since most of the ethnic groups are represented in the
sample.
Measures
Country-of-origin image
This study utilizes multiple measures for each construct in the conceptual model
in Figure 1. The country-of-origin scale measures the consumers perception of
the image of the country where the brand originates. To measure this construct
the consumers are assumed that they have an idea of the originating country of
the brand that they are now using. This variable is measured using seven items
developed for this study.
Brand equity dimensions
Brand equity dimensions consist of four dimensions as suggested by Aaker
(1991) that is, brand loyalty, brand awareness, perceived quality, and brand
associations. To measure brand loyalty, two items were adopted from Yoo et al.
(2000), two items from Chaudhuri (1995) and three items
were developed for this study base on the conceptualization of brand loyalty as
proposed by Aaker (1991). The brand awareness can be measured in two ways;
brand recognition and brand recall. However, in this study, the scale was
designed to measure simple brand awareness, in particular, brand recognition,
rather than brand recall. Four items were adopted from Yoo et al. (2000), which
were based on previous research by Alba and Hutchinson (1987) and Nedungadi
(1990). Three more items to measure brand awareness were developed for this

study. The perceived quality of brand scale measures consumers subjective

judgment about a brands functionality and reliability. Three items were
borrowed from Yoo et al. (2000), which were based on the works of Dodds et al.
(1991) and one item was developed for this study. Favorable associations are
measured in terms of consumers belief that the brand has attributes and
benefits that satisfy their needs and wants such that overall brand attitude is
formed (Keller, 1993). Seven items were developed to measure favorable
associations. Two items to measure strength of association were adopted from
Yoo et al. (2000).
Brand equity
Yoo et al. (2000) have developed the Overall Brand Equity Scale and four items
from this scale were adopted to measure the consumer-based brand equity.
Three more items were developed for this study. This consumer-based method
for measuring brand equity facilitates the definition of brand equity from the
consumer perspective by comparing the brand that the consumer is now using
with the other brands in the same product category.