Publisher’s Comment: Unpacking the country-of-origin effect by identifying and interrogating causes of consumer perceptions

If last week’s Publisher’s Comment served as a prologue to the body of my research work, then this contribution will qualify as an epilogue – as in between these two chapters, there have been a number of ideas I have raised which could serve as a springboard for further research. In it I indicated my current research on brand Africa attempted to develop the Pan African Global Investor and Consumer Attractiveness Index (PAGICAI). This was aimed at deepening knowledge from my research specialisation on how a country’s nation brand impacts on investor and consumer decision making. Fortunately, the investor component of my research, as alluded to previously on this platform, built on the forty variables that I identified and got investors to measure their significance or relevance in their decision making.

So now I have to work on the consumer section of the PAGICAI research by identifying variables that could be measured to the determine their relevance/significance in consumer purchasing decisions. This study is crucial since we have to know what are those factors for us to be able to develop an appropriate branding intervention to increase intra-African trade. There are three distressing realities. African consumers cavort with foreign brands more than with “Made in Africa” service and product brands. As I indicated on many occasions, the annual brand Africa™ survey give testimony to this.

Secondly, the intra-Africa trade is today still sitting at the paltry 14% – after being knocked down from 18% by the lockdowns that saw borders closed as measures to contain the infectious spread of COVID-19 pandemic. This means usually billions of dollars flow out of the continent to pay for the imports made out of the beneficiated commodities that Africa has exported, and in most cases, we pay billions of dollars as licensing fees to the intellectual property owners across the world for those products produced in Africa. Thus, “Made in Africa” isn’t synonymous with “Made by Africa” or “Owned by Africa”.

Thirdly, it isn’t only domestic consumers but foreign consumers also harbour negative perceptions about “Made in Africa” service and product brands. This is what we communicate as country-of-origin effect. According to scholars, Kris Brijs, Josée Bloemer and Hans Kasper, in their seminal paper titled “country-image discourse model: Unraveling meaning, structure, and function of country images”, “country-specific cognitions influence affect, which influences conation. Country-related conations also represent the predominant influence on subjects’ beliefs, evaluation, and purchase intentions.”

I have previously given an example of South Africa’s wine exports, allow me to share it again to illustrate my point. According to the South African Wine Industry Information and Systems, in 2019 the industry contributed R36 billion to the country’s GDP and globally ranked the 8th in overall volume production of wine – this meant 3.3% of the world’s wine production.

Exports of still (i.e. non-fortified) packaged wines for the 2019 calendar year reached 145 million litres – this constituted 45% of South Africa’s wine exports out of the overall total of 320 million litres. In terms of Economic Partnership Agreement signed in 2014 between the EU and the SACU (whose member states are the Botswana, Namibia, Lesotho, South Africa and Eswatini), only 110 million litres could be exported duty free into the EU. Thus the EU is by far the biggest SA wine industry’s export destination at 74,8% of all wine exports.

This data tells us that 175 million litres of wine were exported as non-fortified into the EU where they only added antioxidants – which include resveratrol, catechin and epicatechin; bottled; and then branded as wines from such countries as France, Italy and Germany. The saddest thing is that they are then exported back into Africa in which we pay premium prices for them. (The concept non-fortified wine simply refers to all wines produced through the standard winemaking by fermenting the grape juice).

The irony here is that while “Made in Africa” product and service brands are struggling in Africa, it’s a different story in the Asian market. Bloomberg reported it’s not so in Asia. For example, the Shanghai-based company named its new toothpaste brand, “Darkie”, and emblazoned its packaging with a black-faced man sporting a top hat and a toothy grin.

The English name on the toothpaste’s packaging was changed in the late 1980s after Colgate-Palmolive Company bought 50% of the brand, but the product kept its racially charged name in the Chinese market. It’s still called “Hei Ren Yagao” – which means a “Black Person Toothpaste”- and it is one of the nation’s top sellers.

Now, how do we identify the causes of country-of-origin effect so that we could know how to develop appropriate brand strategies to deal with them? I have decided to use the South African wine export sector as my case study and developed forty (40) variables which could be ranked in terms of relevance and importance on the foreign consumers’ decision making. The 40 are divided into three broad categories – namely, items grouped as universal characteristics of any wine; then items related to the branding of wine according to standard or accepted norms; and finally, items linked to the country of origin of a wine. The split is uneven as under the first category there are six (6) items (constituting 15%); second has 13 constituting 32,5%; and the last has 21 items constituting 52,5. This wouldn’t distort the evaluation of data as each score against the item will be looked at within the context of each category percentage allocated against the whole.

The following is a list of the forty variables categorised into three sections.

a. Quality of wine

1. Winery
2. Category of wine (red; white; rose; sweet or desert: and sparkling)
3. Age of wine
4. Food pairing
5. Flavour character (bright; savoury; tart; or creamy)
6. Characteristics of wine (colour; tannin level; aroma; bouquet; sweet; alcohol level)

b. Branding

7. Quality
8. Labelling (“Made by…” and “Made in…”)
9. Bottling (shape/design/size/cork/screw caps)
10. Price/value for money
11. Brand loyalty/affinity
12. Popularity/Awareness
13. Adventure
14. Recommendation by waitron
15. Mass Media
16. Word of mouth
17. Influence by brand ambassadors
18. Wine testing event (presented by a sommelier)
19. Sentimentalism (attached to a special event in one’s life – e.g. romance)

c. Country of origin

20. The image of the country of origin (from media, first-hand experience, word of mouth)
21. Sentimentalism (attached to a special event in one’s life – e.g. holiday destination)
22. Country/region’s political system (democracy/dictatorship)
23. Country/region’s state of economic development (manufacturing capacity/ infrastructure)
24. Country/region’s labour regime (respect for workers’ rights)
25. Country/region’s occupational health and safety standards
26. Country/region’s commitment to environmental protection
27. Country/region’s culture of human rights
28. Substitution products from country of origin
29. Cost of living in country/region of origin
30. Language and culture in country/region of origin
31. Peace and security in country/region of origin
32. Immigration
33. Distance to/geographic location of country/region of origin
34. Ease of doing business in country/region of origin
35. Policy certainty in country/region of origin
36. Banking industry in country/region of origin
37. Macro-economic stability in country/region of origin
38. Crime in country/region of origin
39. Rule of law in country/region of origin
40. Education and training in country/region of origin.

The last section – which has the highest number of variables – carries more weight in consumer decision making. In their article, “brand origin and country of manufacture influences on brand equity and the moderating role of brand typicality”, academics Leila Hamzaoui-Essoussi, Dwight Merunka and Boris Bartikowski have eloquently explained how a country’s macro and micro images associated with both brand origin and country of production impact on the two main dimensions of brand equity – and these are a brand image and a brand quality. The authors argued that while brand origin images relate positively to both dimensions of brand equity, country of production images does not impact on brand image but only on brand quality.

Furthermore, the authors assert a brand as a representative of the country of origin moderates the impact of brand origin on a product’s brand equity. South African township music lovers may remember the artist Senyaka’s song, “Fongkong” – the word is bastardisation of Hong Kong – which ridiculed the quality of products manufactured in China. As the song took the township music scene by storm, the title song became a popular slang describing products of poor quality.

This research will be undertaken simultaneously with the investor perceptions one. With this one our consumer samples will be both domestic and foreign consumers; and we also include wine brand owners who are already exporting (both emerged and mainstream) and wine industry experts in what they think consumers think as the most significant in their purchasing decision. As I did in the investor perceptions study, I’ll then compare and contrast the feedback from both consumers in the one hand, and local wine exporters and industry experts on the other.

The findings from the two research studies will give us an almost complete understanding of what is significant in investor and consumer decision making and such will empower to develop an appropriate Pan African Global Investor and Consumer Attractiveness Index (PAGICAI) – considering all in all 80 variables. It goes without saying this mammoth task requires more than one company, and therefore I’d be happy to hear from potential partners.

Before signing off, let me wish you all a splendid weekend.

Saul Molobi (FCIM)

Publisher: Jambo Africa Online
Group Chairman and Chief Executive Officer: Brandhill Africa™

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