The Double-Edged Sword of Foreign Brand Names for Companies from Emerging Countries

Abstract

Foreign branding—or using brand names that evoke foreign associations through, for example, spelling a brand name in a foreign language—is a popular means in both developed and emerging countries of suggesting a specific country of origin (COO) in the hope that it will evoke certain product qualities. As a result, consumers increasingly encounter products with brand names that imply a COO that differs from the actual COO (where the product is manufactured). In four experiments, the authors find support for the hypothesis that incongruence between the actual COO and implied COO decreases purchase likelihood asymmetrically. Incongruence backfires in hedonic categories but has hardly any effect in utilitarian categories. Furthermore, incongruence decreases purchase likelihood more if the actual COO is an emerging rather than developed country. The authors address the psychological process underlying the asymmetric effect of incongruence by showing that consumers apply different information-processing strategies to hedonic versus utilitarian products. These results have important implications for (foreign) branding decisions.