ANZMAC 2000 Visionary Marketing for the 21st Century: Facing the Challenge

Modelling And Testing Effects Of Country, Corporate And Brand Images

On Consumers’ Product Evaluation And Purchase Intention
Zhou Peng, Meredith Lawley and Chad Perry

Abstract
Image is important to both consumers and marketers. Indeed, country, corporate and brand images have been
well documented in different areas of business research. However, most past studies tend to approach these
image concepts separately and focus mainly on manufactured goods. To fill gaps in the literature, this paper
proposes three models of the combined effects of country, corporate and brands images on consumers’ product
evaluation and purchase intention and testes them on the international marketing of higher education services
into China with structural equation modelling. Results indicate that models with all three constituents fit poorly
with sample data collected for Australia. However, a brand-only model has reasonable fit with the data. Future
research should seek more explanations for our finding.

Introduction

The importance of image in the marketplace has been recognised in different areas of business research. For
example, issues around country image (Nebenzahl, Jaffe and Lampert 1997), corporate image (Howard 1998)
and brand image (Meenaghan 1995) have been explored from the perspective of international business,
marketing and consumer behaviour. It is generally believed that a positive country image will have favourable
impact on a consumer’s product-specific purchase decision (Papadopoulos and Heslop 1993). As well, an
appropriate corporate image can enhance a company’s competitive advantage by differentiating the company
from its counterparts (Fombrun 1996). Finally, a reputable brand image can increase consumers’ loyalty and thus
help the brand-owner to gain a price premium in a competitive market (Aaker 1996).

Most past research has approached these three image concepts separately. However, a conceptual framework-
driven and buyer behaviour model-oriented integrating theory may be needed (Samiee 1994). Indeed, recent
studies have begun to integrate country and brand images for better prediction of consumer behaviour
(Nebenzahl and Jaffe 1996). In line with this emerging trend, this paper proposes and tests three integrated
models incorporating country, corporate and brand image simultaneously for the first time. These three
integrated models are compared with a brand-only model. All these models are justified with reference to the
Fishbein-Ajzen behavioural intention perspective (Fishbein and Ajzen 1975) of consumer behaviour. The paper
concludes with implications for future research in this area.

Theoretical Models

As stated above, all the three concepts of country, corporate and brand image have been explored separately.
Nevertheless, the joint effects of the three image concepts have not been investigated. To fill this gap, a main
model (Figure 1) that integrates country image, corporate image and brand image is developed in this paper
along with three other competing models.

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Five variables are identified within these models: country, corporate and brand images that are defined as
consumers’ cognitive beliefs about the three types of origin information associated with their targeted products;
product evaluation that is conceptualised as consumers’ reactive attitude toward the products; and purchase
intention that is used as a predictor of consumers’ preferential choices (Kotler 1997). While the three image
variables can exert their impact upon product evaluation in different ways, product evaluation is hypothesised as
having a direct influence upon purchase intention (Fishbein and Ajzen 1975; Kotler 1997). Further discussion
about the each of the five constructs follows.

Figure 1. Proposed main research model

Corporate
image
Country Product Purchase
image evaluation intention
Brand
image
Fishbein-Ajzen perspective: beliefs attitude intention

Country image. In Figure 1, country image is assumed to be the first source that consumers consider in product
evaluation. This primary positioning of country is based on three considerations. Firstly, country-of-origin effect
is of increasing importance in the growing trade from globalisation (Samiee1994). Secondly, as the highest
concept of a consumer’s hierarchical structure, country image should be able to impose considerable influence
upon subordinate concepts such as corporate image (Papadopoulos and Heslop 1993). Thirdly, country image
has been found to have a greater effect on consumers’ product evaluation than other information cues such as
brand image (Wall, Liefeld and Heslop 1991).

Country image studies suggest that consumers’ attitudes toward products are related to their stereotypes of the
source country. Generally, a country’s capability to provide certain products is often used by consumers as an
important information cue. More broadly, consumers’ willingness to purchase a product can be related to the
economic, political, technological and social characteristics of the origin country (Papadopoulos and Heslop
1993).

However, findings of country image studies are ambiguous and concentrate mainly on manufactured goods
(Phau and Prendergast 1999). Will these findings also apply to services? Services are different from goods
because they are intangible, perishable, inseparable and variable (Kotler 1997). Given that services are the fastest
growing part of international trade and services constitute a proportion of GDP that rises with economic
development, this question has particular relevance for international marketing. “Foreign market growth [of
services] is generally higher and presents greater opportunities market share and long term profits” (Doole and
Lowe 1999, p. 371). Moreover, the associations that are the core of image may have special importance for
services (Woodward 1996).

Corporate image. Consumers’ perceptions of an organisation can also impact their attitudes toward products
originating from that organisation, but the effect of corporate image on consumer behaviour should be moderated
by other information cues such as country and brand images (Dowling 1993).

On the one hand, a strong corporate image can differentiate a company from its competitors, influencing
consumers’ predispositions to buy its products and speak favourably of it. In other words, consumers’
favourability of products increases with their familiarity with the provider (Worcester 1986). On the other hand,
as a lower level concept located in a hierarchical structure, corporate image is subject to the halo effect of
country image (Papadopoulos and Heslop 1993).

In short, it is reasonable to think that a favourable corporate image should result in favourable attitudes toward
its products, but the effect of corporate image should be subject to the greater influence of country image, as
shown in Figure 1. Nevertheless, research on corporate image has been mainly conducted from a managerial
perspective, and little work has been reported on consumers’ image assessments in services (LeBlanc and
Nguyen 1996), except for retail stores (Reardon, Miller and Coe 1995). So, how will consumers use corporate

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image in choosing a service? Is image as important in a service where new products are easily copied and price
differentiation is difficult (Boyle 1996)?

Brand image. Brand image is the third image construct in Figure 1. Past studies suggest that brand image can be
an important information cue for consumers to infer product quality and motivate their consumption tendencies
(Bhat and Reddy 1998). Generally, there are two possible ways for consumers to use brand image in their
product evaluation. In the first, rational way, brand image is a construct that consumers use to simplify their
product knowledge about a specific brand (Meenaghan 1995). Thus, consumers will often refer to brand image
prior to their product attitude formation process. In the second, emotional way, consumers are assumed to seek a
match between their self-concept and brand image (Heath and Scott 1998). That is, brand image may provide
consumers a symbolic motivation in their product consumption. In short, brand image is found to be an influence
on consumers’ product evaluation.

However, located as it is at the bottom of a hierarchical structure, brand image is found to be inferior to country
image in recent studies considering the joint effects of the two image concepts (Wall, Liefeld and Heslop 1991).
But these previous brand image studies provide research gaps because they have concentrated mainly on goods.
That is, how does brand image affect product evaluation of a service? Little is known about this.

Product evaluation. Consider the fourth variable in Figure1. Product evaluation is conceptualised as the
attitudes consumers hold towards their targeted products. While it is conditioned by consumers’ images of those
products, consumers’ product evaluation will in turn influence their purchase intention (Kotler 1997).

With belief embedded as a constituent element of image, this paper will follow the generally accepted Fishbein-
Ajzen’s perspective of beliefs→attitude→intention in explaining consumer behaviour. That is, consumers’
images will drive their product evaluation, and their product evaluation will in turn influence their purchase
intention. Although there are still arguments about the Fishbein-Ajzen perspective (Miniard and Cohen 1983), it
is one of the most widely adopted perspectives on consumer behaviour (Chan and Lau 1998)). Indeed, in the
case of high-involvement products like most services, it can be the best perspective available.
Competing models. The main, country-dominant model of Figure 1 might not capture all the richness of the real
world. Therefore three competing models were also developed for testing (Hair et al. 1995). The first, brand-
dominant competing model suggests that consumers might be more familiar with a brand than with its provider
or country of origin (Laskey 1997), but both country and corporate image might still impact consumers’ product
evaluation indirectly through brand image and directly by themselves, while corporate image is subject to the
effect of country image.

Secondly, the three images (country, corporate and brand) might be of equal importance to consumers. So the
second, equal-dominant competing model suggests that there might be no joint effects among the three images
and consumers may use all of them for their product quality inferring and price conceiving. However, as
country, corporate and brand images are engaged in a hierarchical structure (Papadopoulos and Heslop 1993),
these three constructs can be correlated with each other.

Thirdly, brands are becoming more and more important in international marketing (Baker 1999), presumably
because products are manufactured in many places around the world and so are becoming global rather than
having one country of origin. Similarly, concepts of the corporation and the brand may be becoming
indistinguishable, for example, the corporation and brand of Sony or Gucci may be almost the same. Thus a
third, brand-only alternative model is worth testing.

RESEARCH DESIGN, METHODOLOGY AND RESULTS

Research design

To test out the proposed models for international marketing of services, our research was conducted using
prospective Chinese students’ choices of MBA programs sourced from four English-speaking countries. This
research design took several factors into consideration. Firstly, country image has been found to be important for
students’ choice of overseas study destination (Lawley 1998). Secondly, the concept of corporate image may
apply to an educational institution like a ‘university’ and can influence students’ university selection process
(Kotler and Fox 1995). Finally, as a fee-paying program, a reputable brand image is crucial for MBA
recruitment (Nicholls et al. 1995).

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Indeed, country, university and program image correspond respectively to three questions students often have to
ask themselves when selecting overseas tertiary institutions: Which country? Which university? Which program?
Thus they could be relevant to higher education marketing and may exert impact upon prospective students’
overseas study destination choice.

Methodology

A questionnaire was developed according to the proven design methods of

Salant and Dillman (1994). Established operational definitions of elements for the three image constructs were
initially identified through the literature review noted above, rather than having to be developed from scratch
through factor analysis of pilot study data for example. Nevertheless, to adapt items to measure those definitions
to the research setting of marketing MBAs into China, two focus groups and five in-depth interviews with
Chinese students in Australia were conducted. Then a pretest of the questionnaire was done with students in
China through the internet. The final questionnaire had 28 items measured on a seven-point semantic differential
scale, which is appropriate for image studies (Dowling 1994; Kotler 1995).
Data was collected during seminars about MBA education in Western countries delivered by the first author in
three Chinese metropolises. A total of 280 usable questionnaires were collected. This figure of 280 is above the
normal bound of 100 to 200 for data analysis with the structural equation modelling described below (Kline
1998). The respondents provided a reasonably representative profile of prospective Chinese students who intend
to take MBA study overseas. In brief, not only is the data appropriate, it is the only data that can be obtained to
explore the phenomena studied in this research for the first time.

Results

Given that the variables are essentially latent or ‘unobservable’ (Hunt 1991, p. 397) and because of their
complex interdependencies, the most suitable methodology to test the models above is structural equation
modelling (Baggozi 1981; Kline 1998). Thus, after cleaning the data and establishing that the measurement
model was appropriate, the data was analysed with the structural equation modelling program of AMOS 4.0.
Results for the four models for the Australian data are presented in Table 1.

Table 1. Results of model fit for structural equation modelling (Australian data)

Competing models Chi-square DF P CMIN/DF GFI AGFI RMSEA

Country-dominant 918.823 345 0.000 2.656 0.782 0.744 0.077

Brand-dominant 895.517 345 0.000 2.596 0.793 0.757 0.076

Equal-dominant 895.517 345 0.000 2.596 0.793 0.757 0.076

Brand-only 82.957 35 0.000 2.370 0.938 0.903 0.070

The first three models tested in Table 1 did not provide good fit to the data, and no one model was significantly
better than the others. However, the third, brand-only, competing model does fit the data reasonably well and is
superior to the others. That is, when country image and corporate image are deleted, brand image on its own
explains product evaluation and purchase intention.

Conclusions and Future Research Directions

In conclusion, findings from the Australian data suggest that the brand-only model fits the sample data better
than other models, that is, the proposed relationships between country, corporate and brand image are not
supported. In other words, brand image is stronger than the other images, in a service product like education
where the client is so involved in consumption that the relatively ‘hard’ associations of country of origin and
corporate images are subservient to the more ‘soft’ associations like quality within brand image (Baker 1999).
Moreover, the price of an MBA is embedded in its brand image and price is a major consideration for
prospective students in China. A managerial implication of this research is that MBA providers should focus
their marketing effort on building a strong brand image for their programs.

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Further research is proposed in two areas. First, the proposed models need to be tested for the three other
countries for which data was gathered to establish if results are similar. Second, there is a need for more
exploratory research to seek other possible explanations for the current good fit of the brand-only model.

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