In 2005, Coca-Cola entered the juice market in Brazil through the acquisition of an established local juice brand called Sucos Mais and expanded later by acquiring Sucos Del Valle. Although it had plans to use its global brand name (i.e., Minute Maid), the company decided to keep the local name of the acquired juice manufacturer by merging it with its global brand name to form a new brand called Minute Maid Mais, and then Sucos Del Valle Mais. Although Coca-Cola did not consolidate its global brand name in the country, the company leads the Brazilian juice market. Such an example reveals managers can benefit from understanding consumer perceptions of brand origin to develop appropriate marketing strategies in international markets. Consumers’ perceptions of brand origin can be even more important in times of economic recession, when consumers are seeking more information and use brand signals to drive their decisions. The findings from this study suggest that brands with a different country-of-origin perception are differentially affected by economic contractions. The market share of brands that customers most identify as domestic suffer more damage during contractions than brands they perceive as foreign. These results generate a better understanding of brands’ resistance to economic declines based on their perceived country of origin. During economic contractions, when the market share of brands perceived as foreign suffer less damage, the companies may highlight international image cues. In contrast, during nonrecession periods, brands can benefit more if they highlight the domestic-perceived origin.
What You Need to Know
- In non-recessionary periods, brands perceived as domestic have an advantage in terms of market share gains.
- Recession harms the market share of all brands, but those perceived as more domestic are the most affected during downturns.
- Brands can benefit if they highlight their domestic- or foreign-perceived origin based on economic fluctuations.
Drawing on the signaling theory perspective, this study examines the effect of perceived country of origin on brand performance during economic contractions. The authors specify an econometric model linking brand market share to recession periods and analyze the interaction with brand origin perception. They test the model on four years of longitudinal data on consumer packaged goods brands combined with a self-administrated consumer questionnaire to infer consumers’ perceptions about brands’ origins. The authors find that economic contractions differentially affect brands with different country-of-origin perceptions. The results indicate that the market share of brands that customers most identify as domestic suffers more damage during contractions than brands they perceive as foreign. The main contribution of this article is in generating a better understanding of brands’ resistance to economic contractions based on their perceived country of origin. Moreover, the authors provide strategic recommendations to brands based on their origin perception and the country’s economic situation.
Vitor Azzari, Felipe Zambaldi, Leandro Angotti Guissoni, Jonny Mateus Rodrigues, and Eusebio Scornavacca (2023), “Brand Origin Effects During Economic Declines: Evidence from an Emerging Market,” Journal of International Marketing, 31 (2), 25–42. doi:10.1177/1069031X231154483