Differentiation Strategy: Can A Brand Be Positioned on Country of Origin?

Photo Credit: Håkan Dahlström on Flickr

In a famous advertising campaign dating back to (I think) 1975, Stolichnaya, the Russian vodka brand, famously stated:  “Most American vodkas seem Russian”.

In this classic example of a differentiation strategy based on the place of origin, the headline made reference to the American vodka brands’ efforts to project the false image that their product is made in Russia. The ad cleverly continued: “Stolichnaya is different. It is Russian.” The product label boldly displayed the place of origin: “Made in Leningrad, Russia”.

In this third article in the series that looks at different methods of crafting a brand’s differentiation strategy I will address a subject that I am sure will generate a lot of debate: in today’s global economy, is it “safe” for brand managers to use “country of origin” to uniquely position a brand?

The Concept of “Place Branding”

Every country is a brand. Some places do a better job at branding themselves to the world  than others.

Each of us have certain attributes/perceptions that come to mind when we think of different countries: France is “perfumes”, Italy is “fashion and design”, Sweden is “simple and functional design”, Germany is “great engineering”, India is “spices”, Argentina is “tango”, Switzerland is “watches”, China is “low cost manufacturing”.

This is known as “place branding”. Many brands “borrow” these common perceptions and transform them into differentiating elements that help them compete locally and internationally.

What Does “Country of Origin” Really Means?

Well, it can mean different things. It can mean that the company is originally from that country, meaning that it reflects that country’s values and well-known attributes. Ikea promotes Sweden throughout their communication materials starting with the brand’s blue and yellow colors and ending with the products they sell in the cafeteria. Sweden is well-known for functional and modern design, attributes that perfectly complement Ikea’s brand image. 

Then there is the “Made in” country of origin aspect of it. Some brands are famous for positioning on the place of manufacturing. United States consumers for example seem to put real value on the “Made in USA” label. I find that a lot of companies are struggling to maintain a certain image that their product is manufactured in a specific country. In today’s global economy this perception is very difficult to maintain and support.

Two Things To Consider

First, the importance of “country of origin” in the purchase decision varies by product category. As a consumer, I have certain categories where country of origin makes the difference: I prefer French wines, Swiss watches and Belgium beer. I also buy fruits and vegetables that are grown locally, as close to home as possible. For other products, country of origin has no significance: clothing, electronics, etc.

Second, country of origin play la lesser role when products can easily be differentiated through other elements. In my opinion the more differentiated the product is, the easier it is to move away from the country of origin label. If you sell a commodity-type product then country of origin becomes very important. On the other hand if your products are innovative and unique, than you have many more options to differentiate, and the place of origin becomes an endorser rather than a differentiation element. Apple is mainly known for its product innovation, moved away from the country of origin concept. Their product packaging reads “Designed by Apple in California. Made in X”. And nobody seems to care.

My Take On The Issue

I see two big challenges with building a brand’s differentiation strategy around the “Country of origin” concept:

  • The ability to use the claim to your uniquely differentiate a brand from competition. Since multiple brands from one country can make the same “country of origin” claim, this is not the safest avenue to pursue for unique differentiation. All German car manufacturers include an “German” element in their marketing communication, so it is difficult for the consumer to choose the most “German” car available.
  • The capacity to support the claim in the long run due to globalization. In most cases, the claim cannot be sustain over the long run. In today’s global economy, where most companies face pricing pressures, the temptation to move production to lower cost countries cannot be denied. A lot of brands struggle to maintain the perception they created regarding where the product is made, while fighting competitive price pressures. A lot of brands, older ones in particular, started manufacturing in America, but were later forced to move production overseas.

In most cases I recommend using country of origin as an “endorser” that supports the main differentiation idea, whatever that idea is. That being said if you think your brand can sustain and defend the “country of origin” claim long term, you have very good chances of succeeding.

As I said in the beginning, this is a very debatable topic. I am very interested in hearing your opinion on this issue.

More Resources

Check out the brand positioning tutorials page for more articles on how to build strong and differentiated brands.

 

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