Country-of-origin in brand communication: A multinational company perspective

Country-of-origin in brand

communication: A multinational company perspective

Anna Gunnarsson Katrina Holmström

Företagsekonomi, kandidat 2017

Luleå tekniska universitet

Institutionen för ekonomi, teknik och samhälle

Country-of-origin in brand communication:

A multinational company perspective

Anna Gunnarsson Katrina Holmström

Degree project in business administration, specialisation international business.

Bachelor at Luleå University of Technology

Department of Business Administration, Technology, and Social Sciences

I Acknowledgements

This thesis is a bachelor degree project in business administration, specialisation in

international business. This is our final work as students at Luleå University of Technology.

The aim with this thesis is to provide the reader with a deeper understanding how a multinational company can use Country-of-origin (COO) in brand communication.

Our hope is that this thesis will be an interesting read, and somehow useful for marketers and stakeholders who seek to get an insight in nation branding and how it links to COO. It has been an interesting and educative journey to accomplish this final thesis where we have learned how to collect, process and analyse data, and draw conclusions and respond to an unstructured problem.

We want to aim thanks to the involved who made it possible to conduct and accomplish this thesis. We want to express special gratitude to Magnus Kerker, business Navigator at IKEA, who helped us with a very important interview that proved to be substantial for the research.

Finally, we also want to say thanks to our supervisor Anne Engström for patience, support and guidance during the writing and researching process.

Anna Gunnarsson & Katrina Holmström

II Abstract

National branding and Country-of-origin strategy (COO) has not only shown to be convenient for research, but also of considerable importance and interest for companies to enhance competitive advantage. With constantly increasing product range on the markets and continually new technology in the society, the buying behaviour and customer preferences have changed. The customer evaluates not only the product regarding its function or physical capacity, but also regarding the product's intangible value, such as its COO.

The purpose with this study was to provide a deeper understanding about how a multinational company's (henceforth MNC) use of COO in their brand communication, can be described.

To realize and accomplish the purpose, two research questions were formulated which this study had the intention to answer. The first research question was meant to describe what channels in the communication process a multinational company can use to communicate their brand. The second research question was meant to describe how a multinational company can use COO in the message component of the communication process.

The fundamental purpose of the thesis in question was descriptive. The study was performed by observing a multinational case company. The observation of case company was performed partly with an interview and partly with a content analysis. The interview was held with a representative of the case company. The content analysis of case company was performed by reviewing websites in two different countries.

As a result, we found that the case company, which represented a multinational company (MNC), among other channels, used paper catalogues and websites as a channel in the communication process. The study also showed that different COO strategies can be used complementary in the message component in the company´s communication process, with the aim to attain competitive advantage among other companies on the market.

Key words: Brand communication, National branding, Country-of-origin (COO).

III Sammanfattning

Nationell branding och Country-of-origin (COO) har visat sig vara av stor betydelse och intresse för företag i syfte att öka och förbättra konkurrensfördelen i en allt mer

konkurrensutsatt värld. Med ett ständigt ökande produktutbud och ständigt ny teknisk

utveckling i samhället, har konsumenternas preferenser och köpbeteende dessutom förändrats.

Konsumenterna utvärderar inte enbart produkten med avseende på dess funktion eller fysiska kapacitet längre. Utan även gällande produktens immateriella värde, såsom dess

ursprungsland, dess COO.

Syftet med denna studie var att ge en djupare förståelse för hur ett multinationellt företags (MNC) användning av COO i dess varumärkeskommunikation kan beskrivas. För att uppnå syftet och begränsa det något, formulerades två forskningsfrågor som denna studie hade för avsikt att besvara. Den första forskningsfrågan var tänkt att beskriva vilka kanaler i

kommunikationsprocessen som ett multinationellt företag kan använda sig av för att kommunicera sitt varumärke. Den andra frågeställningen var tänkt att beskriva hur ett multinationellt företag kan använda COO i meddelandekomponenten i

kommunikationsprocessen.

Det grundläggande syftet med uppsatsen var beskrivande. Studien utfördes genom att studera ett enskilt multinationellt företag (MNC). Observationen genomfördes delvis med hjälp av en intervju med en väl insatt representant från företaget och delvis från en innehållsanalys där företagets webbsidor i två olika länder granskades och analyserades.

Som ett resultat av studien, fann vi att det studerade företaget som representerade ett multinationellt företag, bland annat använde sig av papperskataloger och websidor som en kanal i kommunikationsprocessen. Studien visade också att flera olika COO strategier kan användas som komplement i meddelandekomponenten i företagets kommunikationsprocess, med syftet att uppnå konkurrensfördelar gentemot andra liknade företag på marknaden.

Nyckelord: Varumärkeskommunikation, Nationell branding, Country-of-origin (COO).

IV

Table of contents

1. Introduction ... 1

1.1 Background ... 1

1.2 Problem discussion ... 4

1.3 Purpose & Research questions ... 5

1.4 Delimitations ... 6

1.5 Thesis outline ... 6

2. Literature review ... 8

2.1 Country of origin (COO) ... 8

2.1.1 COO vs Nation Branding ... 8

2.1.2 COO strategy, advantages, and aims ... 8

2.2 Brand Communication process ... 13

2.2.1 Definition ... 13

2.2.2 Channel component ... 14

2.2.3 Message component ... 15

2.3 Frame of reference ... 16

3. Research Methodology ... 20

3.1 Research Purpose ... 20

3.2 Research Approach ... 21

3.3 Research Strategy ... 21

3.4 Data Collection ... 23

3.5 Sample Selection ... 25

3.6 Data Analysis ... 26

3.7 Validity & Reliability ... 28

4. Data presentation ... 34

4.1 IKEA – a Multinational company ... 35

4.2 Brand communication process: Channel component ... 35

4.3 Brand communication process: Message component ... 35

4.4 COO strategy... 45

5. Data analysis... 47

5.1 Brand communication process: Channel component ... 47

5.2 Brand communication process: Message component ... 48

5.3 COO strategy... 48

6. Results ... 51

6.1 Findings ... 51

6.2 Conclusions ... 53

6.3 Implications ... 54

V

Appendix 1: Data collection guide ... 59

Appendix 2: Interview guide ... 61

Appendix 3: Content analysis protocol ... 63

List of Figures

FIGURE 1.2: Thesis outline...7

FIGURE 2.1: The essentials of the brand communication process (Faveroz & Alvarez, 2013)….….14 FIGURE 2.2: The framework………….………..19

FIGURE 4.1: Print screen of IKEA website in USA..………….……….37

FIGURE 4.2: Print screen of IKEA website in USA….……….………..38

FIGURE 4.3: Print screen of IKEA website in USA………....39

FIGURE 4.4: Print screen of IKEA website in Australia………..41

FIGURE 4.5: Print screen of IKEA website in Australia……….……….42

FIGURE 4.6: Print screen of IKEA website in Australia………..43

List of Tables

TABLE 2.2: Unregulated strategies with associated examples (Aichner, 2014).……….12

TABLE 2.3: Conceptualizing of research question one………….………...…17

TABLE 2.4: Conceptualizing of research question two……….………...18

TABLE 3.1: Strengths & Weaknesses of the chosen source of evidence presented (Yin, 1994)…...23

TABLE 3.2: Case study tactics for Four Design Tests (Yin, 1994)……….………….30

TABLE 4.1: Data presentation overview……….……….34

TABLE 4.2: Observations regarding COO attributes in the message component on IKEA websites in USA………40

TABLE 4.3: Observations regarding COO attributes in the message component on IKEA websites in Australia………..44

TABLE 4.4: Data display summary regarding COO strategy………..………...…….….46

TABLE 5.1:Data analysis display summary regarding channel….………..48

TABLE 5.2: Data analysis summary of unregulated COO strategy…………...………...50

1

1. Introduction

This chapter serves to acquaint the reader with the thesis and provide the reader with a slight background regarding the subject. Furthermore, a problem discussion briefly describes the problem that is studied and tackled in the paper, as well as a purpose and research questions which is the foundation of the study and therefore aims to provide a more in-depth description of the issues that are administered. Lastly, an outline of the thesis is presented.

1.1 Background

A strong brand is very important in the globalized world of today. It is important for companies to attract and captivate the customers (Jaffe et al. 2006). National branding is commonly referred as a form of marketing strategy with the purpose to promote the image of a country or a nation (ibid.). National branding usually implies the development of an image based on a specific country’s positive communicated core values (Domeisen, 2003).

It is previously stated by Simon Anholt (2003), that nations can be treated just like brands because they are recognized in specific ways by groups of people both on domestic and international grounds. Brand and countries can both be associated with certain qualities and characteristics (ibid.)

According to Han (2001), a nation much like brands, have a personality. Countries and nations are recognized by individuals in different ways. Some countries may be considered aggressive, friendly, or unreliable. (ibid.) With this in consideration, it is of essence to accentuate the fact that all nations have a respective image of their own and thus, branding intends to shape, adjust, or at least have a slight impact on the modification of these images and perceptions (Jaffe, et al. 2006). In our current society, nations are in dire need of branding mostly since image and reputation are components that are becoming more fundamentally implemented into a brand and nations strategic equity (Han, 2001).

A nations’ possession of a brand has developed into a significant necessity, and not just a choice (de Vincente, 2004). Furthermore, some individuals consider a nation’s reputation to be an essential influencing factor to an individual’s choice, whether it is a choice regarding an

2 individual’s preferred destination for pleasure purposes or academic purposes, or a choice of purchasing a product from the country in question (O’Shaughnessy and O’Shaughnessy, 2000). However, despite these statements there is still one question that arises when

discussing the topic of national branding, can a nation be branded like a company? If that is indeed the case, then the national brand in question would become the image of which the country’s products and services would be perceived in the minds of individuals (Jaffe, Eugene D., Nebenzahl, Israel D, 2006). The consultant Wally Olins researched this topic and

suggested three different conditions that must be fulfilled which he regards as essential to building a national brand (Olins, 1999). These three conditions are illustrated in Figure 1.1 below.

Figure 1.1: Conditions to build a national brand Source: Adaptation from Olins (1999)

The meaning of Nation branding may be many, but roughly it is about manage the reputation and the authority of countries and nations. Nation branding is also tightly connected to place branding and country-of-origin (henceforth COO). The image of a country or a nation and the successful transmitting of the image to the audience is as significant as what the country produces and sell (Jacqui, 2006).

3

Companies that are participating will need to agree to the brand agenda.

2

Companies using the brand need to have corporate values that correspond with those determined by the organizers of the brand campign, such as a chamber of commerce or government agency.

1

The brand needs to be used consistently over many products or services.

3 One usual definition of a nation is an extensive group of people who speak the same language and have the same race. A country on the other hand can be defined as piece of land, which is employed of a nation. With this said there is just a slightly distinction between nation brand and country brand in literature why the terms are used compatibly and complementary but with the same meaning (Yin, 2006).

As stated earlier, Nation branding can be explained in more than one way. One explanation of Nation branding is when a country’s name or logo is being used to promote the COO. Names or symbols associated with a certain nation can be used to utilize the image of the nation to raise sales and increase exports of products. Another explanation is place marketing where the aim is to raise the interest of a certain place, region, or destination, rather than increase sales (Fan, 2006).

There are also differences between the two concepts Nation branding and Nation brand.

Nation branding, which is covered in this study, is defined as communication with the aim to encourage an image of a nation. A nation on the other hand, has an image regardless of nation branding. (Fan, 2006) A nation brand portrays the nations’ or the country’s’ intangible assets unrelated to any sale or export of a product (Kleppe, 2002).

Research and studies regarding COO clearly shows that famous brands and products can highly influence the image of the country from where they originate. There are several cases of brands going as far as acquiring a role of ambassador for their respective countries, such as IKEA being a representative for Sweden all over the world. For example, there are results showing that COO is associated with high product quality. Therefore, COO can be considered as very important for multinational corporations and companies who seek to expand their sales. (Han, 1989)

Some claim that Nation branding is just another expression for the COO effect (Kotler, 2002).

A multinational corporation or company can be defined as a global organization that operates its business in more than its country of origin. It is empirical recognized that multinational companies can benefit from COO effects in several aspects (Noorderhavet et al, 2003).

Due to the increasing number of new products launched on most markets all over the world and among most different product categories during the last decades, customers evaluate products not only because of its actual function. Customers consider the attractiveness and

4 status of the brand or the product in a wider occurrence. They might also consider a certain product, simply because it come of or are associated with a certain country or nation that has a positive reputation, image, or status in the mind of the customer (Peterson & Jolibert, 1995 in Aichner, 2014).

A clear and concrete example of what COO really means and how it can be used by a brand or a company, is by studying watches made in Switzerland. These products have a universal reputation of being a luxury simply because of its COO. If you compare watches made in Switzerland with watches made in China, the COO will play a huge role in the product evaluation among aware customers. Many customers would rather like to wear a watch made in Switzerland than a watch made in China, because of the higher status and reputation of the Swiss product. (Aichner, 2014)

1.2 Problem discussion

As mentioned earlier in the background, Nation branding can be described as attributes such as names, symbols, and signs associated with a certain nation used to communicate a brand or product. The implied aim is to use the image of the Country-of-origin (COO) to raise the company’s sales or exports. (Fan, 2006)

Research about COO and its effect on customers purchase decision and buying behaviour have expanded rapidly during the last decades. Results shows that customers use COO information in their decision making whether to buy a certain product or not. For example, there are results showing that COO is associated with high product quality. Therefore, COO strategies can be considered important for companies who seek to expand their sales. (Han, 1989)

For many, a communicated COO is perceived as a clear hint that the product is of high status or quality. COO plays therefore a meaningful role in customers buying decision

(Hausruckinger, 1993). Customers are more willing to pay a little bit more for a product that seems to have higher status or quality and is branded with help of the COO, assumed the country has a positive general reputation or image in the mind of the audience (Koschate- Fisher et al, 2012).

5 COO is considered very important for companies since many customers use perceptions and stereotypical images in the process of evaluating the purchase of a product (Hamzaoui &

Merunka, 2006). COO and its effect on customers buying decision is however complex. Due to the competition, there is a variety of dimensions regarding what kind of product or service that is being dealt with (Pharr, 2005).

For customers, it might be a hard time to distinguish the real COO of a product since many products today usually are designed, manufactured, and assembled in different countries.

From a company´s point of view, however, there is a good chance to use the COO in their brand communication. There are several different COO strategies that a company can use in order to promote their products. (Aichner, 2014)

Due to the meaningfulness with COO for the customers buying decision, it is apparently, also important for companies since many customers use perceptions and stereotypes in the process of evaluating the purchase of a product (Hamzaoui & Merunka, 2006). Results from earlier research shows that COO is associated with high product quality in the customers’ buying decision. Therefore, COO, can be considered as an important factor in the process of communicating the brand for companies who seek to expand their sales. (Han, 1989)

With this background and introduction of the subject National branding, COO, and the

benefits of using COO in brand communication, one question may arise: How can a company use COO strategy in brand communication?

1.3 Purpose & Research questions

The purpose with this study is to provide a deeper understanding how multinational company can use COO in their brand communication. To be able to answer the purpose, the channel and message component in the communication process will be described. Thereof, the following research questions are stated:

RQ1: What channels in the communication process can a multinational company use to communicate their brand?

6 RQ2: How can a multinational company use COO in the message component of the

communication process?

1.4 Delimitations

To make this paper a practicable research some delimitations are necessary. National branding and COO is studied from a multinational corporation´s perspective only.

Furthermore, additional limitations are taken to focus on certain things more than others so that the research can be executed accurately. Only the parts in the communication process that are of certain importance for the study are focused on. The main emphasis of this thesis is on specifically two components of the communication process, such as channel and message.

1.5 Thesis outline

The following thesis is composed of six different chapters that are organized as follows;

introduction, literature review, methodology, data presentation, data analysis and finally, results. The very first chapter contains of the background, problem discussion and purpose together with the research question. This chapter aims to briefly introduce the topic that is being researched for the reader and is later intended to be developed into our research. The second chapter seeks to present previous studied that have been accomplished by various researchers and will present the literature for the research question. The third chapter intends to describe the methodology, in which the following aspects are presented: research purpose, research approach and strategy, data collection, sample selection and reliability and validity.

Lastly, findings and conclusions of the research are presented and serves to conclude the thesis as the result. Figure 1.2 on the next coming page illustrates the thesis outline.

7 Theory

Method

Data presentation

Data Analysis

Results

Figure 1.2: Thesis outline.

8

2. Literature review

This section aims to provide an overview of theories and literature that is relevant to the previously presented research purpose and the research questions. The literature is carefully selected to suit the topic to conduct the research accordingly. The aim with the following literature chapter is to untangle and define the concept of nation branding and how it links to COO strategy. The chapter also defines the concept of the communication process and the most relevant parts of it for this research. In the end of this literature section, a conceptual framework is set up to get an overview of the literature that is relevant for the purpose and research questions.

2.1 Country of origin (COO)

2.1.1 COO vs Nation Branding

According to Fan (2006), Nation branding can be explained in more than one way. One definition of Nation branding is when a country’s name, flag, logo, or other country specific symbol is used with the aim to promote the COO of the brand or the product. Names, pictures, and symbols associated with a certain nation can be used to utilize the image of the nation to raise sales for companies and increase exports for countries. (ibid.) Nation branding can also be defined as a universal national brand strategy with the aim to communicate the most competitive images and visions of a nation or a country (Anholt, 1998). It can also be explained as another term for the COO effect (Kotler, 2002).

2.1.2 COO strategy, advantages, and aims

From companies’ point of view, there is beneficial to use COO in their communication strategy. There are many different strategies for how a company can use COO in order promote and communicate their brand or products. (Aichner, 2014) One of the most characteristic COO strategy is to communicate the product with the phrase “Made in…”

(Bilkey & Nes, 1982). This is a simple strategy where the company doesn’t need to use any symbols, signs, images, or slogans that the customers need to associate with the country. This strategy only requires the name of the country in the communication of the COO, e.g. “Made in Germany” (Aichner, 2014).

9 A lot of companies choose to advertise their products´ COO with hope that it will gain

advantages from loyal native national customers, but also from foreign international customers who have a positive image or perception of the country in question (Aichner, 2014).

Considering the fact, how much COO influences the purchase decision among customers, country-specific stereotypes could be studied and used advantageously in the communication of brand and or products. The company can either chose to highlight the COO of the products, or intentional avoid mentioning the COO, obviously depending on what the stereotype

perception of the country in question is. As an example, the British car brand “Jaguar” once chose consciously to not mention the COO of the brand when promoting it on foreign

markets. The reason they knowingly chose to not mention the COO was because of the image of cars from Britain. The image of cars from Britain was not advantageous in the consumers buying decision. (Kaynak et al, 2000)

Obviously, companies can only take advantage from a COO strategy if the receiver in the brand communication process is aware of the actual country. Therefore, some companies attempt to communicate the COO of a brand or product, and simultaneously at the same time arise the awareness and knowledge of the country in question. The company can do this with several different strategies that can be used alone or combined. (Aichner, 2014)

Strategy as a concept is defined as how a company chose to work in long-term to achieve their set objectives (Chandler, 1997). Strategy can also be defined as how a company chose to communicate the COO of the brand or the product to its customers. For companies to benefit from the positive effects that COO can bring, regarding increased sales, the customers need to be aware of it. There are different strategies that companies can use to get the customers familiar with the COO of their brand and or products and thereof also benefit from it. There are both legally regulated COO strategies and unregulated COO strategies. (Aichner, 2014)

10 Regulated COO strategies

Regulated COO strategies are strategies that must live up to directives, assigned by national or international laws and regulations before companies or organisations can use them.

Regulated strategies are those when companies use the phrase “Made in …” or so called

“quality and origin labels”. The first one, “Made in…”, is the most common and simple strategy to use when communicate the COO. The country of origin is stated clear and direct and there is no need for any associations, image, or symbol. The country of origin is just stated out clear like for example “Made in India”. This COO principle is obligatory for industry products in many countries. The reason this COO principle is obligatory in many countries is to make it possible for customers to immediate make boycotts of products from specific regions or countries but also for authorities to make immediate import bans from certain countries. (Aichner, 2014)

The second legally regulated COO strategy is the one about “quality and origin labels”. This strategy embraces the regulated control of labelling products with the purpose to protect and promote the origin of quality, for example the Italian product “Prosciutto di Parma”. This kind of geographic labelling has been used for a long time in Europe and may be a forecast

indicator of the products status, quality, and reliability. In addition to these regulated COO strategies mentioned, there are numerous of more labels controlled by regional laws or

legislators. (Aichner, 2014) In the table below, the two regulated COO strategies with existing examples, will be presented.

Table 2.1: Regulated strategies with associated examples.

Regulated COO strategy Example

“Made in …” Made in USA

Quality and origin labels Lübeck Marzipan, Germany

Source: Aichner, 2014

11 Unregulated COO strategies

According to Aichner (2014), unregulated COO strategies are strategies that are not legally controlled by law or regulation. The purpose with these COO strategies are as well to

communicate the COO of a company, brand, or product, to promote it to potential buyers and customers. Since these strategies are not controlled by regulations, the communicated COO does not have to be the real Country-of-origin. For example, a company can communicate a typical Italian image or symbol on a product that the company want the customer to associate with Italy with the aim to promote the product to be typical Italian. The company can do so even though Italy is not the COO where the product is produced. For example, a brand who produce and sell frozen pizza can make good use of Italy-specific symbols and pictures on the package even though the product is produced in a different country. In this way, the company can benefit from stereotypes that customers might have about Italy to promote the actual product that might not be from such an advantageously origin as the company want to give the appearance of. (Ibid.)

One of the most straightforward COO strategy is, according to Aichner (2014), the one where the company use the name of the COO directly in the company name, for example the bank, Bank of America. Companies can use typical COO words, names, animals, or other country- specific details in the name of the company to communicate the COO. For example, Dollar General, which is a wholesaler in the USA. Companies can also use the language or country- specific slogans as a strategy to achieve the COO effect. For example, German car brand VW use the slogan “Das Auto” in their brand communication which is German for “The car”.

(ibid.)

Aichner (2014) states, that stereotypical actors or other famous personalities can be useful as a strategy to communicate the COO. By using these personalities in advertisement, the COO can be communicated through a stereotypical look, accent or outfit of the person acting in the advertisement. As an example, the Italian chocolate brand Ferrero once used famous models and actors in their TV commercial of a new chocolate product. The characters all had typical Italian names such as Paulo and Francesco. The main characters also had very dark hair which is another stereotypical characteristic for Italian men. Also, the commercial took place in a famous environment of Italy, namely the capital Rome, with several of landmarks, signs, and

12 words in Italian. There was no doubt what COO the company was trying to communicate.

(ibid.)

Further on, Aichner (2014) adduces that flags, symbols, or logos typical for the country might as well be used as strategy to advertise the COO. This strategy is especially useful on food packages and containers. For example, Italian flag on pasta packages and American flags on barbeque-sauce and Ketchup. Landscapes, building or other famous and well-known

landmarks is also a successful strategy to communicate the desired COO of the product or brand. For example, can the Leaning Tower of Pisa in Italy be used effectively to promote Italy as the COO. Or the mountain on the Swiss chocolate brand Toblerone which is Mattehorn, in the Alps. (ibid.)

In the table below, several of unregulated COO strategies with existing examples, are summarized and presented. Companies and brands use these strategies to communicate the COO. It is common among companies that several of these COO strategies are used additionally with each other (Aichner, 2014).

Table 2.2: Unregulated strategies with associated examples.

Unregulated COO strategy Example

COO implanted in the company name Bank of America (bank in the USA) Air France (airline in France)

COO words implanted in the company name Lincoln National (Insurance company in the USA)

Dr Oetker (food producer in Germany)

COO language Dolce & Gabbana (fashion brand of Italy)

Wolkswagen – “Das Auto”

Stereotypical celebrities from the COO Italian actor and model Elisabetta Canalis in TV-commercial for the Italian cookie brand Ferrero, in 2011

13 Official flags and symbols of the COO National flag on food-item package, e.g

American flag on popcorn package

Typical landscapes or buildings from the COO Matterhorn, a Swiss mountain on the package of Swiss Chocolate brand Toblerone

Source: Aichner, 2014.

According to Aichner (2014), it is of certain importance that the customers are aware of the COO, and familiar with the stereotypes of the country-of-origin to benefit from any COO strategy. Many companies use a mix of different COO strategies in their communication to the audience. The purpose and aim with using more than one strategy is to make it total clear what the COO of the brand or product is. The knowledge as well as the perception and stereotypes about the COO are various between customers. It is, as an example, more likely that a customer from Germany have more extensive knowledge about Switzerland than a customer from a faraway country like Australia might have. In that aspect, it is important that the company do have knowledge about the difference between foreign customers and their culture, to be able to effectively communicate the brand or product to the audience. (Ibid.)

2.2 Brand Communication process

2.2.1 Definition

According to Favero and Alvarez (2013), brand communication is the transfer of a message to display the brand to the receiver. Brand communication can also be defined as a desire to communicate offers that can satisfy various needs among the customers (Ibid.). An effective and successful brand communication lead to a conviction of the customer, and it is of importance that the transferred message does match with the reality (Nandan, 2005).

The communication process is needed for companies to notify and convince customers about their brand and products. The aim is to create positive images of the brand, to attract new potential customers and maintain old ones. (Churchill & Peter, 2003)

14 The brand communication process in its whole consists of nine components. These

components are: transmitter, receiver, message, channel (media), encoding, decoding,

response, feedback, and noise. The most important components for the communication aspect, are the transmitter, the receiver, and the message. The transmitter is the stakeholder who is sending the message. The transmitter can be either a company or a brand. The receiver is the one who receives the message that was sent from the transmitter. The transmitter can be a potential customer. (Favero & Alvarez, 2013)

Figure 2.1 below demonstrates the overall process of brand communication with all nine components illustrated.

Figure 2.1: The essentials of the brand communication process Source: Favero and Alvarez, 2013

2.2.2 Channel component

Favero and Alvarez (2013), describes each part of the brand communication process carefully.

A company or a brand can be the transmitter and the potential customer or consumer can be the receiver whom the message is directed towards. To transfer the message from the

transmitter to the recipient, many channels (media) can be used. These channels can be media such as television or radio commercials, advertisement, posters, magazines, or websites on the Internet. (Ibid.)

Transmitter Message Receiver

Feedback Channels (media) Noise

Noise

Noise

Noise Encoding

Decoding

15 There can also be a lot of so called noise in the communications process. This noise is a distraction that occurs in the environment and might make the message not as desired in the perception of the customer. (Kotler & Armstrong, 2007)

Kotler and Armstrong (2007), argues that there is a wide range of specialized functional media captivating advertisers in a wider extent in the communication process than more established traditional channels, such as regular print advertisement, or face-to-face

marketing. Internet facilities like for example customized websites, social networks, emails, and blogs have started to replace traditional media channels in the communication process.

Internet facilities can also work as an efficient complement to the traditional channels. (Ibid.)

Research also shows that new consumption habits among the customers along with new technologies endorses the inducement of new media channels in the communication process, especially driven by the appearance of new internet facilities (Rodrigues, Chimenti & Walnut, 2011).

According to Favero and Alvarez (2013), communication through websites is considered positive on several levels. The use of websites can cut down on high marketing costs for the company. Websites online as media channel also make it possible for the company to receive quick response from the potential customers. Another advantage with communication online is that it is an efficient and somewhat simple way to present a wide range of advertisements and products. Additionally, there is a possibility to reach out to a wide audience at the same time. (Ibid.)

2.2.3 Message component

The two components in the communication process that are the most essential and relevant for communication, are message and channel (media). The message component is defined as a set of symbols, signs, names, colors, or images that are sent by the transmitter in order to deliver a desired message to the receiver. The desired message flows from the transmitter through the chosen channel (media) to the receiver. The potential customer or consumer can be the

receiver whom the message is directed towards. (Favero & Alvarez, 2013)

16 There are opportunities for brands and companies to effectively reach out with the desired message to the customer with a set of signs, symbols, colours, names, or images. These attributes together can contribute to an intensified perception among the customers. The receivers, who in this context are the customers, are all unique in their preference and purchasing behaviour. All recipients of the message might interpret it individually.

(Gezelius & Wildenstam, 2011)

There is also the so-called noise in the brand communication process. The noise can be described as unintended misrepresentations that occurs in the process of communicating the message. This unplanned noise might make the message different to the receiver from what the transmitter intended it to do. (Kotler & Armstrong, 2007)

2.3 Frame of reference

The literature relevant to the topic, the purpose, and the research questions, are the

foundation of the study and compared with the collected data and analysed in order to answer the purpose and research questions. In this section, the theory presented in the literature chapter, are conceptualized in a framework. The aim with the framework and the

conceptualizing below is to demonstrate and clarify the most relevant concepts within the literature that are necessary to define, to answer the research questions. The section ends with an illustration of the framework.

The purpose with this study is to provide a deeper understanding how a multinational company can use COO in their brand communication. In order to achieve the aim, more knowledge is required of what is communicated and through which channels. Therefore two research questions are developed and presented on next coming page.

17 RQ1: What channels in the communication process can a multinational company use to communicate their brand?

The aim with the first research question is to better understand what channels in the brand communication process, a multinational company can use to communicate their brand. In the table below the conceptualizing is visualized.

Table 2.3: Conceptualizing of research question one.

Concept Reference Definition Measurement

Multinational company (MNC)

Noorderhaven et al.,2003

A multinational company (MNC) that operates business in more countries than the COO.

A description of:

-a MNC that operates in more countries than the COO.

Brand communication process: Channel component

Favero & Alvarez, 2013.

Channel is the media through where the message flows from the transmitter to the receivers, e.g.

websites.

A description of:

- Channels (media) used for brand communication by case company.

18 RQ2: How can a multinational company use COO in the message component of the communication process?

The aim with the second research question is to describe how COO can be used in the message of the communication process. To answer this research question, it is necessary to first describe the concept of what a message is in the brand communication process. Due to the purpose with the study, the most central in the second research question is to describe how a multinational company can use COO in the message of the communication process. In the table below the conceptualizing is visualized.

Table 2.4: Conceptualizing of research question two

Concept Reference Definition Measurement

Brand communication process: Message component

Favero & Alvarez, 2013.

Symbols, signs, colour, names, images used to transmit a desired message.

A description of:

symbols, signs, colour, names and images as a message in brand communication

COO strategy Aichner, 2014. Unregulated COO

strategy used by company in order to communicate the brand

A description of:

-unregulated COO strategy used by case company

19 Figure 2.2 below illustrates a model of the framework and what in particular that is studied in the brand communication process of case company.

Figure 2.2: The framework Source: Favero and Alvarez, 2013

Noise

Transmitter Message Receiver

Feedback Channels (media) Noise

Noise

Noise Encoding

Decoding Country-of-origin

(COO) RQ1

RQ2

20

3. Research Methodology

The following chapter serves to present the chosen methodologies for the thesis. First and foremost, the various approaches and procedures that have been applied in order to gather the desired and necessary data for this specific study are presented. Furthermore, the purpose as well as the approach and strategy of this study have been defined. Lastly, the conclusion of this chapter consists of a brief discussion regarding research problems in terms of validity and reliability.

3.1 Research Purpose

The research purpose of a study can either be exploratory, descriptive, or explanatory. A descriptive study is commonly described as something that aims to describe various events or situations, exploratory studies on the other hand, seek to define and determine what is

occurring, and lastly, an explanatory study aspires to institute innovative relationships.

(Saunders, Lewis & Thornhill, 2009)

The fundamental purpose of the thesis in question is descriptive. As mentioned previously, descriptive studies seek to depict various situations or individuals, which in turn allows for the creation of their profiles (Saunders, et al, 2009). As a result of this, the nature of the thesis has been primarily suitable for a descriptive study and is treated as such. The thesis has aimed to describe how a multinational company can use COO in their brand communication.

Although many aspects have been involved in the thesis suggested for its descriptive nature, some factors lean towards the use of an exploratory study as well. As stated above,

exploratory studies seek to define as well as determine what is actually occurring (Saunders, et al, 2009). In fact that this thesis also has delved into the topic and wish to observe the various aspects of the topic in question, it is safe to assume that it can also be categorized as partially exploratory.

21

3.2 Research Approach

A thesis can consist of either a deductive or inductive approach (Saunders, Lewis &

Thornhill, 2009). Considering the fact that this thesis has been based on already existing theories, the approach has been of a deductive nature.

Moreover, it is also known that there are two different research approaches that can be utilized in order to accurately execute various researches. The first one being qualitative approaches, and the second one being quantitative approaches. The thesis in question has been classified as a study that chose to execute a qualitative approach. This approach has been chosen mainly due to the fact that the purpose of the thesis has aimed to acquire a more thorough comprehension regarding the topic of how multinational companies can utilize COO in their brand communication. Qualitative data, as opposed to quantitative data, is completely communicated in words and can thus provide acumens on subjects that could otherwise not be fully quantified in a substantial manner. (Saunders, et al, 2009) With all of these factors taken into consideration, the nature of this research strongly suggested that a qualitative approach was the most suitable.

3.3 Research Strategy

When it comes to the different varieties of research strategies that can be utilized, there are five different strategies that can be of use when executing a particular research: survey, case study, experimental, analysis and history (Yin 1994). The choice of strategy for a given research is fully determined by the nature of the research in question, and in order to make that choice, one must take three different aspects into consideration (ibid.). According to Yin (1994), the three following aspects pose a significant impact on the choice of strategy:

1. The character of the research questions

2. The amount of control over behavioural events 3. The amount of focus on contemporary events

Considering the fact that this study focused on one specific situation and case, it has been evident to determine that it is in fact a case study that would be conducted in this case. A single case study is mostly defined and based upon two main factors, one of which is the fact that the study only involves one case and/or company, and the second being that the study in

22 question has rarely been researched previously (Sanders et al., 2009). Moreover, case studies serve as a useful strategy when trying to comprehend present-day phenomena, and due to this it is a strategy that is regularly utilized in various different fields such as psychology, business and other social studies (Yin, 1994). The primary aim of a case study is to clarify various decisions and explain questions such as why, how and what (ibid).

The thesis in question has presented two different research questions that have aimed to examine an aspect within the topic of National branding. The first question was “What channels in the communication process can a multinational company use to communicate their brand?” Considering that this question is a very clearly a “what” question, it has been evident that the research question is certainly explanatory and thus most suited for a case study strategy (Yin, 1994). The second question, “How can a multinational company use COO in the message component of the communication process?” is a question of ”how”

nature and thus further strengthens the choice of using a case study strategy. Additionally, the second question has focused on a present-day concern and required no significant control over behavioural events, which has been significant to take into consideration when deciding which research strategy to adopt.

According to Yin (1994), there are not only five different research strategies, but also five different ways of using a case study. First and foremost, a case study can be utilized in order to clarify causal connections in real life that are too complex to be examined by other

methods. A case study can also be used in order to depict certain events in a reality context, which is what this thesis intended to execute. Additionally, a case study can be used to portray various topics within an appraisal, which in turn leads to the case study to become of a

descriptive nature. In addition to this, case studies can also be utilized to examine situations that do not have any clear defined set of conclusions. (ibid.) Lastly, a case study can be used as a ”meta-appraisal”, which is a study of an appraisal study (Yin, 1994).

Furthermore, case studies are arguably said to be an acceptable way of examining currently existing theories, and are even stated to be a good way of challenging said theories in order to determine on whether they should be acknowledged or to suggest that more research should be conducted (Saunders, et al, 2009). A case study also provides very satisfying results when conducting researches that seek to observe a variation of different perspectives regarding individuals involved in the given circumstances or events (Gillham, 2000). In a particular case

23 like that, it provides the reader with significant insights regarding the aspect in which the circumstances have been perceived by the target market (ibid), which in the case of this thesis was consumers.

3.4 Data Collection

According to Bryman and Bell (2013), there are several different data collection methods to choose between when collecting the data. There are on one hand quantitative methods that mainly focuses on numbers and statistics such as questionnaires and surveys. In addition to quantitative data collection methods it also occurs qualitative data collection methods that focuses more on deeper insights such as individual interviews, focus groups or observations.

(ibid.)

The data has been utilized in order to accurately answer the research questions in this thesis and has been collected through an interview that was conducted during the on-going period of this research. The interview certainly required a deadline in order to successfully translate the data that was gathered and in that way, be able to apply it accordingly to the study. In order to provide the reader with a deeper understanding, the strengths and weaknesses of the chosen method of the data collection have been presented in the table below.

Table 3.1: Strengths & Weaknesses of the chosen source of evidence presented (Interview)

Source of evidence Strengths Weaknesses

Interview

 Targeted: focus directly on case study topic

 Insightful:

provides

perceived causal inferences

 Bias due to poorly constructed questions

 Response bias

 Inaccuracies due to poor recall

 Reflexivity: interviewee gives what the interviewer wants to hear

Source: Adaptation from Yin, 1994, p.80

24 According to Yin (1994), interviews are a sufficiently effective method when executing a case study. When conducting an interview, it is possible to target the interview to the research in order to provide acumens regarding the causal inferences in question (ibid). Interviews, as opposed to structured queries, are maneuvered dialogues. This implies that there is a smooth connection to the conversation, but in turn, the conversation is being maneuvered by precise questions (Yin, 1994). The main arguments for choosing the aforementioned method relies solely on the fact that it allows for the possibility of follow-up questions, and thus provide a significant chance to detect the various perspectives of the individual that participated in the interview (ibid.). The data gathered with the aid of this method has been served as the fundamental component of this case study.

When referring to interviews, there are various approaches that can be conducted. In this particular case, the chosen approach for conducting the interviews was an individual interview that was executed in person. When conducting the individual interview, the participant was given the opportunity to respond accordingly and timely. Additionally, individual interviews provide significant acumens about a certain topic and also grant the researcher the possibility to discuss the opinions thoroughly. (Yin, 1994)

The interview was executed by conducting a face-to-face conversation with the interviewee in his office at the headquarters of IKEA in Malmö. Additionally, the interview was semi-

structured due to the questions being asked to the interviewee. Interviews that are conducted face-to-face allow for more complex questions to be posed to the interviewees than other types of interviews, such as interviews over the telephone (Sanders, et al, 2009). In the process of collecting the data, face-to-face interview are commonly more favoured due to the fact that it is easier to build trust among the participant and it is also less likely for

misunderstandings to occur between the researcher and the interviewee (ibid.).

Furthermore, a content analysis of IKEA websites has been conducted in order to complement the interview. As it was only possible to obtain one interview, it was necessary to provide more sustainable evidence to our claims by analysing how IKEA use COO in their marketing through their websites. A content analysis was done of two IKEA websites from two different countries, Australia and the United States. The aforementioned countries were chosen because they are highly differentiated from each other, as well as the Swedish culture. Both countries maintain relatively different cultures and opinions, as well as locations in the world, and both

25 countries are fairly distant to the country of origin that IKEA has chosen to distinguish itself with, Sweden. The utilized method of content analysis, which relies solely on comparing data from interview with observations, is called triangulation and served to further strengthen the credibility and result of the study that was conducted (Bryman & Bell 2013).

The data collected through interview regarding the message component has also been

combined with observations through secondary sources from a content analysis. This method, comparing data from interview with observations, is called triangulation and strengthens the credibility of the study and its result. (Bryman & Bell, 2013) There are no doubts about the fact that Internet and communication online has increased remarkably during the last decades.

Internet offers many opportunities as a subject for analysis. Normally a researcher chose one or two types of media (ibid.).

The channel (media) that has been selected for observation in this data content analysis are websites on the Internet. In this research, the content of two different websites has been observed. The intention was to study how the case company use COO in their brand communication, more precisely in the message component of the brand communication process. Two different IKEA websites in two different countries where the case company operates, have therefore been selected for the study. The aim was to see how the company use the COO in the message component. Message as a component in the communication process has in this study been defined as set of symbols, signs, colour, names and images used to transmit a desired message (Favaro & Alvarez, 2013).

3.5 Sample Selection

IKEA has been chosen as the case company when conducting this research. The reason why this particular company has been chosen was relatively straight forward. IKEA is an

established and well-known global company that deals with national branding as well as COO on a daily basis. IKEA has never abandoned its roots and has always made sure to represent its country-of-origin, Sweden. IKEA represents its home country in every continent and nation that they have settled in, by providing products from Sweden as well as naming all of their furniture with Swedish names. This is just one of many ways of how IKEA utilizes Sweden and all that concerns it as their marketing strategy and is one of the major companies

26 in the world that has actually succeeded massively in doing so. Therefore, the choice of companies felt obvious, not only because it is our country of origin as well.

The interview in question has been held with an individual that has been an employee at IKEA for more than 20 years and currently holds a position as Business Controller, after having acquired many different roles within the company. Before conducting the interview, the individual in question was carefully selected before being chosen in order to provide answers that were as accurate as possible. The selection had to be narrowed down to individuals who exclusively acquired significant knowledge regarding COO in brand

communication, and therefore, obtaining several interviewees became significantly harder. In this regard, the sample selection is partially judgmental due to the fact that the participant that was chosen is an individual that was evaluated to best answer our questions (Saunders, et al, 2009).

To create more accuracy and to acquire a more precise understanding to the research questions, certain criteria had to be met in order to allow this case study to provide insights from an individual who held different relevant positions within IKEA, and thus served to give a broader overview of how Sweden is perceived as a brand internationally and how COO is utilized. In conclusion, the following criteria was chosen for this particular case study:

 The participant has obtained a position within IKEA for a long period of time

 The participant has significant knowledge and experience within the field of COO and National Branding

 The participant was willing to cooperate during the on-going period of this research

 The participant was willing to conduct a face to face interview

3.6 Data Analysis

As it has been stated by Yin (1994) when analysing case studies there are two general analytic strategies that should be taken into account: the first one suggests to completely rely on theoretical propositions and the second one being to develop a case description. For the on- going research, it was chosen to solely rely on theoretical propositions, which also happened to be the most preferred strategy, as stated by Yin (1994). The layout of this case study was entirely based on information withdrawn from existing theories as well as theoretical

27 propositions. This implies that already existing theories have thoroughly moulded the data that has been gathered, which in turn have been analysed by comparing it with the existing theories. In spite of this, a framework and interview has been created for this case study and therefore, a case description naturally arose.

After the general strategy for the case study was determined, it was feasible to choose a specific analytic technique that seemed suitable. The techniques were carefully divided into two different groups, ”dominant modes of analysis” and ”lesser modes of analysis”. Within the dominant modes there are different models included, pattern-matching, time-series analysis, explanation-building and program logic models that were relevant to mention for this particular study. These models intend to handle the internal and external validity, which will be introduced subsequently. When referring to the lesser modes of analysis, they are composed of the following: analysis of embedded units of analysis, repeated observations and lastly, the case survey approach. It is essential that these models were used correctly, by utilizing them together with the dominant modes. (Yin, 1994)

For this case study, pattern matching has been the mode of choice. This mode is included within the dominant modes of analysis and is the most commendable mode for case studies as it seeks to correlate the empirical data with the results that are expected (Yin, 1994). To successfully conduct the thesis in question, the empirical data that has been gathered with help of the interview and the content analysis have been observed in order to see if it matched the theory that was utilized.

As a complement to the interview, a content analysis of the case company has also been conducted. Content analysis is an empirical scientific method used to draw conclusions about the content of various types of communication, such as interviews, observation protocols or newspaper articles and websites. This method is very flexible and can be applied in

combination of many different type of media. Content analysis is an approach with the purpose to study existing documents and texts, rather than a tool for generating new data. In the qualitative approach of the content analysis, that has had a major impact and area of use, the focus is on the interpretation of the observed. A qualitative content analysis might include a process of identifying, coding and categorizing basic patterns or themes in the empirical material. (Bryman & Bell, 2013)

28 The purpose with the content analysis in this context has been to observe and identify an objective description of the content in the communication. Thereof, the content analysis has strengthened the data from the interview with observations of how a multinational company can use COO in its branding communication. More precisely how a MNC can use COO in the message component. A protocol has been prepared to make it possible to compare the

observation of websites in different countries. Thereof, it has also made it possible to draw conclusions from the observations.

As it has been stated by Miles and Huberman (1994), qualitative data can be analyzed with the help of the following three steps:

1. Data Reduction 2. Data Display

3. Drawing Conclusions

When conducting a within-case analysis, the primary purpose is to reduce the data that has been gathered to subsequently compare the data that has been collected from the interview with the theory that has been described in the conceptual framework (Miles and Huberman, 1994). As stated previously, this case study has been utilized a deductive approach since the data that was gathered, along with the research questions, has been analysed and thereafter compared with the existing theories. Part of this research has been implied in the analysing of the gathered data in order to observe if there was any patterns that corresponded with the conceptual framework.

To confirm the answer from the respondent and strengthen the data collected from the interview, data from a content analysis has also been used. Secondary sources have been studied to check what channels (media) the case company use to communicate its brand and products. IKEA´s official website in different countries have been observed. IKEA use website as a channel among others to promote and communicate the brand and its products.

3.7 Validity & Reliability

When conducting studies, there are, according to Yin (1994), often risks of encountering problems regarding the methodology. In order to decrease the chance of these risks occurring,

29 there are two different aspects within research that must be taken into consideration. First and foremost, the level of validity, which depends wholly on what degree the results, can be considered as true. Additionally, the level of validity depends on the probability of another individual getting the same results if the person were to conduct the same study. There are four different aspects within the terms of validity and reliability that should be taken into consideration: construct validity, internal validity, external validity and reliability. (ibid.) The aforementioned aspects are illustrated in the table on the next-coming page.

30 Table 3.2: Case study tactics for Four Design Tests

Source: Yin (1994) p.33

Construct validity

Construct validity tends to manage the level of righteousness when it comes to the operational measures that were utilized on the concepts that were being researched (Yin, 1994). For the aforementioned issue, it is recommended to use various sources of evidence in order to establish a flow of evidence and thus enabling the key figures to carefully examine the case

Tests Case study strategy Phase of research in which strategy occurs

Construct validity  Use multiple sources of evidence

 Establish a chain of evidence

 Have key informants review draft case study report

 Data collection

 Data collection

 Composition

Internal validity  Do pattern-matching

 Do explanation building

 Do time-series analysis

 Data analysis

 Data analysis

 Data analysis

External validity  Use replication Logic in multiple-case studies

 Research design

Reliability  Use case study

protocol

 Develop case study database

 Data collection

 Data collection

31 study in question (ibid.). In regard to this thesis, the method of an interview has been utilized and intended in that way to provide validity. The conceptual framework that has been created along with the theories that have been used throughout the case study, created a trace of evidence in order to make it less complicated for the reader to comprehend, and to provide an easy insight into what the study has intended to achieve and how it has attempted to

accomplish this. Moreover, the study has been continuously supervised and revised by individuals with extensive knowledge within the topic that the case study handles.

Internal validity

Internal validity is irrelevant when referring to the thesis in question, mainly due to the fact that the thesis that has been conducted was of typical descriptive nature and therefore, internal validity posed no issue to the case study. As stated by Yin (1994), internal validity can be an issue if a researcher is trying to observe situations where x has led to y; if the causal

relationship is adequate. Since this study has been of a descriptive nature rather than explanatory, internal validity has not been taken into consideration.

External validity

The aim of external validity is to thoroughly examine how accurately the discoveries can be generalized exceeding the case study in question (Yin, 1994). The most prominent issue when it comes to validity is depicting generalizations regarding a certain topic and therefore, it tends to be a notable problem specifically in the process of analysing qualitative data

(Saunders et al, 2009). Considering that this thesis has been involved a study that is of a fairly precise nature due to the fact that only one individual has been interviewed, along with the fact that the data that was gathered was qualitative, there have been no significant

generalizations made. The thesis in question has been to observe as well as define the perception of how multinational companies utilize COO. However, despite our efforts to interview more than one employee from IKEA, it has only been possible to obtain one interviewee, and therefore it has not been relevant to generalize and portray this as larger groups.

The data that has been collected has also been thoroughly analysed and portrayed against the aid of the literature and theories that were demonstrated throughout this study. This was done in order to diminish the risks of deducting faulty or inaccurate inferences. In spite of this, it has been of great importance to preserve an open mind when conducting this study in order to