Product/country image effects and entry strategies in foreign markets

The use of brand “Made in Italy” can allow Italian companies to easier build customer relationship and educate customers of other countries to the use of products not included in their buying habits and lifestyle. By this way, they can penetrate new markets faster and at lower cost of entry, rather than investing heavily in branding and advertising campaigns, or by submitting to the blackmail and "powers" of intermediaries who are often unreliable. Studies on Country-of-Origin effect (COO) largely showed that product and country image (PCI) is relevant in the field of perceptions and of unfamiliar products quality evaluations (halo and summary effect, Han 1989). Niss (1996) suggests that promoting products or services abroad through national image is more frequent and helps the exporter to penetrate the market faster than by investing in brand awareness. Roth and Romeo (1992) emphasize that country image is product specific. They identify a framework that matches the importance of the product category dimensions with the perceived image of the COO. This framework helps managers to better understand when promoting COO is beneficial and when it is not, as well as identify the dimensions along which country images should be improved. The objective of the paper is to analyze PCI effects on new markets penetration strategies of Italian medium-sized firms and the interactions with their brand. Methodologically, we apply the case study method which is under-utilized in comparison to the quantitative techniques. At this end we assume firm’s perspective rather than customer’s one in order to highlight the most appropriate modes to exploit country and product image and the effects on entry and international marketing strategies. Thus the empirical research includes a case study of a medium-sized firm belonging to one of the “Made in Italy” industries selected on the basis of its growth performances. The framework of Roth and Romeo (1992), illustrated in the literature review stage, is applied and then enriched and refined through the empirical research. Expected results suggest that two different situations of product-country match, such as that analyzed, produce different effects in the choices of international marketing and entry strategies. The paper is the first step of a broader research project which aims to expand the number of cases studied of Italian firms operating in several contexts in addition to cases of foreign firms entering the Italian market.