The Effect of Country of Origin on Brand Equity: An Empirical
Study on Generic Drugs
Shamindra Nath Sanyal1 1and Saroj Kumar Datta2 2
1. Lecturer of Marketing Management, School of Management Studies, Narula
Institute of Technology, Kolkata- 700 109, India, e-mail: firstname.lastname@example.org.
2. Dean and Professor, Faculty of Management Studies, Mody Institute of Technology
& Science, Lakshmangarh- 332311, Rajasthan, India, e mail:
The Effect of Country of Origin on Brand Equity: An Empirical Study on
Purpose – The purpose of this paper is to explore the impact of country of origin image on
brand equity of branded generic drugs.
Design/methodology/approach – Brand equity of branded generics is examined through
an analytical review. Country of origin image is hypothesized to influence components of
brand equity, i.e., brand strength and brand awareness, which in turn influence brand
equity. An empirical investigation was carried out among professionally similar
respondents, i.e., doctors of different categories in Kolkata megapolis, India.
Findings - Results showed that country of origin image had a positive and significant
effect on components of brand equity i.e., brand strength and brand awareness, derived
from factor analysis conducted on brand equity components. The result also showed that
country of origin image of branded generics significantly, but indirectly affected brand
equity through the mediating variables, brand strength and brand awareness.
Research limitations/implications – Different variables have influence on brand equity.
This study dealt with only one type of variable, i.e., country of origin image which may
limit the total process of brand equity enhancement.
Practical implications - Marketing actions should be implemented to enhance brand
strength and awareness levels. Country of origin image should be assessed as a
multidimensional concept for enhancing brand equity. Marketers should be aware of the
fact that physicians are influenced by the brand’s original country image.
Originality/value - This research work has extended prior country of origin research by
conceptualising the country of origin image as a brand equity enhancing tool in a new area
called branded generic drugs.
Keywords Brand equity, Brand strength, Brand awareness, Country of origin, Branded
Paper category - Research paper.
Generic drugs are made to be chemically and therapeutically similar to the original brands,
but are significantly cheaper because they are allowed to enter the market after the patent of
the original brand expires. In this way, generic manufacturers do not incur R&D costs and
are able to offer a significant price advantage to the originator brand (Kanavos et al., 2008).
Generics are certified drugs equivalent to those brand-name medicines that are allowed to
enter the market when the patents of original drugs expire (Moreno-Torres et al., 2007).
The introduction of generics has not only helped control total health care costs, but also
provided a unique opportunity to study market evolution of pharmaceutical products. Since
the patent expiration dates can be well observed by the researcher, it is relatively easy task
to define the market opening date, which is unlikely in other markets including the FMCG.
The purpose of this project is to judge the brand equity and thereby, market acceptance of
the generic drug in the Indian market, especially, considering the effect exerted by the
random factor called country of origin. Variable like pricing has already been considered
by many authors as it is a responsible one which determines the degree of acceptance of the
generic products after patent expiration, but no concrete work has been carried out so far
considering country of origin for the generic pharmaceutical products. It will be the
endeavour of the researchers to study the equilibrium relationships amongst the factors that
are deemed responsible for the demand estimation of the generic drug in the Indian market.
WTO Agreement and India
TRIPS and The annex 1C of the Marrakech Agreement (1994), also known as the Trade-
Related Aspects of Intellectual Property Rights settlements (TRIPS) came into force in
January 1, 1995, willing to strengthen the institutional and judicial structure and to
harmonize the rules regarding the intellectual property rights (Souza, 2008).
The WTO Agreement came into effect in 1995 but India received a transitional period of
ten years for the introduction of product patents on pharmaceuticals and other allied areas.
Pharmaceuticals and chemical products will now be subject matter of patents by virtue of
Patent (Amendment) Act, 2005 passed by the Indian Parliament. The new amendment to
the Patent Act aims to fulfill India’s legal obligations under the WTO TRIPS Agreement
within the stipulated time (January 1, 2005) (UNCTAD Report, 2005). Prior to January 1,
2005, only process patents were permissible whereby any person could make the final
product by an alternative route known as the reverse engineering process. Under the WTO
agreement, India was required to introduce several provisional measures, including the
‘mail box system’ or grant ‘Exclusive Marketing Rights’ (EMRs) during the transition
period (UNCTAD Report, 2005).
Mailbox is a special type of mechanism for accepting patent applications till a product
patent regime was actually put in place. Among the pharma companies Pfizer, worlds
number one pharma company, emerged as the biggest patent applicant with 373
applications. Among Indian companies Dr. Reddy's was the aggressive filer with 205
mailbox applications followed by Panacea Biotech with 75 applications (Financial Express,
In case of developing countries, though it has been conceived that implementation of
TRIPS and other trade related agreements will result in loss of wealth and growth rate, yet
the countries that have been able to develop innovation capacities for pharmaceutical
production process development are expected to be on the positive side of the scenario.
Generic Drugs Defined
Generic product can be defined as the product containing an active ingredient which is
“off-patent” in majority of its markets. The essential attribute of generic drugs is that they
cost less than their original brand equivalents (Lofgren, 2002). Factors such as age, gender,
race, income, and health insurance plans tend to affect consumers’ attitude toward generic
drugs. In general, younger and more educated consumers were found to be generic drug
purchasers (Yelkur and Capella, 1995). For prescription as well as patients benefit plans,
generics are one of the best options available in today’s healthcare market. They offer the
therapeutic benefits of their brand-name counterparts for only a fraction of the cost,
providing more affordable access to pharmaceutical care (Snow Jr., 2007).
In developed countries, generics are those drugs which do not have patent protection and
the originator brand’s competitors can copy them without facing any legal problems. In
India, very few drugs are patent-protected and most of the drugs are 'generic' as per
international standard. However, Indian pharmaceutical companies have been marketing
these generics drugs as branded generics by giving different proprietary names. Most of the
big pharma brands in India are branded generics. These branded generics are usually given
a brand name but the trend is the generic name is primarily focused as a brand name
(Sharma et al., 2009). In Indian pharma market, ‘non-branded generics’ are also being
marketed at very low price relative to their ‘branded generic’ counterparts. Pharma
companies are generally supplying these non-branded generics mainly to the government-
run hospitals and also to the markets where high degree of price-consciousness is prevalent.
A vast literature has analyzed the dynamics of original brand market shares and prices
responding to generic entry after patent expiration. With few exceptions, studies have
mainly focused on the US market.
Many of the authors have emphasized on the price factor which is a very important one to
intensify the competition in the off-patent drug markets. Whether generic entry leads to a
reduction in the market share of the originator product depends on factors that may
encourage or discourage generic uptake besides the perceived price competitiveness of
generics (Kanavos et al., 2008).
Original brand market share has been found to be directly proportional to the age of the
original brand, while it is negatively correlated to the number of entrants in the market.
This latter variable was found to be proportional to the total size of the market and
negatively related to the age of the original brand (Hurwitz and Caves, 1988).
Even if their market share decreases after patent expiration, prices of original brand
increase after the entry of generics. These enter the market at a significant price discount
that then declines over time (Grabowski and Vernon, 1992)
In a more recent study (1996), Grabowski and Vernon showed that in the USA generic
competition was found to be intensifying, with major brand names typically losing half of
their market share within a year of patent expiry (Grabowski and Vernon, 1996). In his
PhD dissertation, Ching (2000) developed an empirical dynamic oligopoly model to study
competition between brand-name original and generic drugs. The model highlights the role
of consumer learning and consumer heterogeneity in explaining respectively the initial
slow diffusion of generic drugs into the markets and the pricing increase of original brand
after generic entry.
None of the above-mentioned literatures has considered the effect of country of origin on
the perception of brand equity of generic products (branded or non-branded). One of the
factors that is widely believed to have a high influence on customer perception toward a
specific product, or brand, is the country of origin (O’Cass and Lim, 2002).There are
literatures that have shown the effects to explore the impact of country of origin
information on brand perception and brand image structure or brand equity (Koubaa, 2008;
Yasin et al., 2007; Jin et al., 2006;). It has been observed that country of origin influenced
consumers’ overall perception of brands and there were differences in influences across
highly reputed brands and comparatively less reputed brands. Brand origin is found to be of
significant impact on brand image perception. The effect of country of origin image on
brand image is very strong (Koubaa, 2008). Again, country of origin image has a
significant impact on brand equity dimensions and brand equity (Yasin et al., 2007). But
both these literatures have derived their decisions particularly in consumer durables.
According to Jin et al., (2006), brand origin is an “identifiable feature” for India,
customers. In other words, consumer associates brands with countries where the brands are
originally developed rather than with the countries in which the products are currently
produced (Jin et al., 2006). This is a very important statement in favour of the country of
origin effect, but the aforesaid literatures have been developed on FMCG like Cadbury or
Two things are taking place. First, these literatures have definitely emphasized on the
importance of country-of-origin effect, but, they have either done their studies on consumer
durables or FMCG products and not on any pharmaceutical products.
In general, evaluations of a country in terms of favorable or unfavorable parameters
associated with a product leads to a corresponding favorable or unfavorable evaluations of
the product (Gürhan-Canli and Maheswaran 2000). In general, primarily motivational or
cognitive factors have been analysed in the context of country of origin effects
(Maheswaran, 2006). Previous research has shown that consumers have an active dislike or
hostility towards certain countries due to certain historical circumstances, and then such
enmity influences their subsequent purchase behavior (Klein et al., 1998). But the type of
emotion induced by historical evidences associated with these emotions will determine
whether dislike or hostility effects will obtain (Maheswaran, 2006).
But these literatures have only highlighted the country of origin effect on different factors
related to brand equity study and brand perception phenomena. In an era of increasing
globalization, brand origin may be an important alternative for the more general concept of
country of origin provided that the country of origin for a single product most likely
becomes multi-nation orientated (Jin et al., 2006).
Country of origin is often associated with product quality (Lusk et al., 2006). Consumers
might use country of origin because quality cannot be determined until a product is actually
consumed; that is, country of origin is used in place of missing product information.
Consumers may use a country’s reputation to predict the quality of products (Lusk et al.,
2006). The multidimensional effect of country of origin image influences product beliefs
and attitudes for brands with different levels of equity (Hui and Zhou, 2003). However,
there are number of examples when the product is manufactured in a country with
comparatively lower images than the country of brand origin, country of manufacturer
information produces significantly negative effect on evaluation of products. This effect is
more prominent for low equity than high equity brands (Koubaa, 2008). Again, Thakor and
Lavack (2003) explored that the role of brand origin was potentially very important in
determining brand image.
To the best knowledge of the authors, no scholarly article was developed so far exploring
the effect of brand’s country of origin image on brand equity in Indian branded generic
drug segment. Therefore, this study is expected to cover a new area in establishing
relationship between country of origin image and brand equity of branded generic drugs in
Indian pharma business environment.
In our opinion, the country of origin effect will be of enormous importance especially in
case of dynamics of entry of generic drugs in the era of globalization with the expiry of
patent of many blockbuster drugs within 2010. If the Indian pharmaceutical companies
want to market generic drugs in international market, it is necessary to focus on the price
factor as well as the quality which will be affected by the concept of Indian origin products.
Our emphasis will be to make out a dynamic relationship incorporating the factors called
the country of origin image and brand equity in Indian branded generics segment.
What is Brand Equity?
Brand equity facilitates the acceptance of new products and the allocation of preferred shelf
space, and enhances perceived value, perceived quality, and premium pricing options
(Schiffman & Kanuk, 1997). From a consumer’s perspective, brand equity is the “added
value bestowed on the product” by the brand name (Park & Srinivasan, 1994). It appears
when consumers willingly pay for the same level of quality due to the attractiveness of the
name attached to the product (Bello and Holbrook, 1995). Aaker (1991) explained brand
equity measurement into the following five dimensions: brand awareness, brand
associations, perceived quality, brand loyalty and market behavior.
Regardless of its definitions, brand equity actually represents a product’s position in the
minds of consumers in the marketplace (Sanyal and Banerjee, 2008). It is precisely the
well-established representation and meaningfulness of the brand in the minds of consumers
that provides equity for the brand name (Yasin et al., 2007). The study of Elliot and Percy
(2007) connotes that brand equity generates from consumer awareness for the brand that
sets associations in memory that are linked to the said brand. In course of time, this positive
brand attitude takes on strong emotional associations that extend well beyond simply
‘liking’ the brand (Elliot and Percy, 2007). Brand awareness for a purchase may take two
forms: recognition or recall (Rossiter and Percy, 1997). Majumdar (1998) constructed a
very interesting table pointing out the measurement of brand knowledge constructs. We
have cited a part of the said table here relevant to our studies (Table 1). This table shows
the brand awareness components (brand recall and brand recognition) and their
corresponding measure and purpose of measure.
Table 1: Around Here
But the brands must be salient to facilitate purchase for either of this form of brand
awareness. It means it is associated in memory with the consumer’s set of preferred brands
to meet a particular need, and is likely to come to mind when the need for such a product
occurs (Ehrenberg et al., 1997).
The equity of a brand is partly measured in terms of the awareness it evokes. The role of
brand awareness in brand equity depends on the level of awareness that is achieved (Yasin
et al., 2007). The brand will be dominant when the brand awareness will be higher, thereby
increasing the probability of the brand to be purchased. As a result, raising the level of
awareness increases the likelihood that the brand will be considered by the customers to
purchase (Nedungadi, 1990). It will, in turn, influence buyer’s decision making.
Previous studies have shown that consumers who recognize a brand name are more likely
to purchase that particular brand because familiar products are preferred to those that are
normally not familiar (MacDonald and Sharp, 2000).
Brand Strength Defined
According to Aaker, brand strength represents differentiation multiplied by relevance. The
logic is that a brand must have both characteristics in order to be strong (Aaker, 1996).
The Young and Rubicam model suggested the hypothesis that brands are built sequentially
along the four dimensions viz. differentiation, relevance, esteem and knowledge (Aaker,
1996) as shown in the Figure 1.
Figure 1: Around Here
As per the Interbrand method, brand strength depends upon the variables like leadership,
stability, internationality, support, protection, market and trend (Moorthi, 2003). In this
study we will establish brand strength with the help of the variables suggested by
Objectives of the Study
The main objectives of this study are
1. To explore how the country of origin factor affects the brand strength of branded
2. to study the effect of country of origin factor on the brand awareness of branded
generic drugs and;
3. to establish that the country of origin image of branded generic drugs has a positive
impact on the formation of brand equity.
To achieve the objectives of survey, a structured questionnaire was designed to collect
primary data from respondents. The questionnaire consists of a 5-point Likert Scale ranging
from ‘never’ to ‘always’ option. Instead of putting the option ‘do not know’, we have used
This questionnaire consisted of 21 statements out of which 8 were used by previous
researchers (Yasin et al., 2007, Kumar and Barker, 1987). 13 statements were developed by
the authors where some of the variables were selected from the brand strength
measurement developed by Interbrand.
To choose the sample for this study, random sampling technique was used. Since the
respondents were medical doctors and all of them either attached to a hospital (state-run or
corporate) or clinics (personal or general), the respective names were randomly chosen
from the list of doctors provided by Indian Medical Association, Kolkata Branch and
Behala Branch (southwest fringe of Kolkata city), under the state of West Bengal, India.
The survey was done in Kolkata megapolis area. Three state-run medical colleges, one
state-run institute of post-graduate medical education and research, six small to medium
state-run and three corporate hospitals were included apart from physicians exclusively
with clinic connections.
The respondents so chosen from the cross-section of physicians were not well-exposed to
terms like brand equity, brand awareness, brand strength etc. although they were well
aware of terms like country of origin, quality, research and development etc. As a measure
of abundant precaution, we explained the necessary terms provided in the questionnaire to
make it easy for them to respond correctly.
The demographic part of the questionnaire asked the respondents to record their gender,
education and income. Since all the respondents (sample size n = 200) are practicing
physicians, their levels of education are recorded (i.e. Medical graduate, Post graduate
diploma, Post graduate degree, Member/Fellow of Royal Colleges and Doctoral). Some
respondents marked their education in more than one field (e.g. medical graduate, post
graduate diploma and post graduate degree etc.). In these cases, highest qualification has
been taken into account. Income has been measured as ‘monthly income range (in Indian
Rupees)’ from ‘below Rs. 30, 000’ onwards up to ‘above Rs. 70, 000’ and it has been
classified into six groups, where group A=Below Rs. 30, 000 (34 respondents), group
B=Rs. 30, 000-40, 000 (58 respondents), group C=Rs. 40, 000-50, 000 (53 respondents),
group D=Rs. 50, 000-60, 000 (30 respondents), group E=Rs. 60, 000-70, 000 (16
respondents), group F=Above Rs. 70, 000 (5 respondents). 4 respondents did not provide
Table 2: Around Here
Data Analysis and Discussion
Factor analysis was performed on each of the three variables, i.e. country of origin image,
brand equity components and brand equity separately. Principal component analysis was
done on each of the items of the variables separately after the items of each variable were
grouped separately. The results are shown in Table 3.
The KMO index of sampling adequacy of all the variables is obtained. The KMO indices
are found to be 0.726 for country of origin image, 0.833 for components of brand equity
and 0.853 for brand equity variable. These data interpret that there is relative compactness
of correlation in the data matrix. These data also clarify that factor analysis is highly
appropriate for these data.
The exploratory factor analysis operation for country of origin image has produced one
factor that contributes to 48.64% of the total variance explained (TVE). The factor has an
Eigen value of 2.432. The variable components brand equity has produced two factors
having Eigen value 3.395. They have contributed 30.87% of the item variance. The
variable brand equity has produced only one factor having variance of 70.37%. It shows an
Eigen value of 3.518. No item was dropped during the process of factor analysis.
The factors in the components of brand equity have been termed as brand strength and
One of the creditable single administration reliability tests, the value of Cronbach’s Alpha,
about three common factors respectively achieves 0.7012, 0.7609 and 0.8912 which all
exceed the standardized value of 0.7. Contributory ratio of cumulative standard deviation
(Li et al., 2007) of three factors is 85.98%. We can, therefore, conclude that conceivable
effect of the evaluation model (Li et al., 2007) has achieved very good level (well above
We will now set our hypotheses based on the results obtained in the factor analysis.
H1: The country of origin factor has a positive influence on the brand strength and brand
awareness of generic drugs.
H2: The brand equity factor has a positive influence on the brand strength and brand
awareness of generic drugs.
H3: The country of origin factor has a positive relationship with brand equity through the
mediating effects of (i) brand awareness and (ii) brand strength
Table 3: Around Here
In their pioneering work of establishing country of origin image to the formation of brand
equity of consumer durables, Yasin et al., (2007) have used regression analyses separately
to test the mediating effects of brand distinctiveness, brand loyalty and brand
awareness/associations on the country of origin image and brand equity linkage. Along the
similar line, in this particular study, researchers have used the concept of mediating
variable to judge the relationship between the country of origin and brand equity by using
the mediating variables like brand strength and brand awareness in case of branded generic
According to Baron and Kenny (1986), a variable functions as a mediator when it meets the
following conditions: (a) variations in independent variable levels are significantly
responsible for variations in the presumed mediating variable (b) variations in the mediator
are highly accountable for variations in the dependent variable and (c) when both the
aforesaid paths are controlled, no significant relationship exists between independent and
dependent variables, rather, this relationship is strongly mediated by the mediating variable
(Baron and Kenny, 1986).
In order to determine the relationship between the country of origin image variable and the
components of brand equity, the dependent variable country of origin image was regressed
on the independent variables brand strength and brand awareness. The results are shown in
Table 4: Around Here
From this table it has been found that all the independent variables, i.e. brand strength and
brand awareness have a significant as well as positive influence on country of origin image
at a significance level of 0.000. It is evident from the R2values that 97.4% and 46.3% of
the variance in country of origin image have been explained by the variations in brand
strength and brand awareness respectively. The respective standardized beta weights also
confirm the positive relationships among the dependent and independent variables. It is
evident by analyzing beta coefficients that brand strength (98.7%) has the highest
contribution towards country of origin image, followed by brand awareness (68.0%). This
result supports the hypothesis H1, i.e. the country of origin factor has a positive influence
on the brand strength and brand awareness of generic drugs. This result also conforms to
the proposition (a) given by Baron and Kenny, (1986).
In order to find out the relationships between brand equity and components of brand equity,
the former was regressed as a dependent variable on the independent variables brand
strength and brand awareness. The results are shown in Table 5.
Table 5: Around Here
Table 5 also shows a positive correlation of the components of brand equity, i.e. brand
strength and brand awareness with brand equity. R2values are showing that brand equity
contributed to 13.4% of the variance in brand strength and 26% of the variance in brand
awareness. Based on analysis of beta coefficients it is evident that brand strength (36.6%)
has the highest contribution towards brand equity, followed by brand awareness (51.0%).
This result is in accordance with the proposition (b) given by Baron and Kenny (1986) and
the second hypothesis (H2) has been established by this result.
Table 6: Around Here
To assess the proposition (c) given by Baron and Kenny (1986), brand equity was regressed
on the independent variable country of origin image (Table 6). R2value is showing that
brand equity contributed to 23.3% of the variance in brand equity. Although, the
proposition argues that no significant relationship exists between independent and
dependent variables, a good degree of relationship has been established between the two in
our research work. The standardized beta shows that country of origin image (48.3%) has a
good contribution towards brand equity.
Mediating Effects of Brand Strength and Brand Awareness
In order to test the fact that the relationship between the independent (country of origin
image) and dependent (brand equity) variable is strongly mediated by the mediating
variables brand strength and brand awareness, two regression analyses were carried out.
The results are shown in Table 7.
Table 7: Around Here
We will assume that set A consists of the relationship between country of origin image and
brand equity and set B consists of the relationship between country of origin image and
brand equity including the mediating variables (brand strength and brand awareness)
through mediated regression analysis. The beta coefficients in set B must be less than in the
former case, set A. The results are shown in Table 8.
Table 8: Around Here
Table 8 clearly shows that country of origin image is related to brand equity through the
mediating variables, brand strength and brand awareness. The partial effect of brand
strength on brand equity, holding country of origin image constant, falls short of statistical
significance, = 0.464. The same is true for the partial effect of brand awareness on brand
equity, keeping country of origin image constant, the modified statistical significance
becomes = 0.436. The total result is evident from the decreased values of beta
coefficients. This result also proves our third hypothesis (H3).
The mediation model is illustrated below (Figure 2). The indirect effect of country of
origin image on brand equity through brand strength, (0.987) (0.464) = 0.458, and it direct
effect is 0.483, yielding a total effect coefficient of 0.941 (coincidentally not equal to the
zero-order correlation between country of origin image and brand equity). Again, the
indirect effect of country of origin image on brand equity through brand awareness, (0.680)
(0.436) = 0.296, and it direct effect is 0.483, yielding a total effect coefficient of 0.779.
Accordingly, 0.458/0.941, i.e. 48.7% of the effect of country of origin image on brand
equity is mediated through brand strength and 0.296/0.779, i.e. 38% of the effect of country
of origin image on brand equity is mediated through brand awareness.
Figure 2: Around Here
The current study analyzes the effect of country of origin image on brand equity of branded
generic drugs in Indian pharma market. There are a number of brands available that were
developed in one country as a branded medicine but later marketed in India by different
companies from different origins including India as branded generics. It has been found by
the researchers that physicians have certain inclination towards the country of origin of a
particular brand and this fact is also reflected in their prescriptions. It has also been found
that the brand equity of the pharmaceutical products is composed of two components, i.e.
brand strength and brand awareness. These two components have a significant contribution
to brand equity that has been hypothesized in this process. Therefore, we can say that these
two components help in forming the brand equity in Indian pharmaceutical sector. As we
have established that the relationship between brand equity and its components is positive,
we can infer that a high degree of brand strength and brand awareness leads to the
formation of a high degree of brand equity. In our study, brand awareness has contributed
the most ( = 0.510), followed by brand strength ( = 0.366) to the formation of brand
We have also analyzed the relationship of country of origin image with the components of
brand equity. It has been found that both brand strength and brand awareness lead to a
strong formation of country of origin image. In this particular analysis, brand strength’s
contribution is enormous ( = 0.987) to country of origin image, followed by brand
awareness ( = 0.680). We can conclude from this data that country of origin image is
highly influenced by brand strength, or, brand strength composing variables in particular,
as coined by Interbrand method discussed earlier. The variables are as follows
1) Brand which shows leadership
2) Brand with quality of stability
3) Brand that is accepted internationally
4) Brand that is actively promoted and supported by the company
5) Brand that is adequately protected by trademark
6) Brand that operates in a stable market
7) Brand that shows futuristic trend
From Table 3, we can summarize that variables 1, 5, 2 and 7 mentioned above are mostly
preferred by the physicians as the components of brand strength (considering their
corresponding factor loadings as given in Table 3).This shows that a brand with leadership
trend, trademark-protection, stability and a futuristic trend can act as the core components
of brand strength on which pharma companies can build up their sustainable brand equity.
As country of origin image is basically related to brand strength mainly through these four
variables, for the positive perception of the physicians towards a particular brand originated
from a particular country, marketers should work upon to enhance the country image in
terms of branding as the “favorable country image leads to favorable brand image” (Yasin
et al, 2007).
Our hypothesis is also supported by the fact that brand awareness shows a relationship with
country of origin image with a high degree of positive influence. Two variables, i.e. 1) a
distinct opinion about a particular brand and 2) relating brand with experience show the
most influence (as given in Table 3) in establishing the said relationship. This result
indicates that the brands originated from a country maintaining a high level of quality are
already in the awareness levels of the physicians and get preference in terms of
prescription. Another plausible explanation for this result is that physicians perceive
countries with image of rich research and development and brands that originate from those
countries are reliable. As the physicians are well-informed about the origin of the different
brands, their perception in choosing different brands is expected to be governed by the
country of origin image.
Finally, we have established the relationship between country of origin image and brand
equity in branded generic segment in two ways, first a direct relationship and then through
the mediating effect of the components of brand equity, i.e. brand strength and brand
awareness. In our study it has been found that country of image- brand equity relationship
is partially mediated by brand strength (48.7%) and brand awareness (38%). The detailed
relationship has been depicted in Figure 2.
Apart from the other variables that consumers perceive as being responsible for their choice
of particular brands, country of origin image is already proved as a strong option to the
consumers particularly in consumer goods and consumer durable goods segments. To the
best of the knowledge of the authors, no study was available in this subject in pharma
market. In this particular article, the authors have tried to investigate the relationships
between country of origin image and brand equity in branded generic drugs in Indian
pharma market. This study has proved that country of origin image definitely influences
consumers’ overall perception of brands. There were differences in influences across
highly reputed brands and comparatively less reputed brands. The results of this study
reveal three definite propositions. First, country of origin image has a high degree of
positive effect on brand equity components (brand strength and brand awareness) and
brand equity. Secondly, brand equity of branded generic drugs is significantly affected by
the brand equity components and brand awareness has the major contribution, followed by
brand strength to the formation of brand equity. This result suggests that the marketers
should emphasize in creating extensive brand awareness of their products among the
medical fraternities. Necessary marketing strategies should be taken up to enhance the
brand recognition and in turn, brand recall for a sustained prescription support.
Thirdly, both brand strength and brand awareness partially mediate the effect of country of
origin image on brand equity. Brand strength has been proved to be very effective in this
regard. A futuristic brand with definite characteristics of stability and leadership in market
is expected to have a higher level of brand equity. The drug manufacturers should
concentrate on the brand to exist in market for a longer period of time to enhance its
stability. Again, pharma marketers who want to benefit from country of origin image
should highlight the superior quality of their brands that originated from a particular
country. It will add value to the promotional strategies of the pharma companies to
establish their brand equity in the Indian market.
Executive Summary and Implications for Managers and Executives
The Country-Product Linkage
In some cases, product’s country of origin plays a very important role in decision making
process. Certain products are strongly associated with specific countries and products from
those countries try to get certain benefits out of this correlation. It is not always very good
or bad in getting relevant information about the products’ country of origin; rather this
image stimulates consumers’ minds in purchasing those products. We can conclude that
nowadays, country of origin becomes one of the product attributes that combines with other
cues to stimulate consumers’ minds.
The Indian Pharma Sector-Brand Equity Considerations
The Indian pharma sector is highly fragmented and therefore, there is a high degree of
competition in the generic products area. Branding of pharmaceutical products is not a very
strong proposition and therefore, pharma managers are not giving enough emphasis to this
method. The trend was to set the brand names mentioning the scientific underpinnings of
their molecules or if companies were not referencing its chemical background, they would
name a product according to its indication.
But, since the landscape of the industry is changing, competition is intensifying, pipelines
are getting narrow and new drugs do not usually bring high-level achievements in
treatment; pharmaceutical companies are seeking for a new idea to differentiate their
products and maximize their lifetime value. Hence branding appears as an appealing path
to follow. It has been proved effective in consumer goods, therefore, it is expected that
markets will respond positively toward branding of pharmaceutical products.
Brand Equity Factors
Brand equity may be considered as a detailed expression of the present market value of a
particular brand and its expected future potential in terms of its business utility. Apart from
a consumer’s perception, the brand equity also depends on the characteristics of the
particular market. The need for brand equity is not beyond question, but it very much
appears to fulfill an important purpose, i.e. it sums up the long-term performance of the
brand in general and its marketing communications in particular, and provides an indicator
to its future potential.
Five factors are responsible for generating brand equity, i.e., brand awareness, brand
loyalty, perceived quality, brand associations and other marketing factors. The important
fact is that awareness about a brand in the marketplace does not necessarily mean the brand
enjoys high brand equity in that market, but detailed brand awareness takes place when not
only do the customers recognize the brand, but they also understand the distinctive
attributes that make it better than the competitive ones. Effective brand awareness occurs
when the marketer can differentiate the brand in the minds of target market. Any increase
in brand awareness results in increasing the chance of a brand to be considered by the
customers for their purchase.
Brand strength is important since it is a combination of differentiation and relevance.
Although brand strength is not directly related to brand equity, a strong brand signals that
the marketer wants to build brand loyalty, not merely sells product. A strong brand also
indicates that the marketer is serious about branding strategies. A brand impresses the
organization’s identity upon current and potential customers, and as mentioned, not
necessarily to grab an immediate sale; rather to build a lasting impression of the
organization and its products.
Country of origin concept is highly stereotyped in nature that is based on the decisions
across different products. In many of the cases these stereotypes re biased but they play a
very important role in easing out complex decision situations. When country of origin and
brand equity is correlated for the pharmaceutical market, there are certain factors that
become stereotyped while discussing this issue. These factors include richness in research
& development, high level of technological advancement, maintenance of high level of
quality standards, new drug development process etc. In a combined effort, these factors
stimulate consumers’ minds in complex purchasing situations.
Effect of this Relationship in Pharma
The current study was done in Kolkata megapolis area within the state of West Bengal,
India by using a questionnaire to a sample of practicing physicians randomly selected from
lists provided by the local chapters of Indian Medical Association. It focused on the brand
equity of the branded generic products and its correlation with the country of origin of the
This study inferred that brand equity is highly related to the two components, i.e. brand
awareness and brand strength and their degree of relatedness is very high. Moreover, it
shows that brand awareness contributes more than brand strength.
When the impact of country of origin was taken into account, the following points were
1. country of origin has a distinct influence on brand equity
2. a strong correlation is present between country of origin and brand awareness which
finally acts as an influencing factor in differentiating the brands in the minds of
3. country of origin plays an important role in building brand loyalty which leads to a
consistent prescription support from the physicians.
4. there is a positive relationship between country of origin image and relevance of the
The study explored that in India, physicians prefer the pharmaceutical brands that originate
from a country which is rich in research and development, maintains a high level of quality,
maintains an image of more new drug development and prestigious in terms of drug
manufacturing. In this particular case, country of image plays a very crucial role in
establishing consumers’ overall perception of brands.
Country of origin is an important factor that increases the equity to the customers. Overall,
this study aimed to prove the relationship between country of origin image and brand
equity, a relationship mediated by the identified components of brand equity. The result
shows that there is a high correlation between the variables discussed. Country of origin
image upon the consumers can be considered as a factor that can not be easily regulated by
the marketers, but, undertaking relevant marketing strategies, this factor may overcome the
power of well-known brands in shaping brand image in consumer minds.
Limitations and Future Research
Like any other research, this research has its own limitations. First, it analysed the whole
process with a very specific type of product, i.e., branded generic drugs. Other complex
products (e.g. industrial products) can also be taken into account. In this particular study,
the influence of country of origin factor on brand equity in Indian branded generic drug
segment is studied. Researchers can find out other factors mentioned in different literatures.
The conclusion derived from the respondents is generally highly speculative and vary
greatly as their preferences are not always very logical. Thus such conclusions might be
misleading and might distort the whole result.
The study has been carried out in the open market place where different variables act on the
research settings, thereby, affecting the findings.
Moreover, as this study deals with a specific aspect of consumer behavior, future
researchers may also incorporate some cultural and personal cues and test their effect as
mediating variables on brand equity and establish the relationship between country of
origin and brand equity through these variables.
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About the authors
Shamindra Nath Sanyal is Lecturer in Marketing in School of Management Studies at
Narula Institute of Technology, Kolkata, India. Prior to joining the full-time faculty at
Narula Institute of Technology in January, 2008, he worked in pharmaceutical sales and
marketing for nearly a decade in various positions. He has published scholarly articles in
management journals and in the peer-reviewed literatures. He is a post-graduate in Physical
Chemistry from University of Kalyani, India and MBA in Marketing from Indira Gandhi
National Open University, India. Shamindra Nath Sanyal is the corresponding author and
can be contacted at: email@example.com.
Dr. Saroj Kumar Datta is a Professor and Dean, Faculty of Management Studies at Mody
Institute of Technology and Science (Deemed University u/s sec. 3 of the UGC act, 1956),
Lakshmangarh (Rajasthan), India. He is also former Professor, Vinod Gupta School of
Management, IIT Kharagpur, and IMT Ghaziabad. Prof. Datta has graduated in Mechanical
Engineering (with Honors) from Jadavpur University, India, has done his Post Graduation
in Management from Indian Institute of Management, Calcutta, India and PhD from the
University of Burdwan, India.
Dr Datta has over 25 years of industry experience particularly in the area of marketing and
execution of pollution control projects and 13 years of academic experience in post
graduate management education, research and consultancy. He has also authored books
titled "Marketing Sense" and “Marketing Management” published by Excel Books and
“Strategic Management” by Jaico Books. His scholarly research papers have been
published extensively in different national and international journals.
Table 1: Measurement of Brand Knowledge Constructs (Majumdar, 1998)
Measure(s)Purpose of measure(s)
Recall Correct identification of
brand given product or
some other type of probe
Correct discrimination of
brand as having been
previously seen or heard.
accessibility of brand in
Recognition Capture potential
retrievability or availability
of brand in memory.
[Adapted from Ramanuj Majumdar (1998), Product Management in India, Prentice Hall of India, New Delhi,
p. 56. Reprinted with written permission from PHI Learning.]
Table 2: Demographic Profile of Respondents
Demographic Profiles DescriptionNo. of
Medical Graduate (MBBS/BDS)
Post Graduate Diploma
Post Graduate Degree (MD/MS/MDS)
Member/Fellow of Royal Colleges
Below 30, 000
30, 000- 40, 000
40, 000- 50, 000
50, 000- 60, 000
60, 000- 70, 000
Above 70, 000
Monthly Income Range
Table 3: Summary of Descriptive Statistics and Reliability of Scales
A. Country of Origin Image
1.I will prefer the brand that originates from a country
rich in R & D
I will prefer the brand that originates from a country
with a high level of technological advancement
I will prefer the brands that originates from a country
which maintains a high level of quality
I will prefer the brand that originates from a country
which maintains an image of more new drug
I will prefer the brand that originates from a country
which is prestigious in terms of drug manufacturing
B. Components of Brand Equity
B1. Brand Strength
6.I prefer brand A which shows leadership
7. I prefer brand A with quality of stability
8. I prefer brand A that is accepted internationally
9.I prefer brand A that is actively promoted and supported
by the company
10. I prefer brand A that is adequately protected by
11. I prefer brand A that operates in a stable market
12. I prefer brand A that shows futuristic trend
B2. Brand Awareness
13. I can recall brand A
14. I can relate brand A with my experience
15. I can recognize brand A
16. I have distinct opinion about brand A
C. Brand Equity
17. If a second brand has same quality and feature, I will
prefer brand A
18. If the second brand has the same price as brand A, I will
prefer brand A
19. If the second brand is supported by better promotional
strategy, I will prefer brand A
20. If the second brand is as good as brand A in all respect,
I will prefer brand A
21. If the second brand has the same availability pattern as
brand A, I will prefer brand A
Table 4: Effect of components of brand equity on country of origin image
Brand strength.974 .9871.206 0.000
Table 5: Effect of components of brand equity on brand equity
Brand strength .134.366 5.4850.000
Table 6: Effect of country of origin image on brand equity
Table 7: Effect of country of origin image on brand equity
Brand strength .215.46411.0850.000
Table 8: Relationship between country of origin image and brand equity mediated by
components of brand equity (brand strength and brand awareness)
Brand strength.483 .464
46 Download full-text
[Adapted from David A. Aaker (1996), Building Strong Brands, The Free Press, New York, NY, p. 306.
Reprinted with written permission from Prof. David A. Aaker.]
Figure 2: The mediation model (with standardized path coefficients)