Research Insight | Consumers Prefer Local Products When the Economy Is Good, but They Prefer Global Products During Recessions

In 2005, Coca-Cola entered the juice market in Brazil through the acquisition of an established local juice brand called Sucos Mais and expanded later by acquiring Sucos Del Valle. Although it had plans to use its global brand name (i.e., Minute Maid), the company decided to keep the local name of the acquired juice manufacturer by merging it with its global brand name to form a new brand called Minute Maid Mais, and then Sucos Del Valle Mais. Although Coca-Cola did not consolidate its global brand name in the country, the company leads the Brazilian juice market. Such an example reveals managers can benefit from understanding consumer perceptions of brand origin to develop appropriate marketing strategies in international markets. Consumers’ perceptions of brand origin can be even more important in times of economic recession, when consumers are seeking more information and use brand signals to drive their decisions. The findings from this study suggest that brands with a different country-of-origin perception are differentially affected by economic contractions. The market share of brands that customers most identify as domestic suffer more damage during contractions than brands they perceive as foreign. These results generate a better understanding of brands’ resistance to economic declines based on their perceived country of origin. During economic contractions, when the market share of brands perceived as foreign suffer less damage, the companies may highlight international image cues. In contrast, during nonrecession periods, brands can benefit more if they highlight the domestic-perceived origin.

For more Research Insights, click here.