Country-of-origin, region-of-origin or terroir branding to entice premium Price? The curious case of geographic place origin construal and psychic distance

Abstract

Despite firms' long reliance on geographic place origin branding, such as country-of-origin (COO), region-of-origin (ROO), and terroir, to sell their products in international markets, little theoretical and empirical work has been carried out to investigate which level of geographic specificity stimulates greater premium price when entering new markets. An experiment was conducted in India and Saudi Arabia manipulating place origin as a 3 factorial design (COO vs. ROO vs. terroir) using Australia as the country context, and honey as the product context. Results suggest that COO, ROO, and terroir prompt different place construal, which interacts with psychic distance to people (individual consumer difference), resulting in varying premium price. The study explains under which conditions which of the three place origins benefit companies and which ones backfire.