Many global brands are shifting production to sites in countries with lower manufacturing costs or share production between different sites. This may result in loss of brand equity. A recent study** examined the impact of manufacturing at the brand’s original location (e.g. Godiva in Belgium, Guinness in Dublin, Kinder in Alba) and uncovered a substantial loss in perceived value and a significant drop in willingness-to-pay for consumers who learned that the production site was not the brand’s origin.
If brands are still manufacturing at their original location, they should exploit this effect: Consumers believe in higher levels of, the spirit of the founder or more experience by the workers. For more information click here.
** George E. Newman & Ravi Dhar. Authenticity is Contagious: Brand Essence and the Original Source of Production. Journal of Marketing Research, 2014.