The halo effect of foreign brands on the misclassification of local brands

Abstract

Consumers generally lack the ability to identify brands' true origins, with their attribution of the wrong origins to well-known brands showing their underlying attitudes. This study suggests that the misclassification of local brands in Indonesia is driven by the halo effect of foreign brands (i.e., brands from Japan, South Korea and China) and the inferior image of locally made products. These constructs, however, differently affect Indonesian consumers' attitudes towards local brands. This study strongly suggests that, when consumers misperceive local brands as being from more developed countries, they tend to show negative attitudes towards local brands. This study provides useful recommendations for both local and foreign brand owners seeking strategies to enhance competitiveness in the Indonesian market.