The Perception of German Brands in the World s Key Growth Markets

Transcription

1 BRIC Branding Survey The Perception of German Brands in the World s Key Growth Markets September 2011 Copyright This document of globeonegmbh is intended exclusively for the client or addressee. It remains exclusive property of globeonegmbh until the rights of use are expressly transferred. Any revision, use, duplication or commercial distribution of this work is permitted only with written consent of globeonegmbh. This document is a discussion paper. It makes use of secondary information and hypotheses and is therefore for discussion only. It does not include any recommendations or binding statements. Cologne Shanghai Beijing Mumbai São Paulo Singapore

2 Agenda Executive Summary Survey Approach Germany s Image in BRIC Leading German Brands in BRIC Insights into Information Channels in BRIC Marketing and Communication Strategies for BRIC About globeone 2

3 Executive summary (1/2) Key findings Germany s image in BRIC¹ COUNTRY-OF-ORIGIN IMAGE OF HIGH IMPORTANCE IN BRIC COUNTRIES In BRIC countries, the Country-of-origin Image (COO-Image) is of central importance for consumers and B-to-B buyers in the purchase decision process. POSITIVE ATTITUDE TOWARDS GERMAN BRANDS The vast majority of the urban BRICpopulation has a positive attitude towards German brands highest preferenceis evident in Russia followed by Brazil, India and China. GERMAN BRANDS LEAD NATION RANKING In general, German brands are favored over Japanese, American, French or Chinese brands. This perception is especially distinctive for traditional values like reliability, quality and trustworthiness. SHORTCOMINGS IN MODERN VALUES German brands show some shortcomings for modern values as they are not perceived as being highly innovative or exciting. Japan and the US are in the lead for these attributes. POTENTIAL BARRIERS TO ENTER MASS MARKET Most German brands have a strong premium image. Thus, many of them are perceived as being expensive and face potential barriers to gaining a significant share in the overall market. ¹ The term BRIC is an abbreviation that represents the key growth markets Brazil, Russia, India and China. 3

4 Executive summary (2/2) Key findings Leading German brands in BRIC GERMANY IS BEST KNOWN FOR TRADITIONAL INDUSTRIES German brands are most famousin the automotive sector. In addition, German home appliancesand machinery also enjoy high awareness and preference. BMW IS THE MOST WELL-KNOWN GERMAN BRAND Vast majority of interviewed BRIC population is aware of multiple German brands BMW (89%) is in the pole position followed by Mercedes-Benz(87%) and Adidas (85%). BMW AND PORSCHE ARE THE BEST-LIKED GERMAN BRANDS Automotive brands are leading the ranking with BMW (84%) and Porsche (84%) as most popular German brands in BRIC. Hugo Boss (81%) is the first non-automotive brand behind the automotive champions. ADIDAS IS THE MOST FREQUENTLY PURCHASED/ USED GERMAN BRAND The most frequently purchased/ used German brand in BRIC is Adidas (60%) followed bynivea (51%) and Puma (42%). Many German brands display very low market penetrations among average urban consumers. INTERNET MOST POPULAR SOURCE TO LEARN ABOUT FOREIGN BRANDS The Internetis the leading source for BRIC consumers who wantto research information about foreign brands.the other important sources includetv andpersonal recommendations by family or friends. 4

6 Survey approach Objectives and scope Over 4,000 interviews in 20 of the most important BRIC cities to analyze the perception of German brands Objectives: Identification of Country-of-origin Image (COO-Image) relevance in BRIC Assessment of perception of German brands amongst urban citizens Strengths & weaknesses of German brands and strategic implications Method/ Timing 1 : Inclusion of DAX, MDAX companies and other major German brands Computer-assisted telephone interviews: n 1,000 per country Field work: first half of 2011 German brands Countries/ Cities: Brazil Russia India China São Paulo Moscow Mumbai Shanghai Rio de Janeiro St.Petersburg New Delhi Beijing Porto Alegre Novosibirsk Bangalore Guangzhou Recife Yekaterinburg Chennai Chengdu Brasília Nizhny Novgorod Pune Wuhan ¹ Representative survey of urban population based on field research conducted by certified market research agencies in each country. 6

7 Survey approach Country-of-origin definitions Country-of-origin (COO) as key factor for purchase decisions COO HIGH INTEREST Country-of-origin effect is one of the most analyzed phenomena in consumer behavior in international markets. 1 COO DEFINITIONS German brands Country-of-origin is defined as the country where corporate headquarters of the company marketing the product or brand are located. This does not require local manufacturing. 2 Consumers and customers associate positive or negative attributes with acompany, product or brand if they know it originates from a certain country. 3 Sources: 1) Amine et al. (2005): Executive Insights: Exploring the Practical Effects of Country of Origin; 2) Daniels, J.D./ Radebaugh, L.H., (2002): International Business; 3) White, P.D./ Cundiff, E.W. (1978): Assessing the quality of industrial products. 7

8 Survey approach Country-of-origin relevance Important success factor in BRIC Perception of a brand s corresponding country-of-origin General relevance of a positive COO-Image A positive COO-Image can: Increase perceived qualityand prestige of a brand Promote consumers purchase intentions in favor of a brand! Potential for increasing brand performance dependent on industry and product category BRIC-specific relevance of a positive COO-Image Emerging middle class consumers in BRIC markets are particularly sensitive related to the COO-Image resulting from: Social mobility: Local consumers demand for prestigious brands to display their economic progress Novelty: Lower availability and higher novelty of foreign brands Limited trust: Lower level of quality and marketing competence of local brands in most emerging markets 8

10 Germany s image in BRIC Importance of COO-Image Majority of BRIC population confirms high importance of COO-Image in the purchase decision process Very important 36% 61% 31% 14% Relatively important 29% 29% 38% 47% Does not really matter 10% 10% 19% 25% Not important 20% 0% 8% 13% Not important at all 5% 0% 4% 1% Sample size per BRIC country: 1,023 (Brazil), 1,000 (Russia), 1,000 (India), 1,010 (China) Q.: How important is the country-of-origin of a brand to you when you purchase a product or service? 10

11 Germany s image in BRIC German image as asset 66% of urban BRIC population confirm positive image of German brands 50% 40% 30% 20% 10% 0% 1% I do not like German brands at all General attitude towards German brands in BRIC 5% I do not really like German brands 28% I do not have a preference! 66% associate positive image 43% I like German brands 23% I like German brands very much Two thirds of respondents have a positive attitude towards German brands Only a very small fraction (6%) dislikes German brands Manifold opportunities for an effective positioning utilizing the country-of-origin potential Total sample: 4,033 respondents from BRIC Q.: Do you like German brands, products or services? 11

12 Germany s image in BRIC Russia, followed by Brazil, shows strongest preference for German brands I like German brands very much 22% 45% 16% 9% I like German brands 59% 43% 33% 38% I do not have a preference 13% 11% 42% 47% I do not really like German brands 5% 0% 7% 5% I do not like German brands at all 1% 1% 2% 1% Sample size per BRIC country: 1,023 (Brazil), 1,000 (Russia), 1,000 (India), 1,010 (China) Q.: Do you like German brands, products or services? 12

13 Germany s image in BRIC Income class differences Example China Large potential in middle class due to widespread positive attitude towards German brands Emerging middle class Middle class Lower affluent Upper affluent I like German brands very much 8% 16% 57% and 77% associate positive image 33% 0% I like German brands 38% 41% 44% 33% I do not have a preference 48% 34% 12% 67% I do not really like German brands 5% 7% 11% 0% I do not like German brands at all 1% 2% 0% 0% Income distribution in RMB/month: Emerging middle class(2,700-8,100), Middle class (8,101-18,000), Lower affluent (18,001-36,000), Upper affluent (36,001 and above). Exchange rate: 1 RMB = 0.11 (September 2011). Q.: Do you like German brands, products or services? 13

14 Germany s image in BRIC Income class differences Example Brazil German brands enjoy a very high reputation across all income classes I like German brands very much I like German brands Liking of German brands across social classes (according to gross monthly income in ) 15% E (< 457) 60% 14% D (> 457) Over 75% associate positive image 63% C (> 914) 22% 55% B (> 2,284) 33% 58% A (> 4,568) 41% Over 90% associate positive image 54% I do not have a preference 14% 15% 17% 6% 3% I do not really like German brands 9% 7% 5% 3% 1% I do not like German brands at all 2% 1% 1% 0% 1% Exchange rate: 1 R$ = 0.45 (September 2011) Q.: Do you like German brands, products or services? 14

15 Germany s image in BRIC Detailed perception of brand attributes Germany most strongly associated with traditional values like quality and reliability Perception of brand and product attributes based on respective countries (Germany, US, Japan, China) Excellent quality Good reliability High durability High performance Outstanding design Germany US Japan China High prestige Sophisticated 0% 20% 40% 60% Total sample: 4,033 respondents from BRIC Q.: We are interested in the important brand & product characteristics e.g. design, quality. Which countries are most strongly associated with these characteristics? 15

16 Germany s image in BRIC Country brand image strength index German brands and products enjoy the strongest reputation in BRIC based on 15 key brand dimensions 50% Country brand image strength index (average scores of 15 relevant dimensions) 40% 33% 38% 40% 30% 20% 17% 20% 10% 0% China France US Japan Germany Total sample: 4,033 respondents from BRIC 16

17 Germany s image in BRIC Price perception 62% of interviewees perceive German brands as relatively or very expensive Price perception of German brands in BRIC 46% 34% 16% 3% 1% Very cheap Relatively cheap Similar to other countries' brands Very cheap Relatively cheap Similar to other countries` brands Relatively expensive Very expensive Relatively expensive Very expensive German brands are mostly perceived as relatively expensive reflecting their focus on the premium segments Large potential to target emerging middle class with more locally adjusted portfolio consisting of less expensive products/ brands Total sample: 4,033 respondents from BRIC Q.: What do you think about German brands in terms of price? 17

18 Germany s image in BRIC Top categories for German brands Germany most famous for cars, home appliances, machinery and pharmaceuticals Industries/ categories most commonly associated with Germany Automotive 77% Home appliances 43% Machinery 40% Pharmaceuticals/ Medicine 31% Football 26% Cosmetics/ Perfume 18% Food 18% Clothing/ Fashion 17% Detergent 12% Services (Insurance etc.) 12% Eco-friendly technology 11% Traditional industries like automotive and home appliances lead the ranking Eco-friendly technology not yet strongly associated with Germany Germany less likely to be associated with consumer goods and services 0% 20% 40% 60% 80% 100% Total sample: 4,033 respondents from BRIC Q.: What categories do you think German brands are famous for? 18

19 Germany s image in BRIC Unaided awareness Vast majority of interviewed BRIC population spontaneously remembers multiple German brands Spontaneously remembered German brands in BRIC (top12) Volkswagen 33% Mercedes-Benz BMW 30% 28% 80% 60% 40% 20% 0% 72% Can recall a German brand 28% Can't recall a German brand Audi Siemens Adidas Bosch Nivea Puma 11% 10% 7% 16% 21% 23% Metro Cash & Carry 7% Braun 6% Porsche 5% Total sample: 4,033 respondents from BRIC Q.: Which German brands do you know? Please name as many as come to your mind spontaneously. 19 0% 10% 20% 30%

21 Leading German brands Aided awareness Top 12 Car manufacturers are best-known German brands with BMW as single most known brand BMW Mercedes-Benz Adidas Volkswagen Audi Nivea Puma Siemens Bosch Porsche Bayer Braun Aided awareness in BRIC overall (top 12 out of 45) 89% 87% 85% (3593) (3498) (3442) 83% (3339) 82% (3289) 74% (2979) 74% (2968) 69% (2790) 61% (2441) 58% (2330) 50% (2000) 45% (1803) 0% 20% 40% 60% 80% 100% German car manufacturers lead the top 12 ranking BMW (89%) is the best-known German brand followed by Mercedes-Benz (87%) Adidas (85%) is only nonautomotive brand among top 5 Nivea is only FMCG brand in top 12 (74%) Total sample: 4,033 respondents from BRIC Q.: I will read you a list of German brands. Please tell me, which brands do you know? 21

22 Leading German brands Positive image Top 12 Automotive industry leads image ranking with BMW and Porsche as best-liked German brands Positive attitude towards German brands in BRIC¹ (top 12 out of 45) BMW Porsche Mercedes-Benz Audi Volkswagen Hugo Boss Bosch Adidas Bayer Dr. Oetker Metro Cash & Carry 84% 84% 83% 82% 81% 81% 81% 79% 78% 78% 77% (3018) (1948) (2903) (2703) (2718) (1328) (1965) (2727) (1556) (889) (1210) Puma 77% (2283) 0% 20% 40% 60% 80% 100% German top 12 brands are liked by 77% or more of respondents Automotive brands lead ranking with BMW (84%) and Porsche (84%) as best-liked German brands in BRIC Hugo Boss (81%) first non-automotive brand in the ranking Metro Cash & Carry (77%)as only B-to-B brand among top 12 ¹ Based on interviewees who know the brand Q.: Do you like this brand in general? (Only brands known to interviewee) 22

23 Leading German brands Recognition of German brand origin Top 12 High recognition of German origin for car manufacturers and some niche players Recognition of German brand origin¹ (top 12 out of 45) Deutsche Telekom Deutsche Bank ThyssenKrupp Zwilling MAN Lufthansa Carl Zeiss 91% (957) 87% (1237) 84% (583) 83% (536) 82% (712) 79% (1167) 78% (721) Volkswagen Braun 77% 77% (2568) (1385) Bayer Boehringer-Ingelheim Audi 75% (1499) 75% (724) 74% (2429) 0% 20% 40% 60% 80% 100% Deutsche Telekom and Deutsche Bank lead ranking -very likely due to Deutsche in brand name None of the leading car manufacturers among top 3 Volkswagen (77%) with its Das Auto claim scores highest recognition of German origin among car brands German origin of niche player Zwilling perceived by 83% ¹ Based on interviewees who know the brand Q.: Do you think this brand is originally from Germany or not? (Only brands known to interviewee) 23

24 Leading German brands Purchase/ usage Top 12 Leading brands with relatively high purchase/ usage rate. Adidas in pole position Purchase/ use of German brands in BRIC (top 12 out of 45) Adidas Nivea Siemens Bosch Volkswagen Braun Metro Cash & Carry 25% 23% 23% 22% 33% 38% 51% Puma 42% (1710) Hugo Boss (1335) Bayer 30% (1218) (1013) (934) (926) (874) (1529) 60% (2071) (2416) Top 12 mainly consists of brands from B-to-C sector led by Adidas (60%) and followed by Nivea (51%) Puma with 3rd highest purchase rate (42%) Volkswagen as most purchased/ used German car brand (25%) Dr. Oetker Osram 19% 18% (758) (735) 0% 20% 40% 60% Total sample: 4,033 respondents from BRIC Q.: Which German brands have you bought/used or which services have you used? 24

26 Insights into information channels Internet most used source to learn about foreign brands Sources of information to learn more about foreign brands Internet 1 29% TV 19% Family/ friends 19% Shopping center/ store 13% Newspaper/ magazine 12% Event/ tradeshow 5% Radio 3% 0% 10% 20% 30% Total sample: 4,033 respondents from BRIC, 1) Category Internet includes Internet search engines, social media and corporate websites Q.: How do you generally find out/ learn more about foreign brands? 26

28 Strategies for BRIC Basic implications Improving BRIC performance through effective strategies Strategic implications for corporations (selection): Success in BRIC requires dedicated action and a clear strategic roadmap ( one-world-strategy ) 1 - BRIC brand performance analysis- 1:1 transfer of developed market strategies is rarely successful Almost continental complexity of China, India, Brazil and Russia needs to be reflected in strategy development and alignment of country organizations Fact-based adjustments regarding strategic focus, relevant target groups and positioning strategy necessary Different levels of brand performance require a differentiated approach 1 A one-world-strategy is a strategy that considers the BRIC countries and specific consumer/ customer needs at the very centerof corporate strategy 28

29 Strategies for BRIC Leveraging maximum brand potential to grow sales (1/2) Selected strategies for BRIC Awareness & image challenge 1 Awareness challenge 100% 75% 50% 25% 0% Awareness - BRIC brand performance- Image Recognition Purchase Loyalty Corporation with low brand awareness and thus low general brand performance in all major dimensions in BRIC -Key challenges - Lack of fact-based one-world-strategy for BRIC Local organizational setup not sufficient Slow expansion speed beyond Tier 1 city clusters Inability to bridge gap between HQ and country team Unclear definition of market-driven strategy based on target groups and needs in BRIC Ineffective activation strategy & media investment to communicate above perception threshold Ineffective utilization of media vehicles 2 Image challenge 100% 75% 50% 25% 0% - BRIC brand performance - Awareness Image Recognition Purchase Loyalty Corporation with high awareness but weak image as compared to industry benchmarks -Key challenges - Under-utilization of local customer insights and thus no quick wins Absence of a relevant positioning adjusted to local target group expectation (e.g. prestige appeal) Low differentiation to key competitors/ local hero brands in BRIC Lack of creative execution and effective media strategy Shortcomings in locally relevant story-telling 29

30 Strategies for BRIC Leveraging maximum brand potential to grow sales (2/2) German origin focus & activation / loyalty challenge 3 German origin challenge 100% 75% 50% 25% 0% Awareness - BRIC brand performance- Image Recognition Purchase Loyalty Brand s German roots not properly recognized -Key challenges - Missing link to German origin of a brand Advertising, PR, event or online activitieslacking proactive communication of German brand heritage and thus no realization of additional price premium potential Lack of story-telling related to the brand origin & history although brand history is one of few competitive advantages that cannot be easily imitated 4 Activation & loyalty challenge 100% 75% 50% 25% 0% Awareness - BRIC brand performance - Image Recognition Purchase Loyalty Brand enjoys good reputation but purchase behavior and loyalty remain below industry benchmarks -Key challenges - Lack of a strategy to appeal to middle income groups as well (e.g. creating low-cost brands for more price sensitive target customers) Limited local distribution points Lack of implementing sequential expansion strategies in line with regional development Under-utilization of global CRM basics and related systems in the local market Lack of effective activation at POS & in social media 30

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34 Copyright This document of globeonegmbh is intended exclusively for the client or addressee. It remains exclusive property of globeonegmbh until the rights of use are expressly transferred. Any revision, use, duplication or commercial distribution of this work is permitted only with written consent of globeonegmbh. This document is a discussion paper. It makes use of secondary information and hypotheses and is therefore for discussion only. It does not include any recommendations or binding statements. Cologne Shanghai Beijing Mumbai São Paulo Singapore