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globeone BRIC Branding Survey

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The majority of urban consumers in Brazil, Russia, India and China is highly aware of a multitude of German brands. However, there is great potential to further exploit the strengths of German brand …

The majority of urban consumers in Brazil, Russia, India and China is highly aware of a multitude of German brands. However, there is great potential to further exploit the strengths of German brand origin in these growth markets. This is a key finding of globeone’s first BRIC Branding® Survey.

In total, more than 4,000 consumers in the 20 most important cities in BRIC were interviewed throughout the first half of 2011 about their awareness, preference and purchase frequency of German brands.

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  • 1. BRIC Branding® Survey The Perception of German Brands in the World’s Key Growth Markets September 2011 Cologne | Shanghai | Beijing | Mumbai | São Paulo | Singapore © Copyright This document of globeone GmbH is intended exclusively for the client or addressee. It remains exclusive property of globeone GmbH 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 globeone GmbH. 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.
  • 2. 2 • 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 Agenda
  • 3. 3 Key findings – Germany’s image in BRIC¹ Executive summary (1/2) Source: globeone 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 BRIC population has a positive attitude towards German brands – highest preference is 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.
  • 4. 4 Key findings – Leading German brands in BRIC Executive summary (2/2) Source: globeone GERMANY IS BEST KNOWN FOR TRADITIONAL INDUSTRIES German brands are most famous in the automotive sector. In addition, German home appliances and 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 by Nivea (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 want to research information about foreign brands. The other important sources include TV and personal recommendations by family or friends.
  • 5. 5 • 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 Agenda
  • 6. 6 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 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/ Timing1: • 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 Over 4,000 interviews in 20 of the most important BRIC cities to analyze the perception of German brands Survey approach – Objectives and scope Source: globeone ¹ Representative survey of urban population based on field research conducted by certified market research agencies in each country. German brands
  • 7. 7 Survey approach – Country-of-origin definitions Source: globeone COO – DEFINITIONS “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 a company, product or brand if they know it originates from a certain country.“ 3 COO – HIGH INTEREST “Country-of-origin effect is one of the most analyzed phenomena in consumer behavior in international markets.“ 1 Country-of-origin (COO) as key factor for purchase decisions 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. German brands
  • 8. 8 Survey approach – Country-of-origin relevance Source: globeone Important success factor in BRIC 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 BRIC-specific relevance of a positive COO-Image A positive COO-Image can: • Increase perceived quality and prestige of a brand • Promote consumers’ purchase intentions in favor of a brand Potential for increasing brand performance dependent on industry and product category General relevance of a positive COO-Image– Perception of a brand’s corresponding country-of-origin – !
  • 9. 9 • 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 Agenda
  • 10. 10 Majority of BRIC population confirms high importance of COO-Image in the purchase decision process Germany’s image in BRIC – Importance of COO-Image Not important at all Not important Does not really matter Very important Relatively important 1%4%0% 0% 36% 29% 10% 20% 5% 61% 29% 10% 31% 38% 19% 8% 14% 47% 25% 13% 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? Source: globeone
  • 11. 11 • 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 German image as asset – 66% of urban BRIC population confirm positive image of German brands Germany’s image in BRIC Total sample: 4,033 respondents from BRIC Q.: Do you like German brands, products or services? – General attitude towards German brands in BRIC – 1% 5% 28% 43% 23% 0% 10% 20% 30% 40% 50% I do not like German brands at all I do not really like German brands I do not have a preference I like German brands I like German brands very much 66% associate positive image Source: globeone !
  • 12. 12 I do not like German brands at all I do not really like German brands I do not have a preference I like German brands I like German brands very much 22% 59% 13% 5% 1% 45% 43% 11% 0% 1% 16% 33% 42% 7% 2% 9% 38% 47% 5% 1% Russia, followed by Brazil, shows strongest preference for German brands Germany’s image in BRIC 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? Source: globeone
  • 13. 13 Example China – Large potential in middle class due to widespread positive attitude towards German brands 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? – Lower affluent –– Middle class –– Emerging middle class – Source: globeone 0% 67% 0% 33% 0% 33% 12% 0% 44% 11% 16% 34% 7% 2% 41% 8% 5% 1% 38% 48% – Upper affluent – I do not like German brands at all I do not really like German brands I do not have a preference I like German brands I like German brands very much 57% and 77% associate positive image Germany’s image in BRIC – Income class differences
  • 14. 14 Germany’s image in BRIC – Income class differences Example Brazil – German brands enjoy a very high reputation across all income classes – E – (< 457) – D – (> 457) – C – (> 914) – B – (> 2,284) – A – (> 4,568) 15% 60% 14% 9% 2% 14% 63% 15% 7% 1% 22% 55% 17% 5% 1% 33% 58% 6% 3% 0% 41% 54% 3% 1% 1% I do not like German brands at all I do not really like German brands I do not have a preference I like German brands I like German brands very much Over 90% associate positive imageOver 75% associate positive image Q.: Do you like German brands, products or services? Source: globeone Exchange rate: 1 R$ = 0.45 € (September 2011) – Liking of German brands across social classes (according to gross monthly income in €) –
  • 15. 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 High prestige Sophisticated 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? Germany US Japan China Source: globeone 0% 20% 40% 60%
  • 16. 16 Source: globeone 17% 20% 33% 38% 40% 0% 10% 20% 30% 40% 50% China France US Japan Germany German brands and products enjoy the strongest reputation in BRIC based on 15 key brand dimensions Germany’s image in BRIC – Country brand image strength index – Country brand image strength index – (average scores of 15 relevant dimensions) Total sample: 4,033 respondents from BRIC
  • 17. 17 Source: globeone • 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 1% 3% 34% 46% 16% Very cheap Relatively cheap Similar to other countries' brands Relatively expensive Very expensive Total sample: 4,033 respondents from BRIC – Price perception of German brands in BRIC – Q.: What do you think about German brands in terms of price? Very cheap Relatively cheap Very expensive Relatively expensive Similar to other countries` brands 62% of interviewees perceive German brands as relatively or very expensive Germany’s image in BRIC – Price perception
  • 18. 18 Source: globeone – Industries/ categories most commonly associated with Germany – Total sample: 4,033 respondents from BRIC 12% 12% 17% 18% 18% 26% 31% 40% 43% 77% 0% 20% 40% 60% 80% 100% Eco-friendly technology Services (Insurance etc.) Detergent Clothing/ Fashion Food Cosmetics/ Perfume Football Pharmaceuticals/ Medicine Machinery Home appliances Automotive • 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 Q.: What categories do you think German brands are famous for? 11% Germany most famous for cars, home appliances, machinery and pharmaceuticals Germany’s image in BRIC – Top categories for German brands
  • 19. 19 5% 6% 7% 7% 10% 11% 16% 21% 23% 28% 30% 33% 0% 10% 20% 30% Porsche Braun Metro Cash & Carry Puma Nivea Bosch Adidas Siemens Audi BMW Mercedes-Benz Volkswagen – Spontaneously remembered German brands in BRIC (top12) – Total sample: 4,033 respondents from BRIC Q.: Which German brands do you know ? Please name as many as come to your mind spontaneously. 0% 20% 40% 60% 80% Can recall a German brand Can't recall a German brand Vast majority of interviewed BRIC population spontaneously remembers multiple German brands Source: globeone 72% 28% Germany’s image in BRIC – Unaided awareness
  • 20. 20 • 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 Agenda
  • 21. 21 • 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 non- automotive brand among top 5 • Nivea is only FMCG brand in top 12 (74%) – Aided awareness in BRIC overall (top 12 out of 45) – 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? 0% 20% 40% 60% 80% 100% BMW Mercedes-Benz Adidas Volkswagen Audi Nivea Puma Siemens Bosch Porsche Bayer Braun 89% 87% 85% 83% 82% 74% 74% 69% 61% 58% 50% 45% (3593) (3498) (3442) (3339) (3289) (2979) (2968) (2790) (2441) (2330) (2000) (1803) Source: globeone Leading German brands – Aided awareness Top 12 – Car manufacturers are best-known German brands with BMW as single most known brand
  • 22. 22 • 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 Leading German brands – Positive image ¹ Based on interviewees who know the brand Q.: Do you like this brand in general? (Only brands known to interviewee) – Positive attitude towards German brands in BRIC¹ (top 12 out of 45) – Source: globeone Top 12 – Automotive industry leads image ranking with BMW and Porsche as best-liked German brands 0% 20% 40% 60% 80% 100% 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) 77%Puma (2283)
  • 23. 23 Leading German brands – Recognition of German brand origin Q.: Do you think this brand is originally from Germany or not? (Only brands known to interviewee) Source: globeone • 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% Top 12 – High recognition of German origin for car manufacturers and some niche players 91% 87% 84% 83% 82% 78% 79% 77% 77% 75% 75% 74% Deutsche Telekom 0% 20% 40% 60% 80% 100% Deutsche Bank Zwilling MAN Lufthansa Carl Zeiss Volkswagen Braun Bayer Boehringer-Ingelheim Audi (957) (1237) (583) (536) (712) (1167) (721) (2568) (1385) (1499) (724) (2429) – Recognition of German brand origin¹ (top 12 out of 45) – ThyssenKrupp ¹ Based on interviewees who know the brand
  • 24. 24 • 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%) Leading German brands – Purchase/ usage Q.: Which German brands have you bought/used or which services have you used? – Purchase/ use of German brands in BRIC (top 12 out of 45) – Source: globeone 60% 51% 38% 33% 25% 23% 23% 22% 19% 18% Adidas 0% 20% 40% 60% Nivea Siemens Bosch Volkswagen Braun Metro Cash & Carry Hugo Boss Dr. Oetker Osram (2416) (2071) (1529) (1335) (1013) (934) (926) (874) (758) (735) Top 12 – Leading brands with relatively high purchase/ usage rate. Adidas in pole position 42%Puma (1710) 30%Bayer (1218) Total sample: 4,033 respondents from BRIC
  • 25. 25 • 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 Agenda
  • 26. 26 Internet most used source to learn about foreign brands 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? – Sources of information to learn more about foreign brands – Insights into information channels Source: globeone 0% 10% 20% 30% Internet1 TV Family/ friends Shopping center/ store Newspaper/ magazine Event/ tradeshow Radio 29% 19% 13% 12% 5% 3% 19%
  • 27. 27 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
  • 28. 28 Improving BRIC performance through effective strategies Strategies for BRIC – Basic implications • Success in BRIC requires dedicated action and a clear strategic roadmap (→ ‘one-world-strategy’)1 Strategic implications for corporations (selection): Source: globeone • 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 - BRIC brand performance analysis - 1 A ‘one-world-strategy’ is a strategy that considers the BRIC countries and specific consumer/ customer needs at the very center of corporate strategy
  • 29. 29 Selected strategies for BRIC – Awareness & image challenge Strategies for BRIC – Leveraging maximum brand potential to grow sales (1/2) 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 25% 50% 75% 100% 0% Corporation with high awareness but weak image as compared to industry benchmarks 25% 50% 75% 100% 0% Awareness Image Recognition Purchase Loyalty Awareness Image Recognition Purchase Loyalty - 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 - BRIC brand performance - Source: globeone Awareness challenge1 - BRIC brand performance - Image challenge2
  • 30. 30 Strategies for BRIC – Leveraging maximum brand potential to grow sales (2/2) Source: globeone Brand’s German roots not properly recognized - Key challenges - • Missing link to German origin of a brand • Advertising, PR, event or online activities lacking 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 Brand enjoys good reputation but purchase behavior and loyalty remain below industry benchmarks Awareness Recognition Purchase Loyalty - 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 German origin challenge3 Activation & loyalty challenge4 - BRIC brand performance - - BRIC brand performance - Image 25% 50% 75% 100% 0% 25% 50% 75% 100% 0% German origin focus & activation / loyalty challenge Awareness Recognition Purchase LoyaltyImage
  • 31. 31 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
  • 32. 32 globeone – Driving marketing and business success in key growth markets Source: globeone Global Strategy + Local Opportunity = Success in BRIC globeone supports senior executives in systematically developing a leading brand position and successfully managing the manifold marketing and communication challenges in the world’s most dynamic markets. globeone creates sustainable business value for its customers by combining marketing and communication strategy consulting with sound implementation expertise and hands-on project management support. This is what globeone is all about – from insight generation to strategy definition and joint execution. About globeone • Specialized strategy, marketing and communication consulting & services with focus on BRIC markets • Headquartered in Cologne with network offices in Shanghai, Beijing, Mumbai, São Paulo and Singapore • Providing many DAX, MDAX or EuroStoxx listed corporations with day-to-day support • A truly global team of corporate communications and marketing experts leveraging on local insights to seize global opportunities for our clients • Committed, results-focused and customer-oriented in order to drive corporate success and shareholder value in key growth markets
  • 33. 33 Contact globeone Cologne Head Office Kranhaus Süd Im Zollhafen 24 50678 Köln Germany Shanghai Office 16F Feidiao Internat. Building 1065 Zhao Jia Bang Road 200030 Shanghai People's Republic of China Mumbai Office B 806, Sagar Tech Plaza Sakinaka Junction Andheri Kurla Link Road Andheri (East) Mumbai 400072 India São Paulo Office Singapore OfficeBeijing Office Office 39, Room 509A No. 4 Gong Ti Bei Lu Chaoyang District 100027 Beijing People's Republic of China Av. Cidade Jardim, 400 20th floor – room 08 01454-000 São Paulo Brazil 10 Collyer Quay, 40-53 Ocean Financial Centre Singapore 049135 Singapore Email: mumbai@globe-one.com Phone +91 (0) 22 6770 3718 (ext. 11) Mobile +91 99 2066 3306 Fax +91 (0) 22 6645 9842 Email: saopaulo@globe-one.com Phone +55 (0) 11 3818 0837 Mobile +55 (0) 11 9300 9039 Fax +55 (0)11 3818 0899 Email: singapore@globe-one.com Phone +65 6808 6050 Mobile +65 9725 5320 Fax +65 6622 5999 Email: beijing@globe-one.com Phone +86 135 0129 8737 Fax +86 (0) 21 5158 1686 Email: shanghai@globe-one.com Phone +86 (0) 21 5158 1688 (ext. 1352) Mobile +86 1381 65 44 122 Fax +86 (0) 21 5158 1686 Email: cologne@globe-one.com Phone +49 (0) 221 788068-0 Fax +49 (0) 221 788068-29 www.globe-one.com 33
  • 34. Cologne | Shanghai | Beijing | Mumbai | São Paulo | Singapore © Copyright This document of globeone GmbH is intended exclusively for the client or addressee. It remains exclusive property of globeone GmbH 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 globeone GmbH. 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.