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globeone Emerging Markets Brand Survey - English Version

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Brands from South Korea, Brazil, Russia, India, and China are still often hidden giants in Europe …

Brands from South Korea, Brazil, Russia, India, and China are still often hidden giants in Europe

German consumers are still relatively unfamiliar with champion brands from emerging markets. Only one-third of German consumers can spontaneously name a brand from South Korea, Brazil, Russia, India, or China. Brands from the emerging markets surveyed generally show major weaknesses in the traditional values like quality, reliability, and sustainability. However, German consumers see potential for brands from emerging markets and expect even stronger brands to emerge especially from South Korea and China. Also brands from Brazil can build on untapped positioning potential.
Those are the results of globeone’s representative study on the perception of emerging market brands by German consumers. In total, 1,000 German consumers were interviewed in June 2013.

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  • 1. Cologne  Shanghai  Beijing  Mumbai  São Paulo  Singapore  Seoul Emerging Market Brands Survey How German consumers perceive brands from Brazil, Russia, India, China, and South Korea August 2013
  • 2. 2 Agenda • Executive summary • Survey approach • Survey results • Strategic implications and recommendations • About globeone
  • 3. 3 Key findings (1/2) STILL LOW AWARENESS LEVELS FOR EMERGING MARKET BRANDS Only 36% of German consumers can spontaneously recall at least one brand from China, India, Brazil, Russia, or South Korea. Brazilian brands in particular are almost unknown to German consumers – only 6% can name at least one brand. Brands from Russia and South Korea are spontaneously recalled by 36% and 32%, respectively. LOW PREFERENCE AND PARTLY NEGATIVE PERCEPTION Most respondents (69%) do not prefer brands from emerging markets. Brazil tops the list, with an indifference rating of 86% due to very limited availability. China and Russia even have a strongly negative perception: 32% have a negative opinion of Chinese brands, and 24% of Russian brands. PARTNER VS. COMPETITOR: CHINA AND SOUTH KOREA SEEN AS BIGGEST THREAT FOR GERMAN INDUSTRY Consumers are particularly suspicious of China (68%) and South Korea (42%) – these countries are considered major competitors of Germany. Despite these concerns, South Korean products still enjoy the strongest positive image in comparison to the BRIC countries: 24% hold a positive image of South Korean brands. CLEAR LEAD INDUSTRIES ASSOCIATED WITH EACH COUNTRY China (19%) and South Korea (20%) are most strongly associated with home appliances and electronics. In addition, South Korea ranks high in automotive (20%), China in textiles (17%). Brazil ranks highest in tourism (23%), Russia is linked to raw materials and energy (33%), while India is known for textiles (23%) and IT (16%). SHORTCOMINGS IN TRADITIONAL VALUES – CHINA PUTS PRESSURE ON SOUTH KOREA Brands from all countries show relatively low levels of “quality” perception and other traditional values. Compared to BRIC, South Korea is perceived as clear quality leader (25%). However, China is already pushing for leadership in “innovation” (2% pp. behind leader South Korea), and is already the leader in “good value for money”. Note: pp. = percentage points
  • 4. 4 Key findings (2/2) BRAND ORIGIN – GERMAN CONSUMERS MIX IT UP When asked to spontaneously name an emerging market brand, German consumers often name brands that actually have different origins than consumers assume. Many vodka brands are falsely associated with Russia, trendy fashion brands are assumed to be Brazilian, and many Korean technology brands are seen as Japanese. AWARENESS RANKING LED BY SOUTH KOREAN AND ACQUIRED WESTERN BRANDS South Korean brands lead the brand awareness ranking. Four brands have an aided awareness rate of over 90% (Samsung, Kia, Hyundai, LG). Acquired Western brands Volvo, Jaguar and Land Rover have similar results (96- 94%), leaving the next genuine emerging market brand, Lada (Russia), clearly behind with 77%. “MADE IN SOUTH KOREA” – A BRAND ASSET AND BENCHMARK FOR OTHER EMERGING MARKETS Korean brands already have the strongest positive image even though their champion brands do not emphasize their origin (yet). Although Chinese and Russian brands have to overcome a COO-barrier, Chinese brands are challenging the Korean benchmark. Brazilian brands have the most favorable positioning potential. SHARED BRAND CHALLENGES German consumers see similar improvement potential for brands from all emerging markets. Product quality (more than 50%), image (more than 39%), and eco-friendliness (more than 46%) are considered the most critical aspects that need further improvement. EMERGING MARKET BRANDS ON THE ADVANCE – CHINESE BRANDS FOLLOWING THE KOREAN STRATEGY German consumers see most potential for emerging market brands in industries that are already associated with these markets. Chinese brands are expected to become much more important in the automotive industry as well as in home appliances and electronics – further challenging South Korea’s benchmark.
  • 5. 5 Agenda • Executive summary • Survey approach • Survey results • Strategic implications and recommendations • About globeone
  • 6. 6 Relevance of emerging market brands in Germany – national champions go global “The next set of big global brands will come from emerging countries.” David A. Aaker, 2013 “Emerging market brands are more agile, prepared to work harder, and have the appetite to do what it takes to be number one.” Prof. Amitava Chattopadhyay, Insead Business School, 2012 Emerging market brands going global Country of origin (COO) A new wave of Chinese investment is rolling across the world, and Europe is where much of it’s washing up. Over the past couple of years, Chinese groups have been snapping up an assortment of manufacturing companies and consumer brands at a steadily increasing pace. Last year Chinese investments into Europe totaled $12.6 billion, up 21% over 2011. Time Magazine, 2013
  • 7. 7 65 brands from 5 countries2: Over 1,000 interviews among German consumers to analyze the perception of emerging market brands 1 Most relevant brands for the German market determined via pre-test. 2 A short description of each brand (“Brand Snapshot”) can be downloaded at http://www.globe-one.com/news-insights/publications/. Objectives: • Analyze perceptions of emerging market brands in Germany • Identify country of origin image (COO image) of emerging market countries in Europe’s largest economy • Define strengths and weaknesses of emerging market brands and their strategic implications Method/timing: • Representative survey among German consumers (n ≈ 1,000) • Include 65 brands from Brazil, Russia, India, China and South Korea1 • Field work conducted: June 2013
  • 8. 8 Agenda • Executive summary • Survey approach • Survey results • Strategic implications and recommendations • About globeone
  • 9. 9 Hidden giants: only 1 out of 3 Germans can correctly recall at least one brand from emerging markets – Spontaneous recall of at least one brand from one of the countries surveyed – (Brazil, Russia, India, China, South Korea) Q.: What brands from … are you familiar with or have you heard of? 64% 36% 0% 20% 40% 60% 80% Cannot recall at least one brand Can recall at least one brand % of respondents correctly recalling at least one brand – Country-specific level – 11% 17% 32% 36% 6% – Overall –
  • 10. 10 – Unaided awareness of emerging market brands among German consumers – Consumers mix it up: brands mentioned spontaneously often have different origins than consumers assume Q.: What brands from … are you familiar with or have you heard of? Top 10 – brands mentioned spontaneously per country = brand from respective country = brand from different country • VW (do Brasil) • Pitu • Guarana Antárctica • Desigual • Embraer • Petrobras • Brahma • Chiquita • Miezko • Rio Tinto • Gazprom • Lada • Wodka Gorbatschow • Puschkin Vodka • Smirnoff • Wolga • Lukoil • Kalashnikov • Absolut • Aeroflot • Tata • Mittal • Dacia • Air India • Kingfisher • H&M • Adidas • Amit Electricals • Ashok Leyland • Asia Motor Works • Huawei • Lenovo • Toyota • Air China • Haier • Yingli Solar • Foxconn • HTC • Toshiba • Tsingtao • Samsung • Hyundai • Kia • LG • Daewoo • HTC • Ssangyong • Sony • Suzuki • Daihatsu Small flags indicate the correct country of origin
  • 11. 11 Most German consumers do not prefer emerging market brands – General attitude towards emerging market brands in Germany – • 18% of respondents have a positive attitude towards emerging market brands • More than two thirds of German consumers have no preference when asked for emerging market brands • However, only 13% dislike emerging market brands, which underscores their positioning potential 1% 12% 69% 11% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% I do not like emerging market brands at all I do not really like emerging market brands I do not have a preference I like emerging market brands I like emerging market brands very much Majority with no preference! Q.: Do you like products and services of brands from…?
  • 12. 12 – General attitude towards emerging market brands in Germany – South Korean brands hold strongest positive image – Chinese and Russian brands face biggest COO challenge I do not like brands from … at all I do not really like brands from … I do not have a preference I like brands from … I like brands from … very much 86% 3% 21% 0% 9% 4% 63% 1% 11% 22% 10% 56%75% 1% 10% 7% 7% 67% 1% 8% 0% 14% 10% 1% 8% 0% 2% 3% 24% associate positive image ! 24% associate negative image ! 32% associate negative image ! Major gap – need for action Q.: Do you like products and services of brands from…? !
  • 13. 13 – Perception of country role for Germany’s economic development – Country level: consumers particularly suspicious towards China and Korea Competitor Neutral Partner Q.: With regard to the economic development of Germany, how do you see the role of …? • China and South Korea have a clear competitor image – especially China is regarded as clear competitor with respect to Germany’s economic development • Brazil most often called a partner for Germany’s economic development • Russia and India share similar roles, with both countries being rather perceived as partners – however, most respondents see them as neutral 9% 68% 52% 39% 44% 30% 26% 26% 42% 33% 13% 18% 23% 35% 42%
  • 14. 14 – Perception of current strengths in key industries (selected results)– 7% 5% 5% 16% 8% 23% 12% 7% 10% 19% 12% 6% 17% 5% 4% 20% 20% 17% 2% 10% 6% 10% 2% 3% 13% 6% 10% 20% 5% 2% 1% 18% 13% 23% Industry level: China and South Korea are associated with strengths in similar industries, Brazil ranks high in tourism IT/ telecommunications Home appliances & electronics Automotive Raw materials/ energy Q.: What industries are products and services from … known for? (Multiple answers possible) Food & beverage Textiles Tourism 33% !! !! ! ! !
  • 15. 15 ‘Quality’ perception: all countries show relatively low levels – South Korea still seen as quality leader – Perception of ‘excellent quality’ as attribute for products from the respective countries – Q.: Please indicate what attributes you associate with products and services from … 12% 14% 14% 14% 25% 0% 10% 20% 30% 40% 50% 60% China Russia Brazil India South Korea
  • 16. 16 Perception of ‘innovation’: China clearly pushing for leadership in terms of innovation and high tech – Perception of ‘innovation and high tech’ as attribute for products from the respective countries – Q.: Please indicate what attributes you associate with products and services from … 14% 14% 26% 41% 43% 0% 10% 20% 30% 40% 50% 60% Russia Brazil India China South Korea
  • 17. 17 Perception of ‘good value for money’: Chinese brands perceived as leading in this dimension – Perception of ‘good value for money’ as attribute for products from the respective countries – Q.: Please indicate what attributes you associate with products and services from … 25% 28% 39% 41% 49% 0% 10% 20% 30% 40% 50% 60% Russia Brazil India South Korea China
  • 18. 18 – Perception of brand and product attributes for respective countries – Image profile: China challenges South Korea’s pole position in terms of ‘design’ and ‘innovation’ Q.: Please indicate what attributes you associate with products and services from … 0% 10% 20% 30% 40% 50% Brazil Russia India China South Korea Outstanding design Excellent quality High prestige Environmentally friendly High reliability Innovative & high-tech Fashionable & exciting
  • 19. 19 – Perception of brand and product attributes for respective countries – All brands are associated with low levels of ‘trustworthiness’ and ‘sustainability’ Q.: Please indicate what attributes you associate with products and services from … 0% 10% 20% 30% 40% 50% Brazil Russia India China South Korea High performance Durability Good value for money Good customer service Trustworthy Good corporate citizenship Close to customer needs
  • 20. 20 – Aided awareness of emerging market brands (rank 1 to 10) – • South Korean brands clearly dominate the ranking • Top 10 dominated by car and electronic/ household appliance brands • Chinese and Indian companies make the Top 10 only through brand acquisition • Russian brands show comparably strong awareness rates Aided awareness: Korean, acquired Western brands, and Russian brands show very high awareness levels 98% 97% 97% 96% 96% 94% 94% 77% 76% 71% Samsung Kia Hyundai Volvo Jaguar LG Land Rover Lada Gazprom Kaspersky Q.: Please indicate which of the following brands you are familiar with or have heard of.
  • 21. 21 – Aided awareness of emerging market brands (rank 11 to 20) – • Lenovo, as the first originally Chinese brand, also benefited initially from its acquisition of IBM’s personal computer business • Although Brazil’s first brand is ranked 14th, Pitú is still recognized by nearly 50% of German consumers • Air India is the only genuine Indian brand in the Top 20 Most famous original brands from China, India, and Brazil are substantially behind those from South Korea 68% 62% 57% 47% 45% 44% 44% 44% 40% 38% Kalashnikov Lenovo Aeroflot Air India Hankook Tyre Pitú Tupolev Huawei Beluga Korean Air Q.: Please indicate which of the following you are familiar with or have heard of.
  • 22. 22 – Correct recognition of country of origin (rank 1 to 10) – • Russian brands show highest recognition of country of origin • South Korean brands generally have low COO recognition (Kia 52%, rank 23; Samsung, 43%, rank 32) • No Brazilian brand among top 10 Recognition of country of origin: top 10 featured brands with most explicit country reference 95% 94% 94% 92% 92% 90% 90% 89% 84% 75% Tupolev Air China Air India Kalashnikov Korean Air Russian Standard State Bank of India (SBI) Gazprom Aeroflot Tsingtao Q.: Where do you think this brand is from?│ Sample: Based on interviewees who are familiar with the brand
  • 23. 23 – Perception of necessary improvements for brands from respective countries – Shared brand challenges: perceived shortcomings with regard to quality, image, and eco-friendliness Q.: What areas do products and services from … need to improve in? 0% 10% 20% 30% 40% 50% 60% 70% Brazil Russia India China South Korea Product quality Value for money Availability Image Customer service Eco-friendliness
  • 24. 24 – Expected future success potential in key industries – 5% 4% 4% 26% 5% 29% 11% 5% 15% 22% 16% 3% 16% 5% 4% 24% 17% 20% 1% 9% 5% 0% 4% 1% 4% 11% 6% 13% 23% 3% 2% 1% 13% 11% Future success potential: consumers see brands’ potential – China to put further pressure on South Korea Q.: In which industries do you think products and services from … will be (more) successful in the future? IT / telecommunications Home appliances & electronics Automotive Raw materials/ energy Food & beverage Textiles Tourism 45% 33% !! ! ! ! !
  • 25. 25 Agenda • Executive summary • Survey approach • Survey results • Strategic implications and recommendations • About globeone
  • 26. 26 Main challenges for emerging market brands targeting European consumers #1 Brand awareness challenge #2 Brand image challenge #3 Country of origin challenge • Most strikingly, BRIC brands lack market exposure, as they are simply not available or have to few distribution points • Consequently, those brands also lack significant awareness, interest, and profiling to be in the relevant brand set for German consumers • Brand awareness is the entry ticket – but so far the brand-building efforts of these new players are very limited  Expand and upgrade marketing capabilities to create positive awareness in the right target groups of German consumers • “Low cost” or “value for money” are often perceived as predominant competitive advantages • Sustainable brand building is not only about differentiating products, but also about building emotional values and relationships with and among consumers  Address concerns and needs based on insights, and counter low brand knowledge by emphasizing unique brand attributes, entering into dialogue, or using external credibility booster (e.g. tests, testimonials, guarantees, cooperation) • The COO image can serve as a cue in the purchasing decision process. It can strengthen the image of a brand, but also weaken it. The effect varies across categories • Emerging market brands often need to overcome negative associations related to the broader political, social, or technological environments of their home countries  Apply market-driven strategies to overcome a COO challenge or to realize potentially positive COO image effects in different product categories ? Innovative? Not desirable ??? Low quality ??? ???
  • 27. 27 From awareness to image to purchase: different routes of emerging market brands can be observed (1/2) Note: routes based on “Brand Breakout” by Nirmalya Kumar and Jan Benedict E.M. Steenkamp, 2013 {1 Entering a market with a decent-quality, low-price product to attract price-sensitive consumers, and then steadily increase quality and price to enter higher segments until a dominant market presence across the entire price/quality range is achieved (examples: Samsung, LG, Haier) “Asian tortoise route” {2 Taking over traditional brands to rapidly enter new markets and build on a strong customer base; thorough decision to retain the acquired brand as a separate brand or to merge it (examples: Geely-Volvo or Tata Motors-Jaguar) “Brand acquisition route” {3 Overcoming negative country of origin associations that can be a significant purchase barrier for brands (example: “Incredible India”). COO image campaigns are most effective when governments and companies with champion brands join forces to launch positioning campaigns or establish and seize positioning opportunities “Positive campaign route” – work on the COO {4 Ensuring substantial support form the state to establish a dominant position in the domestic market. This strong position is then leveraged to enter international markets subsequently. The government can provide indirect (barriers to entry for competitors) or direct (with e.g. subsidies) support (example: Gazprom) “National champion route”
  • 28. 28 From awareness to image to purchase: different routes of emerging market brands can be observed (2/2) Note: routes based on “Brand Breakout” by Nirmalya Kumar and Jan Benedict E.M. Steenkamp, 2013 {6 Branding natural resources on the basis of an association between the brand and a particular geographical region (example: Natura Brazil associating its brand with the country’s biodiversity) “Natural resource route” {7 Following emigrants into the world, e.g. by first addressing people with a background in emerging markets, or people who have made experience with the brand in its domestic market (e.g. by tourism, business travels) and seek the same experience upon return to their home country (example: Reliance Mediaworks’ Big Cinemas) “Diaspora route” 8 Leveraging B2B strength in B2C markets, e.g. by developing from a contract manufacturer into a branded player, or by brand extensions (example: Huawei) “Business to consumer route” { 5 Positioning on positive cultural myths, transferring unique associations to the brand (e.g. ayurveda from India, silk from China, vodka and withstanding heavy winters from Russia, beach and samba culture from Brazil) (example: Havaianas) “Cultural resource route” { Market-driven brand positioning as key factor for sustainable success for all of these approaches
  • 29. 29 globeone Market-Driven Positioning Process® Source: globeone 2013 #4#2 #6 #1 #3 #5 #7Screening the market: Local positioning options are matched with the brand’s global value proposition to filter out concepts that would over- stretch the brand. Aligning your brand: Evaluating existing internal data and combining it with pragmatic external research produces initial insights and a thorough overview of the market. Based on a thorough competitor analysis, only the truly unique positioning concepts remain in this phase – the ‘blank spots’ for the brand. Setting your brand apart: The optimal market-driven positioning enables the brand to become and stay highly relevant in the local market. Proposing the ideal values: Relevance comes first: Understanding what people really care about and what makes them buy a product points the way to potential positioning routes. Making your brand credible: Finding out what internal and external target groups already think of the brand helps to identify the most convincing positioning concepts. Finding the best positioning The ideal concept for the brand is chosen through detailed testing and validation. Consistency Check Credibility Check Differentiation Analysis Attractiveness Validation Market-driven Positioning Concept Relevance Screen Brand/Market Insights Market-driven Positioning Concept Market-driven Positioning Concept Market-driven Positioning Concept Sporty Elaborate Progressive
  • 30. 30 Agenda • Executive summary • Survey approach • Survey results • Strategic implications and recommendations • About globeone
  • 31. 31 globeone’s mission globeone is a management consultancy with a focus on the world’s key growth markets. From our offices in Germany, South America, and across Asia, we combine global strategy and local opportunity to help brands with market-driven positioning where it matters most. With special competence in brand management, marketing strategy, communications and research, we help ambitious leaders outsmart the competition.
  • 32. 32 We deliver a global service portfolio from our regional hubs
  • 33. 33 We support our clients throughout implementation, helping our partners reach long-term goals. We position products, brands, and organizations in markets with relevant target groups. Market- Driven Positioning Market-Driven Positioning – the core of what we do We work based on insights from consumers, stakeholders, and market intelligence. We craft strategies for growth: market entry, market expansion, organizational transformation.
  • 34. 34 Brand Performance Monitor Market Structure Analysis Customer Insight Generation Definition of Market Drivers & Segmentation Competitor Bench- marking/COM Analysis Growth Area Mapping Digital Excellence Transformation Road- mapping Integrated Marketing & COM Planning Strategic Positioning Initiatives Concepts Integrated Campaign Development Lead Generation Processes (CRM/dCRM) Agency Selection & Steering Performance Measurement Insight Transfer Strategy Planning Roll-out Internal COM Screen Growth & Expansion Plan Stakeholder Alignment Project Management Support Market-Driven Positioning – our services Market-Driven Positioning
  • 35. 35 Contact Christian Titze Manager, Global Practice Lead globeone Kranhaus Süd Im Zollhafen 24 50678 Köln – Germany Phone: +49 (0) 221 788068-0 Fax: +49 (0) 221 788068-29 E-mail: cologne@globe-one.com www.globe-one.com Dr. Niklas Schaffmeister Managing Partner Carina Hauswald Managing Director, globeone Cologne
  • 36. 36 Also available: globeone BRIC Branding® Survey • The survey offers exclusive insights and strategic recommendations for the world’s key growth markets, e.g.:  Insights regarding the perception of German brands in key growth markets  Derived strategic recommendations on brand management in these markets • The survey was featured in several leading German business newspapers such as Handelsblatt, FAZ, Wirtschaftswoche and Manager Magazin Download the survey: http://www.globe-one.com/news-insights/publications/
  • 37. Cologne  Shanghai  Beijing  Mumbai  São Paulo  Singapore  Seoul © Copyright This document of globeone GmbH or its network office is intended exclusively for the client or addressee. It remains exclusive property of globeone GmbH or its network office until the rights of use are expressly transferred. Any revision, use, duplication or commercial distribution of this work is permitted only with the consent of globeone GmbH or its network office. 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. Note: registered trademark application for globeone Market-Driven Positioning Process pending