globeone BRIC Branding Survey

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

• 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

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

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 Internet is 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


• Survey Approach





• About globeone

Agenda

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

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

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


• Survey Approach





• About globeone

Agenda

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

• 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 BRICQ.: 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

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

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


brands




much

57% and 77% associate

positive image

Germany’s image in BRIC – Income class differences

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


brands




muchOver 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

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 BRICQ.: 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 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 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


– Price perception of German brands in BRIC –

Q.: What do you think about German brands in terms of price?

Very cheapRelatively

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 Source: globeone

– Industries/ categories most commonly associated with Germany –


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

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 BRICQ.: 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


• Survey Approach





• About globeone

Agenda

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 BRICQ.: 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

• 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

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

• 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)


25


• Survey Approach





• About globeone

Agenda

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 websitesQ.: 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

Agenda


• Survey Approach





• About globeone

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

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

benchmarks25%

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


Image challenge2

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



Image

25%

50%

75%

100%

0%

25%

50%

75%

100%

0%

German origin focus & activation / loyalty challenge

Awareness Recognition Purchase LoyaltyImage

31

Agenda


• Survey Approach





• About globeone

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

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:

[email protected]

Phone +91 (0) 22 6770 3718

(ext. 11)

Mobile +91 99 2066 3306

Fax +91 (0) 22 6645 9842

Email:

[email protected]

Phone +55 (0) 11 3818 0837

Mobile +55 (0) 11 9300 9039

Fax +55 (0)11 3818 0899

Email:

[email protected]

Phone +65 6808 6050

Mobile +65 9725 5320

Fax +65 6622 5999

Email:

[email protected]

Phone +86 135 0129 8737

Fax +86 (0) 21 5158 1686

Email:

[email protected]

Phone +86 (0) 21 5158 1688

(ext. 1352)

Mobile +86 1381 65 44 122

Fax +86 (0) 21 5158 1686

Email:

[email protected]

Phone +49 (0) 221 788068-0

Fax +49 (0) 221 788068-29

www.globe-one.com

33

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.