globeone BRIC Branding Survey - China Edition
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Transcript of globeone BRIC Branding Survey - China Edition
BRIC Branding® Survey – China Edition
The Perception of German Brands in China –
Strength, Weaknesses and Opportunities
Beijing, March 2012
Cologne | Shanghai | Beijing | Mumbai | São Paulo | Singapore
2
• About globeone
• Survey Approach
• Germany’s Image in China
• Leading German Brands in China
• Insights into Information Channels in China
• Marketing and Communication Strategies for China
• Contact
Agenda
3
Global network with strong China focus
Mumbai Office
Cologne Head Office
São Paulo Office
Singapore Office
Beijing Office
Shanghai Office
globeone is a boutique business consultancy with a strong representation in the world’s fast growth markets
We offer specialized marketing strategy consulting & project management to help driving success in the world’s key growth regions
About globeone (1/2)
4
Marketing & communication strategy consulting to drive customer success in BRIC
Exec
uti
on
St
rate
gy s
up
po
rt
Consumer & strategic market insight
1
Quantitative market research design (e.g.
market potential, segmentation)
Customer insight generation / Market trend
studies
Competitor analysis / Benchmarking
Qualitative market research (e.g. online user experience, focus groups)
2 Optimized positioning & planning
Brand architecture and brand portfolio strategies
Definition of goals and KPI’s & related strategy
development
Brand and product (re-) positioning / Value
proposition development
Business case / Market entry program development
3 Support of 360° fulfillment
Employer brand development & program
implementation
Hands-on project management & creation of professional presentations
Creation of 360°integrated activity
planning
Creation of briefings & steering of specialized
agencies (e.g. pitch support)
4 Brand performance & loyalty
Marketing spending effectiveness (e.g.
correlation of investment and sales)
Brand performance analysis and controlling
(e.g. brand monitor surveys)
CRM audit and development of CRM
strategy
Set-up of activities and programs to enhance
brand loyalty
Global Strategy + Local Adjustment = Success in BRIC
– Typical project examples of globeone for major global clients (selection) –
About globeone (2/2)
5
• About globeone
• Survey Approach
• Germany’s Image in China
• Leading German Brands in China
• Insights into Information Channels in China
• Marketing and Communication Strategies for China
• Contact
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 conducted: 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
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Cities:
Objectives:
• Identification of Country-of-Origin Image (COO-Image) relevance in China
• Assessment of the perception of German brands
• Analysis of China-specific strengths, weaknesses and opportunities
Method/ Timing1:
• Inclusion of DAX, MDAX companies and other major German brands
• Computer-assisted telephone interviews: n = 1,010 for China
• Selection of cities to achieve a good representation of urban China
Over 1,000 interviews in the 5 key cities in China to analyze the perception of German brands
Survey approach – Objectives and scope
Source: globeone
¹ Representative survey based on research conducted by certified market research agency in China. The city sample was selected in order to achieve a good representation of Chinese regions
German brands
Shanghai
Beijing
Chengdu
Guangzhou Wuhan
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COO – Definition
Survey approach – Country-of-origin definition
Source: globeone
“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
“Country-of-origin effect is one of the most analyzed phenomena in consumer behavior in international markets.“ 1
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
Country-of-origin as key factor for purchase decisions in China
COO – High interest eST
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Survey approach – Country-of-origin in China
Source: globeone
COO-Image – Important success factor in China
Upper middle class consumers in China are particularly sensitive related to the COO-Image resulting from
• Local consumers’ demand for prestigious brands to highlight their social progress
• Lower availability and higher novelty of foreign brands is also boosting their image
• Limited trust: Lower Level of quality and marketing competence of local brands in most emerging markets
China-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 brands’ corresponding country of origin –
!
10
• About globeone
• Survey Approach
• Germany’s Image in China
• Leading German Brands in China
• Insights into Information Channels in China
• Marketing and Communication Strategies for China
• Contact
Agenda
11
47% associate positive image
• Roughly half of respondents have a positive attitude towards German brands
• Only a very small fraction (6%) that dislikes German brands
• Opportunity for an effective positioning utilizing the country-of-origin potential
German image as asset – Half of urban population in China confirms positive image of German brands
Germany’s image in China – General attitude towards German brands
Q.: Do you like German brands, products or services?
– General attitude towards German brands in China –
Source: globeone
!
Sample size in China: 1,010
1%
5%
47%
38%
9%
0%
10%
20%
30%
40%
50%
I do not likeGerman brands
at all
I do not reallylike German
brands
I do not have apreference
I like Germanbrands
I like Germanbrands very
much
12 Source: globeone
Germany’s image in China – Income-class-specific attitude towards German brands in China
German brands enjoy substantially higher reputation in middle class/ upper middle class
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
Q.: Do you like German brands, products or services?
– Liking of German brands across social classes (according to gross monthly income in €) –
– Middle class – (> 2,000)
2%
41%
34%
7%
16%
– Upper middle class – (> 4,000)
0%
11%
44%
11%
33%
– Emerging middle class – (< 900)
2%
38%
47%
5%
8%
46% associate positive image
77% associate positive image
57% associate positive image
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Germany’s image in China – Detailed perception of brand and product attributes (1/2)
1
2
3
4
5
6
7
0% 20% 40% 60%
Germany most strongly associated with traditional values like quality and reliability
– Perception of brand and product attributes of brands from different countries in China based on respective countries –
Excellent quality
Good reliability
High durability
High performance
Outstanding design
High prestige
Sophisticated
Q.: We are interested in the important brand & product characteristics e.g. design, quality etc. Which countries are most strongly associated with these characteristics?
Germany
US
Japan
China
Source: globeone
Sample size in China: 1,010
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German brands are not seen as very innovative or exciting but score high in terms of being trustworthy
1
2
3
4
5
6
7
8
0% 20% 40% 60%
Innovative & high-tech
Fashionable & exciting
Close to local customer needs
Good after-sales service
Good value for money
Trustworthy
Good corporate citizenship
Protecting environment & climate
Germany’s image in China – Detailed perception of brand and product attributes (2/2)
Source: globeone
Germany
US
Japan
China
Sample size in China: 1,010 Q.: We are interested in the important brand & product characteristics e.g. design, quality etc. Which countries are most strongly associated with these characteristics?
– Perception of brand and product attributes of brands from different countries in China based on respective countries –
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Source: globeone
26%
31%
39% 40%
46%
0%
10%
20%
30%
40%
50%
France China US Japan Germany
German brands enjoy the best reputation in China based on 15 relevant performance indicators
Germany’s image in China – Country image strength index
– Country-of-origin image strength index –
(average scores of 15 relevant dimensions)
Sample size in China: 1,010
16 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 product portfolio consisting of less expensive German brands/ products
1% 3%
40%
50%
6%
Very cheap Relatively cheap Similar to othercountries' brands
Relatively expensive Very expensive
Sample size in China: 1,010
– Price perception of German brands in China –
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
56% of interviewees in China perceive German brands as relatively or very expensive
Germany’s image in China – Price perception
17 Source: globeone
– Industries/ categories most commonly associated with Germany –
Sample size in China: 1,010
13%
16%
16%
16%
17%
30%
42%
47%
57%
78%
0% 20% 40% 60% 80% 100%
Eco friendly technology
Detergent
Food
Clothing / Fashion
Services (insurance etc)
Cosmetics / Perfume
Pharmaceuticals / Medicine
Home appliances
Football
Machinery
Automobile / Motorcycles
• Traditional industries like automotive and machinery lead the ranking
• Eco-friendly technology not yet strongly associated with Germany yet
• German brands 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, machinery, home appliances and pharmaceuticals
Germany’s image in China – Categories with highest association
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8%
8%
10%
11%
11%
18%
20%
31%
35%
38%
39%
43%
0% 10% 20% 30% 40%
Zwilling
Puma
Nivea
Bayer
Porsche
Adidas
Metro Cash & Carry
Audi
Volkswagen
Siemens
Mercedes-Benz
BMW
– Unaided awareness for German brands in China (top 12) –
Q.: Which German brands do you know ? Please name as many as come to your mind spontaneously.
0%
20%
40%
60%
80%
100%
Can recall aGerman brand
Can't recall aGerman brand
Vast majority of interviewed Chinese population is consciously aware of multiple German brands
Source: globeone
85%
15%
Germany’s image in China – Unaided awareness
Sample size in China: 1,010
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• About globeone
• Survey Approach
• Germany’s Image in China
• Leading German Brands in China
• Insights into Information Channels in China
• Marketing and Communication Strategies for China
• Contact
Agenda
20
• German car manufacturers lead the top 12 ranking
• BMW (98%) is best-known German brand followed by Audi (97%)
• Siemens (95%) is only non-automotive brand among top 5
• Nivea (65%) is only FMCG brand in top 12
– Aided awareness in China (top 12) –
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
Audi
Mercedes-Benz
Siemens
Volkswagen
Adidas
Porsche
Puma
Nivea
Metro Cash & Carry
Skoda
Bayer
98%
97%
97%
95%
93%
85%
82%
73%
65%
65%
53%
52%
(991)
(979)
(977)
(959)
(941)
(862)
(832)
(737)
(657)
(656)
(536)
(530)
Source: globeone
Leading German brands – Aided awareness (1/3)
Top 12 – Car manufacturers lead best-known German brands with BMW as single most known brand
Sample size in China: 1,010
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• Deutsche Bank (35%) is leading financial service brand in ranking followed by Allianz (27%)
• smart (17%) with significantly lower awareness than other German car brands, while MINI commands much higher awareness (42%)
Q.: I will read you a list of German brands. Please tell me, which brands do you know?
0% 20% 40% 60% 80% 100%
52% Braun
Miele
smart
MAN
Carl Zeiss
Hugo Boss
Lufthansa
Allianz
Deutsche Telekom
Leica
Continental
Becks
Deutsche Bank Henkel
Bosch
Osram
MINI 42%
41%
38%
37%
35%
32%
29%
28%
28%
27%
26%
23%
23%
19%
18%
16%
(527)
(428)
(410)
(379)
(369)
(356)
(327)
(297)
(287)
(280)
(269)
(258)
(230)
(230)
(195)
(177)
(161)
– Aided awareness in China (rank 13 to 30) –
Source: globeone
Rank 13 - 30 – Deutsche Bank and Allianz as most prominent financial service brands
Leading German brands – Aided awareness (2/3)
33% Zwilling (336)
Sample size in China: 1,010
22
7%
7%
7%
10%
– Aided awareness in China (rank 31 to 45) –
• Media Markt (13%) opened its first Chinese store in 2010, however, its awareness is higher than Dr. Oetker (11%) and Paulaner (11%)
• ERGO (8%) is least known service brand in ranking
• Worldwide industry leader ThyssenKrupp (7%) and SAP (7%) last the ranking
Q.: I will read you a list of German brands. Please tell me, which brands do you know?
0% 20% 40% 60% 80% 100%
16% Hansgrohe
Haribo
Bertelsmann
Boehringer-Ingelheim
Media Markt
Dr. Oetker
Paulaner
DHL
LANXESS
BASF
ERGO
Grundig
Linde
SAP
ThyssenKrupp
15%
15%
13%
13%
12%
11%
11%
11%
9%
8%
(157)
(156)
(147)
(134)
(127)
(119)
(115)
(115)
(107)
(106)
(90)
(73)
(73)
(71)
(76)
Source: globeone
Leading German brands – Aided awareness (3/3)
Rank 31 - 45 – B-to-B brands overall with lower brand awareness among urban citizens
Sample size in China: 1,010
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• German top 12 brands are liked by 71% or more of respondents
• Automotive brands lead ranking with BMW and Mercedes-Benz (both 88%) as best liked brands in China
• Siemens (79%) is the only non-automotive brand among top 5
• Metro Cash & Carry (74%) as only B-to-B brand among top 12
Leading German brands – Positive image (1/3)
Q.: Do you like this brand in general? (Only brands known to interviewee)
– Positive attitude towards German brands in China (top 12) –
Source: globeone
Top 12 – Automotive industry leads ranking with BMW and Mercedes-Benz (both 88%) as best liked German brands
0% 20% 40% 60% 80% 100%
BMW
Mercedes-Benz
Audi
Porsche
Siemens
Adidas
Metro Cash & Carry
Volkswagen
Zwilling
Carl Zeiss
Braun
88%
88%
87%
87%
79%
79%
74%
73%
72%
72%
71%
(991)
(977)
(979)
(832)
(862)
(959)
(656)
(941)
(336)
(230)
(527)
71% MINI (428)
Sample size in China: 1,010
24
Leading German brands – Positive image (2/3)
Q.: Do you like this brand in general? (Only brands known to interviewee)
Rank 13 - 30 – Bayer leads ranking as best liked German pharmaceutical brand in China
– Positive attitude towards German brands in China (rank 13 to 30) –
Source: globeone
• Bayer (69%) leads the brand image in pharmaceutical sector
• Beer brand Becks (61%) enjoys greater popularity than Paulaner (56%)
• FMCG brands Nivea and Haribo liked by more than 63% of interviewees
0% 20% 40% 60% 80% 100%
Leica 70% (287)
Bayer 69% (530)
Osram 69% (410)
Bosch 68% (379)
Nivea 67% (657)
Puma 66% (737)
Hugo Boss 65% (230)
Haribo 63% (156)
Lufthansa 62% (258)
Becks 61% (327)
Hansgrohe 61% (157)
Boehringer-Ingelheim 61% (134)
smart 60% (177)
Henkel 57% (369)
Grundig 57% (76)
Dr. Oetker 56% (119)
Paulaner 56% (115)
AEG 57% (67)
Sample size in China: 1,010
25
Leading German brands – Positive image (3/3)
Q.: Do you like this brand in general? (Only brands known to interviewee)
Rank 31 - 45 – ERGO and Deutsche Telekom enjoy relatively low positive attitude
• DAX 30 aspirant Continental leads lower third with 55% of ranking
• Financial service providers like ERGO, Deutsche Bank and Allianz with relatively low positive image (maximum 47%)
• Service provider SAP with relatively low positive recognition
0% 20% 40% 60% 80% 100%
53% DHL (115)
52% Skoda (536)
ThyssenKrupp 52% (71)
Miele 50% (161)
MAN 49% (195)
Media Markt 46% (127)
BASF 46% (106)
Deutsche Bank 45% (356)
Linde 45% (73)
Bertelsmann 40% (147)
ERGO 40% (90)
Deutsche Telekom 39% (280)
Allianz 47% (269)
– Positive attitude towards German brands in China (rank 31 to 45) –
Source: globeone
55% Continental (297)
Sample size in China: 1,010
SAP 37% (27)
26
Leading German brands – Recognition of German brand origin (1/3)
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 due to “Deutsche” in brand name
• None of leading car manufacturers among top 7
• MAN (77%) with its Chinese translation “German MAN” claim scores highest recognition of German origin among mobility brands
• German origin of niche player Zwilling scores by 80%
Top 12 – High recognition of “German origin” for top 12 brands
94%
93%
89%
84%
80%
77%
77%
77%
75%
75%
75%
75%
Deutsche Telekom
0% 20% 40% 60% 80% 100%
Deutsche Bank
Continental
Boehringer-Ingelheim
Zwilling
Siemens
Metro Cash & Carry
MAN
Mercedes-Benz
Bayer
Lufthansa
ThyssenKrupp
(280)
(356)
(297)
(134)
(336)
(959)
(656)
(195)
(977)
(530)
(258)
(71)
– Recognition of “German brand origin” (top 12) –
Sample size in China: 1,010
27
Leading German brands – Recognition of German brand origin (2/3)
• Car brands with relatively high recognition of “German origin”
• Volkswagen using its “Das Auto” claim scores 69%
• Grundig, now owned by Turkish Koç Holding, still perceived as a traditional German brand (63%)
Source: globeone
Rank 13 - 30 – German car brands like Volkswagen with relatively high recognition of German origin
74%
73%
70%
70%
69%
67%
65%
65%
64%
64%
63%
63%
61%
59%
56%
55%
55%
54%
BMW
0% 20% 40% 60% 80% 100%
Braun
Audi
Bosch
Volkswagen
Osram
Henkel
Becks
Leica
Carl Zeiss
Grundig
Linde
Haribo
Hansgrohe
BASF
Allianz
Adidas
(991)
(527)
(979)
(379)
(941)
(410)
(369)
(327)
(287)
(230)
(76)
(73)
(156)
(157)
(106)
(269)
(862)
– Recognition of “German origin“ of German brands (rank 13 to 30) –
Q.: Do you think this brand is originally from Germany or not? (Only brands known to interviewee) Sample size in China: 1,010
MINI (428)
28
Leading German brands – Recognition of German brand origin (3/3)
Q.: Do you think this brand is originally from Germany or not? (Only brands known to interviewee)
Source: globeone
• Volkswagen’s Skoda (33%) and Mercedes-Benz’s smart (51%) with relatively low recognition of its “German origin” in automotive sector
• Nivea has the least German recognition among FCMG brands
• Hugo Boss (51%) and Puma (43%) both have relatively low recognition of “German origin”
Rank 31 - 45 – Skoda with lowest “German origin” recognition despite its German mother company
53%
LANXESS 52%
51%
51%
50%
49%
49%
48%
47%
43%
40%
39%
39%
37%
33%
0% 20% 40% 60% 80% 100%
smart
Hugo Boss
Dr. Oetker
Bertelsmann
Paulaner
ERGO
Puma
Nivea
Miele
AEG
DHL
Media Markt
Skoda
(107)
(230)
(177)
(147)
(119)
(90)
(115)
(657)
(737)
(67)
(161)
(127)
(115)
(536)
– Recognition of “German origin“ of German brands (rank 31 to 45) –
Sample size in China: 1,010
Porsche (832)
29
• Top 12 mainly consists of brands from B-to-C sector led by Adidas (56%) and Siemens (48%)
• Volkswagen (15%) as most purchased/ used German automotive brand
• Adidas’ competitor Puma only bought/ used by 28% of the interviewees, 28% lower than Adidas
Leading German brands – Purchase/ usage (1/2)
Q.: Which German brands have you bought or which services have you used? (Only brands known to interviewee)
– Purchase/ use of German brands in China (top 12) –
Source: globeone
56%
48%
39%
37%
28%
18%
19%
Adidas
0% 20% 40% 60% 80% 100%
Siemens
Metro Cash & Carry
Nivea
Puma
Braun
Bayer
Zwilling
Osram
Henkel
Becks
(565)
(485)
(390)
(371)
(282)
(190)
(179)
(125)
(111)
(131)
(97)
Top 12 – Leading brands with high purchase/ usage rate with Adidas at top spot
Sample size in China: 1,010
12%
11%
11%
10%
Volkswagen 15% (148)
30
Leading German brands – Purchase/ usage (2/2)
– Purchase/ use of German brands in China (rank 13 to 30) –
Source: globeone
• Audi (7%) as second most purchased/ used German automotive brand and first most purchased/ used German premium car brand ranked 14th
Rank 13 - 30 – Audi as most purchased/ used German premium automotive brand
Audi
0% 20% 40% 60% 80% 100%
Leica
Carl Zeiss
Mercedes-Benz
BMW
Lufthansa
Skoda
Haribo
Bertelsmann
Continental
Allianz
Miele
Hansgrohe
DHL
Porsche
(68)
(22)
(73)
(69)
(47)
(45)
(37)
(34)
(27)
(33)
(16)
(21)
(20)
(33)
(14)
(10) MINI
Q.: Which German brands have you bought or which services have you used? (Only brands known to interviewee) Sample size in China: 1,010
7%
7%
7%
Bosch (101) 10%
5%
4%
6% Hugo Boss (65)
4%
3%
3%
3%
2%
2%
2%
2%
2%
1%
1%
31
• About globeone
• Survey Approach
• Germany’s Image in China
• Leading German Brands in China
• Insights into Information Channels in China
• Marketing and Communication Strategies for China
• Contact
Agenda
32
Internet is the most used source to learn about foreign brands in China
Sample size in China: 1,010 1 Category Internet includes Internet search engines, social media and corporate website research Q10.How do you generally find out/ learn more about foreign brands?
– Sources of information to find out/ learn more about foreign brands –
Insights into information channels – Key sources (1/2)
Source: globeone
0% 10% 20% 30%
Family/ friends
Internet1
TV
Shopping center/ store
Newspaper/ magazines
Radio
34%
17%
12%
11%
7%
3%
16%
Event/ tradeshow
33
Within digital communication, internet search engines, social media and corporate websites are most relevant
Q10.How do you generally find out/ learn more about foreign brands?
– Sources of information to find out/ learn more about foreign brands –
Insights into information channels – Key sources (2/2)
Source: globeone
0% 10% 20% 30%
Internet search engines
TV
Family/ friends
Shopping center/ store
Social media
Event/ tradeshow
Radio
16%
12%
11%
7%
5%
17%
Newspaper/ magazines
Corporate website
17%
12%
3%
Sample size in China: 1,010
34
• About globeone
• Survey Approach
• Germany’s Image in China
• Leading German Brands in China
• Insights into Information Channels in China
• Marketing and Communication Strategies for China
• Contact
Agenda
35
Further improving China performance through effective strategies
Strategies for China – Leveraging maximum brand potential to grow sales
• Success in China requires dedicated action and a clear strategic roadmap
Strategic implications for corporations:
Source: globeone
• 1:1 transfer of ‘developed market’ strategies rarely successful
• Almost continental complexity of China as key challenge for annual strategy development and alignment of country organizations
• Fact-based adjustments regarding strategic focus, relevant target groups and brand strategy necessary
• Different levels of brand performance require a differentiated approach and COO - strategy
- China brand performance analysis -
36
Selected communication challenges China
Strategies for China – 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 China
- Key challenges - • Lack of fact-based ‘one-world-strategy’ for China • Local organizational setup not sufficient • Inability to bridge gap between HQ and country team • Unclear definition of market-driven strategy and
local target groups and needs • Ineffective activation strategy & media investment to
communicate above ‘perception threshold’ • Ineffective utilization of media vehicles / insufficient
media investment
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 China • Lack of creative execution and effective media
strategy • Shortcomings in locally relevant story-telling
- China brand performance -
Source: globeone
Awareness challenge 1
- China brand performance -
Image challenge 2
37
German origin and activation challenge
Strategies for China – Leveraging maximum brand potential to grow sales (2/2)
Source: globeone
German roots of the brand 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 image and price premium potentials
• Lack of story telling related to the brand history although brand history is one of few competitive advantages that cannot be easily imitated
• Absence of educational approach
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 challenge 3
Activation & loyalty challenge 4
- China brand performance -
Image
25%
50%
75%
100%
0%
25%
50%
75%
100%
0% Awareness Recognition Purchase Loyalty Image
- China brand performance -
38
• About globeone
• Survey Approach
• Germany’s Image in China
• Leading German Brands in China
• Insights into Information Channels in China
• Marketing and Communication Strategies for China
• Contact
Agenda
39
Global offices
globeone
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Im Zollhafen 24
50678 Köln
Germany
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200030 Shanghai
People's Republic of China
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B 806, Sagar Tech Plaza
Sakinaka Junction
Andheri Kurla Link Road
Andheri (East)
Mumbai 400072
India
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Singapore Office
Beijing Office
Office 39, Room 509A
No. 4 Gong Ti Bei Lu
Chaoyang District
100027 Beijing
P.R. China
Av. Cidade Jardim, 400
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Brazil
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Singapore
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www.globe-one.com
39
Contact
Cologne I Shanghai I Beijing I Mumbai I São Paulo I Singapore
Thank you!
41
Factors that drive the need for local adjustment
Different macroeconomics
and political environment
Different ways to conduct business
Different key competitors
Different regional/city
structures
Different cultural background and
expectation
Different experience levels
Different languages
Different perceptions of
brands and country image
Different habits and media behavior
Different ways to display social
status
Different needs and expectations / brand drivers in key target
groups
Need for sufficient adjustment as far as required to ensure
business success
42
- Relevant impact factors in China (selection) -
A successful approach to branding recognizes these cultural specifics of transitioned
Economy in transition Regional disparities Cultural differences
• Cultural differences are relevant for fashion-makers as well
• Strong tensions that arise from increasing levels of individualism in a traditionally very collectivist society (e.g. family acceptance, personal relations)
• Specific communication habits (e.g. preference for personal communication and relationship building, importance of word-of-mouth and recommendations)
• Socialist heritage (e.g. clear rejection of uniform offers, strong wish not to be treated as 2nd class customer)
• The quick transition of the Chinese economy influences purchasing patterns
• Buying as symbolic consumption (e.g. as manifestation of the own social status and cosmopolitan sophistication)
• High prestige value of foreign brands • Intensive wish to “catch up” with
customers in other countries (global village idea)
• Low level of brand loyalty and high readiness to try new concepts
• Social heterogeneity of target groups and broadly varying economic and social backgrounds
• Increasing need to reflect regional differences in a pragmatic way
• Tremendous regional differences with regard to various marketing-relevant parameters
Income and price sensitivity
Specific customer needs
Purchase behavior
Preferences
• Many companies apply a pragmatic city-tier approach that differentiates between 2-3 regional segments
43
Some common factors in BRIC markets 1/2
• Higher heterogeneity and complexity to be considered • Need to work with city tiers and regional clusters • Sequential entry approaches ( it’s all about timing) • Local relationships required
Huge geographical size: The BRICS are more continents than countries
• Importance of proper market segmentation • Understanding key brand drivers (e.g. status appeal, convenience, …) • Different relevance of foreign brands • Quick changes of segments and correct selection of growing segments
• High media cost (e.g. Shanghai as expensive as New York) • Usual trap of communicating below the necessary level for perception • Importance of clear and straight format positioning • Importance of cut-through creative execution and PR
• Need for local competitor analysis / best practices • Need for differentiated and relevant positioning + USP • Understanding of ‘category killers’ required • Need to maintain good relationship with local authorities / government
- Factors - - Implications / Selections -
Local champion brands and competitive pressure
1
2
3
4
Fast transition of economy: Emerging middle class changes behaviors quite quickly
High competition for share of voice
44
Some common factors in BRIC markets 2/2
• Adjustment of specific marketing-mix parameters required • ‘Educational’ marketing approaches ( e.g. brand academy) • Storytelling and brand heritage is key to develop price premium • Systematic lead generation and loyalty building required
• Awareness about local price sensitives and competitor prices • Understanding ‘added value’ of the foreign brand correctly • Consideration of brand stretching or creation of ‘value brand’ • Fact-based pricing and cost management • Impact on global pricing scheme / brand architecture likely
• Extremely high importance of digital COM channels • High overlap between higher incomes and digital access • Higher activation through E-CRM • The internet is mobile !
- Factors -
Generally lower experience and brand knowledge in many product categories and lower levels of brand loyalty
5
7
Higher digital and mobile media affinity
Pressure on prices / higher price sensitivity
6
- Implications / Selections -
45
Importance of a strong and locally adjusted brand
Differentiation from other competitor brands
High competition for share of voice
Downward pressure on prices in many categories
Cultural specific factors
Brand as an important decision-criterion after price for high-income target groups
High share of customers who have not yet chosen a favorite brand
Building of long lasting brand preferences
Emotional benefit and appeal of foreign brands / concepts if adjusted properly
Strong impact on sales and leads
Generation of price premiums
Mar
ket
imp
act
fact
ors
46
Local adjustment is not localization !
• Reducing the foreign appeal or even pretending to be a local brand
• Fully embracing the local culture, and local tastes
• Playing in the same field with local heroes
• Limiting negative influences if consumers’ patriotism or government intervention is high
• High relevance for local target groups
• Utilizing local brand drivers
• Highlighting status appeal and sophistication of the foreign brand
• Highlighting the Country-of-Origin (if appropriate) to differentiate and create price premium
• Avoiding inappropriate messages / acceptance barriers
• Using locally effective and cost-efficient marketing mix
Brand adjustment Localization
Optimizing performance, not becoming a local brand !
Becoming a local brand (can be functional in some extreme cases)
47
Successful corporations recognize the need for careful brand adjustment
• Launch of Crest toothpaste with jasmine flavor. Chinese consider jasmine as a universal remedy for bad breath.
• Packaging and shelf space differ according to premium or middle brand in order to avoid confusion and cannibalization.
• Development of a differentiated pricing system with the aim to compete better with local cheap brands as well as simultaneously maintain the perceived value of the brand.
• The waiving of their famous “do it yourself” approach in China. But instead offering of assembly service at home for a low fee.
• Selection of store locations in the cty centers and an offer of special delivery services.
• The name in Chinese “Yi Jia” means: comfortable home for the family.
• Nokia was one of the most expensive mobile phone brands until 2002.
• In order to approach and younger generation and grow in the middle market Nokia developed a new low-price range for below 1,000 RMB ($120).
• Simultaneously Nokia ensures to strengthen the positioning as a premium-brand. For example the Nokia 8800 was offered at a price of 8,800 RMB (€ 880).
• Traditional offers such as sandwiches with Beijing duck, tomato-egg soup and bamboo sprouts were integrated in the menu.
• A breakfast special was introduced (not available in the USA).
• Chinese holiday decoration is extensively used during bigger festivals (especially during the Chinese new year).
• Home delivery service.
48
The preference for foreign vs. local brands depends on a set of key factors
Status relevance
• Illustrating buying power and prosperity is one of the key drivers for many purchase decisions
• In transitional economies: Consumers generally use foreign brands as a tool to display status
• Motivators for the use of foreign brands: Social Prestige – (I can afford) Display of “Cosmopolitan Sophistication” “Being part of the global village” Overcome the shortcomings of the past
• Key goal: To experience a better treatment by social reference groups
Source:
Product category Patriotic
orientations Income level
49
The decision for a local versus foreign brand is heavily dependent on the product category
Status relevance
• The product category is a key factor to decide between a foreign and a Chinese brand
• Some product categories are close to local culture (e.g. food, medicine, liquor for festivals)
• Other categories are not strongly bound to culture (e.g. more innovative categories like cars, electronics, sports equipment and most B2B markets)
Source: Various sources compiled by globeone . Literature upon request.
Product category Patriotic
orientations Income level
50
Consumer patriotism is also important for the individual to make a choice
Status relevance
• Preference for foreign versus local brands also depends on the degree of consumer patriotism
• There are certain segments in Chinese society that are more patriotic than others (e.g. „traditional party elites“, lower income consumers, elderly)
• Chinese pragmatism: Even among patriotic consumers there usually is no strict rejection of foreign brands or even Japanese brands
Source: Various sources compiled by globeone. Literature upon request. .
Product category Patriotic
orientations Income level
51
A higher income level is a precondition to a frequent purchase of foreign brands
Status relevance
• The preference for a certain brand is highly dependent on the target group’s: Income level Ability to afford foreign brands
• Having reached a certain degree of prosperity, the urban Chinese consumers show a relatively high preference for foreign brands across many categories
• The rapid growth of the Chinese middle class (“little rich”) is likely to have a positive impact on the purchase of foreign brands
Source: Various sources compiled by globeone. Literature upon request. .
Product category Patriotic
orientations Income level
52
The emergence of the middle class: Consumption behavior and brand choice is in constant flux
Source: : National Bureau of Statistics of China; Farrell, D. et al. (2006).
Emerging of
lower middle
class segment Emerging of
upper middle
class segment
Upper Middle Class (40.001 – 100.000 RMB)
Lower Middle Class (25.001 – 40.000 RMB)
Poor (below 25.000 RMB)
Mass Affluent ( 100.001 – 200.000 RMB)
Affluent ( more than 200.000 RMB)
estimation
53
Excursus: Different countries, different target groups
- Example: Financial services for relatively affluent customers -
Germany China
Most affluent group: 42-62 28-40
Characteristics of key target group:
Conservative, serious, experienced Young, prestige-driven, curious, playful, willing to try
new things
Loyalty: High Low, frequent switching
Key dimensions for branding:
Reliability, trust, security, service Prestige, services, high yield performance, excitement
Typical market approach: Mailings, traditional newspaper ads “Hello Kitty“ co-branded credit card,
aggressive field promotion teams
54
There are three major positioning configurations
Source: : globeone
Status Level: High
Product: Not bound to culture
Patriotic Orientation: Low
Income Level: Affluent
Status Level: Medium
Product: Not closely related to culture
Patriotic Orientation: Medium
Income Level: Mass Affluent/Middle Class
Status Level: Medium/Low
Product: Close to local culture
Patriotic Orientation: Medium/ High
Income Level: Middle Class/Mass Market
Global
Hybridized
Local
1
2
3
4
1
2
3
4
1
2
3
4
55
Examples for elements that might require selective adjustments to boost market performances
What is a brand?
‘ It is the consumers’ idea of a product or service’
Memorable
Meaningful
Likable
Unique
Brand name
Price positioning
Packaging
Claim / Slogan
Logo, design and colors
Brand association, key visuals
Symbolism (e.g. cultural symbols)
Positioning and key messages, target group
Country-of-Origin (COO)
Brand
name and
CI
Brand
Values
Other factors (selection)
56
Importance of marketing and communication excellence in BRIC: Why bother?
Source: : globeone Shanghai
Corporate performance
and shareholder
value
Enhanced brand value* More sales growth
Generation of price premium through proper strategy and positioning
Enhanced stock market performance through aligned story-telling
* More market penetration = higher brand value
1 2
3 4
57
- Example for a consumer market segmentation-
High importance of understanding the market structure and dynamics
Source: globeone, market research partners
• Lifestyle and value orientation are
important influence factors of
preference and purchase decision
• Correct identification of the main
preference of target group based
on qualitative and quantitive
researches
• Find ways to bridge tradition and
modernity
• Example luxury car:
Researches show high
relevance and complexity of
social status in China which is in
the transformation !
!
!
2010 ( current) Possible segmentation 2013 (Illustration)
Brand
Essenc
e
50
%
CO
O
Brand drivers of the modern business elite 1. Distance to the old system
2. Social status
3. Demonstration of superiority
4. Outstanding security
5. Technology
58
Local values and consumption motifs heavily impact positioning and messaging
Source: : globeone
Confucianism
Collectivism/ Social responsibilities
National pride
Transformation into market economy
Foreign influences and modernization
High relevance of status and social prestige (strong desire to show
personal success)
Wish to be recognized as a driving force of China (“movers and shakers”) and to cosmopolitan sophistication.
Desire to “explore the world” and to experience exciting things
(be part of the “global village”)
Strong perceived importance of family and children as well as pressure to
meet expectations of parents/ancestors
59
globeone’s BAM®- Methodology – Fact-based adjustment of leading brands
- Analytical process of brand adjustment translates in an optimised brand positioning that is transferable into precise marketing plans-
Source: : globeone
Basic VP concepts according to local key preferences
Fine tuning and test of final concepts
Analysis of key competitors regarding brand status and communication
Global brand essence and brand status
Pro
cess in
pu
t
VP routes adjusted to global brand essence/-status (Consistency, Reliability)
VP routes with high degree of distinction (Differentiation)
VP routes market potential (Relevance)
Preferred concepts, which could be tested with focus group (optimised concepts)
BMW 7 Series.
Recent example of a brand campaign with focus on brand heritage
Slide 60 | March 2009 | BBDO Consulting Shanghai
BMW 7 Series.
Slide 61 | March 2009 | BBDO Consulting Shanghai
Recent example of a brand campaign with focus on brand heritage
BMW 7 Series.
Slide 62 | March 2009 | BBDO Consulting Shanghai
Recent example of a brand campaign with focus on brand heritage
BMW 7 Series.
Slide 63 | March 2009 | BBDO Consulting Shanghai
Recent example of a brand campaign with focus on brand heritage
BMW 7 Series.
Slide 64 | March 2009 | BBDO Consulting Shanghai
Recent example of a brand campaign with focus on brand heritage