globeone, an international marketing and strategy consultancy based in Cologne, Germany, has conducted a representative survey to examine the perception and potential of German companies in India. As the fifth annual India Week in Cologne (7-16 June) gets underway, the results and recommendations of the “BRIC Branding Survey” are attracting attention.
1,000 respondents in five Indian cities were surveyed for the study. The result: even though lower-income groups in India prefer domestic brands, German and Japanese brands are at the top of the higher-income wish lists. The appeal of German products is strongest among the upper-middle and upper classes: here 71% and 63% respectively like German brands.
More good news: in many categories German brands are viewed far more favorably than competing brands from the USA, Japan, or China. Indian consumers in the upper-middle and upper income categories gave German brands especially high marks in the categories “quality”, “durability”, and “design”. German brands are also leaders in “prestige”: half of those interviewed associate them with this attribute.
But despite this positive perception, many German companies continue to see India as a difficult market. Among the reasons for this are the country’s complicated bureaucracy and lack of infrastructure. Until 2012, tough restrictions were in place for foreign single-brand retail companies for example: they were allowed to own no more than 51% of a company located in India. Now that these restrictions have been lifted, retail giants such as H&M and IKEA have announced plans to enter the Indian market. Pursuing comprehensive reforms, the Indian government is in the process of even further opening its domestic market to foreign companies.
But German companies will need to reach out more to aspiring middle-income groups if they want to increase their market shares. “German companies focus almost exclusively on premium products,” says Dr Niklas Schaffmeister, Founder and Managing Director of globeone. “Especially in India, a market-driven positioning is of utmost importance. Reaching out to the steadily growing middle-income groups, defined as those earning up to 700 Euros per month, is a key success factor. To do that, companies need to either extend their brand universe, or expand their existing brands to include new, more economically priced products.”
Despite recent sobering growth figures, the market place on the subcontinent, known as the “sleeping giant”, continues to promise tremendous opportunities. India is not only the most populous democracy in the world, but also the third-largest economy in Asia. “The India story is just beginning for many companies from Europe or the USA,” says Tina Marie Monelyon, Managing Director of globeone in India. “They have realized that they need to respond to the wishes and demands of Indian consumers, and especially that they will need to have some patience if they want long-term success in India.”
To achieve that, globeone has two recommendations for German CEOs: first, adapt your products more to the particular requirements of the Indian market. Second, emphasize the strength of the “Made in Germany” seal, so that middle-class Indian consumers know they are purchasing a product of German origin.
For interviews, further expert insights, or background information, please contact Dr Niklas Schaffmeister or Tina Marie Monelyon.
(Link to study: The image of German brands in India)