Dr. Niklas Schaffmeister | Group Managing Director | globeone GmbH, Cologne
Tina Marie Monelyon | Country Manager | globeone India,  Mumbai

First published in M+V’s India Insight in June 2012

It comes as no surprise that Indian consumers show a high level of loyalty towards local brands. They have been consuming a plethora of Indian ‘local champion’ brands that have been around for decades ranging from Amul to Zandu Balm. According to the ‘BRIC Branding Survey’ of German business consultancy, globeone, 76% of surveyed urban consumers in India agreed that buying local brands is at least relatively important for them. This is especially relevant for product categories such as food, detergent and clothing. When thinking about these products, the first brands that come to the mind of at least every second consumer, are Indian.

The India edition of the ‘BRIC Branding Survey’ also revealed that Indian consumers, especially those from higher income segments, attribute a high level of importance to owning prestigious – often foreign – brands.

The brands most highly-associated with a ‘prestige factor’ by these consumers are first and foremost thought to have a German brand origin, followed by the USA and Japan. A fact that explains the reason for ‘premium prices’ charged for German luxury brands. The findings also suggested that German brands can further leverage on many attributes on which they receive substantially more positive perceptions than brands from other countries. They include product excellence properties such as “excellent quality”, “high durability” and “outstanding design” and Indian consumers credibly assign these to brands of German origin. These insights can be smartly utilized for even more success in the Indian market. For 69% of the respondents, especially those in the higher income groups, brand origin is an important factor in their purchase decision process. The image of brands with German origin is particularly preferable. This is one of the few competitive advantages that cannot be easily imitated, particularly in industries where brand association with Germany is prominent and where Germany has long had a global stronghold, such as automotive and engineering. Thus, emphatically highlighting the German origin can, for example, provide a shortcut to emphasizing these characteristics in a cost efficient manner for German B2C as well as B2B brands.

The German brands with the highest awareness rates in India are sportswear giant Adidas (79%), consumer goods brand Nivea (73%), insurer Bajaj Allianz (68%), followed by automotive brands BMW (65%) and Mercedes–Benz (60%). Despite the traditional dominance of German automotive, BMW and Mercedes–Benz were outperformed by German consumer brands with an even stronger brand history in India. In the eyes of Indian consumers, Adidas is not only the most well-known but also the most popular German brand, with 57% of consumers claiming that they like the brand. In the popularity stakes, Adidas is closely followed by Puma and Nivea (both 52%).

However, German brands do not enjoy a perfect scorecard in India – only 28% of the respondents believe German brands are closely oriented towards “meeting local customer needs”, compared to 56% for the Indian brands. Furthermore, local brands perform more strongly in offering “good value for money” and “good after-sales service” – which are strong purchase drivers in the Indian market. On these attributes, German brands have more difficulty in India. The relatively high prices – about 68% of Indian consumers consider German brands to be expensive – and, in many cases, the premium positioning of German brands are likely causes. Thus, despite the good reputation and consumer preference of German brands, they are purchased infrequently in many product categories and face potential barriers to gaining a significant share in the market.

For more India-specific study results and insights from other BRIC-markets, please visit Globeone.