Brands boost German firms

08 May 2012

BERLIN: Companies in Germany generate almost €900bn from branded goods and services a year, a figure that could rise further as shoppers place a heightened emphasis on product safety and quality.

McKinsey, the consultancy, and Markenverband, the trade body, reported that firms headquartered in the country yielded €894bn each year from branded products.

This amount is equivalent to 80% of Germany's total exports or the combined annual revenues delivered by the country's retail, transport, hospitality, information and communications industries.

Manufacturers of branded goods claimed €457bn per year, with financial services on €177bn, transport and telecoms providers on €134bn, energy suppliers on €98bn, and the publishing, film and radio sectors on €28bn.

Based on a survey of senior executives, the analysis also revealed that 78% of domestic corporations had only been "somewhat" affected by the economic crisis or not impacted at all.

The finding that 84% of organisations had made limited or no cutbacks to their communications spending was said to have favourably shaped this trend, an argument equally applicable to the decision of 93% to follow the same route for innovation.

Moreover, 61% of featured companies stated they had resisted lowering their prices even though the fiscal climate had become increasingly challenging.

Indeed, 52% of respondents agreed that price now held a more central role in the purchase process, measured against 54% in an equivalent study from 2008 and 46% in 2006.

Looking forward, however, just 5% of enterprises expected to prioritise this area in their future communications, versus 34% giving it a "low" level of importance and 61% not planning to mention it.

By contrast, in 2008, a more modest 48% of operators ignored the matter altogether, whereas 11% gave it an integral position in their marketing messages and 41% afforded it at least some importance.

A separate poll of consumers found 68% believed product safety and security would soon gain greater importance in shaping their habits, with trust and responsibility receiving 50% apiece on this metric.

Innovation posted 43% here, beating values like "solidarity" on 40%, "power" on 33%, "luxury" on 23% and "adventure" on 22%.

"The new customer desire for security is advantageous for brands – after all, quality is one of the key arguments for purchasing these products," the study concluded.

Data sourced from McKinsey; additional content by Warc staff