“Made in Germany” is threatening to become “Late in Germany”. According to a current survey, many German industrial companies are relying solely on the fact of where their product is from when it comes to sales, and are investing too little in their own brand image. This means they threaten to fall behind compared to the global competition.
Industrial companies are underrating the potential of their brands
German small and medium-sized enterprises (SMEs) from the B2B segment are apparently not doing enough for their brand image. This is according to the latest dossier “Late in Germany” (German) from the consulting company McKinsey and the creative agency Jung von Matt (JvM). SMEs are relying on Germany as the origin of their products in many cases, although offers from the USA and Asia are just as innovative and are cost-effective, which is toughening up the competition. According to the survey’s authors, German companies have to show significantly more engagement when it comes to making their own brand stand out.
The report clearly shows that those responsible for B2B brands and the decision-makers from industrial companies have different views on where brand relations can take the company. From the perspective of German manufacturers, strong brands grab more attention and interest, but they are secondary when it comes to closing the deal. For instance, the myth of the purely fact-based purchasing decision still reigns in German industrial companies. As professional buyers theoretically cannot expect any personal advantage from their purchase, they can make a purely rational decision. Which is why product quality, service, reliability and price are more important – so they think. Brand leadership is therefore an ongoing topic among just less than one-fifth of those companies surveyed.
However, behaviour research has shown that half of all professional purchases are made intuitively. When the complexity is reduced, the brand is intuitively seen as promising high quality, a good reputation and peace of mind – and approach that is also an enormously important purchasing criterion for B2B businesses. This makes the brand for buyers from industrial companies a central driver of invitations for tenders and for the first order.
Why brand building is so important
Strong brands achieve up to 20 per cent more profit than weak brands. A well-known brand creates trust and allows products and services to appear more worthy of investment. B2B decision-makers, too, show to have a high loyalty towards brands in many cases. Within the B2B segment, personal relations, trust, credibility and expertise come first and foremost. In this case, brands function as an anchor for customers – reducing the often highly complex offering and simplifying the purchasing decision.
While consumer goods focus on standing out from the crowd of nearly identical products by having a strong brand, the strength of brand awareness goes in a different direction in the frequently less competitive B2B segment. Here it is mainly about gaining trust and recognition value for the company – and thus creating (perceived) peace of mind for the investment decision. A strong brand offers the chance to bundle the differentiating competitive advantages in a “good name” and to anchor it in the hearts and minds of the target group over the long run.
Within the company, the brand supports motivation and teamwork among the colleagues, and creates synergies between the different business units. The acceptance of difficult decisions also increases. In the process, the brand serves as a guiding principle on which everything else is based. It formulates the vision and mission of the company.
Solutions: what B2B companies should change
Although the focus on the label “Made in Germany”, in combination with excellent products, was enough in the past to stand out from the global competition – in future, it may not do the trick to get a piece of the pie. According to the above-mentioned dossier, the effects of the pandemic mandates, the worldwide switch in values, digitalisation and hyper-competition are resulting in a whole new set-up of the market. If they don’t invest in their brands, German B2B companies will be stamped with the label “Late in Germany”.
To prevent this from happening, the survey’s authors recommend five steps for reinforcing your own brand over the long term:
- Customer survey: An anonymised capture of information amongst existing customers as well as former and potential customers helps to develop a deeper understanding of the customer. In this case, it’s important to find out why certain services are not or no longer taken advantage of and what the customers’ reasons are for this.
- Employee survey: A strong brand helps to position the company within the battle for talent and specialists. Knowing what your own employees think is often enlightening: what is special about the company? How can the company gain brownie points, and where is there a need for improvement? Which perspectives do the employees have? All of these insights contribute to becoming a strong (employer) brand.
- Company philosophy: Those responsible should clarify what their company stands for. A strong brand is always based in the end on a clear idea of where the company is at and where it strives to go.
- Brand relations: In German B2B companies is brand relations, compared to the B2C segment, still profoundly underfinanced. New budgets help to not only enforce brand relations within the company, but to also engage support from the outside. External experts see the brand from a different, rather neutral perspective and thanks to their special competence, lend the brand building process new impulses.
- Brand vision: This vision should serve as the guiding principle of what the company should aim to achieve with its brand awareness. It’s important to define smaller achievable goals along the way.