Many German industrial companies see little need for their own branding work. That could have consequences in international competition.
(Photo: imago images / Manfred Segerer)
Dusseldorf Many industrial companies see little need for their own branding. They hope for the label “made in Germany”, which has stood for the good reputation of German industry for decades and which gives them a certain leap of faith.
But just relying on the collective brand is no longer enough, warns a new study by the McKinsey consultancy and the Jung von Matt (JvM) agency. Inexpensive and innovative offers are increasingly coming from the USA and Asia. It is therefore questionable whether the German designation of origin will in future be sufficient to survive in the global competition for attention, says JvM partner Andreas Ernst. “Companies have to try to differentiate themselves with their own brand.”
The study shows that especially medium-sized companies that are active in the corporate customer business (B2B) hardly deal with their brand. 46 percent only deal with brand issues once a year at board level, just 17 percent do this on a monthly basis. In addition, the responsibility for branding and marketing usually lies a few levels below the board of directors.
The budget is also low: the B2B companies surveyed only spend an average of two percent of their sales on marketing measures. Other surveys show even lower values. For companies that advertise directly to customers (B2C), the share of marketing expenditure is at least five to 15 percent.
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Companies can benefit from good branding. McKinsey studies show that companies with a strong brand have a 21 percent higher profit (EBIT) than those with weak branding.
IBM as a role model: Business customers also buy strong brands
Increased by Corona, the competition for orders, skilled workers or raw materials has increased. A strong brand could provide support here on several levels: Firstly, it helps to position itself as an attractive employer. Second, a strong brand is an investment in the future because it also instills trust in future products.
And thirdly, it can increase sales success: Customers often choose a product from a strong brand for comparable functions. This can also be transferred to B2B business: “The more complex a product is, the more often decision-makers rely on the good name of a company,” says McKinsey partner Sascha Lehmann.
In the advertising industry there is a saying: “Nobody ever got fired for buying IBM.” With a strong brand, industrial companies can gain trust and influence their partners’ purchasing decisions. Behavioral research shows that half of all professional purchases are made intuitively.
Ernst and Lehmann observe that, although more and more industrial companies are recognizing the benefits of strong brands, many are not yet taking any concrete steps. It is important that the executive suite push the topic forward. “The CEO doesn’t have to have a degree in marketing, but he should understand the importance and potential of brands,” says Ernst.
Corporate marketing can learn from the consumer business
Lehmann advises companies to first create a factual basis by asking about the needs of customers, business partners or employees and thus get a picture of how one is perceived as a brand. Not entirely unselfishly, the authors recommend seeking external help in order to develop a branding strategy.
It is easier for companies that have both corporate and private customer business, such as Bosch. When it comes to washing machine sales, for example, such companies have been involved in sophisticated marketing for a long time. In the area of robotics or spark plugs, this has only recently emerged. When it comes to brands, B2B can still learn a lot from B2C, the authors write.
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