Report 1: Cultural Analysis of Introducing a Product into Germany
The modern-day folding bicycle would be a great introduction into Germany, also known as the Federal Republic of Germany. Types of folding bikes include urban utility bikes, urban performance bikes, road bikes, and mountain bikes. There is a competitive drive of motivation to innovate them to be simpler, lighter, faster, and stronger. Most all Germans live active lifestyles and are into “green products.” These bikes can help one to keep control of their daily workout, weekly gas bill, and carbon foot print as well as help put an ease to any economic, environmental, or life pressures they may have. From youth to old age almost anyone can ride a bicycle and Germans are big on family. Also, according to the CIA – World Factbook (2009) Germany is “Europe’s largest economy and second most populous nation (after Russia),” which provides marketers a great deal of opportunity there.
Because of its, strategic-like, central location, Germany is located in central Europe and shares borders with more European countries than any other country on the continent. Its neighbors are Denmark in the north, Poland and the Czech Republic in the east, Austria and Switzerland in the south, France in the southwest, and Belgium, Luxemburg, and the Netherlands in the west. Germany’s elevation ranges from the mountains of the Alps, where the highest point is the Zugspitze at 2,962 meters (9,718 ft) in the south, to the shores of the North Sea (Nordsee) in the northwest and the Baltic Sea (Ostsee) in the northeast, and its lowest accessible point in the town of Neuendorf-Sachsenband is 3.539 m (11.61 ft) below sea level. Germany is vastly forested and also home to some of Europe’s major rivers such as the Rhine, Danube, and Elbe (CIA – World Factbook, 2009). Michael Roos (2005) found that in Germany “geography is more likely to influence the spatial distribution of production than the distribution of consumption” (p. 605). Germany’s geography provides a beautiful terrain to ride bikes and also helps to resolve a current environmental issue that “emissions from coal-burning utilities and industries contribute to air pollution” (CIA – World Factbook, 2009).
Germany’s government is mostly stable. In fact “Germany is a key member of the continent’s economic, political, and defense organizations” (CIA – World Factbook, 2009). Also, the government’s attitude toward business is a positive one. “The decline of the USSR and the end of the Cold War allowed for German unification in 1990. Since then, Germany has expended considerable funds to bring Eastern productivity and wages up to Western standards” (CIA – World Factbook, 2009). The folding-bike industry can certainly help to provide an opportunity for this direction while producing a “green product.” Germany’s government “established a mechanism for ending the use of nuclear power over the next 15 years” and is “working to meet EU commitment to identify nature preservation areas in line with the EU’s Flora, Fauna, and Habitat directive” (CIA – World Factbook, 2009). Germany’s currency is also very strong. “In January 1999, Germany and 10 other EU countries introduced a common European exchange currency, the euro” (CIA – World Factbook, 2009).
However, Germany’s GDP growth is declining which is directly affecting their economy. “While corporate restructuring and growing capital markets have set strong foundations to help Germany meet the longer-term challenges of European economic integration and globalization, Germany’s export-oriented economy has proved a disadvantage in the context of weak global demand” (CIA – World Factbook, 2009). If the folding-bicycle industry gets established there it can help the German economy by exporting its products to all of Germany’s neighboring countries. As “the fifth largest economy in the world in PPP terms and Europe’s largest – began to contract in the second quarter of 2008 as the strong euro, high oil prices, tighter credit markets, and slowing growth abroad took their toll on Germany’s export-dependent economy” (CIA – World Factbook, 2009).
Germany’s regulations and bureaucratic procedures encourage foreign investment, but at the same time can be quite complicated. “While not discriminatory in the classic sense, government regulation is often complex and may offer a degree of protection to already-established local suppliers.” Germany presents “few formal barriers to U.S. trade or investment interests” and the “German government and industry actively encourage foreign investment in Germany.” However, “there are no free trade zones or free ports in Germany” (German Tariffs, Trade, Taxes, Trademarks, 2000). “All industrial imports are subject to an ‘Import sales tax’ of 19%. It is equivalent to the value-added tax (VAT) which is levied on all domestically produced items, thus placing the same tax burden on imported and domestic products” (Federal Ministry of Economics and Technology, n.d.).
Habich, Headey, and Krause (1995) found the “Federal Republic’s taxes and benefits, which were more progressive than the Communist regime’s, had the effect of counteracting the increasing inequality of household gross in-comes” (p. 225). “Government taxes and transfers may reduce net income inequality, but there is no suggestion that they cancel out market driven income differentials. It seems reasonable to predict that net income inequality will increase in the transition to democracy and a market economy” (Habich, Headey, & Krause, 2005, p. 226).
Germany’s culture has been classified as “Das Land der Dichter und Denker” which translates to a culture of thinkers and poets (Culture in Germany, 2007). The culture that is present in Germany is largely due to religious and educational focuses that are also seen throughout the entire European Union. Education is a major focal point of the government, as officials are firm believers that it will develop a more socially organized country. The mindset of the government is, “if they focus highly on the education of individuals, it will develop the citizen’s social aspect as well as will contributing to the success of the country” (Culture in Germany, 2007). Unlike many other countries, Germany’s education system is known to be balanced and “unified” throughout the entire country. While one can see different “teaching styles” and/or curriculum among the United States, this is absent in the German culture.
When speaking to the topic of religion, Germany is considered to be in biggest proponents of one of the largest religious movements; the country was the birthplace of the Protestant Reformation. In modern Germany, religion does not play as much of a key role as it did in the Protestant movement. The major religion in Germany is primarily Christianity followed by Protestantism and Catholicism. Education and social organization play a huge role in the purchasing, advertising, and media category. Germany has been considered to be one of the most technological and industrialized countries in the EU as well as the world. Being responsible for the development of many different products in the country as well as around the world; therefore education is a key aspect of the country as it develops different products for the usage of many other countries (Come to Germany). When thinking about the product that is being introduced in Germany, social organization will play the major role in marketing the product. Since Germany is focusing more on the “green movement;” introducing a product that will speak to this mindset will increase the social organization aspect of the country.
Music is the highlight of cultural activities in Germany; which then branches off to the many different musicals as well as arts in the country. Composers such as Beethoven and Bach originated many of their great works from this country. The musical rich country of Germany is home to over 100 different music theatres as well as hundreds of museums that highlight the musical aspects (Germany Tour Guide). Germany displays a wide variety of music, other than the classical composers listed above, such as pop and hip hop. Drama is another aspect that is popular in the German culture; musicals and operas are prevalent throughout the nation.
When relating the cultural symbols to the citizens Germany, it was largely seen that represent an extreme cultural appreciation of their country. Yet, similar to America, citizens do not wear clothes or contain items that show the “country colors”. Similar to the United States, cultural representation is important in the country, yet it is seen to a greater extent, when the individual is outside of their country. For example, one may see a German citizen with a shirt with a German flag in the United States. Yet if one is in Germany, this is less likely to be seen in greater numbers.
Living Conditions and Leisure
Over the past ten years, health, nutrition, housing, and recreation have been a main focus in German culture. Germany is a country that prides itself on having extremely healthy individuals while focusing on the “green movement”. Germany, along with its citizens is considered to be a country of activity. There are great opportunities to walk, hike, bike, backpack, as well as other exercise activities. Soccer is the sport has seen great recognition in Germany. Many citizens are fans of the sport, which has drawn an abundance of recognition by the world as well as the citizens.
The product that will be introduced will cater to the active lifestyle of German and the healthy lifestyle that is seen throughout the European countries. Germans are extremely clean and tidy individuals who are extremely particular in their lives. The folding bikes will promote this lifestyle that the Germans host (Germany Tour Guide). It is compact enough to fit into the petite living space that is seen throughout Germany as well it promotes the active lifestyle that is prominent as well as catering to the green movement that is extremely active in Germany.
Consumer Behavior in Germany
Germany is the largest country within the European Union, with more than 80 million people and one of the highest Gross Domestic Products (GDP) per capita in the world. In 2007 79.2% of all households had an annual disposable income of more than $25,000 (Euromonitor International, 2009). Germans are extremely price conscious and tend to make decisions based on price over brand recognition. They say that this is a long-term shift in consumer behavior and not a short-term trend. The authors of the Roland Berger study said that manufacturers should group consumers in terms of their attitudes rather than demographics such as income or age (Roland Berger Strategy Consultants, 2008). In the U.S. consumer decision making style is broken into an eight factor model. German consumer decision making is based on only six of these factors: brand consciousness, perfectionism, recreational/hedonism, confused by over choice, impulsiveness, and novelty-fashion consciousness. Variety seeking is another factor that was found to be novel to Germany and replaced brand loyalty and price-value consciousness which are found in other countries (Gianfranco Walsh, 2001).
German consumers were found to be likely to become wary of high-quality products offered at lower prices. Germans say, “Was nichts kostet, taugt nichts” (“What costs nothing, is no good”), which shows Germans’ willingness to pay premium prices for certain products as long as the quality is right. German consumers prefer detailed information on products. Consumers feel uncomfortable with limited data about the product and associate this with vagueness and ambiguity. Germans want detailed information about products and advertisements place a greater emphasis on facts rather than entertainment. It is common for products to be described, analyzed, as well as telling where the product can be purchased and for what price. The low levels of brand loyalty make it difficult for marketers due to loyal customers providing a base for future purchases and loyal customers being more difficult for competitors to attract. It is difficult to gain a high level of brand loyalty due to the number of regulations prohibiting comparative advertising (Gianfranco Walsh, 2001).
In Germany their remains gender gaps in wages. Women make significantly less money than men do in all industries. Women working outside the home have increased over the years but they remain the primary shoppers and maintain the household. The reunification of East and West Germany caused many problems for women. East Germany encouraged women to work and had many provisions for childcare and abortion right that West Berlin did not provide for women. After reunification many of these benefits were lost. Women are still struggling to regain equality in the form of equal pay and childcare benefits. Germany remains a male dominated workforce where they hold the higher positions of management (Tatyana, 2009). The primary shoppers in Germany would be women for many goods or people in their twenties and thirties.
A company that currently sells folding bikes in Germany is Riese and Mueller. They reportedly sell 5,000 bikes per year based on a 2007 report. Germans buy 4 million biked per year so this shows that this is a small portion of overall bike sales (McClellan, 2007). This shows the potential to expand the sales of folding bikes in Germany.
Consumer Behavior in the US
There was a high point or the bike boom in the 1970s but this boom ended when the bike industry reached a saturation point where it did not have enough products choices to maintain the levels of sales. The industry however has grown a stronger foundation with approximately 2000 companies who are involved in the process of manufacturing and distribution of bicycles and cycling products to retailers or even the consumers. Today there are hundreds of bicycle brand names to choose from. The consumers therefore have enjoyed a variety of both bicycles and bicycle products.
An interview was conducted with James Bernard who works at King Stone bicycle manufactures in the US. When asked what kind of bicycle that people like today he mentioned that mountain bikes are doing very well with a market share of 28%. He also noted that the consumers have liked the stylish kind of bicycles introduced in the market when he was asked how the consumers have been reacting to the frequent changes in the kind of products that they offer (J. Bernard, personal communication, September 24, 2009).
The bicycles are majorly bought by families and households for children and also for adults. Some companies may also need the bicycles for distribution of their products or for running petty errands. There are many other places where the bicycles are used. In bicycle championships the bicycles are used in plenty. They also use different kinds of bicycles for different events (Crown, J. 2008).
According the consumers of this product in the US, they believe that this industry has done a lot to bring into existence more comfortable products that are more applicable to everyone and also very stylish and comfortable. At least every house hold in the US own at least one bicycle. The families that have young children buy bicycles as the children grow because they may need different kinds of bicycle (Rose J. 2008, US bicycle consumer).
Introducing the folding-bicycle into Germany would be a splendid idea because it appeals to the lifestyle of the German population. As stated before, “green products” are well-recognized in many European countries, especially Germany – therefore, the folding bicycle is an alluring product for commuting consumers. Germany is filled with many bike trails and lots of flat land which makes it easier for people to pedal to their destinations. Along with religion, education is a key aspect of German culture which means that the majority of youth (6-18) go to school. With this said, introducing the folding bike will make it easier for students to go to school and will be a compact enough product to store in schools with small lot areas. In addition, the “green movement” has had a huge impact on the Germans lifestyle – therefore, the folding bike would be a great product for families who enjoy outdoor activities, exercise activities as well as sports. The quality of this product will also demand consumer’s attention because Germans pay close interest to the way an item is made versus its’ price. As a result, introducing the folding bike into Germany will set sail for a wondering reformation as the country progresses into the world of environment-friendly products.
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