Market Entry Methods Used Most Frequently Into Germany

Market Entry Strategies Into 2004 Germany: High Value, Low Volume Is the Key to Overcoming German Pessimism and Conservative Consumerism

Because of its relative political stability, and great economic wealth, Germany remains one of the most desirable countries for investment and market entry, in all of Europe. In short, there are, comparatively speaking, many Euros floating around the nation to be spent, despite the conservative investment policies of the average German worker, and the recent European recession. Wages are high and lifestyles of individual Germans are affluent. But the German consumer remains wary, for taxes are high as well, and labor unions are strong, and the system of social services encourages a way of living that is not disposable, as in America, but tends to place more of a stress upon quality of life, via long vacations and enjoyment of what one has, than conspicuous consumption. (U.S. Commercial Services, German Business Practices, 2004)

Some popular venues of market entry into Germany have involved, "strategic alliances with local firms" ranging "from direct marketing, retail, and wholesale distribution companies for low value/high volume products; to systems integrators and value-added resellers, which are service oriented, highly skilled and usually specialized by market sector, for low volume and high value products. These alliances provide access to market sectors, and local support," from German firms, which is especially desirable, given the frequent need to overcome occasional bouts of German consumer xenophobia of American or foreign-based products (Austrade, 2003)

But this above-quoted generalized statement, it might seem, could apply to many first world nations. After all, doesn't every market wish to get the biggest 'bang for its buck/Euro/yen' with the greatest quality possible? And isn't even the slogan "Buy American," a selling point that our own nation frequently touts, that was only overcome in the 1980's by many manufactures, such as Toyota. However, when approaching the German market of today with an eye upon entry, the stress upon perceived and real high product value is key. For market entry into Germany, quality rather than quantity, when selling technological or durable goods, is even more important, to secure a market foothold, than it is for the United States. The German consumer is not part of the American culture of shopping, of shopping at malls for recreation alone.

Quality and value are more important marketing stress points for German consumers. For instance, the 'cuteness' factor that may draw in a Japanese or a teenage United States consumer of technology, such as a multicolored iPod, is simply not present in Japan. (Austrade, 2003) Also, despite the 2003 recovery from a period of economic decline, moreover, "Germans often have a hard time living down their reputation for pessimism, and Americans are almost automatically expected to be optimistic." (Invest in Germany, Sept 2004) This pessimism regarding economic forecasts results in the more conservative consumption behaviors detailed above.

Thus, when marketing any product and positioning one's entry into Germany, the stress must be upon something that is built to last, that is purchased not on an impulse, but in a planned fashion, and yet also has a reliable brand name that is impressive because of its reputation as well as its social acceptability. In other words, much to many a marketer's dismay, Germans are not very 'trendy' in their consumption patterns, but at least have the value, from a marketer's view, of being predictable in their consumption and home allocation of financial resources.

In fact, not only have two recent studies have found that stereotypes regarding German consumer pessimism may still hold true but indicate that Americans are vastly more optimistic about marketing opportunities in Germany than Germans themselves, something that could eventually work to the American advantage. The first such study entitled "Benchmarking Germany 2003," was published by the American Chamber of Commerce in Germany and Droege & Comp and concluded that acquisitions, in other words, the merging and purchasing of older firms by up and coming firms -- but retaining the older and reputable names of the acquired firm -- often lead to the quickest business results for new American entrants, rather than establishing a new brand and having to generate consumer confidence over a very long-term. (Invest in Germany, Sept 2004)