Market Research: Automated Climate Control Systems in Germany (Nest)
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Transcript of Market Research: Automated Climate Control Systems in Germany (Nest)
Automated Climate Control Systems in Germany
German Marketing Environment
Key Marketing Environment Takeaways The German people are very environmentally
conscious consumers, paying a higher price 59% of the time for a product that proves to be environmentally sustainable
The German family structure limits the target demographic in a very meaningful way, with the majority of households occupied by adults with no children
Germany is a high-income country, and Germans have a high disposable income
The German aesthetic is very functional and minimalist, with emphasis on personalization and customization
Defining Historical Events in Germany
Luther’s theology WWII 1939-1945 Division into East and
West Germany in 1949 Democratic West Communist East
Fall of Berlin Wall on November 9, 1989
Holidays include Unity Day, Oktoberfest, Christmas and Easter
German Cultural Overview– 2012
German fashion icon, Karl Lagerfeld’s 2012 designs
A friendly game between No. 2-ranked Germany and the No. 7-ranked Netherlands ended in a draw on Nov. 14
“Diamond” by Rhianna is #1 on the German Billboard Charts, but German jazz house song, “Sonnentanz,” is #4
Part 2 of the Pope’s trilogy on the life of Christ– #1
The #1 movie at the German Box office was the French film, Intouchables, a comedy about a quadriplegic aristocrat who hires a man from the projects to be his caretaker
Germ
an S
treet
Art
German Cultural Overview– Classical German humor
Jokes about other nationalities– “The United Nations initiated a poll with the request, "Please tell us your honest opinion about the lack of food in the rest of the world." The poll was a total failure. The Russians did not understand "Please". The Italians did not know the word "honest". The Chinese did not know what an "opinion" was. The Europeans did not know "lack", while the Africans did not know "food". Finally, the Americans didn't know anything about the "rest of the world"
Classical literature The Song of the Nibelunas, Luther’s Bible, The Sorrows of Young
Werther, Children’s and Household Tales Classical music National heroes Religious Traditional dress
German Demographics Population of 81,305,856– 92% ethnically German
Under 14 years: 13.2% 15 – 64 years: 66.1% 65 years and over: 20.7%
74% of Germans live in an urban setting Major metropolitan areas include Berlin, Germany’s capital,
Hamburg, Munich and Cologne Educational spending accounts for nearly 10% of all
government expenditures 13 years of compulsory education 23% graduate college
Germans vacation, on average, 4 weeks out of each year
The German Household 43% of Germans own their homes, while 54% rent
Mortgage rates are low Average household size is 2.4 persons Median household income is €16,279 Two-thirds of all German households are one-generation
24% of households consist of married couples without children Average age of first marriage is 33 years for men, 30 for women
20% of households are maintained by single women 15% of households are maintained by single men
On average, children move out of their parents’ homes at 22.5
50% of households have made energy efficient improvements to their homes, or plan to
The German Consumer German consumers want user-friendly and affordable
products4
34.1 million German consumers buy merchandise or services on the Internet1
half of Germans between the age of 50 and 69 buy merchandise on the Internet
Top online vendors are eBay and Amazon Market for consumer electronics in Germany grew 6%
during its recent recession2
82% of Germans attach importance to individuality and self-expression3
60% of survey respondents said using products and services designed for consumer needs is important3
The German Consumer
They grocery-shop at Edeka– a supermarket that holds 26% of the German market share
Metro Cash-and-Carry, the “German Costco,” is a food products wholesaler
OBI, the “German Home Depot,” is the country’s largest DIY retailer
Media Markt is Germany’s go-to retailer for consumer electronics, and it’s second-largest in the world after Best Buy
Geo-demographics
Diverse Terrain Flatlands in the north Mountainous south Low-lying islands Beaches
Average Daily Temperature January: 31 degrees July: 66 degrees
22.5” of precipitation per year
German Environmental Considerations The regulation and protection of the
environment in Germany is under the jurisdiction of its Ministry for Environment and Federal Agency for Nature Protection
Germany honored its commitment to the Kyoto Protocol as of 2008
Current environmental concerns include Air pollution from coal-burning utilities and
industry, as well as from vehicle exhaust Heavy pollution in the Baltic Sea from raw sewage
and industrial waste1
German Environmental Considerations Energy used for heating homes in Germany
accounts for 33% of the carbon emitted by the country
Germany has reduced its energy consumption in every capacity since 2006 Petroleum consumption down 7.5% Natural gas consumption down .3% Coal consumption by 7.3%
27 of the 500 global companies with the lowest environmental impact are headquartered in Germany, surpassed only by Japan, China and the United States
German Political Environment Germany has a
democratic, federal republic form of government with a civil law legal system Unity Day– October 3,
1990 75% of the public votes
during elections 6 major political parties,
with the Green Party garnering nearly 6% of votes in 1983 parliamentary elections
German president, Joaquim Guack, hosted an Environment Week in Germany this year to demonstrate synergies between social, economic and ecological issues
Legal Environment for Business in Germany The German market is open for investment in practically all
industry sectors Business activities are free from regulations restricting day-to-day
business German law makes no distinction between Germans and foreign
nationals regarding investments or the establishment of companies The legal framework for Foreign Direct Investment in Germany
favors the principle of freedom of foreign trade and payment. There are no restrictions or barriers to capital transactions or
currency transfers, real estate purchases, repatriation of profits, or access to foreign exchanges
On average, corporate companies face an overall tax burden of less than 30%– a very competitive tax rate
The 2 products certification and normalization bodies for companies exporting to Germany TÜV and Deutsches Institut fur Normung (DIN)
German Financial Environment Germany is on the euro (€)
100 euro cents (€0.01) in 1 euro (€1)
Coins come in 1, 2, 5, 10, 20 and 50-cent denominations
Banknotes come in 5, 10, 20, 50, 100, 200 and 500-euro denominations
€1 = $1.2998 As part of the European Union,
financial stability of Germany’s currency is largely dependent upon its member nations’ economic actions Greece
Inflation rate: 2.5% Commercial bank interest rate:
3.94%
The value of $1 in euros over the past year, according to Bloomberg Businessweek: 12/1/12
German Economic Environment Europe’s strongest
economy and the world’s fifth Exports
World’s sixth highest GDP at $3.114 trillion
26th highest GDP per capita at $38,1001
The German state of North Rhine-Westphalia– the economic center of Germany, according to the German Trade Office
German Economic Environment—Industry Industry, or manufacturing, accounts for 28.6% of
German GDP Industrial production grew 8% in 2011 24.6% of the labor force works in manufacturing1
Technologically advanced producers of Steel Cement Chemicals Machinery Vehicles Electronics
Top industrial brands headquartered in Germany include Volkswagen– automobiles, Siemens– technology, ThyssenKrupp– steel, Bayer– pharmaceuticals
German Economic Environment Social Market Economy1
High wages to induce high productivity High public investments in
Education Health Social Security Environmental Protection
Homogeneity and standardization of contracts Monetary stability characterized by low inflation
and high international demand for their domestic industry
German Economic Environment
Economic Strengths Economic Weaknesses
Central geographic location makes it a center for international business
World’s leading exporter of machinery, vehicles, chemicals and household equipment1
Social Market Economy, guaranteeing free play of entrepreneurial forces while ensuring social stability2
Germany prepares to lose 5 million workers over 65 from its labor force of 41 million in the next 15 years3
High debt-to-GDP ratio as a result of costly reunification measures4
Weakened domestic economic growth due to cyclical slowing of world economy5
German Economic Environment Germany is a wealthy country
with a sophisticated socio-economic infrastructure and a high quality of life Ranked 10th in the world for its
Human Development Index, which takes into account longevity, knowledge and education, as well as economic standard of living1
Average household wealth is €32,078, including real assets such as land and dwellings Average household disposable
income is €21,2052
6% unemployment rate
The Business to Consumer Market in Germany A large number of small, independent shops Lower levels of concentration than other parts
of Europe Predominance of distribution in urban areas Predominance of discount stores and distance
selling Mail order E-commerce
German Imports Imports total $1.333
Main imports include machinery, data processing equipment, vehicles, chemical, oil and gas, metals, electric equipment, pharmaceuticals, food and agricultural products
Germany’s top importing partners are China (9.7%), The Netherlands (8.4%), France (7.6%), U.S. (5.7%) and Italy (5.2%)
Measuring, testing and control instruments account for 3% of German imports from the United States
Apple, Inc. has a sophisticated distribution channel for exporting to Germany, including wholesale network, the retail outlets, the logistics partners
German Trade Infrastructure The German road network covers more than
238,000 km of roads More than 11,000 km are toll-free highways
22% of inland freight is transported by Germany’s 44,500 km railroad system
Main German sea ports are Hamburg, Rostock, Bremen and Duisburg
The airport of Frankfurt, the most important, ensures 70% of the air freight
German Marketing Environment Overview Television advertising
By law, advertising within an hour must not exceed 20%
Product placement is not allowed on television
Radio advertising By law, radio advertising is not to
exceed 90 minutes per day There are no regulations
regarding advertising on the internet or mobile devices
Product placement is allowed in German cinema
Germany has very sophisticated advertising, promotions and communications channels
Key Marketing Environment Takeaways The German people are very environmentally
conscious consumers, paying a higher price 59% of the time for a product that proves to be environmentally sustainable
The German family structure limits the target demographic in a very meaningful way, with the majority of households occupied by adults with no children
Germany is a high-income country, and Germans have a high disposable income
The German aesthetic is very functional and minimalist, with emphasis on personalization and customization
Overview of and the Learning Thermostat
The Learning Thermostat
History of Nest Labs Founded by Tony Fadell and
Matt Rogers in 2010 Former Apple directors
Headquartered in Palo Alto, California
Nest thermostat currently only available in US and Canada
“A startup with a lot of attention, Nest has leaned into quality to justify the price; everything about the Learning Thermostat screams classy and thoughtful. If you love the look and feel of high-end design, you won't regret the investment” –CNET review
Core Business Competencies The world’s first learning
thermostat iPhone and Android
compatibility Stylish design Energy-efficient product,
saving as much as $300 per year, per household
Nest Labs’ experts in artificial intelligence– machine learning
Venture investors Available for purchase online,
at Best Buy, Lowe’s and Apple
Nest Labs’ Mission and Vision Mission
“We take what’s familiar and look at it in a new light. Our team focuses on making technology that’s simple, fresh and helpful.”
Vision “We make things that work for people. Technology
should be more than the newest, loudest and prettiest. It should make a difference.”
Product Positioning and Strategy The Nest Learning Thermostat
remembers what temperatures you like, creates a custom schedule for your home, and turns itself down when you’re away.
Once it’s learned your schedule, Nest can save 20% on your heating and cooling bills.
Remote climate control from your phone, computer or tablet
With Energy History and Energy Report, you also can see how much energy you’ve used and get tips to help you save more.
Nest Learning Thermostat Key Features Auto-Schedule creates a personalized schedule based on the temperature
changes you select and continually adapts to your changing life. 99% of users find that it matches their life schedule
Nest Sense™ personalizes Nest's features for you, creating the right balance of comfort and energy savings for your home Auto-Away™ sensors detect when no one is home, automatically adjusting to a more
conservative temperature Airwave™ automatically turns the air conditioner off a few minutes early, then uses
the fan to spread that cold air through your home, reducing A/C runtime by up to 30% Nest Leaf™ appears when you turn Nest to a temperature that’s energy efficient,
guiding you to energy savings. Energy History and Energy Report shows how your temperature adjustments, the
weather, or Auto-Away affected your energy use in a customized monthly report Over 90% of connected Nest owners use the remote control feature Nest can blend in with any environment, reflecting the color or pattern of your
wall and blending in with any environment Most Nest owners install Nest themselves, in 30 minutes or less Nest and Nest Web and Mobile apps are available temperatures in Fahrenheit
or Celsius
Market Description– Prospective Buyers
Homeowners and home renters Men and women 23– 69 years
old College-educated Income €25,850 and above Sustainable buying habits
Size of potential market estimated at 12.5 million Germans
Online purchases through German Nest and Apple websites Germans familiar with Apple brand Direct export
Retail sale through discount consumer electronics outlets Media Markt Indirect export– Apple’s
distribution channel
Market Description– Demand Demand for this product is expected to grow as
early adopters demonstrate its cost efficiency in terms of conserving energy and saving money on utilities
Sales in the United States totaled $3.5 million in June of 2012, and comparable products are already being sold in Germany at sales of $29 million annually
41% of Germans respondents to a 2008 environmental protection survey said that they feel it is important to live an ethical and sustainable lifestyle
Competition: Tado◦
Tado is a smart phone climate control system which aims to increase the operating efficiency of home and apartment climate control systems
Launched November 2012 Estimated sales of
$29,855,000 (€22,863,376) according to Hoover’s
Competition: Tado◦
Strengths Weaknesses
Headquartered in Munich, combining technical development, design, sales and customer service under one roof
Automatic energy consumption optimization, responsibility messaging and mobile climate control system already on sale in Germany today
Control of Tado takes place almost exclusively through its internet app
With only a few buttons, it is less programmable than the Nest thermostat
Annual subscription fee of €99, as opposed to a one-time startup fee
Market Potential for Nest The global market for all heating, ventilating
and air conditioning systems grows 6% annually1
With projected sales for a comparable German product valued at $29 million in its first year Year one– $29 million Year three– $32 million Year five– $36 million
Operational Plan– Product Changes
As a globalized product, to successfully penetrate this new market Nest needs only German-language Thermostat interfaces Web and mobile phone
applications Product labels
Position it as a more expensive, more efficient alternative to its German competitor through strategic communication
Operational Plan– Promotion Total promotional budget of $2.9 million Total promotional time period of one year Trade Missions– 20%
Using earned media inclusion, or public relations, garner positive coverage in 50% of top technological print publications (Computer Bild) and 75% of top consumer electronics review websites (Chip Online) by allowing trade journalists and bloggers to test the Nest product
Print Media– 30% Paid advertising in top German consumer magazines (Cover, Das Haus), tailoring the
“Nest in Real Homes” depictions to various age demographics, but maintaining Nest’s clean, simplistic brand messaging
TV– 20% Demonstrate Nest’s efficiency, effectiveness and aesthetic appeal through daily paid
TV commercials airing every third week during prime time (between 8:15 and 10:30 PM) on news, home improvement, science and documentary channels
Outdoor Ads– 20% Utilize the German minimalist art aesthetic to create “street art” of Nest’s
thermostat technology, erecting eye-catching billboards in metropolitan centers whose simplistic designs contrasted by powerful copy will drive traffic to the site
Operational Plan– Pricing One-time, up-front price of €190
59% of Germans are willing to pay a higher price for a product that proves to be environmentally sustainable
Nest’s German competitor charges a yearly subscription fee of €99 Nest’s price represents more than €200 in yearly energy
savings, not to mention a savings of about €5,000 over a lifetime, compared to its competitor
Electronic import duties (14%), transportation and insurance costs as well as markup built into manufacturer’s suggested German retail price
Promotional fees will total 10% of net sales of Nest thermostats
Operational Plan– Calendar for Marketing Activities Product changes
German-language thermostat interface by June 2013 German-language web and mobile applications by July 2013 German-language packaging by July 2013
Promotional goals Trade missions completed between February 2013–
February 2014 Print media advertisements to run between July–December
2013 TV advertisements to run between July–December 2013 Outdoor advertisements to run between July–December
2013 Export to Germany by October 2013
Operational Plan– Budget
Budget: $17,171,095
ManufacturingPromotionDuties and Tar-iffsTransportation
Advertising Samples
Key Takeaways Potential to reach 12.5 million Germans Largely untapped market with room for more
than 6% growth annually Already-establish distribution channels make
this product logistically feasible Nest’s physical aesthetic is in line with
German preferences Germany is a huge market for environmentally
sustainable technologies
Thanks youfor your time