This article has been modified from its original posted date.
In this era of globalization, companies are choosing to expand abroad in order to leave a global footprint. Many companies look to Germany for expansion, as it represents an enormous market opportunity and can be used as an entry to the larger European market. But to really make your mark on the German market, often localization is necessary. This article will provide some important tips for localizing for the German market.Product Globalization vs. Product Localization
To properly localize your products or services you need to understand the difference between globalization and localization. Globalization involves extending a product’s reach overseas and transcending cultural, linguistic, and regional barriers to give it a truly global feel. Product localization, on the other hand, centers on making the product appear as if it were made by and for those living in the target region. A well-localized product does not stand out as being from a foreign market.
Market Validation
German consumers have their own unique needs and purchasing habits. Because of this, you should not make any assumptions about how your product or service will be received by Germans. Research and preparation matter. German culture plays a large role in the success of a new product or service, so you’ll want to make sure you fully understand how German culture plays a role in consumer preferences. When you do your research, remember to consider factors such as disposable income, age, education, buying behaviors, expectations on building trust, the importance of relationships over time, and your own market readiness.
Another important point to keep in mind is that Germans are much more cautious and curious with their purchases than US consumers. Germans like to have as much scientific data and trusted information as possible when making decisions and generally prefer to take their time making decisions. Germans are by nature risk averse and as a new business, you have to work very hard to earn their trust and money.
Cultural Localization
Cultural localization is particularly important for the German market, but is often overlooked by US companies. Many companies presume, incorrectly, that they understand the importance nuances of German culture. Important cultural differences to understand include likes and dislikes, manners, behaviors, gestures, expectations, and beliefs.
Cultural localization should play an integral role in your marketing and sales strategies. Your marketing strategy should take into account how Germans expect to learn about your products or services (e.g., direct introductions, conferences, email, tv, internet advertising) and how they expect to purchase products or services like yours (e.g., online or in-store). In recent years, Germans have made more purchases and payments online than ever before. Popular payments systems include Paypal, and some methods specific to Germany, such as Sofortüberweisung.de, ClickandBuy and Giropay. For larger purchases, many Germans prefer to pay “on account,” (e.g., invoiced) a payment practice that is unknown to many other cultures. You may need to add other payment options to your Germany localized online store.
You should also understand that there are strong regional differences that can impact your business. These differences can impact consumer decision making, expectations, and purchasing patterns. Keep differences in mind when you market. For instance, don’t assume that all Germans can relate to lederhosen and dirndls, the traditional clothing typically seen at festivals and special events in Bavaria often associated with Germany as a whole. Northern Germans will not relate to images using traditional Bavarian dress.
Language Localization
Although it is likely you can get by in Germany speaking only English, German is used in business and all government activities. For all B2C business you will want to communicate (speak, market and advertise, provide customer service) with your customers in German. Even if your B2B business partners speak English, your relationships will be more successful if you learn at least a few key phrases. Although, there are many dialects in Germany, ‘high German’ is recommended for business purposes. If you want to target specific regions within Germany, it is important to localize for culture and dialects.
Product Localization
Although product localization is important, before you make major changes to your product, website, or marketing and advertising materials, test and validate your assumptions by talking to prospects and conducting product testing. This will allow you to more easily determine what modifications you must make in order to appeal to your German customers. It might be as easy as including a section on your website with German pricing, customer support, and slightly altered marketing materials. However, to be competitive, you may need to make more complex localization changes, including a new product or product line, different packaging, new regulatory approvals, 24/7 localized customer support, and different sales and marketing methods.
Currency
German currency is the Euro. Because you will have to work with currency exchanges, keep up with current exchange rates to ensure your prices are reasonable and competitive. Currency rates fluctuate almost daily. Furthermore, Germans expect that the ‘shelf price’ includes taxes (VAT in Germany). In other words, Germans do not expect to pay additional taxes on a purchase like they would in the US. The price they see on the shelf already includes VAT; therefore, carefully consider your pricing model when expanding into Germany to ensure that you fully understand your margins. Use our International Pricing Strategy and calculator to help you work through your own pricing.
Legal
Doing business within a new legal environment is always a challenge. Mistakes are common. German data privacy laws are very strict and consumers are very particular about companies not sharing their information. Germany also has stringent email marketing laws you’ll need to follow. To keep your mistakes from tanking your business, it is imperative you understand your legal obligations. A local attorney is the best resource to help you understand and comply with your new legal obligations. Globig can connect you to some of the best legal experts in Germany.
Germany is a great business opportunity for many companies. Germans have their own unique culture that should be considered when introducing a new product or services to the market. Start out on the right foot by making the necessary localization changes.
Related Articles and Content You Might Like:
The Do’s And Don’ts Of Email Marketing In Germany
A Quick Guide to Business Etiquette in Germany
Globig Special Report – Doing Business in Munich
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