1. Siemens Industry Sector Communications Development Research Findings Prepared for Siemens and Ogilvy New York March 2013

2. 1 Report Structure Background: – Research objectives – Research sample Summary and conclusions The manufacturing environment: global picture The manufacturing environment: individual markets – Similarities and differences across the markets – Individual breakdown by market:  Germany  US  China Reaction to the marketing communications

3. RESEARCH BACKGROUND AND OBJECTIVES 2

4. 3 Background and research objectives Investment in manufacturing equipment is at a very low level – Clients and Potential Clients in manufacturing and processing industries are avoiding or delaying capital investment decisions Siemens/Ogilvy are seeking to open the minds of decision makers to investment - and have produced an advertising campaign (film and print advertising) Research was commissioned in order to explore and develop this advertising, but to do so within the broader context of current attitudes and feelings within the industry sector More specifically: – What are the issues facing manufacturing and processing industries? – What is accelerating new investment in new technologies and what are the barriers to investment? – Exploring the potential for the advertising to start to open minds and encourage investment consideration – How can the advertising be developed to maximize effectiveness and engagement? – What are target audience reactions to concept of ‘Making Things Right’ and what job does it do for Siemens ? – What impact does it have on the audience in terms of creating confidence?

5. 4 Methodology and sample: 15 in-depth interviews amongst proxy sample A series of 15 in-depth telephone interviews, 5 in each of the 3 markets: – US, Germany and China – All interviews took place in English – apart from 3 Chinese interviews in which an interpreter was used A proxy sample was used from Gerson Lehrman’s expert panel: – Participants were high calibre people with senior industry or policy experience – but not active industry decision makers – They were selected for their experience and intimate knowledge of decision making in industry and because they are still very active in consulting roles to industry decision makers

6. OVERALL SUMMARY AND CONCLUSIONS 5

7. 6 Tension between ‘wait and see’ caution and growing sense of pressure to seize opportunity Mood of cautious optimism across the 3 markets: – Things really did seem to be getting better (this time) – The money was there – and/or borrowing was cheap – Renewed faith and belief in manufacturing in economic and cultural terms – A sense that underinvestment can only go on for so long – and there was a need to move forward and compete The key barrier to immediate capital investment is a ‘confidence gap’: – Was this (yet) another false dawn? – Faith in traditional cycles of boom and bust knocked by scale of recent events – How would the fiscal cliff/European situation play out? – Stringent ROI requirements are ‘unwritten rule’ in large international corporations In addition tangible challenges identified in all 3 markets: – In China limitations on technological sophistication (equipment and employers) - as well as increased labour costs – In US in terms of education and tax environment – In Germany in terms of productivity, cost structures and political unpredictability Tension between need for caution and urge to seize unique opportunity: – Financing conditions favorable, chance to steal a march on competitors and be ready to exploit the upturn

8. 7 ‘Making Things Right’ campaign has potential to play 2 key roles It can build on growing sense that we are on the brink of manufacturing renaissance (and therefore NOW is the time for manufacturing investment): – Urgent, rallying tone  Sense of momentum – Offer implicit reassurance that investment in manufacturing now will not be regretted – Taps into pent-up desire for action It can provide a strong Communications Platform for Siemens in the manufacturing space: – Can create emotional connection through shared belief/passion in the value of ‘building real things’ –a belief/passion that exists on both personal and national level – Some evidence in US and China that this was first truly emotional connection brand has made – previously respected but distant – It is a leadership position where Siemens speaks for the whole industry – and inspires them – Siemens’s global profile and German/engineering heritage make this position a credible one

9. 8 Key learnings from the research can further strengthen the campaign ‘Making Things Right’ was powerful and direct for English speaking audiences but work needed to find appropriate translations in other markets Need to ensure that manufacturing is set in high-tech context to ensure innovation is at heart of the campaign: – This will ensure that rallying cry is appropriately forward looking and not interpreted as nostalgic plea Leadership role for Siemens should not be seen as implicitly relegating role of others: – Clients are calling for credit/inclusion – There was some feeling from US and Chinese participants the campaign was currently a little too European The press needs development to maximize contribution: – In developing sense of inclusiveness of clients and other nations – In dialing up the sense of innovation – In showcasing national industrial achievements to be proud of

10. THE MANUFACTURING ENVIRONMENT: GLOBAL PICTURE 9

11. MOOD OF CAUTIOUS OPTIMISM PREVAILED 10

12. Most felt ‘cautiously positive’ about economic conditions: – Things were “on the up”, signs of growing confidence Participants from all 3 markets identified rational reasons for optimism but it seemed as much based upon emotional factors: – Desire for upturn very strong and degree of wish fulfillment/ “fingers crossed” mentality – Belief that boom must eventually follow bust Optimism in US and Germany was tempered by previous ‘false dawns’: – Optimism often caveated by “in theory” – Concern around factors outside of their control – in Europe and with regards regulation and the political climate Scale of ‘innovation and training’ challenge in China appreciated But the key barrier to immediate investment was attributed to a lack of confidence/continuing uncertainty: – The idea of a “confidence gap” resonated strongly 11 Mood of ‘cautious optimism’ prevailed across markets “Things are in place…it is looking good out there.” “We’ve been here before, haven’t we?”

13. THE CONFIDENCE GAP 12

14. 13 Psychological barrier of uncertainty creating a ‘wait and see’ approach to capital investment Lack of funds is not the problem: There is a general feeling that… “The biggest theme is uncertainty …2 years ago we had the financial crisis, then the election and then the squeeze on access to capital…now there is no demand out of Europe…things seem to be getting better…but when will we know things are getting better?” “In this climate of unknowns the risks are so much greater, if you make a good decision today in five years time you will be in a much better position but if you make a bad decision it is not just a case of not being as profitable you could be dead. As a business man and entrepreneur I want to make progress but I also have a duty to be a stable employer.” “At present …the only certainty is the uncertainty in life.” “Business and investment works best in a climate of certainty, there are a lot of question marks at present.” The issue was confidence: “Money is cheap, you only earn half a percent on it.” “The money is there but the case needs to be made.”

15. 14 Psychological barrier of uncertainty creating a ‘wait and see’ approach to capital investment (2) This uncertainty was focused around specific events: – Fiscal cliff – and likelihood of tax increases/end of incentives for business and manufacturing: BUT remains for others – “Tax deductibles that incentivise investment under threat …tax ceiling will have to be raised but Obama will push to make changes here” (US Policy) “It won’t get any worse…and that is key to know.” “Today we have a third layer of complexity in investment decisions that was not there In the past, which is the European situation. In the past we were just looking at profits and the cost of borrowing and drawing up a business plan … now we are in a position where we can not put a clear business plan together as there is too much unpredictability.” – Uncertainty as to European situation – this was fading for some:  Uncertainty around the future regulatory and political (Germany) environment “We have elections coming up and it is not certain what the outcome will be.” (Germany)

16. 15 Psychological barrier of uncertainty creating a ‘wait and see’ approach to capital investment (3) There was some evidence of a more profound uncertainty – the scale of the financial crisis led some to question the model of recession and recovery: – Failing banks and failing states led some to worry that this was “system failure” not just recession – “Not sure we can still trust in turnarounds …Japan never has.”  “After the events of recent years …’bad news’ has been redefined!”  “Maybe the reduced purchasing power of the middle class in Europe is just going to become the new reality.” – Waiting (impatiently, anxiously) for the reassurance of ‘business as usual’ This was an uncomfortable line of thinking and even those who voiced it, would talk themselves back round: – “ But I am being overly pessimistic…there are too many signs that the system is righting itself.”

17. “There is lots of money and it is sitting around earning half a percent – getting the money isn’t the problem – it is making the case internally ” 16 Reassurance of ROI key tangible barrier in place This uncertainty was manifested in an environment were the burden of proof of success was much higher than previously: – “Investment is always a risk but now you get the feeling that risk is unacceptable.” In larger companies ROI reassurances had become an “unwritten rule”: – Figures to demonstrate ROI in 3- 4 years demanded: – A sense that there is a pressure for faster ROI demands in China, partly due to the speed of growth in the economy but also due to political uncertainties – Longer term opportunities “still not getting off the ground” – In Germany, Mittel-stand companies less risk averse/accountable There is therefore a need to de-risk decisions as well as inspire action: – Framing the case in the language of ROI may confer key advantage “We are looking at a 3-4 year payback, for example we are holding out at the moment to see whether the farmers are going to spend – impact on the drought…we just need to wait another 3- 4 months and see.”

18. 17 Pressure not to miss the boat becoming important counterweight and potential stimulus for action The culture of caution was increasingly being questioned – in the belief that the costs of not acting were potentially just as high: – “The last thing you want is to be caught with your trousers down - we will need to keep up with productivity.” – “We need to ensure we can also compete at the value end of the market and that is going to require a significant investment in technology.” – In the US and Germany there was also the threat faced by a resurgent China – and a sense that that threat needed to be prepared for, with appropriately modern and efficient technology in place Some feeling that this might be a golden opportunity to invest – given that the cost of borrowing was essentially free: “That happened to me at GM. We were sitting in Shanghai in the middle of the biggest ever car boom in history…and we didn’t have the cars to sell.” “Are you going to look back and think back in 2013 capital was cheap, energy was cheap, our European competitors were on their backs and we still didn’t do it…” “Not a capital issue – money is cheap, virtually free – if you don’t invest at the right time you will not be armed to make it all up on the up turn.”

19. 18 How it feels: Strong desire for action frustrated There was talk about the tension that existed: – The knowledge that the opportunity was there, the potential losses of waiting too long and being ‘outsmarted’ by competitors with “more balls” – Some sense that the people making these decisions were looking over their shoulders, wondering what competitors were doing ;  This could be something that could be exploited – if decision-makers knew competitors were jumping or getting close to jumping… – All this created a feeling of nervousness within organisations There was a strong sense of frustration Inaction, waiting was clearly not a comfortable state for these types of people: “Knowing exactly when is the right time…we all wished we had a crystal ball.” “All business men are basically entrepreneurs, you want to grow and invest and see the rewards of your efforts.” “You are pumped up and ready to roll…the sort of guys that are pushing these things are pumped up, successful guys….you’ve get a head of steam and then the brakes are put on… and you’ve got to let the team down…people who have been living for this.”

20. SUMMARY OF COMMONALITIES AND DIFFERENCES ACROSS MARKETS 19

21. 20 In all markets a tension exists between an optimistic desire to push ahead and the prevailing uncertainty Mood of cautious optimism Signs of a recovery but also a desire to push ahead Uncertainty or the ‘confidence gap’ acts as the key barrier in all markets – Outcomes harder to predict than in more prosperous economic times – Political and/or fiscal uncertainties exacerbating challenges of predicting long term Burden of proof has become higher - desire to have a clear handle on ROI over 3 year period Tension exists in all markets between the need for caution and the urge to seize the potential opportunity – Recognition that the cost of not acting could be being left behind

22. However, the precise causes of the tension do differ between markets USGermanyChina Triggers for optimism Revitalisation of manufacturing Signs of a move towards (& hope of) increased insourcing Cost competitive lead of China may be diminishing Talk of ‘restoring innovation lead’ & investing in education Pride in the culture of manufacturing excellence Economic strategy vindicated Kudos of ‘Made in Germany’ reputation seen shift in core markets to emerging economies Strong foundation of Mittel-stand companies Skilled workforce Huge growth in strength of manufacturing Making progress on innovation front & technology will need to play a key role Domestic market remains buoyant Surplus of capital Tangible barriers Having a sufficiently skilled workforce US fiscal cliff decision creating uncertainty & an ‘innovation backlog’ Fear of ‘false dawns’ Tension between caution to invest and need to improve productivity & maintain competitiveness Short term ROI focus Market & political uncertainties (especially in Eurozone) Need to shift to a more high tech/low consumption model Increasing wage costs Lack of skilled workers Growth slowing? Uncertainty around Governments attitude 21

23. GERMANY 22

24. 23 Cautious optimism in Germany based on culture of manufacturing excellence Continued focus on manufacturing has been vindicated as finance and services struggle:  “We stayed on course and true to it (manufacturing ethos)…I think the UK and US have learned hard lessons.” – Strong sense of pride in German manufacturing and engineering  “ We created the standards that countries like Japan –and companies like Toyota - took to heart.”  “80% of our costs are invested in the design and drawing stages.” Pride in the kudos around the ‘Made in Germany’ reputation: – Declines in the European market have been replaced by the increasing consumer demand from China and emerging markets The strength of Mittel-stand companies ensured quality but also offered less risk averse environment: – The was a feeling that these companies did not have the same degree of ROI limitations on investment that bigger conglomerates laboured under:  “These companies are not trapped in the cycle of quarterly figures.” Continued investment in education at (at apprenticeship/technical level) ensured a highly skilled workforce now and in the future: – Some acknowledgement that business, marketing and leadership skills were stronger in US – Pride in the action taken in previous years to reduce labour costs and tackle the unions – now paying dividends

25. 24 Tangible barriers in Germany Participants acknowledged the tension between the need to maintain competitiveness and productivity against the backdrop of caution with regard investment: – “We need to invest in technology so we can also produce cheaper cars, but shrinking incomes are making people nervous and all investment decisions are double, triple checked.” – “We need to invest in more manufacturing technology and more capacity, it is about both quality and cost.” – “People are currently careful to invest in new technology but without productivity advances we will not meet targets – ultimately one of the biggest drivers for new investment will be this need to increase productivity.” Larger companies were stifled by short-term ROI focus: – “Where other, bigger companies have taken over they have brought with them a risk aversion and short term thinking…the unwritten rule…3 year return on investment….” – “In difficult times, payback period are shorter, 2-3 years as you can only trust the order book for a shorter period of time.” Also a number of market uncertainties: – Eurozone crisis remains unresolved and the shift from developed economies to emerging economies creates hesitation – Germany has adapted well to these changes to-date but it remains in the background – Fears that the positive economic conditions could deteriorate if there is a change after the election – Issues around cost and security of energy (given rewenables focus) and resources/commodities

26. UNITED STATES 25

27. At cultural level there was a renewed belief in ‘products’ (as opposed to services/virtual products): – “Ideas are great but they do not replace stuff people buy and use.” – “The knowledge economy does not replace the regular one.” At a political level there was perception that US based manufacturing was a way of creating jobs for Americans – and if based upon the latest innovation, ‘real jobs that could last”: A sense that there could be issues for China going forward with the need to move to a more skilled workforce, increasing labor costs and political unrest – an opportunity for US 26 US Market: Revitalisation of manufacturing at cultural, political and economic levels “ The ‘next generation” is the sort of language you hear a lot …Obama uses it…the attention is on what young people will do for jobs.”

28. 27 US Market: Revitalisation of manufacturing at cultural, political and economic levels (2) In-sourcing also made economic sense. It allowed a greater focus and control over quality: – “Like with the call centre thing from the consumers side – we have realised that ‘quality’ is important.” – “The decision (where to build) is not just based on unit labor costs but takes into account other cost and risk factors…how long freight takes to arrive, potential delays” – “We have competitive advantage …improving workforce, stable laws…you know what you are getting in the US.” – Some felt it was more about ‘rebalancing’ – and out-sourcing would continue to be a reality in some industries:  “We are not going to assemble laptops here (US)…or make clothes.” Skilled workforce in US (especially at leadership level):  “Our engineers are better than Indian engineers – and not too far off the German gold standard.”  “Labour productivity is high.”  Improvement in education and focus on STEM (science, technology, engineering & mathematics) subjects seen as vital correctives - and there is increased emphasis in these areas “Restoring innovation lead” was seen as “overused political rhetoric” by some policy experts – but contained important truth: – Innovation was seen as panacea – and culture of innovation best fostered by creating pro—business tax and incentive environment and focusing on education – “Our children our losing out to other countries…something is going wrong between 6 th and 8 th grade.”

29. 28 US Market: Tangible barriers identified Still some anxiety about sufficiently skilled workforce: – Weakness in STEM (science, technology, engineering and math) subjects had led to shortage of skilled workforce at middle level:  “The weakness shows when you can’t hire non US nationals…say in Aerospace…you then feel the crisis.” Immigration was an important way of filling the gap: – “ We should not be concerned with sending people back when they come out of Stanford – we need to keep them.” In US fiscal cliff decisions creating “innovation backlog”: – Uncertainty of impact on investment conditions of future tax regulation – “Tax deductibles that incentivise investment are under threat …tax ceiling will have to be raised but Obama will push to make changes here.” – “We need ensure the US remains a friendly place for people to set up business.” Natural gas boom had yet to benefit US manufacturers directly due to lack of access created by insufficient infrastructure: “The transporting, the pipelines and the rail network aren’t there yet…certainly not for Eastern companies.”

30. CHINA 29

31. 30 Chinese market: Until now the focus has been on growth, now a shift towards becoming a world class producer Worlds ‘workbench positioning’ is no longer an option Manufacturing seen as still performing well but less consistently so: – “Development is unbalanced …still showing growth but not in all areas…over 10 % in plastics and electrical l but less than 10% in steel and transportation.” – “The boom times are over – and quality and good management will rise to the top – Auto and aircraft sectors are doing well.” Market conditions meant China is no longer an automatic choice for foreign manufacturers: – “If you wanted 10,000 workers quickly and cheaply then there was nowhere but China… but now rising labour costs and dearth of labour are key issues.” The country is looking to change its manufacturing model to one based on innovation and quality – and this is echoed by Government’s plan for ‘high tech/low consumption”: – Focus on training and investment in innovation – Accompanied by sustainability and environmental focus – “We need a shift from traditional manufacturing which is low tech and low added value but consumes a lot of energy and raw materials to high tech and high added value but reduces consumption through innovation.” – “We need to maintain our pride in all areas, not just having pride in our huge growth, the next step is pride in our innovation and skills.”

32. 31 Chinese market: Until now the focus has been on growth, now a shift towards becoming a world class producer (2) Signs of real progress on innovation front: – Increasing number of patents sought and number of credible innovators growing:  “Lenovo is leading the way…genuine world class company.”  “Huawei is another example of genuine progress.” – Technology seen as playing a key role in this transformation Work bench model was overly simplistic and undersells Chinese current involvement in some sectors:  “It is not just assembling…we have core competencies and are (increasingly) participating in design elements.”  “Expertise is growing through exposure…in railways China began by importing but running such a vast system has created operational expertise which is transferable…learning by doing.”  “We are doing great things in some areas already but turning traditional industry into manufacturing focused on high technology and innovation is going to be a 5-10 year process.” Access to capital is not the issue and with the growing middle classes the domestic market remains buoyant and prepared to pay for quality:  “The capital resources are there to invest, we had 11 trillion fiscal revenue annually, in 1997 there was less than 2 trillion.”  “Chinese consumers are trading up as the rest of the world is trading down.”

33. 32 Chinese Market: Tangible barriers exist Need to change mindsets to focus on innovation and innovation capability: – “We are good at large capacity projects, some may say we have over capacity but the quality in the main is still ‘me too’ products with low end equipment to go with this.” – “China is not lacking in cash flow or CAPEX, we spend way too much money re-investing in the same quality of fixed assets and create over capacity. It is more about what to invest in and the Government and business mindsets needs to change.” There was an awareness of the ambition and scale of the objective: – “I have worked in many sectors and manufacturing is upgrading but it is still very backward.” – “It is a big transformation.” – “It (innovation and quality focus) is our wish but realism is necessary.” – “The Government has put great publicity on this trend but I am not sure all company leaders have grasped this.” – “It is changing but it takes a while, we are still in the developing stage.” In some areas concern that progress is not fast enough or that focus may shift if growth slows: – “In the last 5 years the Government and business community are placing sustainability high on the agenda, there is Government investment going on in this area but the music is louder than the action. The business community and Government are back to looking at short term GDP.” Also a need to focus on the quality of the skilled laborers & focus on training programs and education: – “In China training has not traditionally been part of our operating culture.” – “Chinese kids are smart but they are not encouraged to develop their own learning.”

34. 33 Chinese Market: Initial assumption that Siemens were looking to invest rather than compete in China Automatic assumption that Siemens would be looking to invest in China rather than looking for Chinese business – still viewing western businesses as investors/allies not competitors: – Interviewer needed to rebut this presumption There was an acknowledgement that Western companies could play vital role in addressing manufacturing issues : – Role in training and upgrading of technology:  “We need companies like Siemens to help us improve the technology and training to help Chinese companies compete.”  “We need to encourage innovation and put sharing of learning with the international community at the top of our agenda.” – Preference for companies to get involved rather than foreign Government Siemens seen as ideally placed: – Already very involved across breadth of industries  “It is a world leader in manufacturing of precise equipment, I visited Siemens, and know them particularly in the area of medical instruments.” – Respected for its innovation,  “Siemens has great credit in Germany for its innovations.”  “ Chinese people would be very happy for Germany to come here and work at the training institutes …or participate in exchanges …there are no Government restrictions on this.”

35. 34 Chinese Market: Possible to detect underlying pressure to ‘buy Chinese’ Initial assurances that Government exerted no pressure/had no policy on buying from foreign multinationals: – “The only pressure is the commercial pressure…internationals companies are very expensive …and our companies are not as profitable as they were.” However, there are indications of a pressure to favour domestic suppliers: – SOE’s decisions to work with companies like Siemens “subject to SASAC approval” – Government believed in importance of Chinese companies to develop innovation and technology internally for future manufacturing performance Good reasons for ‘buying Chinese’ were also readily expressed: – Foreign multinationals often imposed conditions that limited freedom for Chinese companies to transfer the technologies they were purchasing – Foreign multinationals were often ignorant of Chinese market Feeling that the opportunity for Siemens was to take a longer term view and understand such relationships as reciprocal: – Access to huge market – In return for commitment to help develop technology and training Attitudes seen to differ considerably between state owned, privately owned and foreign owned enterprise: – Foreign-owned enterprise clearly lowest hanging fruit – in other contexts Siemens would need to demonstrate willingness to train and share technology –and demonstrate reciprocity of relationship

36. REACTION TO MARKETING COMMUNICATIONS: THE POWER OF “MAKING THINGS RIGHT” 35

37. 36 Recap of findings: Current attitudes to the state of manufacturing were characterized by paradoxes and tensions On the one hand there was optimism about market conditions, on the other anxiety and uncertainty remained: – Things were getting better Vs. fear ‘another false dawn” – Belief that recession is always followed by recovery (as night follows day) - challenged by fear that we have moved “into uncharted territory” The need for caution, “to wait and see” co-existed with urge to act: – Desire to build, innovate and develop stymied by culture of caution leading to frustration The sense of risk associated with capital investment was counterbalanced by a sense of golden opportunity: – Risk aversion and ROI focus vs. ‘fortune favours the brave” (and may punish the timid)

38. 37 The territory of ‘Making Things Right’ has real power: Building on pressure for action The “rallying cry” for manufacturing was timely and appealing: – It was a call for action in a time of caution/restraint – that could speak to the frustration of ‘wait and see’ mentality - could add to momentum growing for investment NOW – Idea of ‘making things’ refreshing in the age of the virtual products and experiences – and the previous focus on virtual and service products – Has the potential to tap into the current Government rhetoric in China around using technological progress and innovation to ‘shift/upgrade’ manufacturing towards ‘healthy’ and ‘sustainable’ growth The campaign is striking a rich vein: – Tapping into widely held belief about the excitement and satisfaction of making things – Connecting with people in a fundamental way : – It makes what people do (what they are) feel worthwhile and significant – It conveys a sense of contribution ‘Making Things Right’ line was powerful summation – especially for English speaking: – Colloquial and hard hitting – US and (some) German were able to detect a pleasing duality – “Right” speaking to both quality AND ethical/societal issues “That (making things) is why I am in the business I am in.”

39. 38 Making Things Right – In their own words “I love ‘Making Things Right’ – passion, standing behind the project…that idea really resonated with me.” “I am all over this (message about making things) …Let’s go!” “I liked the film….great message…I grew up in manufacturing (so it really resonates) …” “It really brings alive the renaissance in manufacturing and demonstrates that it is the heart of an economy. ” “I could have sat through it 10 times.” “It gives me goose bumps.”

40. 39 Making Things Right’ – In their own words (2) “Film really attracts me, says we should do something important to improve society, wealth and industry” “It evokes a scale of scope and ambition” “Sort of thing you can show at the company conference and the workforce leave thinking ‘I work for a really great company’” “That could have been written by the no 2 at GM, a good friend of mine…that is what he feels (passion for making things)” “They are really onto something…sense of pride…”

41. 40 The territory of ‘Making Things Right’ is a space that Siemens can own It is the voice of a leader: The campaign conveys the passion that Siemens have for manufacturing and innovation: – It is a shared passion that creates an emotional connection – Taps into the belief that Siemens is a global leader The message is a credible one coming from a German company well known for its engineering heritage “Making things’ is a clever synonym for manufacturing, ‘Making Things Right’ suggests they are leading a change in industry and how it works. We have had industry in the past but now we are going to make it better.” “It is Siemens talking on behalf of the whole industry’”

42. REACTION TO MARKETING COMMUNICATIONS 41

43. 42 ‘Making Things Right’ line less effective when translated from English ‘Making Things Right’ not necessarily fully understood in Germany and China – simply understood as making things well or ‘properly’: – Societal element not necessarily understood – the phrase may come across as a little literal in the German translation:  “We know Siemens’s makes things well.”  “An idiom that can appear somewhat abstract and the link with innovation and progress would not necessarily be understood in China.” The phrase works best in US/English - where the vernacular allows a pleasingly direct and urgent tone: – Need to find the equivalent in Germany/China to maximize potential In China translation problems were not limited to ‘Making Things Right’: – Tone was a little too formal – Unfamiliar tone of voice

44. 43 Manufacturing needs to be set in high-tech context and tap into the power and appeal of innovation Making tangible things is key to appeal but must ensure that innovation is at the heart of the campaign: – Underline that campaign is future focused and not interpreted as nostalgic call for old days of “making things with your hands” and/or lacking the sense of inspiration and progress it is meant to convey: – “What is missing is the word ‘innovation’…that is what everyone wants to hear right now …” In current form, there are a couple of examples where this sense is missing: – Some felt the film could show more innovative images (e.g. the welding images in the film – when in reality would only weld by hand if things had gone wrong in the production line) – Use of coffee in press and film, container shots in Chinese print:  “There is too much about coffee.” In China is tapping into current Government thinking but the language does not always fully express this: – Sense that using some of the Government rhetoric (the ‘5 year vision/plan’) would more overtly tap into Siemens potential role in the delivery of the shift towards high tech and low consumption industry

45. 44 Need to ensure that campaign is fully inclusive Some call for clients to have a role (even a co-starring one): – As partners to Siemens in manufacturing innovation – not simply Siemens trying to convert – They do not want to be passive receivers of the call – but part of it Some sensitivity around the implication that ‘Making Things Right’ is not the status quo: – Some felt need to acknowledge that ‘Making Things Right’ was continuing goal for some – and did not in anyway imply lack of focus on quality  “As a CEO my objective is always to be the best we can be, that is not to say Siemens can not support me in this goal but they should acknowledge that we would be wanting to make things right in the first place.” There was some national sensitivity about inclusion: – “The film screams European values… mass transit, European cities…and mentions climate change – that is kiss of death here.” – Chinese respondents were keen to see definite Chinese visuals included  “We need to know it is China…perhaps some iconographic Chinese architecture.” – Some feeling (US) that it suggested outsourcing to Asia - images perceived as depicting Asian workers/plants  “Would be nice if some of the shots (visuals in film) were US shots….”

46. 45 Potential for press to play key role The press ads were an opportunity to ensure the campaign was fully inclusive: – Appease national pride  “You mention North China Pharma… which is good …but it could be s more influential company like Huawei.”  “Both visuals (in China) are of the medical industry…what about avionics or steel or electronics?” – Ensure that the role of the client was not merely passive  There was a hope that the aspect of partnership would be highlighted in the text  Articulating specifics examples grounded in client context was seen as vital In current form some negatives were identified: – Without clear sight of the sub head, the link to the film was not always clear – there was a need to ensure that quality and innovation were highlighted in the copy – Danger of coffee images seeming like ‘old technology’ – vital call for manufacturing interpreted as building innovative things, exacerbated by coffee not being seen as a major energy consumer – danger that it detracts from the inspirational call of the message – The container visual used in China had similar connotations  “Containers are not the sort of innovative image Siemens should convey.” – Call for all visuals to be as innovative as the ‘girl raising her hand ’visual – Press ads in China talk about improved competition – ‘Making Things Right’ also needs to include technology to support the shift to more efficient (less commodities) and sustainable (environmental impact) production Some objected to idea that business should have responsibility for making jobs: – “It is not our role to create jobs -We can grow the business and that will lead to jobs…”

47. 46 The advertising from the Policy Perspective There was agreement that this campaign would ‘play well’ amongst the political classes as it did within business: – It fitted well into the current beliefs about the importance of manufacturing –and the role Siemens was adopting was commended  “They are stepping up to the plate – leading the charge…it is what more US companies should be doing!”  “China would welcome Siemens playing a key role in helping to upgrade our technology and train our people.” The focus on jobs was welcomed: – In US some feeling that campaign should talk directly about manufacturing’s potential to create ‘real jobs, not just any jobs: – “There is a sense that manufacturing and innovation is what this country needs to provide the sort of jobs that stay and grow…you hear a lot of jokes here about well qualified young people working in Starbucks.” Campaign was commended for “walking the political tightrope” : – The business case and the social case delivered together, which could please both sides of the political divide:  “It talks to the business case with words like ‘nimble’ but also the social case with words like ‘community’, ‘stability’ and ‘future generations’ …I can see Democrats and Republicans standing together …by the Siemens stand…all nodding their heads in agreement.”  “ I like the language – expand, flourish, transform…words we used a lot in the Bush administration” ‘Making Things Right’” – a good balance of business sense and what the politicians need to hear.”

48. Reactions to marketing broadly consistent but some differences emerged USGermanyChina ‘Making Things Right’ direct, urgent and multi-dimensional Film too European Film showing outsourcing not in-sourcing Political sensitivity of marketing communications applauded ‘Making Things Right’ more literal statement Press too reliant on ‘old technology” Marketing taps into national pride – in terms of manufacturing heritage ‘Making Things Right’ more literal statement Tone of film too formal Film/press need to tap into Government rhetoric Press needs to be more representative of Chinese industry 47

49. MARKETING COMMUNICATION IMPLICATIONS 48

50. 49 Marketing Communication Implications Although advertising on its own cannot persuade decision-makers to invest, it can add to the pressure that already exists: – The time is now via its sense of urgency – Confirms via ‘Making Things Right’ the instinct that manufacturing/making things is the right thing for them, their company and the economy “Making Things Right” has the potential to carve out a powerful and compelling positioning for the brand in the manufacturing space: – As a leader that speaks for the entire industry as a passionate advocate for manufacturing – and the highest quality standards in manufacturing – As a socially responsible business organisation Siemens is seen as having the credentials to claim this positioning: – Global scale – Reputation for quality and innovation

51. 50 Marketing Communication Implications (2) The “Making Things Right” line requires careful translation in Germany and China in order to match its power in English The Campaign needs some revisions to meet its potential: – Dial up innovation – Include clients as partners who share the passion for “Making Things Right” – Adjust press to ensure campaign feels relevant to all markets, not a German campaign Siemens can also frame the argument in the appropriate ROI language to persuade decision-makers – and ‘arm’ them to make the internal argument