The 15 nations which form the European Union together make up the world’s biggest consumer market in terms of expenditure. Per capita GDP is $19,443, (12,151) compared with $19,295 (12,059) in the North American Free Trade Association.
This market offers tremendous opportunities for American companies, provided they acknowledge certain cultural and demographic differences. Many impediments to cross-border transactions have been demolished and a shared currency, currently being adopted by 11 countries, will remove much of the uncertainty associated with multinational transactions. Still, the EU is by no means a “common market”.
With all this talk of integration, it is easy to overlook basic differences between European countries. Europe is a mosaic – each country has its own language, its own customs and its own culture and cuisine. It is important that these differences are not overlooked.
There are some overriding trends, such as an ageing population, that are common to all European countries. However, variations in many other factors need to be considered before deciding how to launch your product or service in Europe. These variations include household size, income levels, spending patterns, women’s role in society, and perceptions of advertising.
The EU is often likened to the US, but four times as many Europeans live in the space occupied by one American. This number goes still higher in the affluent and highly educated northern countries, such as
Holland and Belgium. European houses are smaller and closer together. The roads are narrower and more crowded. As a result, cars, appliances, and packages need to be smaller than the equivalent US models.
The total population of Europe is not expected to grow very much between now and 2020 – an extra two per cent is all that is expected – which means that older people will make up an increasing percentage of the population.
This population shift will generate demand for a new range of products and services designed to meet the entertainment needs of the swelling ranks of retirees. Additionally, there will be a growing demand for products to meet the physical needs of older people; for example, stair lifts and sheltered housing.
Household size varies greatly between EU countries. This is partially due to differences in each country’s social security system, but deeply ingrained cultural traditions also play a role.
The average European household consists of 2.54 persons, but the range of household size country by country is enormous – 2.06 in Denmark to 3.26 in Spain. This may not sound like much of a difference, but it equates to significant variance in the composition of households. For example, 36 per cent of Danes live alone, compared with only 13 per cent of the Spanish population. Conversely, 17 per cent in Spain live in households composed of five or more members, compared with five per cent in Denmark.
Single households are a phenomenon of northern Europe, while southern Europeans tend to live in larger groups. Forty per cent of Swedes live alone in single households, while only 17 per cent live in households of more than four people. In Spain the opposite is true: 41 per cent live in large households and only 13 per cent live alone.
The reasons for this are mainly cultural, but also economic. A strong desire for independence is prevalent in the northern countries, while in the South, conviviality and extended family are important. A high level of youth unemployment in the southern countries also limits the number of people living alone.
Marriage takes place at different ages in different countries. For example, Danes get married an average four years later than their Portuguese counterparts. This affects the purchase of major household appliances. When they marry, the average Dane has lived on his own, while the Portuguese has remained at home with parents. It should come as no surprise, therefore, that purchases of appliances in Denmark are substantially higher than in Portugal.
Average post-tax private income varies in Europe, from $12,802 (8,001) per capita in Luxembourg to $4,627 (2,892) in Greece. However, differences in living costs reduce this income disparity. When these costs are taken into account, the picture changes. Italians have more disposable income than any other nationality, while wealthy Swedes have a reduced purchasing power.
This, coupled with a strong cultural sense of style, explains why Italians spend nearly three times as much as Greeks on clothing. However, Austrians, who have substantially lower incomes than Italians, spend almost the same on clothing.
Forty-four per cent of working age women in Europe have jobs. This varies greatly between countries – from 35 per cent in Italy to 59 per cent in Denmark. The level of female participation in the workforce helps to explain differences in the aver-age household income from country to country. This leads to greater demands for childcare facilities and convenience food products in the countries where a greater proportion of women work.
The number of single mothers is also an issue. Again, the demarcation between north and south is clear: 54 per cent of the children born in Sweden in 1996 were outside marriage compared with only three per cent in Greece.
The average European believes that there is too much advertising, that advertising tempts people to buy things they don’t need and that it makes things more expensive. The most pro-advertising countries are Britain and Finland, while the most hostile are Germany and Spain.
Oddly, attitudes to advertising are not linked to the amount of advertising that people see: Germans are exposed to more advertising than the British or the Finns, but the Spanish are exposed to even less.