Nikos Diamantopoulos
BizWorks Strategy
Management Consulting
Athens, October 2009

Contents
Economic developments
Bailout plans
Investment activity
Business environment
Market analysis
Key strategies
Nikos Diamantopoulos, Athens, October 2009
nikolaos.diamantopoulos@gmail.com

Economic developments
Emerging markets
experienced intensive Real GDP Growth (% )
growth rates, within
this decade. In
7,1
6,8
6,6
Southeast Europe
6,2
5,9
5,9
5,8
5,5
6
countries, GDP
5,3
5,4
5
increased at 6% level,
4,2
double to that of
3,5
Greece while in Euro
2,1
zone was kept to 2%.
2
NBG Sept. ‘09
Disarray in the global
0,9
0,6
0,5
financial markets is
being felt keenly in
the Balkans.
Economies are under
-1,2
recession conditions,
activity is slowing
-3,4
-3,5
sharply and it is
-4,2
-5,4
-4,5
estimated that within
-4,8
-6
2009, GDP will be
Greece Euro Turkey SEE-5 Albania Bulgaria Fyrom Romania Serbia
decreased by 3%.
Area
2002-2007 2008 2009
Nikos Diamantopoulos, Southeast Europe Business Review

Vital economic sectors have been hit hard. Industrial production, in central and southeast Europe has
dramatically reduced and it is strongly linked to dropping exports. This slowdown reflects low growth in key
EU export markets. At the same time there has been reported a negative trend in retail. Therefore, it is reduced
the consumers’ market value in FMCG, fast moving consumer goods and durables industries. Consumer
packed goods markets that dealt with a more than 20% value growth in Romania during 2007-2008 are
presently, limited in best cases in a slight, single digit increase. At the same time Greek food retailers-SM
revenues decreased by approximately 7% in January-July ‘09.
Major regional tourist destinations have affected according to national tourist organizations. Tourism revenues
in Turkey shrank 10%; sector's revenues, for the first half of the year decreased by 15% in Greece and 15,5% in
Cyprus. In Adriatic, it is estimated Croatia’s losses to exceed 5% within ‘09. Additionally, Bulgaria saw foreign
tourist arrivals fall more than 10%.
The Greek economy
Apparently, liquidity is limited and SME with their small cash 2007 2008 2009
flows are more susceptible to payment risks. At the same time Selected economic indicators y-o-y %
CPI/Inflation 2,9 4,2 09F:1,2
banks have moved to restrict lending and corporate credit has Domestic demand 5,1 0,7 09F:-3,1
decreased. Furthermore, a number of companies proceeded in Final consumption 3,9 2,4 09F:-0,4
shutting down units and decreasing personnel. This inevitably Private consumption 3,1 2,2 Q2:-1,2
Exports 3,1 2,3 09F:-13,6
has increased unemployment levels. Unemployment rate 8,2 7,7 09F:9,5
Total investments 4,2 -11,6 Q1:-6,3
In a deteriorating international environment structural public Retail sales volume 2,4 -1,2 Q2:-13,3
Industrial production 2,0 -3,5 Q2:-10,1
finance issues are critical. Croatia and Albania had a high state
Construction -3,1 -16,1 M:-41,5
debt by the end of 2008 with both approaching 55% of GDP. At Loans to private sector 20,9 16,4 Q2:7,4
the same time in Greece approached 98% of GDP. Countries Fiscal policy
Government deficit/GDP 3,6 5,0 09F:8-9
that depend heavily on reimbursements from abroad mainly Government dept/GDP 94,8 97,6 09F:106
remittances from their diasporas and Foreign Direct Investment NBG, Alpha bank, Sept. '09
have seen those funds diminish.
Nikos Diamantopoulos, Southeast Europe Business Review

Surely, economy slow down has affected Greek banks, exposed internationally. Aggressive lending, in the
region that contributed in achieving a 20% market share, has undoubtedly intensified the deterioration of their
loan portfolio quality. Consequently, they were forced to increase their provisions for bad loans, hurting their
profitability and capital base. Data from the Central Bank show nonperforming loans rose to 7% at the end of
H1 ‘09, from 5% at the end of 2008. It is estimated that they will reach 9% by the end of the year. Furthermore,
given the current low level of savings in emerging markets, a rather balanced development policy between
safer loans and deposits is adopted.
Although a 28-billion-euro bank support package was devised by the government to keep the Greek economy
adequately funded, the rate of credit expansion to the private sector is now seen slowing to 5 percent by the
end of the year. Some 50,000 small businesses in Greece have benefited from the loan guarantee program by
the state-backed Small Enterprises Guarantee Fund institution. The total amount of loans issued has reached
€4.8 billion. Nevertheless, it is estimated that postdate checks issued substituting liquidity, exceed €100 billion.
More than 250.000 households in Greece are dealing with their inability to fully pay their loans. Although credit
expanded rapidly during the past few years, household leverage in SEE remained relatively low in comparison
with that in developed countries. In Greece retail credit has reached 48% of GDP, early 2009, while in Bulgaria
was 26% and in Romania 20%. Lower, at 14% in Serbia and Albania.
As far concern the extent of banking system expansion, their investments in the region, remained relatively
low. Total assets in European emerging markets estimated in 2008 for less than 25% of Greek GDP. On the
contrary, Austrian banks had invested up to 60% of their state’s GDP.
Romanian foreign owned banks possessing the vast majority of country’s banking assets, agreed to maintain
their overall exposure to Romania and to increase the capital of their subsidiaries. They signed an agreement
with the IMF to boost their capital by 1 € billion.
Nikos Diamantopoulos, Southeast Europe Business Review

Country profiles
The Turkish economy Turkey 2009 The Bulgarian economy Bulgaria 2009
Facts '08 Selected indicators y-o-y % Facts '08 Selected indicators y-o-y %
Nominal GDP, € billion 516,0 GDP Q1 -13,8 Nominal GDP, Euro billion 34,7 GDP H1 -4,2
Unemployment rate 10,7 Unemployment 09F 14,9 Unemployment rate 5,6 Unemployment 09F 9,0
CPI yoy 9,8 CPI 09F 6,0 CPI yoy 8,8 CPI 09F 1,0
Exports, USD billion 142,0 Private consumption Q1 -9,2 Exports, € billion 16,4 Private consumption Q2 -5,0
Exports, % GDP 18,5 Exports July -28,0 Exports, % GDP 47,0 Exports Q2 -18,8
Share of exports to the EU % 56,0 Net FDI H1 -57,0 Share of exports to the EU % 60,0 Investments Q2 -13,9
Net FDI, USD billion 17,9 Wholesale trade Q1 -25,4 Net FDI, € billion 3,8 Retail sales H1 -8,0
Net FDI, %GDP 2,3 Manufacturing Q1 -18,5 Net FDI, %GDP 15,0 Retail sales Jun. -17,0
NBG ’08, Sept. ’09. Alpha Aug. ‘09
Banks foreign owned, % assets 16,0 Construction Q1 -18,9 Banks foreign owned, % assets 80,4 Industrial production Q2 -20,0
Customer deposits, % GDP 40,0 Customer deposits, % GDP 52,8 Construction Jun -8,6
Retail credit, % of GDP 12,0 Retail credit, % of GDP 26,0
Corporate credit, % of GDP 23,0 Corporate credit, % of GDP 47,0
Net public dept, % GDP 30,3 Net public dept, % GDP -1,6
The Romanian economy Romania 2009 The Serbian economy Serbia 2009
Facts '08 Selected indicators y-o-y % Facts '08 Selected indicators y-o-y %
Nominal GDP, Euro billion 134,6 GDP H1 -7,7 Nominal GDP, Euro billion 35,1 GDP Q1 -3,5
Unemployment rate 4,4 Unemployment 09F 7,6 Unemployment rate 17,6 Unemployment 09F 20,3
CPI yoy 6,7 CPI 09F 4,5 CPI yoy 8,5 CPI 09F 7,5
Exports, € billion 33,5 Private consumption Q1 -12,2 Exports, USD billion 12,0 Exports H1 -22,5
Exports, % GDP 24,9 Exports Q1 -20,3 Exports, % GDP 23,0 Net FDI H1 -67,0
Share of exports to the EU % 70,0 Direct investment H1 -43,0 Share of exports to the EU % 54,0 Retail trade Q2 -7,2
Net FDI € billion 6,9 Retail sales Q2 -13,5 Net FDI USD billion 4,4 Manufacturing Q1 -20,0
Net FDI, %GDP 4,5 Industrial production Q2 -8,7 Net FDI, %GDP 8,5 Construction Q1 -14,4
Banks foreign owned, % assets 82,9 Banks foreign owned, % assets 75,1
Customer deposits, % GDP 30,2 Customer deposits, % GDP 32,2
Retail credit, % of GDP 20,0 Retail credit, % of GDP 14,0
Corporate credit, % of GDP 19,0 Corporate credit, % of GDP 28,0
Net public dept, % GDP 17,0 Net public dept, % GDP 26,0
Nikos Diamantopoulos, Southeast Europe Business Review

Country profiles
Fyrom economy Fyrom 2009 The Albanian economy Albania 2009
Facts '08 Selected indicators y-o-y % Facts '08 Selected indicators y-o-y %
Nominal GDP, Euro billion 6,4 GDP H1 -1,2 Nominal GDP, Euro billion 8,8 GDP Q1 6,0
Unemployment rate 33,7 Unemployment 09F 35,0 Unemployment rate 13,1 CPI 09F 1,3
CPI yoy 6,3 CPI 09F 0,5 CPI yoy 2,1 Exports Q1 -15,0
Exports, Euro billion 3,0 Private consumption Q2 -0,5 Exports, USD billion 1,4 Retail trade volume Q2 1,2
Exports, % GDP 45,0 Exports Q1 21,6 Share of exports to the EU % 79,0 Industrial sector Q1 -13,3
Share of exports to the EU % 66,0 Net FDI Q1 -42,4 Net FDI USD billion 0,8 Construction Q1 8,0
Net FDI Euro billion 0,3 Industrial production Q2 -13,1 Net FDI, %GDP 6,1 Remittances H1 -4,8
NBG ’08, Sept. ’09. Alpha Aug. ‘09
Net FDI, %GDP 3,9 Construction Q1 1,7 Banks foreign owned, % assets 94,0
Banks foreign owned, % assets 53,2 Customer deposits, % GDP 16,1
Customer deposits, % GDP 45,5 Retail credit, % of GDP 14,0
Retail credit, % of GDP 18,0 Corporate credit, % of GDP 23,0
Corporate credit, % of GDP 26,0 Gross public dept, % GDP 55,0
Net public dept, % GDP 11,0
Ukrainian economy Ukraine 2009 The Cypriot economy Cyprus 2009
Facts '08 Selected indicators y-o-y % Facts '08 Selected indicators y-o-y %
Nominal GDP, Euro billion 126,4 GDP Q2 -18,0 Nominal GDP, Euro billion 16,9 GDP H1 -0,2
Real GDP growth,% 2,1 Unemployment 09F 5,0 Real GDP growth,% 3,7 Unemployment 09F 4,7
Unemployment rate 3,0 CPI 09F 13,8 Unemployment rate 3,0 CPI 09F 1,0
CPI yoy 21,0 Private consumption 09F -18,0 CPI yoy 4,7 Domestic demand Q2 -0,4
Exports, USD billion 68,2 Exports Q2 -15,9 Exports, Euro billion 1,1 Private consumption Q1 1,5
Exports, % GDP 36,2 Investments Q2 -48,7 Exports, % GDP 6,3 Exports Q1 -19,3
Net FDI USD billion 10,6 W/S & Retail trade Q2 -18,0 Net FDI Euro billion 0,9
Net FDI, %GDP 5,6 Manufacturing Q2 -36,5 Net FDI, %GDP 5,2
Customer deposits, % GDP 39,2 Construction Q2 -54,1 Banks foreign owned, % assets 39,0
Net public dept, % GDP 7,8 Customer deposits, % GDP 201,0
Gross public dept, % GDP 50,0
Nikos Diamantopoulos, Southeast Europe Business Review

The crisis subsides
The global economy seems to be on the verge of recovery. The advanced economies, hit particularly hard by
financial crisis and the collapse in world trade, are showing signs of stabilization driven mainly by an
unprecedented public policy response. The shape of recoveries will vary, however with economies that
suffered financial crises likely to experience weaker recoveries than those were affected mainly by the
collapse in global demand. Recent Euro area data suggest that the pace of decline is moderating. The output
decline across region was driven by a combination of falling domestic demand –especially investment- and
shrinking trade within a tightly integrated region with individual economies suffering to varying extents
depending largely on their pre crisis imbalances. The rebound in emerging and other developing economies
is being benefiting from currently developed policy frameworks, stronger than during previous crisis.
Emerging Europe has been particularly hard by the drop in capital inflows. In recent months the pace of
contraction has slowed dramatically in much the region, with risk appetite returning, exports accelerating,
and the inventory drawdown moderating although private credit remains sluggish and unemployment is on
the rise. In emerging Europe financial institutions are vulnerable to a further deterioration in asset quality
IMF, Global Economic Outlook, Oct. ‘09
because losses in the corporate sector may rise while capitalization remains fairly low. The recourse to
shortened work hours in effort to preserve jobs may have slowed the fall in employment so far, but as labor
market pressures continue in the months ahead and as employment support programs reach their limits,
unemployment is forecast to remain high. As credit conditions remain tight, investment will likely remain
low. At the same time inflation is at low levels and private demand is likely to remain particularly subdued in
many European countries. Service and product market reforms are needed to raise productivity growth and
facilitate a reallocation of resources between the tradable and non tradable sectors. In this regard, the crisis
could present an opportunity to push forward with ambitious reforms that would help energize growth.
Finally, following the signs of improvement in the real economy, GDP growth over the medium term, is likely
to return to pre crisis rates. We appear now to be embarking on the road to recovery.
Nikos Diamantopoulos, Southeast Europe Business Review

Bailout programs
Governments faced the twin challenge of reassuring public anxiety while taking steps to cushion the economic
blows. Across the region, governments have adopted anti-crisis plans that should help the fragile economies
survive. These include: keeping the budget deficit under control refusing to abandon national infrastructure
projects subsidized by foreign investment; supporting and providing guarantees for deposits; increasing
exports while reducing imports; preserving the currency's exchange rate; and protecting the most vulnerable
groups of the population from being heavily affected.
The region has been facing a severe recession and local economies are not in a position to finance the large
public deficits. Due to this fact a significant external financing program implemented in order crisis-hit
economies to get back on track and calm fears of a meltdown. Earlier this year, IMF enabled the release of an
amount of $3.6 million for Albania, while currently, IMF approved a $1.57 billion loan for BiH and $2.9 billion for
Serbia. Belgrade government, having available a total of $3,9 billion, adopted measures, to support production
and export growth this year. Serbia will also receive a loan from Russia. As far concern Ukraine a $16.4bn IMF
loan package granted. Additionally, the IMF, the EU and the World Bank made available a total of €20 billion to
help Hungary.
Country Fiscal balance Current account
It was also reported that IMF had offered Turkey $19 billion in % GDP balance % GDP
credit; the deal is under negotiations. Naturally, international 2008 2009 2008 2009
lenders review governments’ economic performance under Turkey -1,8 -6,2 -5,7 -1,5
Romania -4,9 -7,5 -12,3 -5,5
their program of measures and reforms’ implementation to
Bulgaria 3,0 -1,3 -25,3 -12,3
ensure stronger control over areas that pose the biggest fiscal Serbia -2,5 -5,2 -17,2 -8,5
risk. Fyrom -1,0 -4,0 -13,1 -10,8
Albania -6,0 -8,0 -15,4 -13,2
Ukraine -3,2 -7,2 -7,2 -1,0
Cyprus 0,5 -4,0 -18,3 -14,2
NBG Sep. 2009
Nikos Diamantopoulos, Southeast Europe Business Review

A €20 billion IMF-led rescue package was also, announced for Romania. The Fund approved a two-year stand-
by arrangement for Romania worth nearly €13 billion euro and the EU agreed to contribute another €5 billion to
the bailout which includes also loans from the World Bank and the European Bank for Reconstruction and
Development/EBRD. Bucharest government passed a plan allocating 20% of the country's budget to finance
massive public investments in infrastructure - transport, environment, healthcare, education and roads - the
main sector that will create jobs and ensure a certain degree of economic growth.
Investment activity
At regional level, during last 3,5 years approximately 3.500 deals of €113 billion total value completed.
Targeted countries under consideration have been: Bulgaria, Czech Republic, Hungary, Fyrom, Poland,
Romania, Serbia and Turkey. First half of ’09, according to Zephyr & Mergermarket databases, 350 transactions
of € 6,8 billion were implemented in the region. Apparently, trend had reversed and sum of deals was 40%
lower to that of first semester of ’08.
Greece, a €243 billion economy, has strongly associated with the region due to €50 billion invested, since 90’s
and 4.000 companies established whereat 100.000 local staff is employed. Furthermore, top 30 Greek groups of
companies, in terms of profitability is consisted of regional players.
Currently, significant investment Major transactions in Southeast Europe, 2009
Acquiror Target Sector Value Deal
projects have been confirmed. In mil.€ type/stake
Serbia, Swedish furniture manufacturer Cosmote SA Telemobil SA, RO TMT 207,0 Majority
IKEA plans to open a shopping centre Atel Energie AG SC EHOL Distribution SRL, RO Energy 100,0 Majority
CME Production BV Media Pro Entertainment, RO TMT 67,0 Majority
and department store in Belgrade. The GED Iberian PE Diamedix SRL, RO Pharma 15,0 Majority
project will cost approximately €300m. Telekom Slovenije DD Cosmote/Germanos Skopje TMT 190,0 Majority
Cosmote SA Albanian mobile TMT 48,2 12,6%
CEZ, Czech utility OSSH, power distributor, ALB Energy 102,0 48,2%
NBG & Mergermarket. Deals completed, ytd Sep. 2009
Nikos Diamantopoulos, Southeast Europe Business Review

In Bulgaria, Austrian energy company EVN will invest €95million to build a wind power park. The project
includes 25 turbines, which are expected to produce about 140 GWh of electricity per year. Slovenia's largest
retailer Mercator plans also to invest some €80 million through the construction of up to nine hypermarkets.
The investment comes under the company's expansion strategy for the Southeast Europe. Mercator aims to
become the leading chain of fast moving consumer goods in the region. Austrian media company Stevia
Communications has acquired a 50% stake in news broadcaster Evropa TV. Furthermore, South Korean
Choice Consortium plans to build a USD 20 million industrial park.
In Romania, Nokia launched accessories production. The factory will be the only supplier for Nokia
accessories in Europe. The investment amounts to €60m. The Agency for Foreign Investment announced
some 20 foreign investors plans to invest in the country since the beginning of the year, with the total
value of projects amounting to €1.5 billion, and 5.000 new jobs. Among them, Pepsi Americas is investing
€105 million in a bottling plant in Bucharest.
Business environment
Global Competitiveness Index 2009-2010 of World Economic Forum, is an experts’ assessment of national
competitiveness prospects that captures microeconomic and macroeconomic foundations of competiveness,
which is defined as “the set institutions, policies and factors that determine the level of productivity of a
country”. Furthermore, Doing Business 2009 report of World Bank is tracking government reforms implemented
aiming at making business easier and reduce administration obstacles. Within SEE region, Fyrom and Cyprus
implemented significant reforms. Relevant ranking quantifies the number and the impact of measures associated
with regulations affecting the stages of business life. Apparently, these highly influence investors’ decisions.
Nikos Diamantopoulos, Southeast Europe Business Review

Ranking on the ease Global Competitiveness Index Global Competitiveness
of Doing Business Index components
Basic requirements
Country 2010 2009 Country 2010 2009
Institutions
Highest Ease Highly competitive
Infrastructure
Fyrom 32 69 Cyprus 34 40 Macroeconomic stability
Cyprus 40 36 Slovenia 37 42 Health and primary
Bulgaria 44 42 Portugal 43 43 education
Hungary 47 41 Hungary 58 62 Efficiency enhancers
Portugal 48 48 Turkey 61 63 Higher education and
Slovenia 53 58 Montenegro 62 65 training
Romania 55 45 Romania 64 68 Goods market efficiency
77 Greece 71 67 Labor market efficiency
Montenegro 71
Croatia 72 61 Financial market
Turkey 73 63
sophistication
Albania 82 89 Bulgaria 76 76
Technological readiness
Serbia 88 90 Ukraine 82 72 Market size
Croatia 103 110 Fyrom 84 89 Innovation &
Greece 109 100 Serbia 93 85 Sophistication factors
BiH 116 119 Albania 96 108 Business sophistication
Ukraine 142 146 BiH 109 107 Innovation
More difficult Less competitive
182 countries. World Bank 2009 132 countries. World Economic Forum 2009
Doing business regulations
Starting a business Protecting investors
Dealing with construction Paying taxes
Employing workers Trading across borders
Registration property Enforcing contracts
Getting credit Closing a business
Nikos Diamantopoulos, Southeast Europe Business Review

Significant investment factor remains the labor cost. Average monthly gross salary, at national level for full
time employees is €922 in Slovenia and €725 in Croatia, these are among the highest in the region. In Serbia it
is €467, in Fyrom €490, in Romania € 318 and €264 in Bulgaria. Income strongly affect household expenses
that for food and drinks consumption in Bulgaria and Romania are at least 3 times less compared to Greece,
according to ’08 Euro stat . That didn’t necessarily reflected to food volume since price levels in these
countries are 30% less than in Greece which is equivalent to EU average. As far concern the level of
corporate tax is quite low. In a number of countries, namely: Cyprus, Serbia, Fyrom, Albania and Bulgaria the
corporate income tax rate is 10 percent.
Min salary GDP, per head Corporate tax
Country € Country $ Country
Montenegro 55,0 ΕU 33.400 Montene 9%
Ukraine 61,0 Greece 32.000 Cyprus 10%
Serbia 131,0 Slovenia 29.500 Bulgaria 10%
Bulgaria 122,0 Cyprus 28.600 Serbia 10%
Albania 134,0 Hungary 19.800 Fyrom 10%
Romania 140,0 Croatia 16.100 BiH 10%
Hungary 257,0 Bulgaria 12.900 Albania 10%
Poland 290,0 Romania 12.200 Romania 16%
Turkey 307,0 Turkey 12.000 Croatia 20%
Croatia 426,0 Serbia 10.900 Turkey 20%
Slovenia 566.5 Montenegr 9.700 Slovenia 22%
Greece 701,0 Fyrom 8.900 Ukraine 25%
Cyprus 840,0 Ukraine 6.900 Greece 25%
2009 Monthly gross salary. BiH 6.500 2008 KPMG
Full time employees. FedEE Albania 6.000
Kosovo 2.300
2008 CIA, World Fact Book
Nikos Diamantopoulos, Southeast Europe Business Review

Governments’ Foreign Investment strong
support is undermined by the existing Corruption Global Corruption
high levels of corruption associated with Perception Index Barometer
public sectors’ bureaucracy and the Rank Country CPI score Country
political system, regardless the fact that Highly clean Low bribery levels
significant progress has been achieved 26 Slovenia 6,7 Portugal 2%
last decade. Global Corruption Report 31 Cyprus 6,4 Turkey 2%
2009 of Transparency International 32 Portugal 6,1 Croatia 4%
identifies perceptions of the degree of 47 Hungary 5,1 BiH 4%
corruption as seen by business people 55 Italy 4,8 Fyrom 4%
and country analysts. Areas investigated 57 Greece 4,7 Bulgaria 5%
62 Croatia 4,4 Kosovo 13%
include: bribery, corporate fraud, cartels
70 Romania 3,8 Hungary 14%
and corruption in supply chain and
72 Bulgaria 3,6 Romania 14%
transactions. In the relevant Corruption 72 Fyrom 3,6 Greece 18%
Perception Index, top 25 of highly clean 85 Albania 3,4 Serbia 20%
countries is possessed by high income, 85 Serbia 3,4 Ukraine 21%
developed countries. Regional best 85 Montenegro 3,4 High bribery levels
positions possessed by Slovenia and 92 BiH 3,2 Citizens(%) paying bribes. '09
Cyprus. Furthermore, it is revealed that 134 Ukraine 2,5 69 countries. Transparency Int.
corruption is very/highly relevant to Highly corrupt
business in Bulgaria: 36%, Serbia: 35% Global corruption report 2009
and Romania: 29%. 180 countries. Transparency Int.
Furthermore, Global corruption barometer, by same organization, pointed out sectors perceived most affected
by corruption: Public officials in Turkey and Ukraine; Judiciary in Bulgaria, Croatia, Fyrom and Kosovo;
Political parties in Greece and BiH.
Nikos Diamantopoulos, Southeast Europe Business Review

Market analysis
The segmentation of consumer packed goods markets in SEE states is directly associated with socio economic
factors. That affects brand strategy the notion of added value, profit margins and pricing which is actually a
cost for consumers. Additionally, product availability and therefore distribution channels and geography are
taken into consideration as well as regional variations within the country, which in many cases is
complemented by cultural conflicts. Consequently brands based on their characteristics, benefits and values
are positioned by consumers in a specific market segment.
Consumer market segmentation
Premium International brands. Added value, quality products in advanced packaging and premium
segment pricing. Mostly imported from multinational companies. Up market, targeted to higher socio-
economic classes. Distributed nationally to main urban areas. Parallel development to that of
International supermarkets chains. High profit margins product category.
Mainstream Quality characteristics products with functional packaging and pricing compatible to emerging
segment middle class perception towards value for money. A few semi-national producers and
international companies with an effective country wide distribution network that covers
Nikos Diamantopoulos ‘09
national and local key accounts. This market segment obtains dominant position in terms of
value share in the market.
Affordable Min quality characteristics products. Νo frills packaging and extremely low price affordable to
segment low income socio-economic classes. Mostly multiple local producers with low production cost,
basic infrastructure and regional distribution network around their homeland. Known as
discount/value sector in developed markets. Dominant in volume sales, market segment.
Nikos Diamantopoulos, Southeast Europe Business Review

SocioEconomic Classes
In emerging economies, the size of
Upper middle class is estimated at 15% up to
25 percent of the population. Regardless
Middle the wealth acquired by the oligarchy in
transition period, lower socio economic
Emerging
classes and groups experiencing
poverty represent the vast majority of
Low er
the population. The inevitable middle
class growth over the medium term,
Poverty illustrates the region’s market potential.
Upper
In developed, high income
Developed
Middle industrialized countries, the
size of middle class is
Low er calculated from 50% up to
80% of the population.
Poverty
0 10 20 30 40 50 60 70 80 90
(%) Population
Nikos Diamantopoulos ‘09
Nikos Diamantopoulos, Southeast Europe Business Review
Framework of marketing segmentation,
in Fast Moving Consumer goods in South East Europe
Στρατηγικη προσεγκιση, Το πλαισιο τμηματοποιησης της αγορας
στα ταχεως κινουμενα καταναλωτικα αγαθα στην Νοτιοανατολικη Ευρωπη
Νικος Διαμαντοπουλος, Ιουλιος 2009 .

Structural industry analysis is applied in order to understand the nature of competition. It provides through
strategic groups identification, an intermediate frame of reference between looking the industry as whole
and considering each firm separately. Grouping is based on similar characteristics and strategies followed.
Industry analysis
Strategic groups
In this case presented from FMCG-
Nikos Diamantopoulos ‘09
food in SEE, the selected strategic
dimensions to distinguish
competitors are pricing and market
coverage. Companies are clearly
segmented according to their Prem ium
premium, middle or lower pricing Im ported
policy. Market coverage is based
on the companies’ distribution
expansion. They are defined in
more than 50 locals, some 5 semi Pricing
nationals that rather have a
regional distribution network
within the country and a company
Nikos Diamantopoulos ‘09
operating nationally, that achieved
a countrywide distribution and the
only one invested in brand
Multiple National
communication. Bubble size
Locals Group Leader
represents the sales value of the
group as a total. Strategic groups
analysis reveals the intensity of Regionals
rivalry within industry. Same Sem i-Nationals
time captures that factors such as
importance of branding should not Market Coverage
overemphasized.
Nikos Diamantopoulos, Southeast Europe Business Review

Key strategies
Managing and developing business strategies, during crisis in emerging markets
Core business Define precisely the industry that company operates. Sustain investment while re-evaluate
synergies. Focus in core business. Utilize organization experience in technological knowledge,
R&D and distribution channels. Disinvest from what doesn’t work.
Mass market Prioritize market segments. Go beyond premium, invest in mainstream segments to achieve
scale in procurement, production, distribution, and branding.
Marketing Product: Rationalize and localize product portfolio on the basis of consumer insights.
Place: Command the dynamics of local distribution, placement and merchandizing.
Price: Competitive pricing, taking into consideration price elasticity and psychological limits.
Promotion: Invest to communicate and build the brand.
Innovation: Make the difference. Now that the market is paused, few can afford to think more
and design innovative solutions.
Customers Acquire customers selectively, optimize supply chain. Broaden distribution levels.
Secure customer base and service standards. Maximize collections.
Operations Cost management: Make most costs variable than fixed. Reduce overhead. Revamp
procurement practices. Make firm decisions even if they are unpopular.
Nikos Diamantopoulos ‘09
Re-engineering: Develop reformation frameworks, design and implement re-organization,
Law enforcement, anti-corruption policies and procedures.
Organization Structure: Build effective local business units with limited international dependency.
Empower local management.
People: Gain loyalty of employees. Recruit new talents. Align people motivation to long term
Value creation. Rather than laying off personnel, retrain and relocate to needed areas.
Nikos Diamantopoulos, Southeast Europe Business Review

Nikos Diamantopoulos
BizWorks Strategy
Management Consulting
Nikolaos.Diamantopoulos@gmail.com
http://www.linkedin.com/in/NikolaosDiamantopoulos
Athens, October 2009