Enter strategy of Church's into Russian market


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  • Russia: Since 2000, the Russian GDP has grown by an average of 7 percent a year. In the same period, dollar income per head has grown by nearly 29 percent annually, faster than China. This unparalleled growth in the population ’ s disposable incomes has created not only the famed billionaires and oligarchs, but also an emerging upper middle class that is clamouring for the finer things in life. The growing spending power, combined with the significant numbers of the very wealthy, has created a lucrative luxury export market sector for top quality products and services. Russia luxury market: The 4 th luxury market in the world Growth of 15% per year The volume of market is 3-4 billion GBR Luxury goods are 15% of whole market of clothes and shoes The forecasts are different from various resources: -2% of increase by Bain&Company -Decline from 7%(optimistically) to 30%(pessimistically) Index Box Research Overall, the volume of luxury market will decline but it’ll according to world wide situation 2) The volume of decreasing in sales varies from company to company and the experts explain it as dependence of marketing strategy and assortments 3) But the quantity of rich Russians has increased in 16% and reached 119 000 numbers
  • Competitors (sales 2008 in millions) Dolce&Gabbana - 31 Gucci Group 23 Prada Group -20 Louis Vuitton Moet Hennesy - 20 Armani Group - 15 Christian Dior Group- 15 Bottega Veneta- 9 Burberry Group - 8 It’s easier to work through distributors due to peculiarities of Russian market. Distributors: Monopolized market by 5 distributors, but the situation is changing “ While all major brands are now present in the Russian market, the opportunity for some smaller players in the luxury sector is huge. ” (Schimel, A., head of the French men's fashion house Zilli) Alain Schimel, head of the French men's fashion house Zilli, which operates in Russia through four stores, said the country already generated more than 42 percent of group sales of around €30 million, or $41 million, a year. He said the company's sales in Russia rise 65 percent annually.
  • - Moscow is the 5th fashion capital in the world Marketing budget for the year= £ 445,000
  • 1 out of 4 russians use the internet. With the use of traditional media, especially TV advertisement losing its credibility among Russian consumers, the Internet will replace and provide Church’s with the appropriate leverage required to target this segment. Moreover, the internet’s popularity is on the rise and a lot of consumers are now watching bloggers’ opinions rather than magazine editorials for product information and opinion, as indicated in Russia’s luxury website: http://luxurysociety.com/articles/2010/09/a-reviving-russian-luxury-market Furthermore, to add to these, according to the Citibank Russia, Russians are to spend RUB 600 billion (approximately GBP 122 million) on Internet purchases in 2010 . http://www.citibank.ru/russia/news/eng/269.htm Anticipating this rise in internet purchases, the internet has become increasingly popular with advertisers as it not only offers a much cheaper form of advertising, and targeting the appropriate segment, but is also taking away a good portion of budget from traditional media, especially TV and print media. The following Internet sites will be mainly used for the advertising. Church’s official website ( http://www.church-footwear.com ) Set up a customized Russian-version of Church’s website Men’s shoe blogs, such as the following internet sites will have Church’s advertisements: http://www.theurbangent.com http://www.jargol.com/blog/   http://theshoebuff.com/ http://www.blog.shoes.co.uk Shoe and Fashion blogs are important source of product information for the fashion conscious people, which is more important than traditional media such as TV. According to Citibank Russia, Russians are to spend RUB 600 bn on Internet purchases in 2010   Moreover, with bloggers opinion and blogging gaining rapid popularity, a lot of marketing activities will be involved in blogs, and bloggers will be invited and encouraged to participate in the company ’ s social events. As a company looking for advertising opportunities to a specific market, internet advertising offers some targeting methods that insure that those who see your ads are the ones most likely to buy.
  • By looking beyond the immediate sale, you raise the bottom line to high-end. Turn a customer into a client and you extend the lifespan from transaction to lifestyle, from encounter to relationship We want our target customers to feel the need of buying this product by seeing the advertisement. The soul of our campaign lies in creating an emotional bond with customers It is how you enter and stay in the minds and hearts of customers
  • Enter strategy of Church's into Russian market

    1. 1. In Russia
    2. 2. Outline <ul><li>About Church’s </li></ul><ul><li>5C analysis of Russia </li></ul><ul><li>Campaign objectives </li></ul><ul><li>Positioning / Message creation </li></ul><ul><li>Media </li></ul>
    3. 3. <ul><li>Church ’ s is a legendary luxury British brand </li></ul><ul><li>It was founded in 1873 </li></ul><ul><li>From the production of handmade man’s shoes to Luxury footwear brand </li></ul><ul><li>It has operations in over 15 countries worldwide </li></ul>
    4. 4. Russia as a country GDP has grown by an average of 7 % a year Unemployment rate: 8.4% (2009 est.) Income growth rate: 5.20% Inflation Rate : 7.00% Resource: http://www.tradingeconomics.com Russian Luxury Market: The 4 th luxury market in the world 15% growth per year The volume of market is 3-4 billion GBP 15% of whole market of clothes and shoes
    5. 5. Competitors & Distributors More than 120 luxury brands Eight of 40 top luxury brands can be as competitors “ While all major brands are now present in the Russian market, the opportunity for some smaller players in the luxury sector is huge. ” (Schimel, A., head of the French men's fashion house Zilli, 2008) 80% of market is taken up by only 5 Russian distributors with exclusive procurement
    6. 6. Customer-Market segments Mass Elite : 0,90% -  of population / 1 200 000 people 11% -  of overall income Target profile: Males, 45-50 year old Income from £ 45 000 per year and above Business owners, Top management, professionals Benefits: Exclusiveness , Quality, and the Value of goods Motivation- Decision making: Q uestion of prestige Status products
    7. 7. Church’s in Russia <ul><li>Moscow, Stoleshnikov pereulok </li></ul><ul><li>ROI = 7.15 % (on the 5th year) </li></ul><ul><li>Payback period = 5 years </li></ul><ul><ul><ul><ul><ul><li>Marketing budget for the year = £ 750,000 </li></ul></ul></ul></ul></ul>
    8. 8. Objectives and Media Objectives Short term objective (3 months) –> Create awareness Long term objective (1 year) –> Increase Sales & Profitability Company objective-> Increase market share
    9. 9. Media for Launch Internet 43.6 million Internet users in Russia Rising popularity of shoes & fashion blogs Internet spending to reach RUB 600 bn Internet advertising will be in fashion and shoe blogs
    10. 10. Campaign Planning & Budget TOOLS TYPE Estimated cost Advertising   Short term   Internet £ 15 , 000 Long term Magazines £ 100 , 000 Long term Internet £ 1 5, 000 Long term Exhibitions/Sponsorships £ 50 , 000 Sales promotion   Short term Launching campaign with celebrity endorser £ 50 , 000 Long term Celebrity endorsement £ 5 00 , 000 Public relations   Short term Press release (newspapers) £ 20 , 000 Total budget : Short term   £ 8 5 , 000 Total budget: Long term   £ 665, 000
    11. 11. Brand Positioning -> Unique selling point
    12. 12. Launching campaign
    13. 13. Launching campaign <ul><li>Opening event </li></ul><ul><li>Celebrity endorsement – Brand ambassador (Pierce Brosnan) </li></ul><ul><li>Craftsmen in Store </li></ul><ul><li>200 VIP guests (influential Russian Businessmen, Govt. officials, Russian celebrities, Press & Fashion and shoe Bloggers </li></ul>
    14. 14. Advertising Appeal <ul><li>The soul of our campaign lies in creating an emotional bond with the customers. </li></ul><ul><li>Emotional Appeal: </li></ul><ul><li>Ambition, Recognition, Status, Pleasure </li></ul><ul><li>- to represent Church’s customers emotions to wear high-end footwear. </li></ul><ul><li>to represent the brand’s dignity in history </li></ul>
    15. 18. Cost of entry
    16. 19. Conclusion PAYBACK PERIOD = 5 YEARS Marketing budget (for the whole year)= £750,000 ROI= 7.15%
    18. 21. References: <ul><li>Aginsky, Alexander. (2008), Market and Industry Report: Russian and Ukrainian Watch Market, Russian blog [blog] 23 July, Available at: < http://www.russiablog.org/2008/07/market_and_industry_report_rus_2.php > [Accessed 10 November 2010] </li></ul><ul><li>  </li></ul><ul><li>Church’s (n.d.), [online] Available at: http://www.church-footwear.com/ [Accessed 15 November 2010] </li></ul><ul><li>  </li></ul><ul><li>CIA- The World Factbook (2010), Central Asia: Russia, [online], Available at: < https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html > [Accessed 12 November 2010] </li></ul><ul><li>  </li></ul><ul><li>Citibank (2010), Russians To Spend RUB 600 bn on Internet purchases in 2010, [online], Available at: < http://www.citibank.ru/russia/news/eng/269.htm > [Accessed 25 November 2010] </li></ul><ul><li>  </li></ul><ul><li>Fill Chris (2005), Marketing Communications, Fourth Edition, FT Prentice Hall, London </li></ul><ul><li>  </li></ul><ul><li>Fashioner Information Analytical Agency (2010), Russian Market of Luxury Clothing and Accessories 2009, RUSSIAN CFA MARKET EXPERTS, St.Petersburg, Russia </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>Koslow, Brian. (2008), What Makes a Man, Men’s fashion blog [blog] 22 September, Available at: < http://www.whatmakesaman.net/wordpress/2008/09/22/10-classic-english-shoemakers-part-2-the-traditional-brands/ > [Accessed 10 November 2010] </li></ul>
    19. 22. References: <ul><li>Petukhova, Ekaterina. (2010), A Reviving Russian Luxury Market, Luxury society blog [blog], 13 September, Available at: < http://luxurysociety.com/articles/2010/09/a-reviving-russian-luxury-market > [Accessed 12 November] </li></ul><ul><li>RT News (2010), Prada to open new flagship store in Moscow, [online] Available at: < http://rt.com/business/news/prada-luxury-retail-moscow/ > [ Accessed 15 November 2010] </li></ul><ul><li>Slavina, K. (2007), Report Russia 2007:Russian Luxury Goods Market , Swiss Business Hub Russia , [online] Available at: www.osec.ch/sbhrussia [Accessed 10 November 2010] </li></ul><ul><li>Yaremenko, Boris. (2010), Russian Billionaires Double Their Wealth, [online], Available at: < http://english.pravda.ru/business/finance/21-04-2010/113101-russian_billionaires-0/ > [Accessed 15 November 2010] </li></ul>