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Marketing In Russia


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Marketing In Russia

  1. 1. Marketing in Russia
  2. 2. Market Basics <ul><li>Economic crisis in 1998 affected Russia </li></ul><ul><li>Russia & Eastern Europe has a strong economic growth & a huge potential </li></ul><ul><li>Large Educated middle class is fuelling demand for consumer goods </li></ul><ul><li>Emergence of democratic system is causing changing government rules & regulations </li></ul><ul><li>Free markets & capitalism are still taking root – Many people are yet to learn the rules of capitalism and free markets </li></ul>
  3. 3. Market Basics <ul><li>Newly Democratized countries like Russia and former Soviet states have income levels comparable to that of developing countries </li></ul><ul><li>Russia has highly educated population who are aware of the latest standards </li></ul><ul><li>People are proud of their past achievements and hope for a better future </li></ul><ul><li>High tech sector like software, machinery etc is fast growing </li></ul><ul><li>Oil & Energy plays a major role in local economy </li></ul>
  4. 4. International Agencies <ul><li>International Agencies like World Bank, EBRD etc play important role by Lending capital, economic planning and technical assistance </li></ul><ul><li>Firms engaged in infrastructure development need to interact & build networks with international Agencies </li></ul><ul><ul><li>Telecommunication </li></ul></ul><ul><ul><li>Roads </li></ul></ul><ul><ul><li>Electric Power </li></ul></ul>
  5. 5. Political Factors <ul><li>Political Risks are still high in Russia </li></ul><ul><li>Government intervention in business is not uncommon </li></ul><ul><li>Changing rules & regulations add to the headache </li></ul><ul><li>Political attitudes towards capitalism and free market is not very encouraging </li></ul><ul><li>Export-Import controls still hinder trade </li></ul><ul><li>Export controls from Western countries hinder trade in high tech goods </li></ul>
  6. 6. Market Segmentation <ul><li>First stage of segmentation will be ethnic segmentation </li></ul><ul><ul><li>Hungarians in Slovakia etc. </li></ul></ul><ul><li>Psychographic Segmentation based on income levels and attitudes </li></ul><ul><ul><li>Kuptsi (Merchants) </li></ul></ul><ul><ul><li>Cossacks </li></ul></ul><ul><ul><li>Students </li></ul></ul><ul><ul><li>Business Executives </li></ul></ul><ul><ul><li>Russian Souls </li></ul></ul>
  7. 7. Attitudes & Preferences Lada Marlboro Smirnoff Mercedes Winston Johnnie Walker 2CV Marlboro Local Vodka BMW Dunhill Remy Martin Volkswagen Chesterfield Stolichnaya Preferences Car Cigarettes Liquor Passive Followers Hopeful Ambitious Western oriented Seeks Status Passive Scraping by Idealistic Practical Ambitious Independent Nationalistic Seeks Status Reliant, nationalistic, Practical, Seeks Value Dominant traits Russian Souls Business Executives Students Cossacks Kuptsi
  8. 8. Product Positioning <ul><li>Income Level, Usage Conditions, and needs drives positioning </li></ul><ul><li>For Basic products at low end pricing will be beneficial </li></ul><ul><li>High-end customers demand the finest quality products </li></ul><ul><li>MNC’s can take first mover advantage at the high end market </li></ul><ul><li>Competition from domestic players exist with basic products </li></ul>
  9. 9. Marketing Tactics <ul><li>Russians are ambivalent about their domestic products </li></ul><ul><ul><li>Doubt quality of local products </li></ul></ul><ul><ul><li>Have loyalty to local products </li></ul></ul><ul><ul><li>Want to protect local production/factories </li></ul></ul><ul><ul><li>Country-of-origin effects are strong </li></ul></ul><ul><li>Market penetration pricing will help a firm gain market share and win in the long run </li></ul><ul><li>Financial instability forces firms to repatriate profits at the earliest </li></ul>
  10. 10. Distribution <ul><li>Distribution infrastructure is weak and inefficient </li></ul><ul><li>Lack of market middlemen makes distribution ineffective and expensive </li></ul><ul><li>A new value chain may have to be created to over come existing problems </li></ul><ul><ul><li>Power cuts makes it necessary to redesign electric appliances </li></ul></ul><ul><ul><li>Electrolux uses small local service contractors </li></ul></ul><ul><ul><li>McDonalds had to grow potatoes to supply its stores </li></ul></ul>
  11. 11. Distribution <ul><li>Firms must engage in training and developing various middlemen in basic marketing principles and practices </li></ul><ul><ul><li>How to sell, distribute & service </li></ul></ul><ul><ul><li>Also train bureaucrats on the role of free market system </li></ul></ul><ul><ul><li>Value of distribution network </li></ul></ul><ul><ul><li>The need and functions of middlemen </li></ul></ul><ul><li>Need to educate consumers on use of end products </li></ul>
  12. 12. Promotion <ul><li>Advertising media such as TV, Print and radio exists but with limited reach </li></ul><ul><li>Use media to educate customers about the merits of new products </li></ul><ul><li>Creditability of advertising causes problems for marketer – People distrust products which are advertised extensively </li></ul><ul><li>Hard sell advertising often faces backlash </li></ul><ul><li>Word-of-mouth is considered more reliable </li></ul>
  13. 13. Closing Thoughts <ul><li>Russia offers a huge market potential </li></ul><ul><li>Abundant natural resources has attracted lot of foreign capital </li></ul><ul><li>Lack of rules and institutions to control & regulate capital markets hinders growth </li></ul><ul><li>Urban markets in Moscow are as sophisticated as developed world </li></ul><ul><li>Rural market is vast and is yet to be tapped </li></ul><ul><li>Need for market middlemen and market institutions exists </li></ul>