Despite its 1.86 Trillion dollar GDP and 9th ranking in world economy, Russian market continues to be a challenge for many brands. Russia caught the hyper growth after 2000 thanks to political stability and increasing oil prices. As a result, consumers, rewarded the first Western brands such as McDonalds, Nike, Microsoft, after years of limited choice. Despite the fact that the economy slowed down after 2008, Russian market still continues to offer big opportunities for brands. Here are some recommendations for Expat Brand Managers who want to win in Russia:
Do not forget the fact that Russians are extremely sophisticated: Russians, of whose population’s 60% are university graduates, yearned for even the simplest consumer products before 2001’s when the BRIC terminology came into agenda. However, fast entrance of the multinational companies in the past 20 years, have closed this gap. Today, being a brand is “necessary” yet not “sufficient” condition. Brand managers have to do extensive research to understand the fast changing Russian consumers and find out the most important aspects of their brands to convince them.
Invest into premium segment: Ultra-rich class, driven by the chronic income inequality, continues to spend excessively for show-off which also sets the standard of excellence for aspiring middle class. Another reason for luxury spending is that is that Russians lost their savings multiple times in recent history due to several economic crises. What does it mean for your brand? Drive your brands prestige and profitability by offering products that compete in premium segment. Do not forget the fact that this segment not only attracts ultra rich but also aspiring middle class.
Focus first on functional benefits, then emotional ones: Due to years of propaganda and low quality products of 90’s, Russians consumers are extremely skeptical. To win the value equation, first focus on concrete benefits. Ensure guarantees of quality by using endorsements from international institutions. However, this is not enough. To reach the hearts of serious looking, rational Russian consumers, it is crucial to win their trust first by creating brands that deliver on their promises. Because if a Russian trusts you, she/he trusts fully. At this point, you may add additional emotional benefits to your brand equity by understanding their core motivations.
Place digital at the core of marketing: Ranking 2nd in Europe, Russia has 60 million internet users, of which 41% use internet primarily to find information. Digital marketing is a must have. Key necessities are a website for product details and technical information, purchase of related search words in Yandex, starting a Vkontakte group or partnering with an existing content provider and creating annual conversation calendar with opinion leader bloggers. But here is the most important tip: It is crucial to work with a media planning agency to activate this plan.
Create a winning organization that understands Russians: You need to combine the opportunity driven mindset of Western management with ability to understand and operate in Russia, ideally, with local partners. It is possible to find capable and trusted partners, yet it still requires to be on the ground for your business. Create a reward system that focuses your team on short term wins with long term thinking. Do not expect much of employee loyalty in the dynamic Russian market and continuously develop new staff from the ranks.
Big success still awaits brand managers who are equipped with the right organization, understand fast changing Russian consumers, and manage digital focused marketing.