Russia is a complex and constantly changing market. But for brands looking of ways to win in the second of the BRIC countries, there is also an opportunity to interact with a diverse consumer group, for those who are ready to face it.
Olga Menshikova, Deputy Managing Director of Added Value Russia, shares her top tips on how brands can win in this ever-changing market.
1. Know how to reach your audience
Although Internet is evolving across Russia, it is not yet a nation-wide channel. According to research from FOM, in autumn 2013 the monthly Internet audience in Russia stacked in at just over half the population at 57% and significantly higher in Moscow at 74%. So how can brands reach a mass audience in Russia? The most effective channels are the Federal TV and nation-wide retail chains with the global players like Unilever, P&G and L’Oreal spending an estimated average of US$10 million annually for nationwide campaigns for their brands.
How to win? Don’t ditch digital, but incorporate more traditional channels into communications too.
2. Know your history, know your rivals
To understand the local competition, brands need to know that Russian consumers tend to favour local brands with deep historical roots that know their needs and traditions. They are also seen as better value for money than foreign brands. These types of products are most often in food categories from dairy to cereal, vegetables and baked goods. Take the condiment category, for example. Russian mayonnaise brand Sloboda’s consumer buying preference increased from 18% in 2005 to 27% in 2012, whilst foreign brand Calve decreased from 40% to 31.4%. And let’s not forget the famed Russian heritage goods like kvass, caviar. Oh, and vodka.
How to win? Look outside the food category, and beat the competition by offering better quality, service and innovation.
3. Be discreet
Although the low price segment has a strong position, Russian consumers tend to steer away from products with cheap looking packaging or brands that directly communicate low cost. Whilst the majority of the population spends most of their income on food, utility bills and public transport they often feel embarrassed to demonstrate that they are regularly buying budget products. If we compare two middle priced local Russian supermarkets, Perekrestok and Auchan, the packaging of the former looks more neat and modern, whereas Auchan’s private brand Kazhdiy den (which translates as “every day”) looks cheaper and less appealing.
How to win? Provide value for money, but don’t shout about it.
4. Understand the constantly changing market
Following the breakup of the Soviet Union, thousands of brands flooded the market in a quest to win. But such variety meant that Russian consumers became spoilt for choice and less and less loyal to brands as new ones emerged. Today, Russians believe that quality of goods deteriorates with time. A newly launched brand is only good for a few months until a newer and better brand comes along. In fact, Russian beer brand Stariy Melnik redesigns its bottle every 3-4 years reacting to market changes and consumer behavior. It remains one of the most well-known brands in Russia.
How to win? Be prepared to constantly innovate and change to keep up with consumers hunting for the next best thing.
5. Embrace the cultural diversity of the country
Russia has an eclectic mix of nationalities due to increasing migration from neighbouring CIS countries. The nation is home to 200 ethnic nationalities, who speak 200 different languages and dialects. It is a melting pot of diverse traditions, religions, habits and behaviours, already reflected in the food category with Halal products making up 10% of all beef and lamb sales in Russia. But brands should be aware that the most significant trends are born in Moscow (the economic centre) which brings in 20-35% of annual sales across most products and services, from alcohol to cosmetics.
How to win? Be mindful of different audiences to tap into the right cultural conversation.
Written by Olga Menshikova, Deputy Managing Director of Added Value Russia.