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Marketing in today’s fast-changing Russia

The magical allure of “Imported” is quickly losing its sparkle in Russia.

Fickle are the ways of the world. In Russia not that very long ago, all you had to do was bring in something “imported” and it was bought almost sight unseen. No marketing needed at all.  It didn’t test the imagination that such eager acceptance of anything foreign-made was understandably in response to years of scarcity and mono-choice products.

When first visiting the then USSR in the late 1970’s, no matter where you went, it seemed to my western eyes there was only one brand of milk for sale, and was intriguingly branded and marketed as “Milk” in shops fetchingly named “Products” or “Groceries”.

The Soviets took generic branding to an entirely new level. In the Soviet era, a much-heard term in shops when looking to purchase just about anything was “it is in deficit”. Countries, culture, politics and times do change, some as in the case of Russia by 180 degrees.

Russian consumers are by nature forgiving, they do not hold grudges as a rule, yet the rules of marketing and production of things are changing. Today you could probably successfully sell “designer” items with brands such as “Boris Johnson Baby Diapers”, “John Bolton’s Moustache Wax”, or even “Theresa May Mouthwash” – as long as they were mostly produced or assembled in Russia. This is a significant, rather recent shift in consumer perception.

The other day I was shopping for shampoo and watched two well turned out ladies examining the cosmetics they were looking to buy, making sure they weren’t imported, but either made under license in Russia, or simply made in Russia. This trend, for those who know Russia, is a significant change in mindset especially as imported goods for decades have been promoted as being better than anything Russia could make.

While on the topic of beauty, personal care and things hygienic – since 2014, when new sanctions were first imposed on Russia, and the mirrored responses to them by Russia, the country’s personal care market has contracted to some degree. Strong undercurrents seem to be driving long-term changes to the sector, notably an increasing preference for locally produced less costly products by sometimes hard-pressed consumers.

The increase in the grocery-basket of prices over the past four years has played a role, as consumers will always prioritize groceries over all but the most basic of toiletries. Within the beauty and personal care industry, this is seen in consumers looking for local price advantages even if it means giving up the ephemeral social prestige seen in some brand associations.

Not very long ago it was seen as “fashionable” for trendy Russians to look like advertising signboards for Moschino, Gucci, D&G and so on – less so today. The “nouveau” has gone out of the “riche”, and price:quality is reasserting primacy. The idea of “foreign” is steadily losing out if the Russian equivalent meets similar basic criteria, and the change has its own cachet.

The devaluation of the Russian ruble has led to high unit price hikes, as many international personal care and beauty brands and their ingredients are still largely imported, therefore far above even the upper middle-income ranges today.

Despite the sanctions, ruble devaluation and the follow-on lukewarm performance of the beauty and personal care market, Russia remains the largest market for cosmetics in Eastern Europe and accounts for 50% of the retail cosmetics market of the CEE. Russia alone is considered Europe’s largest market with a population of over a 143 million, and yet foreign companies historically have had trouble accessing the full purchasing power of Russian consumers.

Cultural sensitivity and understanding of trending realities are one key to effective marketing. The specifics of a nation, its beliefs, and its idiosyncrasies can make or break a business. Marketing in Russia needs a strong cultural adaptation. The basis of the culture and certainly language is different from Western cultures, in daily life as in business.

Russians are a patient but deeply proud people. They are patriotic and strong defenders of the reputation of their country. They accept that their lives are difficult when measured by climate, distances and geography, and take pride on being able to flourish in conditions that others could not.

Today, intra-market competition and the digital world have launched marketing, from basic retail to online e-commerce and social media marketing (SMM) onto undreamed of heights throughout Russia.

As of this writing a tad more than 75% of the Russian population are Internet users. Those remaining outside include the “older” generation (70+ years) as well as those living in very small or remote villages and settlements. As for the young and middle-aged living in cities, Internet use reaches 100%. In terms of marketing to Russian’s it means using the Internet and SMM resources to promote inside Russia is no longer optional, it is a necessity. It is the most efficient promotion channel today in Russia for most goods and services.

In 2017 Russia’s e-commerce reached the ruble equivalent of US$18 billion, growing at a rate of 13% pa and beating out bricks & mortar retail which grew by low single digits (3-5%).

Today, social networks reach over seventy-five percent of the population, and many users have developed multiple site familiarity. Female audiences form a majority in all six popular Russian social networks: the percent of female users on both Instagram and Odnoklassniki is about 70%; MoiMir 60%; Facebook and Vkontakte there is a small majority of female over male users; and on Twitter, there is no appreciable difference.

The same tools as anywhere are in the Russian Internet: Search Engine Optimization, Contextual Advertising, Banner Advertising, Social Media and Blog Advertising, E-mail Marketing, Cost-Per-Action Mechanisms. That said and this being Russia, it is mostly Russian companies that are the undisputed leaders on the internet of things. One example is Yandex, being the most popular search engine in Russia and not the Google’s of this world. Besides, there are some specific behavior differences in a Russian Internet audience.

Transitioning a business internationally is more than simply costs and procedures. It has more to do with cultural alignment and social linguistics than the skillful arrangement of numbers. It is making your product or service fit the desires and unique markers that characterize the users’ in country.

Domestic marketing of any business is challenging, doing it at a distance and in another culture is the Olympics of marketing. Countries may be becoming a bit more similar thanks to the worldwide web, but each country at its cultural core will rarely budge for anything: their sensitivities, traditions, humor, dialogues, myths and protocols are essentially unchanging and can be most stubbornly unaccommodating.

What keeps non-Russian corporations out can seem a little mysterious, given the new, globalized marketplace. The Russian language for one is incredibly rich with plenty of terms and descriptors that have six or seven synonyms in English, or simply defy translation altogether.

As for Russian consumers, translation is a bottom line necessity, as vast majorities of them do not speak a second European language. Russians will not be able to appreciate and respond to marketing material that has not been completely and carefully translated into their own language.

Despite being a fully globalized country with widespread internet access, infrastructure and one of the highest literacy rates on Earth, Russian consumers are a unique group in how they have resisted certain aspects of the globalizing age.

A common perception is that local Russian companies today, especially small businesses, are more trustworthy and cheaper than foreign equivalents. Any foreign corporation trying to appeal to Russians will have to pro-actively fight such perceptions.  It also makes a real positive difference to fully localize a company or brand web presence in Russia. Getting a “.ru” domain assists in appearing more acceptably native.

A number of American companies have understood this trend and the “hints” and have set up local production inside Russia, becoming “made in Russia”. Here are just a few: Pfizer, Forever 21, Boeing, Crate & Barrel, Ford-Sollers, Pepsico, Procter & Gamble, Philip Morris, Mondelez, GM, J&J, GE, Cargill, Alcoa, Archer Daniels Midland, McDonalds, even Starbucks has opened its 100th Russian store, with Krispy Kreme snapping at its heels with five shops.

At the end of the day, it does make a significant difference if the product being marketed can factually be labelled made, compounded, or assembled in Russia. I think it was Joe Chernov who first said “Good marketing makes a company look smart. Great marketing makes the customer feel smart.” That in a nutshell is the sort of sensitivity and approach which keeps paying dividends for years to come.

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