How to Make It in Risky but Rewarding Russian Market

Cultural Understanding Pays Off in Country That Embraces Western Brands

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The diverse world can be scary and uninviting for some -- and fun, surprising and successful for others. Industry success comes to those who understand and embrace the traditions of the countries where they do business. As marketers, we have to appreciate cultural differences if we wish to succeed in building brands in today's emerging markets, while at the same time continuously challenge and adapt our ways of thinking. Cultural understanding and adaptability are key to successful market entry, and Russia is no different.

Like within any emerging market, the Russian market and consumer can be very unpredictable. However, make no mistake, regardless of socio-economic profile, this is a very astute consumer; one that very much welcomes Western trends and brands of good quality and will always take it to a new level. From Facebook to the miniskirt, no matter the trend they will make it bigger and bolder while adding a national and cultural identity to the product. If the brand or trend is a success in the West, it will be an even greater one in Russia -- and should it begin to fail elsewhere, in Russia it will do so tenfold. Should these consumers lose faith in the quality or validity of your brand, they will then quickly turn away and look internally and nationally for their own innovative creations and advanced technologies.

ABOUT THE AUTHOR
Givi Topchishvili is president-CEO of Global Advertising Strategies. A native of Georgia, of the former Soviet Union, he has a deep understanding of world cultures, and over 20 years international experience covering an array of industries throughout the U.S., Europe, Russia and Asia.

All of this makes Russia a very attractive market for global brands, while at the same time making it a risky one. There are numerous cases of bankruptcy among established brands, and as the country continues to adjust to the fluctuations of the global economy, it's difficult to forecast the future of big Western brands in their fight for the Russian consumer. However, this is an eager consumer and the opportunity for Western brands is still there as long as marketers understand the Russian audience.

As with any market, there are a variety of media vehicles that can be utilized to tap into the Russian consumer. One of the least used -- accounting for only 2.8% of all advertising spending in 2008 -- but with the most potential is the online segment. This segment is doing better than other media areas, in large part due to its better targeting capabilities and greater measurability. As within the U.S., more and more consumers get their brand messaging online, and within Russia there is a large growth potential in the fast-growing digital market. But know your target to ensure a greater ROI.

Be aware that your target audience, whether it be the elite crowd or the price-conscious consumer, will only be reached if addressed through audience-specific messaging. You either need to position your products and services as absolutely elite or win the consumer through competitive pricing. Here are a few tips for those wishing to foray into this vast market of extremes.


1. FIND RELIABLE PARTNERS ON THE GROUND IN THE U.S. AND MOSCOW

This means working with people (not so easily found) that are bicultural, not just bilingual and have an in-depth knowledge of both American and Russian cultural aspects, particularly when it comes to best business practices, marketing vehicles and the appropriate lines of communication, which can be as simple as ICQ or SMS vs. e-mailing. Trust their viewpoint and try to learn/understand the local traditions from them. Too often I have seen Western companies make the mistake of thinking they know better. Surely they know their brand the best, but not necessarily the market they wish to target. This is an all-too-common deadly mistake.


2. WHEN PUTTING TOGETHER A COMPLEX MARKETING PLAN, IT WOULD HELP TO ACCOUNT FOR THE RISK OF THE UNEXPECTED SHUTDOWN OF CERTAIN MEDIA

Even a leading Russian publication or web resource can suddenly go out of business -- the recent shutdown of Independent Media's two major projects, Smart Money and Interni, is an example. Not only do you risk certain financial losses, but the integrity of your media plan may be compromised.


3. TAKE A DIRECT APPROACH

Unfortunately, many in the West can mistake the direct Russian communications approach for rudeness. Please be aware that being direct is part of everyday business in this part of the world, and rudeness is certainly not the intent. When doing B-to-B or B-to-C marketing in this country, the direct approach is the best approach. Most will find that in doing so they will experience the warmth and positive response of this particular culture.


4. BE CAREFUL WITH CELEBRITY ENDORSEMENTS

The Russian market, not unlike any other, needs its own local celebrities featured in ads and endorsements in order for the message to resonate with the consumer. However, when challenging economic conditions force stars to accept more offers, and celebrity endorsements are pouring in, the very concept, value and quality of a "celebrity" becomes more and more diluted. "Celebrity price lists" now need to be scrutinized more than ever. When defining the contractual terms, be sure to set some limitations in terms of celebrity engagements with other brands.


5. DO BUSINESS THE RUSSIAN WAY

Many business transactions and relationship bonding in the U.S. are successfully conducted on the golf course and/or in restaurants. Russia too has its local customs and traditions, deep rooted in its history. Many business relationships are solidified in banyas (the local alternative to saunas,) or over the love of sports such as soccer and hunting, as well as in restaurants. It is important to be able to share in these passions and traditions in order to establish the business trust and respect that is needed to succeed.

As with any foreign marketplace cultural understanding and adaptability is key. Having spent many successful years of my career in Eastern Europe, and having conducted business in other countries such as China, England, France, Italy and the U.S., this has been the most beneficial lesson I have taken with me. Learn and trust the professionals around you and partake in the local customs, this will provide you with insight that no other learning tool can give you. The old adage still rings true: When in Rome do as the Romans -- or in this case when in Russia, do as the Russians.

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