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Do you think about diving into dealing with the Russian market? Have you already taken some steps to advance your business towards Russia? Do you have a steady business and want to rise it to a higher level?
President of RMAA Group – Russian Marketing and Advertising Agency - Vadim Tylik shares some top secrets about succeeding in the Russian Market. Challenges that may face you on the Russian market, Russian consumer behavior, and attractiveness of the Russian market for foreign business – the most important things you should think about managing your business in Russia.
How hard is it for a foreign company to break into the Russian market
Of course, the complexity of signing on the Russian market depends on the specifics and the magnitude of your tasks. There is no single answer. If we talk about an on-line store it is one level of difficulties and problems, if we mean the development of distribution, it is the next level, if we concern B2B segment, there again it is another story. I cannot say that some of this is harder or easier. If you have a lot of experience of doing business in domestic market, then to work in Russia, it is important to understand some national characteristics. The major factor of success in the Russian market is to understand how the process of sales and marketing will be organized. It is important to analyze the demand for the product in Russia, and if it is high, you can overcome any problems. If there is a demand and an understanding of how to sell, the other problems are secondary. Overall, I consider the Russian market to be quite open for foreign companies.
It is important to know your customer. That is to think about some questions, as: Who he is? What the difference between the consumer of your product from your own country and from Russiais? What do they expect from your product and how do their expectations differ? How can you get their attention?
What products do Russian consumers want to buy from abroad?
To answer this question properly, I would like to turn to the history of Russian business, which is only 25 years old. In the early '90s, when the borders were opened to the Russians, we all rushed to the Chinese market, Russians were happy with the price of goods, while they turned a blind eye to the quality. Starting from the 2000s, the situation changed dramatically: the level of Russian economy has grown, Russians have come into money and the consumer has become more selective, so it was not the low prices to lure them. Russians began to pay more attention towards European and American goods. That is why Russians interested to buy from Europe and the United States something really exclusive and high quality! Russians prefer to buy cheap average-quality products within easy reach, in neighboring China.
Thus, today many people believe that the United States and Russia has hardly any economic relations. "Well, except that Russians buy house properties in Miami" – an authoritative Russian economist joked. But it is only at the first glance. In reality, you can see a lot of foreign made goods in Russia. Starting with Apple production, which is a huge success in Russia, finishing with cosmetics, clothes and household appliances.
If you face the truth, thanks to the Hollywood films American culture dominates in Russia. Young people are considered to be very cool to buy clothes from the famous US or European brands, so Russians are often order clothes in online stores, supposing it to be of high quality. An online store from abroad has more credibility than the Russian one selling similar clothes. In general, foreign brands can conquer the Russian consumers more easily for one simple reason: "Russians give more confidence to foreign manufacturers than to the Russian ones."
In our our blog about the successful marketing strategies in Russia we have already wrote time and again that the following proverb works in our country: "A prophet is not recognized in his own land", which certainly gives an advantage to foreign manufacturers and usually it is U.S. and European manufacturers who inspires confidence. And sometimes it comes to the absurd. Thus to make the brand popular in Russia, Russian businessmen register a trademark abroad to pass it of as the foreign goods. For example, a number of Russian companies registered their trademarks in Italy and successfully sell "Italian" luxury footwear in Russia.
Therefore, if we talk about the products that small and medium businesses can supply Russia, for B2C direction – that is selling quality clothes, dietary supplements, drugs, cosmetics, high-tech products and various accessories. If we talk about B2B segment that is the sale of software, high-tech equipment, etc.
What are typical traps foreign business owners fall into when doing business in Russia? What to look out for?
There are lots of such kind of traps: traps of a legal nature, national stereotypes, mentality. But I would like to focus on the mistakes which can be made in marketing, as a rule they are associated with our mentality. I have been working in this field for eight years, so I see these "traps" foreign businessmen and marketers fall over quite often. My company helps foreign companies to do marketing in Russia and to adapt overseas marketing strategies to the market of Russia.
Let me make an example from my experience. An American business, especially if it is e-commerce, decides to do the active expansion to Russia after seeing decent traffic on their website.They see sales to Russian customers and on this basis they decide - it's time to do more active promotion in Russia. I work with an American client who turned to our agency RMAA Group; he wanted us to help with marketing in Russia. I found out that the client's website is available only in English, while the stream of sales in Russia is decent. Customer stated that he is going to promote such English website in Russia on the grounds that they have already had sales at this stage, so then there will be sales too! Unfortunately this is the mistaken opinion. Let me explain where the catch is in here. If Russians make orders on your English site, it’s very good, it means your product is in demand in Russia and Russians are ready to go through the "language barrier" to order your product. But for active expansion to the Russian market this option will not work. Not many Russians speak English.
So if a foreign business wants to have a stable and "nonrandom" success, all marketing and sales materials, including the website should be in Russian. This will give you access to a much wider Russian audience!
Do Russian consumers prefer to shop online or in stores?
Of course we can say that online shopping is popular in Russia, but the percentage of off-line purchases is still higher.
Nowadays, the market of online trading in Russia looks like U.S. online trading market of 2002-2005. In Russia, more and more people prefer to buy online. Every year the number of people who begin to trust online reservations is getting bigger. For the moment, the biggest problem is distrust in online payments. Although Russian billing systems fully meet the requirements of security, Russians still worry about the transaction safety. As for shopping in online stores overseas, here, in my opinion, Russians are very active. In Russia they really love buying online goods from abroad. I often hear from my friends: "I have bought very steep American sneakers; they should come in a month." And this market will certainly grow.
Therefore, European and American companies can succeed in on-line mode, it is important to have Russian-language sites, it is important to understand that not all Russians speak English, so it is important to adapt the online stores to the Russian market.
Why is Russian market so attractive to foreign small businesses?
I think I have partially answered this question above. American and European companies offering exclusive and high quality products, and doing the right marketing, enjoy success in Russia. If your business offers a quality product, Russians will find it interesting, they are ready to pay.
Besides European and American companies have a certain reputational advantage over their colleagues from Asia.
What are the most important things foreign businessmen should know about selling to Russian consumers?
I have also partially answered this question above. Let me briefly outline the most key points:
I wish you every success in achieving your company’s growth plans!
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About the Author
Ksenia Kuznetsova is the Editor of the Blog about Successful Marketing Strategies in Russia. She has been working at RMAA Group as a Assistent of Client Service Director since 2015. Ksenia has experience in planning and carrying out of advertising campaigns for foreign companies in Russia.