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Marketing in today’s fast-changing Russia

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

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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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De-Dollarization Tops Agenda at Russia’s Eastern Economic Forum

The Eastern Economic Forum (EEF) was held in Vladivostok on Sept.11-13. Founded in 2015, the event has become a platform for planning and launching projects to strengthen business ties in the Asia-Pacific region.

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This year, the EEF brought together delegations from over 60 countries to discuss the topic “The Far East: Expanding the Range of Possibilities”. A total of 100 business events involving over 6,000 participants were held during the three days.

1,357 media personnel worked to cover the forum. Last year, the number of participants was 5,000 with 1,000 media persons involved in reporting and broadcasting. The EEF-18 gathered 340 foreign and 383 Russian CEOs. Nearly 80 start-ups from across South-East Asia joined the meeting.

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This year, a total of 175 agreements worth of 2.9 trillion rubles (some $4.3 billion) were signed. For comparison, the sum was 2.5 trillion rubles (roughly $3.7 billion) in 2017.

They included the development of the Baimsky ore deposits in Chukotka, the construction of a terminal for Novatek LNG at Bechevinskaya Bay in Kamchatka and the investment of Asian countries in Russia’s agricultural projects in the Far East.

Russian Direct Investment Fund (RDIF), Mail.Ru Group, Megafon and Chinese Alibaba inked an agreement on establishing AliExpress trade joint venture. Rosneft and Chinese CNPC signed an oil exploration agreement.

The Chinese delegation was the largest (1,096 people), followed by the Japanese (570 members). The list of guests included the president of Mongolia and prime ministers of Japan and South Korea.

It was also the first time Chinese President Xi Jinping attended the event to meet his Russian counterpart. The issue of de-dollarization topped the agenda. Russia and China reaffirmed their interest in expanding the use of national currencies in bilateral deals.

During the forum, Kirill Dmitriev, the head of RDIF, said the fund intends to use only national currencies in its transactions with China starting from 2019. It will cooperate with the China Development Bank.

This “yuanification” is making visible progress with Shanghai crude futures increasing their share of oil markets up to 14 percent or even more. China has signed agreements with Canada and Qatar on national currencies exchange.

READ MORE: Eastern Economic Forum opens new chapter in US-Russia dialogue

De-dollarization is a trend that is picking up momentum across the world. A growing number of countries are interested in replacing the dollar. Russia is leading the race to protect itself from fluctuations, storms and US-waged trade wars and sanctions.

Moscow backs non-dollar trade with Ankara amid the ongoing lira crisis. Turkey is switching from the dollar to settlements in national currencies, including its trade with China and other countries. Ditching the US dollar is the issue topping the BRICS agenda. In April, Iran transferred all international payments to the euro.

The voices calling for de-dollarization are getting louder among America’s closest European allies. In August, German Foreign Minister Heiko Maas called for the creation of a new payments system independent of the US.

According to him, Europe should not allow the United States to act “over our heads and at our expense.” The official wants to strengthen European autonomy by establishing independent payment channels, creating a European Monetary Fund and building up an independent SWIFT system.

Presenting his annual program, European Commission President Jean-Claude Juncker called on Sept. 12 for the European Union to promote the euro as a global currency to challenge the dollar.

According to him, “We must do more to allow our single currency to play its full role on the international scene.” Mr. Juncker believes “it is absurd that Europe pays for 80 percent of its energy import bill – worth 300 billion euros a year – in US dollars when only roughly 2 percent of our energy imports come from the United States.” He wants the raft of proposals made in his state of the union address to start being implemented before the European Parliament elections in May.

70% of all world trade transactions account for the dollar, while 20% are  settled in the euro, and the rest falls on the yuan and other Asian currencies. The dollar value is high to make the prices of consumer goods in the US artificially low. The demand for dollars allows refinancing the huge debt at low interest rates. The US policy of trade wars and sanctions has triggered the global process of de-dollarization.

Using punitive measures as a foreign policy tool is like shooting oneself in the foot. It prompts a backlash to undermine the dollar’s status as the world reserve currency – the basis of the US economic might. The aggressive policy undermines the US world standing to make it weaker, not stronger.

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Putin and Erdogan Plan Syria-Idlib DMZ

What the Putin-Erdogan DMZ decision means is that the 50,000 Turkish troops occupying Idlib will take control over that land, and have responsibility over the largest concentration of jihadists anywhere on the planet.

Eric Zuesse

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As I recommended in a post on September 10th, Russia’s President Vladimir Putin and Turkey’s President Tayyip Erdogan jointly announced on September 17th, “We’ve agreed to create a demilitarized zone between the government troops and militants before October 15. The zone will be 15-20km wide,” which compares to the Korean DMZ’s 4-km width. I had had in mind the Korean experience, but obviously Putin and Erdogan are much better-informed about the situation than I am, and they have chosen a DMZ that’s four to five times wider. In any case, the consequences of such a decision will be momentous, unless U.S. President Donald Trump is so determined for there to be World War III as to stop at nothing in order to force it to happen no matter what Russia does or doesn’t do.

What the Putin-Erdogan DMZ decision means is that the 50,000 Turkish troops who now are occupying Idlib province of Syria will take control over that land, and will thus have the responsibility over the largest concentration of jihadists anywhere on the planet: Idlib. It contains the surviving Syrian Al Qaeda and ISIS fighters, including all of the ones throughout Syria who surrendered to the Syrian Army rather than be shot dead on the spot by Government forces.

For its part, the U.S. Government, backed by its allies and supported in this by high officials of the United Nations, had repeatedly threatened that if there occurs any chemical-weapons attack, or even any claimed chemical-weapons attack, inside Idlib, the U.S. and its allies will instantaneously blame the Syrian Government and bomb Syria, and will shoot down the planes of Syria and of Russia that oppose this bombing-campaign to conquer or ‘liberate’ Syria from its Government. The U.S. has announced its determination to protect what one high U.S. official — who is endorsing what Trump is doing there — “the largest Al Qaeda safe haven since 9/11.” He admits it, but he wants to protect them from being bombed by Syria and by Russia.

During recent weeks, the U.S. military has increasingly said that even if the jihadists they’ve been assisting to assemble the materials for a chemical-weapons attack fail to carry it out or to stage one, any attempt by Syrian and Russian forces to destroy the jihadists (which the U.S. side calls ‘rebels’) in Idlib will be met with overwhelming U.S.-and-allied firepower. That would spark WW III, because whichever side — Russia or U.S. — loses in the Syrian battlefield will nuclear-blitz-attack the other side so as to have the lesser damage from the nuclear war and thus (in military terms) ‘win’ WW III, because the blitz-attack will destroy many of the opposite side’s retaliatory weapons. In a nuclear war, the first side to attack will have a considerable advantage — reducing the number of weapons the other side can launch.

If, on the other hand, the DMZ-plan works, then Turkey’s forces will be responsible for vetting any of Idlib’s residents who try to leave, in order to prohibit jihadists and their supporters from leaving. Once that task (filtering out the non-dangerous inhabitants and retaining in Idlib only the jihadists and their supporters) is done, the entire world might be consulted on whether to exterminate the remaining residents or to set them free to return to the countries from which they came or to other countries. Presumably, no country would want those ‘refugees’. That would answer the question.

America’s Arab allies, the oil monarchies such as the Sauds who own Saudi Arabia and the Thanis who own Qatar, and which have funded Al Qaeda and the Muslim Brotherhood, would then be put on a spot, because if they say “Exterminate them!” then their clergy who have provided the moral imprimatur upon those families’ ownership of those nations, will either be in rebellion or else will themselves become overthrown either by their own followers or else by their monarch — overthrown from below or from above.

Alternatively, after Turkey’s forces in Idlib will have allowed release from Idlib of all who will be allowed out, Syria’s and Russia’s bombers will simply go in and slaughter the then-surrounded jihadists and take upon themselves the responsibility for that, regardless of what the leaders of the U.S. and its allied governments might say.

On the night of September 17th in Syria, there were missile-attacks “from the sea” against several Syrian cities; and those attacks could have come from either Israel’s or America’s ships, or from other U.S.-allied ships. Russian Television bannered, “Russian plane disappears from radars during Israeli attack on Syria’s Latakia – MoD” and reported:

A Russian military Il-20 aircraft with 14 service members on board went off the radars during an attack by four Israeli jets on Syria’s Latakia province, the Russian Defense Ministry said.
Air traffic controllers at the Khmeimim Air Base “lost contact” with the aircraft on Wednesday evening, during the attack of Israeli F-16 fighters on Latakia, said the MOD.Russian radars also registered the launch of missiles from a French frigate in the Mediterranean on the evening of September 17. …
The attack on Latakia came just hours after Russia and Turkey negotiated a partial demilitarization of the Idlib province

If the missiles were authorized by President Trump, then WW III has already begun in its pre-nuclear stage. However, if the attacks were launched by Israel’s Netanyahu, and/or by France’s Macron, without U.S. authorization, then the U.S. President might respond to them by siding against that aggressor(s) (and also against what he used to call “Radical Islamic Terrorists”), so as to prevent a nuclear war.

Late on September 17th, Al Masdar News bannered “NATO warships move towards Syrian coast” and reported “The NATO flotilla cruising off the Syrian coast reportedly consists of a Dutch frigate, the De Ruyter, a Canadian frigate, the Ville de Quebec, and a Greek cruiser, the Elli.” Al Qaeda and ISIS have influential protectors.

Ultimately, the decision will be U.S. President Trump’s as to whether he is willing to subject the planet to WW III and to its following nuclear winter and consequent die-off of agriculture and of everyone, in order to ‘win’ a nuclear war, such as America’s aristocracy has especially championed since the year 2006. The nuclear-victory concept is called “Nuclear Primacy” — the use of nuclear weapons so as to win a nuclear war against Russia, instead of to prevent a nuclear war. That concept’s predecessor, the “Mutually Assured Destruction” or “M.A.D.” meta-strategy, predominated even in the U.S. until 2006. Trump will have to decide whether the purpose of America’s nuclear-weapons stockpiles is to prevent WW III, or is to win WW III.

In Russia, the purpose has always been to have nuclear weapons in order to prevent WW III. But America’s President will be the person who will make the ultimate decision on this. And Idlib might be the spark. Netanyahu or Macron might be wanting to drag the U.S. into war even against Russia, but the final decision will be Trump’s.

The ultimate question is: How far will the U.S. go in order to continue the U.S. dollar as being the overwhelmingly dominant global currency?

—————

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

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Russian MoD: Il-20 downed by Syrian missile after attacking Israel’s F-16s used it as cover

Israeli pilots used the Russian plane as cover and set it up to be targeted by the Syrian air defense forces.

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Russia has stated that it “reserves right to response” after claiming that Israel’s actions led to downing of Il-20 by Syrian S-200 missiles.

The Russian military accused their Israeli counterparts for causing the downing of a Russian Il-20 plane by the Syrian air defense forces, which were responding to an Israeli air raid on Latakia.

Via RT


The Russian military say the Israeli raid on Syria triggered a chain of events, which led to the shooting down of a Russian Il-20 plane by a Syrian S-200 surface-to-air missile. Moscow reserves the right to respond accordingly.

On Monday evening four Israeli F-16 fighter jets attacked targets in Syria’s Latakia after approaching from the Mediterranean, a statement by the Russian defense ministry said on Tuesday. The Israeli warplanes came at a small altitude and “created a dangerous situation for other aircraft and vessels in the region”, it said.

The military said the French Navy’s frigate “Auvergne” as well as a Russian Il-20 plane were in the area of the Israeli operation.

“The Israeli pilots used the Russian plane as cover and set it up to be targeted by the Syrian air defense forces. As a consequence, the Il-20, which has radar cross-section much larger than the F-16, was shot down by an S-200 system missile,” the statement said.

The Russian ministry stressed that the Israelis must have known that the Russian plane was present in the area, which didn’t stop them from “the provocation”. Israel also failed to warn Russia about the planned operation in advance. The warning came a minute before the attack started, which “did not leave time to move the Russian plane to a safe area,” the statement said.

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