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Marketing Communications and Market Research in the New Russia
(Marketing Memo, October, 2004)

Seventeen years after Mikhail Gorbachev introduced Perestroika (restructuring) and 13 years after Boris Yeltsin privatized businesses, liberated the press, and opened markets, democracy and a market economy are still evolving. Since then, some Russian businesses have learned to value marketing and to use marketing communications to increase company capitalization and brand credibility, said Genia Freidenhov, a marketing communications consultant I met in Moscow.

Initially, businesses, customers, and the media could not grasp the importance of marketing and marketing communications. No one knew how to create or execute a marketing communications strategy. In those days multinationals converted profits to vodka since they could not take rubles out of the Former Soviet Union.

Censorship was widespread. Except for posters in the 1920's, advertising hardly existed. "There was nothing to advertise!" Television ads were really pictures with captions. After privatization, shoppers queued up for the few pricey goods available. By 1992 a few advertising and marketing communications agencies had offices in Russia. Their clients were YUKOS Oil Company and other large companies, which initially promoted themselves through advertising. Now, many companies use marketing communications to increase market share, observes Freidenhov.

After graduating in 1996 from a private Russian university where he majored in business and specialized in mass communications, Freidenhov worked for the Public Relations and Promotions Group (PRPG), which is now part of Weber Shandwick of New York. Among PRPG's clients were the first foreign companies to establish a beachhead in Russia. These clients introduced media relations, direct marketing, telemarketing, and TV advertising to Russians. Freidenhov then worked for YUKOS.

While, Intel, Coca-Cola, and McDonald's have succeeded, conducting business in Russia remains challenging. Freidenhov advises companies that are interested in opportunities in Russia to:

  • Understand the Russian mentality. Use market research to understand Russian perceptions and to gauge which segment(s) want a product. Mitsubishi introduced a car in Chili that did not sell because of its name. Use surveys, interviews, and focus groups to avoid such errors.
  • Learn about local laws that govern regulated products, such as telecommunications products, tobacco, and liquor, to avoid wasting money on illegal marketing activities.
  • Educate customers and the media about using public relations properly. In smaller Russian cities some PR people bribed journalists to print articles about their companies, but the articles were boring and lacked credibility. "Black PR" is slowly ending as people learn that effective PR arises out of the trust established between companies and the media.
  • Work with local marketing consultants who grasp customers' needs and perceptions and can bridge cultural differences.

About 100,000 Americans are now doing business in Russia, and many are developing marketing programs that resemble those in the U.S.

Winett Associates provides market research and writing services.

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