At first glance, the contradictory demands and expectations of Russian consumers can seem daunting. But winning their trust – and their family’s – can reap huge rewards, as Russians are known for their brand loyalty. Here’s how to cultivate a successful brand identity in Russia.
Russian consumers can be tricky to win over. The fragility of the Russian banking system, the ongoing aftermath of the 2008 financial crisis and the prevalence of online scams have combined to create a cautious consumer base focused on security and value for money. At the same time, Russian cultural sensibilities often lead consumers to impulsively spend large amounts on ‘exclusive’ goods – luxury items designed to demonstrate their owner’s wealth and status.
To the uninitiated, Russian consumer behavior can seem like a web of contradictions. For international brands looking to make inroads into the region, it’s important to understand the local culture in order to build a successful marketing strategy.
RUSSIAN CONSUMERS AT HOME: KEY CHARACTERISTICS
1. Culture of saving and spending
Russians are not savers. On average, they spend around 80% of their income (source: Santander) and do not trust the bank to look after their hard-earned cash. The more long-lasting and valuable a product is, the more appealing it will be to Russian consumers.
As a result, shopping in Russia is focused on needs rather than desires in a much greater way than in more affluent economies – only 16% of Russians consider shopping an enjoyable experience, 10% less than the global average (source: Santander). Spending power is relatively low for many consumers, so the concept of ‘retail therapy’ is often unattainable. Instead, consumers are looking to maximize their investment. As such, international brands need to market themselves in terms of reliability and value.
With that being said, Russian skepticism toward saving also leads to a high number of short-term purchases. A recent Nielsen report found that 47% of items are purchased for use on the same day. Similarly, Russian consumers are much more likely to spend money on high-end items as a way of converting cash into a more reliable format.
In other words, Russians want to exercise their spending power now, before any further economic disaster hits, and will invest in luxury where possible rather than saving for a house deposit, for example.
Key lesson: Russians are bank-shy, quality-conscious and think in the short term. Marketers should help ease the guilt of spending by emphasizing the value of their offering.
2. Post-crash economics
After the 2008 crash, the value of the ruble crashed, driving up prices and reducing the spending power of the emerging middle classes. Quality of life and disposable income have plummeted by anywhere between 30% and 50% in the last decade (source: Fashion United).
As a result, consumers who would previously have purchased goods abroad are now focused more on Moscow and St. Petersburg as retail centers. Local brands that can change their prices flexibly have an advantage over their global counterparts – they don’t have to balance Russian economic conditions with external pressures, so can quickly appeal to current levels of disposable income.
Middle class consumer confidence is low and likely to stay that way (source: Fashion United). 69% of women and 62% of men in Russia believe that 2016 was a year of recession, so there is little appetite for lavish spending at present (source: Deloitte).
Key lesson: For international brands, the challenge is how to make a profit without scaring consumers away. Present your brand as a wise investment and/or a worthwhile luxury lifestyle component. The sweet spot for success in Russia is shiny but cost effective.
3. Brand loyalty
If that sounds depressing, there is a silver lining. As discussed in our blog on Russia’s eCommerce, Russians are very loyal to brands once they’ve become customers. Apple has replicated this characteristic in its Western customers – the famous round-the-block queues for the latest iPhone are a good example of the kind of loyalty that Russians demonstrate on a more regular basis.
If you can get a Russian consumer on your side, they’re highly likely to keep coming back for more. The high premium on value means that once a brand has been tried and true once, it will be trusted in the future. The high rate of scamming in Russia also contributes to this; if you can prove to consumers that you’re not out to steal their money and that you provide a high-quality service, you’ll gain long-term leads.
Key lesson: Brand awareness is paramount in Russia – develop an image as a trustworthy company, and encourage consumers to rely on you long term.
4. Family values
A key point to note when marketing to Russians is the influence of the family on purchasing decisions. Just over 50% of Russian consumers regularly shop for their entire family (8% more than the global average), and in contrast, just a third shop for only themselves. The family unit still has a powerful effect on buying habits in Russia.
Key lesson: International brands should tap into this dynamic by considering a wider marketing campaign that incorporates all demographics in the household. Don’t just tell the young man what he could be if he buys your product – tell his mother how it’s going to improve her son.
5. Personalized service
Finally, Russians like to be able to speak to someone when making purchases online to reduce the risk of being scammed. Communication between sellers and buyers is commonplace in Russia. As a result, contact centers are a must, and supplying active phone numbers and web chats will go a long way to inspire all-important customer confidence.
Russia has a low level of English proficiency (12% – source: Education First), so these customer relations should be conducted in Russian – which means hiring local communications teams. It’s also highly advisable to translate all web pages and product descriptions, and to display the price in rubles. The number of consumers who are willing and able to interact in English and convert from dollars is minimal.
Key lesson: Customer service is crucial in Russia. This needs to take place in Russian, or your reach will be severely limited, and personal contact, either via phone or web chat, is essential to avoid your product being labelled as too risky an investment.
Russian consumers can be a hard sell. They’re highly conscious of price, value and brand reputation, and will not readily shift brand allegiances just for the sake of novelty. They have limited disposable income and are not optimistic about the economic future of their country.
On the other hand, once you engage successfully with a Russian consumer, there is a very real possibility they will stick with your brand for years and introduce their family and friends to it as well. International brands should be ready to justify their higher price tags, but the rewards are worth the effort.