Skippy’s Russian Adventure Kaitie Euler Erin Heinhold Brandy Noble Jenna Pottschmidt Matt Urban

Western Views of Russia Anna Kournikova

Western Views of Russia Anastasia

Western Views of Russia Men with Furry Hats

Western Views of Russia Vodka

Skippy In the U.S. Skippy’s current strategy within the United States targets kids ages 6-12 Packages feature cartoon-like characters on the label Promotions and contests offer vacations, prize packs, money, etc Web site features kids games and recipes

Marketing Standardization in Russia? Skippy’s U.S. marketing strategy would not work well in Russia because children have less influence over what is purchased Children are less likely to go grocery shopping

Consumption Styles Innovators-8% Have to the potential to spend significantly more than the average. Spontaneous-19% Consumer potential is average, often buy goods impulsively. Ambitious-11% Moderate consumer potential, tend to rely heavily on advertising when making purchase decisions. Self-Realized-12% Consumer potential is high, value reliability and quality in products. Settled-25% Average to above average consumer potential, novelty products are of little interest to this group. Traditionalists-16% Relatively low consumer potential, strongly traditional consumer behavior. Thrifty-8% Lowest consumer potential, price is most important factor in purchase decision.

SWOT Analysis Strengths- Investment resources not readily available to most Russian companies. Technology and experience give western companies advantages for cost reduction and efficiency. Russian consumers not biased against foreign- made products.

SWOT Analysis Weaknesses Very few large-scale wholesalers Poor infrastructure in some areas, making it difficult to maintain a standard level of service. High taxes- 20% VAT and 5% Sales Cannot purchase land, land leasing in promising areas as expensive as other European countries.

SWOT Analysis Opportunities Government support Low competition from domestic firms Political and economic stabilization Threats Too many foreign companies entering market may lead to competition and market saturation in the future. Corruption, complicated regulations and bureaucratic procedures make doing business difficult.

Price Low because stock market crashed in 1998, the economy has taken a serious hit. Imports are half of what they were before Average disposable income.

Product Texture: Creamy vs. Crunchy Packaging: 18oz or Smaller? Glass jar or plastic jar? Labeling requirements name and type of product country of origin producing company (can be in English) weight or volume Ingredients nutritional value conditions of storage (where necessary) expiration date instructions for use recommendations for use conditions for use (e.g., side-effects)

Map of Russia

Place Production: Where: In Russia-  Import peanuts from China, India, Pakistan, Egypt, Nigeria, USA (no import tax)  buying a current company  Creating a partnership  Starting a new company Outside Russia-  Partnerships  Importing

Production In Russia Buying a current company Abundance of legal regulations and paperwork Citizens are loyal to locally established businesses (if health standards are met) Requires significant initial investment Subject to labor laws (max. 40 hrs/wk) + Facility is already operative + Some form of infrastructure already existent + Gain total profit

Production in Russia Partnerships Need to share profit Lose some overall control of company Possible lack of communication Subject to labor laws (40 hrs/wk) + Requires less initial capital + Lowers total financial investment + Offers benefit of gaining cultural knowledge + Some form of infrastructure already in existence + Facility is already operative

Production in Russia Starting your own company Difficulty of acquiring property Abundance of legal regulations and paperwork Requires significant initial investment Requires significant amount of time Large amount of risk Citizens are loyal to locally established businesses (if health standards are met) Subject to labor laws (40 hrs/wk) + Gain total profit + Design to specific needs + Total control of company

Production Outside of Russia Partnerships- Higher transportation costs Import taxes (10-20% on finished goods) Product subject to 10% VAT Lose some control of company Need to share profits Need to deal with an additional culture + Requires less initial capital + Lowers financial investment + Offers benefit of gaining cultural knowledge + Some form of infrastructure already in place + Facility is already operative

Distribution Intermediaries 5 Major Import/Export Manufacturing Facilities in Moscow A limited number scattered throughout the rest of the country

Distribution Transportation Railways: Network is of great importance due to poor road system and relatively few vehicles outside cities Provides main route connecting European Russia with Siberia and the Far East Roads: Approximately 70% paved Few roads in Siberia and the Far East, and are often impassible

Distribution Shipping Ports are prevalent around Western boarders Increases import/export abilities

Infrastructure Warehousing: Important step in distribution channel 58% of retail establishments in Moscow are traditional small shops Most of these small shops buy directly from the warehouse Manufacturers usually do not sell directly to retailers, thus increasing the length of the distribution channel

Retailers Supermarkets: 12% Open-air markets: 30% Traditional small shops: 58% Most retailers purchase from warehouses Eliminates inefficiencies of direct interaction with many smaller stores Selling directly to supermarkets is still an option because they are purchasing larger quantities

Promotion Media Newspaper/Magazines Best selling weekly Newspaper- Argumenty i Fakly Best selling daily Newspaper- Moskovskii Komsomlets and Komsomolkiaya Pravda Television Broadcasting 550 total stations  150 government owned  Reaches 92% of population Radio Primarily in Moscow

Promotion Shoppers love promotions Price-offs, bundled offers, buy x amount get y amount free Direct marketing leaflets in mail Including information and coupons Sampling Lowers buyer remorse Risk-free product introduction

Questions?