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"I am deeply convinced and my personal experience shows that in Russian regions the concept of" brand "comes after the concept of" price "and" repairability "
16.06.2016

Life in the war of sanctions, as some marketers believe, gave national brands a chance to improve value of the Russian market. However, the success of a brand depends not only on economic conditions - social and psychological perception of a product in a national context and country often contributes to their development.


Oleg Privalov


Brand value is a key factor in the calculation of goodwill, that is, the value of intangible assets of a company. Despite the fact that there are even entire institutions involved in the assessment of global brands in the world, there are still no other applications of the brand value. "Russian brands, most of which are relatively inexpensive, of course, have potential, however, it is problematic to reach in the present circumstances. Brand value Increase is too expensive a thing, and it is only used in the case of international integration of the company", - believes Alexander Filimonov, partner of Artisan Group Public Relations. - The higher the value of the brand, the company is more resistant to external shocks”, he notes.


In the service of the homeland


The world economy knows many examples when the reputation of successful commercial brands actually strengthened the authority of the country of origin of most of those brands. On the other hand, a state, having a heritage and sustainable set of clichés and stereotypes about themselves in the minds of people, allowed national brands to develop in the "comfortable reputational conditions. "For example, products manufactured in Italy, are associated with fashion and style. And all brands from Germany – with quality and reliability. Japan is the birthplace of technology and innovation, and Switzerland is famous for its punctuality and perfectionism. Swiss banks and watch brands only strengthen this common attitude to the country", - says Alexei Andreev, co-president of the Russian Association of branding companies and Depot WPF managing partner. He draws attention to the fact that the mass consciousness sometimes allows itself amazing generalizations. Thus, without making much difference, people perceive the Nordic countries - Denmark, Norway, Sweden and Finland, bringing them to the concept of "Scandinavia". "All Scandinavian brands are quality, understandable, socially responsible ones. Simply put, if you are going to establish a new brand of chocolates or abbey beer in Belgium, you have already part of the success previously guaranteed. People know that the Belgian beer and chocolate are on top. As a result, we have synergy in its purest form: the state helps brands by its reputation, and they, by way of a thank you, strengthen the credibility and image of the state", - says Mr. Andreev.


Lobbying trick


However, this effect is not observed in Russia, although some national brands have a wide international reputation.
Dmitry Porochkin, president of the Moscow club of young entrepreneurs, points out that today telecommunications companies hold first line according to brand value in Russia: Interbrand evaluates MTS at the amount of 192.1 billion rubles, "Beeline" -  155 500 000 000, "Megaphone" - 114.2 billion, only "Gazprom" is ahead of them - 1.261 trillion rubles. After telecom there go all fuel companies: TNK and Lukoil are little under 100 billion, and "Rosneft" and barely exceeded 30 bln. "Most of our traditional national brand leaders suffered greatly due to the foreign policy situation and the sanctions in recent years. In first of all it was the mining industry. But it's time to pay attention to a good potential for brand development in tourism - from Kaliningrad to Kamchatka and from Karelia to Crimea. The main component of a universal method for the development of a brand is quality of products. In the highly competitive crisis market only high-quality product can meet the demand, and it also makes the brand recognizable", - said Mr. Porochkin.
Currently, the concept of the brand in Russia greatly devalued. Now any more or less well-known trademark is called a brand. "In fact, after we lost "Stolichnaya" vodka, there was only one undisputed global Russian brand - Kalashnikov rifle. This is a real super-brand, well known in all parts of the world. Also, in recent years our ships" Progress "and" Union "transformed into a truly global brand," - said Vladimir Evstafiev, Head of the Department of Advertising and public relations at Institute of branch management RANHiGS, vice-president of the Russian Association of communication agencies (RACA), the official representative of the International Advertising festival "Cannes lions" in Russia and CIS countries.


Maintainability overtakes brand


Blazej Bernard Reiss, CEO of TPV, agrees with the colleagues: "What is Russia's national brands except state monopolies?" “Gazprom ", Kalashnikov rifle. A few dozen of such can be remembered. They are also the most expensive ones.  And their value will not have anything to do with the market one… We may recall the brands in the field of high technology, financial services, bio pharmaceutics, FMCG market. But are they really "national"? Are they known somewhere other than in megacities? Returning to the estimation of cost, TPV global brand is costs nothing apart from its production facilities. That is, the value of a brand may not be related to the value of a company. And vice versa. By the way, in my opinion and personal experience, the concept of "brand" in Russian regions comes after the concepts of "price" and "maintainability".
"The cost of some Russian brands is very high, but here it is important to understand that brand assessment without accounting of other assets is just a subjective lobbying gimmick.  There are no mathematical tools for calculating the cost of a brand in nature. There is a demand and reputation – and then manipulation and large policy come. Here's a close analogy. How much, for example, can cost Leonardo da Vinci or Van Gogh painting? Specifically, "Mona Lisa" - how much? And here you can declare any amount, because it's still not for sale but for ranking. For creating a coordinate system. The same is with brands", - Mr. Andreev said.
"There is no formula of building a brand that would work in all cases. The only trouble-free way  is to score all the available information space with mentions of the brand, but it results in enormous costs for advertising media and extensive media plan, which no agency cannot cope with. Building the brand is a unique combination of tools of advertising, product placement, endorsement, public relations and information exposure, and to find a happy combination in their use seems to be pretty hard to me", - said Mr. Filimonov.


The two approaches


Alexander Jansson, analyst at Conomy, notes that the universal model of building a successful brand doe not exist, but there are two most common approaches. Conventionally, they can be divided into "Japanese" and the classic "Western" ones.
In the case of "Japanese" approach, the basic idea at the initial stage is not the construction and development of the brand, but the constant release of new products. Such approach allows for experimentation without long and costly market research, thereby attracting new customers, and in the case of issuance of a failed product it can be quickly replaced. With this approach, the formation of a strong brand is a continuation of a properly chosen strategy of the company. The use of this approach is difficult for large companies because of the complexities of production restructuring. Of course,  companies periodically produce unusual variants of its products, but usually such experiments occur in local markets and do not go beyond them.
The distinctive features of the classic "Western" approach is long preparation, complex multi-level market research and building a strong brand as a basis for development of the company.
In the Russian realities the use of the "Japanese" concept as the basic strategy does not look attractive: our market has no sufficient level of competition in order to maintain a high rate of new product releases. Therefore, the main way in building a brand in Russia will still be the "Western" one, that is, long-term preparation for the release of the product, promotion, expansion of the customer base and customer loyalty increase.
"Building of the brand is a complex and long process. But it is an important process. Especially in the construction market, where the purchase price is high, in fact, the apartment is bought once or twice in a lifetime. And one of the driving forces of acquisition from this company is the brand name of a developer. As a result, the company with an unconstructed brand and bad reputation is forced to sell cheaper to attract buyers. Thereat the difference can range from 5 to 20 thousand rubles per square meter", says Paul Berezhnaya, executive Director of "SER" holding.


The communicated value


Arsen Dallakyan, an independent expert in the field of behavioral marketing, mass communications and branding, as well as his colleague from Depot WPF, believes that when building a brand an important place is given to the values broadcasted by it. This applies to products and services in any industry. Brands that go into international markets, one way or another, "cling" corporate values and even country values with them. "But brand managers often make mistakes, exploiting images reflecting value replicated at a given time. For example, for 2016 it is belligerence, aggression, shocking and breaking the rules. We call it a mistake, because the information environment is changing very quickly and brands lose their relevance ", says Mr. Dallakyan. Therefore, the expert believes, it is necessary to encode the archetypal values into basis for long-lasting emotional brand equity. For Russia, this is collegiality, environmentality and creativity. "Firstly, collegiality. No matter how the authors of the foundations of the cultural policy of Russia want it, Russia throughout its history has been a multicultural country, combining both Europe and Asia. Russian brands just cannot be one-valued, duality is in their nature. This concept was played upon very well in Yota Devices campaign "on the other hand".
Secondly, environmentality: no matter what infancy may the ecological culture in the Russian Federation be at, the nature and adapting to it remains a cornerstone value of our culture. Huge territory, harsh climate, a wealth of resources - all this from the ancient times has been and will stay for a long time in Russia’s image. It is important to note that when we talk about environmentality, we do not assume gigantism and pathetic ecopatriotism in the style of "Gazprom" but mean the ability to coexist with the natural environment for the benefit of ourselves and for it (for example, Faberlic, Kaufman, "Arkhyz", "ABC taste ")," - says Mr. Dallakyan.
Nikolay Kalmykov, director of the Expert-Analytical Center RANHiGS, as well as colleagues, believes that brand value is often tied to its geography. He believes that the brands of regional products (RP) partially already are and further can be strongest national brands. And actually the RP umbrella brand itself. RP, according to expert, is a raw, gourmet, and in some cases, food, the authenticity and typicality of which comes from their geographical origin. This ensures the connection between the product and the territory, which is the relevant area of the Russian Federation well-defined geographical boundaries. "The concept of" territory "is crucial and includes both natural and human factors, and means that the final product with such name cannot be made outside. Regional product is a tool that provides a positive perception of the territory through an associated" family tree " quality product, clear history of its origin and technology of its production. It is the pride of the region, its "business card", the one that tourists try and take, - says Mr. Kalmykov - the correct name of any RP should always consist of two words - adjectives by geographic name and product category of the product in the singular. The right examples are Tula gingerbread, Vologda butter, Bashkir honey. Availability of RP product category, the umbrella brand "Regional product" allows both consolidating commodity of the produced mass food, and to organize their single promotion which can significantly improve efficiency".


"Naphthalene" brands


Mr. Andreyev believes that the "Friendship” cheese, "Lada" cars and even Kalashnikov will not significantly increase the reputation of Russia. "Even "Gazprom" with “LUKOIL” and “Sberbank” with Rosneft "can do little. And the problem here is the lack of unified communications and blurred positioning of the country itself. What do they think about us abroad? What Russian brand, except, perhaps, "Aeroflot", can make at least any positive image of our country? Hydrocarbons and weapons are not the best attributes. of Roscosmos, the Bolshoi Theatre and "Stolichnaya" vodka, unfortunately, are not connected to each other. And although this question is not difficult, but it lies in some other spheres, far removed from marketing", - Mr. Andreev believes.
He believes that the brand does not exist until it finds a target. "In the case of FMCG categories (mass market products) it’s all clear. Famous retro brands here are given new life everywhere, and some, as the already mentioned above processed cheeses "Friendship", "Amber", "Wave" and the others under the name" Karat" are literally growing by leaps and bounds! It is important, keeping the knowledge and respect for the true Russian brand, give it a new impulse to prove the high quality and to identify the vector of development. People do not like" naphthalene "brands. Sentimental memories of their first "Zhiguli" and color TVs "Rubin" are no guarantee of victory in the competition necessary to comply with the level of ambition that today's consumer market defines. Imported brands "spoiled" the domestic buyer and one has to comply with it, or even better to be ahead. That's the long and the short of the secret" - Alexei Andreev sums up.

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