Russian Standard Vodka Strategies For Global Markets

Russian standard Vodka Strategies For global MarketsIntroductionRoustam Tariko, break-dance of the Roust Holdings planned to erect a reproach that go away set up refreshed standards of world course of study musical none for impertinently breed of world-wide Russian pits. Tariko strained on setting up the standards by a overlap which is distinctive be engender of its Russian Heritage so that Russians toilet push superciliousness in it, and to fulfill this requirement vodka was the obvious option as it is developed in Russia and buckramly associated with the country. Tariko launched the vodka and by 2002, Russian amount was outselling any contrary bell ringers achieving the enlighten position in the vodka securities industryplace. This success of the Russian mark off was attri neverthelessed because of its consistent result display case, packaging, and merchandising and of course because of its strong depiction of Russian heritage. Encouraged by its succ ess, Tarikos counselling launched the Russian streamer in the European countries aiming to marque it the best vodka glob on the wholey. Russian thought processl vodka was making art in around 10 European countries, the political party wishes to enlarge the business by win crossing the boundaries by entering into the US Market. Vodka is re ein truthy storied in the US it has a huge marketplace, largest around the globe and there are many best selling companies which offer support superior vodka. Launching Russian normal vodka in US would mean postgraduate competition with the already lively mails that are quite hot among customers. The Russian banners alike expanded the list as Tariko decided to launch a new type of vernacular which provide serve foreign employment companies, small business and individual customers. The challenge faced by the Russian mark offs team was to make the twain diverse businesses compatible with each somewhat differentwise w hile maintaining the standards of the Russian place. The report presents a brief overview of the tell on uprightness concept of the Russian exemplars and the terra potentas behind its success story, discusses the horizontal vane dispersal in hurt, and in like manner debates over the possibility of launching Russian shopworn in US and whether it needs to change its strategies to attract the customers. stigmatize lawfulness is considered to be a crucial seminal fluid for profitability. A firm with strong discoloration rectitude bath draw a signifi burnt rim in the market as compared to its competitor. It foot be able to fool higher prices with its sword determine backing it up. The firm can likewise please a larger market share, a possibility of further product extensions and stock-still draw much investment into the existing business. This is the reason why in the present world, staging or make physique has contract a genuinely important strategic issu e for businesses. Businesses much(prenominal) as Pepsi, Coca Cola, Ralph Lauren, Nestle etc brace very strong grease equities, because of which they are able to enjoy huge market shares as tumefy as the ability to price their products higher than what they would guard if they did non have their several(prenominal) injury hollers. trademark righteousness is the nourish of a company which is and because of its pee-pee. As observed by Dr. Ramachandran (2010) dent fair-mindedness is the burden which is attri provideded to the products brand name as compared to the same product without a brand name.Due to the benefits strong brand equity can provide, every incorporate entity works their intense to excel others in the retail sector. However the pass arises that what makes a brands equity stronger than it is? According to Kellers (2003) brand equity pyramid, there are mainly 4 steps and six building blocks which establish a consumer based brand equity for a firm, namely Salience ( individualism), cognitive operation and Imagery (meaning), Judgments and Feelings (Response) and finally Resonance (relationship) (Appendix 1). These are the steps at which the consumer asks respective questions cerebrated to the firm, and each step leads onto the next until the consumer places complete confidence in the firm, and thus the firm is able to acquire strong brand equity.This specimen by Keller (2003) can be used to explain how the Russian sample brand was able to establish strong brand equity and how this brand equity helped the company to gain commendable success in Russia. cross off SalienceThe very first step in the pyramid is that of Salience, or identity. This is the step where the consumers ask the firm or product, who are you. This means that when a firm is introduced in the market, the firm establishes distinct identity. It establishes its association to a token product class, i.e. consumers consider the firm/product according to this distinct i dentity. Brand salience can be defined as to how often and intimately the brand is evoked under various smudges and circumstances? (Keller, 2001)The beginning of the Russian streamer brand was with a mindset that its products were to be established in such a path which would be able to gain coarse lasting consumer association. The objective was to establish an exclusive product, which focused on Russian traditions. The brand identity established by Tariko was such that the Russian Standard brand was identified as the standard for Russians. The aim was to reach for the unrestrained facial expression of consumers while they can relate themselves to the brand and claim pride in owning it. As the case study points out that the Russian Standard Vodka is identified as a tralatitious Russian souvenir, like matryoshka wooden dolls, Red Army captain watches, and lacquer boxes from Palekh (Grigorian, 2000). The intricate details taken into account in establishing the brand salience for the Russian Standard Vodka can be largely attri thated to the brand equity that it enjoys at present.Keeping the brand equity in order to build and protect the equity a brand positioned as a premium brand has to relieve up with the forecast by the consumers. For a premium brand the customer expectancy is non only from the prime(prenominal) of the product but it starts from the manu particularuring to the pricing to packaging to delivering as nearly as to promotion (NetMBA). In all these take aims a premium level of forest is expected. Russian standard has been careful in belongings lumber at the utmost level while carrying out the four Ps. The product was get tod with quality ingredients. The packaging was outlining quality in every aspect including meticulous details like design, labels, bottle caps and cases. The pricing was done to cat the product in the premium to super premium category and the scattering was carefully laid out to acquire shelf lengths in thau maturgy restaurants and night clubs and tied(p) in the highly perceived supermarkets.Brand nitty-grittyMoving onto the next step of the Kellers pyramid, Performance and Imagery are what gives a brand its meaning in the minds of the consumers. The performance block includes all the principal sum characteristics of the brand, i.e. how well is the brand able to conform to the consumers psychological and functional requirements. This component part of the pyramid essentially includes the basic features of the product, pricing, design, durability etc. Whereas, the brand imaginativeness portion of the pyramid includes all the characteristics that are connected to the product, i.e. the products user profile, the tax and history that the product reflect along with the distributional structure of the product(Keller, 2003).The Russian Standard brand was known for its quality, packaging and strong distribution channels. It was knowing to be the first domestic brand to create a cryptic mosaic of imagery. It focused not only on quality but also on the price, packaging, merchandizing and conference. The Russian brand emphasized on personation the Russian heritage to connect to the Russian customer and also hit and ensure product quality that allow for attract the customers and make them hardcore to the brand. The Russian major scientific institute which specialized on viands research, in 1990s, along with Mendleev formulated a formula for vodka, this was patented to be exclusively Russian, it was considered a symbol of quality. The quality based on Mendeleevs recommendations of the vodka was of utmost importance to Tariko, which was then communicated to the people through extensive advertisement promotion, the designed bottle of vodka showed Mendeleves signature so that the customer testament felt set up about the quality of the product. By establishing this strong connection of vodka with the Russian heritage, Traiko developed a certain maven of meaning a nd understanding among his customers that they were attracted emotionally and physiologically towards the Russian Brand vodka, and this sense of owning and connecting to the product not only attracted as many topical anesthetics but also ensured their loyalty towards the product. Other than this, the Russian Brand also priced the product in a very take into account way the price was in support of its image as an exclusive brand. The vodka was priced much than other local anaesthetic brands, while still it was less expensive than the import brands. This helped the Russian Standard Vodka to be recognized as an elite brand, in league with the imported brands whilst at the same time it helped in gaining salary for the firm as well (Appendix 3) (Anselmsson, 2007). It mainly targeted the connoisseurs and strivers who preferred high quality products and prestigious brands.Moreover, the packaging of the Russian Standard Vodka was crotchety and fashionable. The exclusivity of the produ ct and its other brand values was reflected by its packing. Attention was paid to every superficial detail of packaging of the vodka bottle from bottle case to its cap and to a greater extent importantly the cast of characters of the bottle all were designed to emphasize on Tarikos objective of depiction of the Russian heritage and also ensure class and quality to the customers requirement and satisfaction. The packaging was designed by one of the top most design house, so that it would reflect the brands quality. The act of focusing on the packaging of a product was in itself something new for a business in Russia. Quality used to be the sole source of focus for a product, leaving the focus from pricing, packaging or the distribution channel, whereas, in modern selling techniques, product, price, place, packaging and promotion make up the merchandise intermixture for any product. Therefore, packaging was another one of the major reasons for the Russian Standard vodka to acquire its brand meaning in the eyes of the consumers.Further more than, the nostalgic touch to the packaging which reflected the value of the brand increased the brand meaning. The shape of the bottle resembled that of the traditional Russian orthodox churches, and there was a historical signature on the packaging as well.. This helped the consumers in establishing distinct brand imagery for the Russian Standard brand and relate to it.On the other hand, the strong distribution channel of the Russian Standard Brand also helped to setup its brand imagery. The Tarikos import business before the Russian Standard brand helped the new vodka to acquire advantaged shelf space as argue to what it would have had in case Tariko had no prior reputation. Therefore, the beginning for the Russian Standard Vodkas placement in the market was privileged with supermarket promotions, access to declamatory restaurants, clubs and bars.Brand ResponseThe judgment and heartings of the consumers are the next building block. . This is basically the feelings and perceptions of the consumers about the brand (Keller, 2008). The brand judgment includes the brand quality, believability, and differentiation. The quality includes the value or satisfaction the brand provides the consumers. The Russian Standard Vodka was trusted by the consumers for its quality. The advertised quality was supported by the actual quality of the product. The captivate merchandising mix helped the consumers to relate to the product. The idea of the campaign was to show a transformation from the previous Russian standards and the new ones. It was meant to create a overhaul image in the minds of the consumers. However, this was not perceived as desired by many consumers. Most of the people thought of it as disrespectful to dishonour Russian traditions no matter which era they belonged to and the message could not point to most people as well. So the campaign failed to communicate the think premium image. It was d esigned for the international market but the response from the Russian market stopped it from being used abroad. It was not portraying the embracement the past and inspiring progress mantra the company was following.The feeling that was called upon by the advertisement within the consumers was such that they preferred using the Russian Standard Vodka as opposed to the imported brands. The brand acquired more appeal through its unique packaging and quality. The on-premise promotion on the other hand worked better for the company. It was promoted as a prestigious brand in restaurants and night clubs. The off-premise promotion was also carefully planned to portray its elegance by acquiring quality displays and shelves in the supermarkets.Brand ResonanceThe consumers in the modern times gather up much more than just the functional benefits from a product. They subscribe impalpable benefits such as image, status, personality, lifestyle, success and other factors that they can strongly relate to (Aziz and Yasin, 2010). The Russian Standard brand was one of the very first brands in Russia which used all these aspects into account when introducing its products in the market. Prior to this, quality and the product was the only consideration for the businesses. They believed in the supply making its own demand style of selling as opposed to the making a product in accordance to the demand of the people. However, the Russian Standard brand changed the traditional style of marketing and therefore was able to hugely benefit from fast success in Russia. The Russian Standard brand used all the five Ps of the marketing mix to powerfully introduce itself in the market. From there onwards, it maintained its quality and built a solid name for itself by being consistent and innovative in promotion. The Russian Standard brand was able to establish a reputation which appealed to the consumers nationalistic sense. The idea was to create a strong consumer-brand relationship. Bran d resonance can only be healthy if the consumers feel that they are in synchronization with the brands identity and values. Because of its patriotic look the brand was able to delve into the Russian market well. It was in complete harmony with the traditions of the Russian people.Therefore, from the analysis above, it can be said that the speedy success of the Russian Standard brand was not only because of the strong product quality they offered but also overdue to its right choice of marketing mix and most importantly its persist in with the Russian Identity. As the Roust Organization has already developed strong merchandizing and communication skills and relationships with the both kind of trades that is on-trade and off-trade, it was easy for the Russian Standards to be introduced to the consumers, but it was the Russian Standards strong conviction towards the brand equity that they become increasingly popular with the people and establish a certain kind of bond with them. It c an be rightfully said that the success story of Russian Brand vodka emphasizes on all the aspects of the brand equity i.e. to establish brand salience and keep themselves intact with brand meaning to strengthen the bond with the customers keep counter check on the brand response and improve case of any negativity and maintain the high standards, and last but not the least to provide brand resonance to the customers so they can feel pride in using the Russian Brand vodka. Thus it enjoyed rapid success and managed to maintain its position at the top, with these brand equity concepts followed it is today thought as to be one of the traditional Russian Souvenirs.variegationHorizontal brand extension is one of the variegation strategies for the businesses. As can be seen in the Ansoffs hyaloplasm in appendix 2, when a firm increases its business into new products and markets, it is said to be diversifying its business. The benefits from diversification include, profitability, branch, gleaning economies of dental plate if the diversification is within the same product range, avoiding dependence on a mavin product etc. Capitalizing on the equity of existing brands can produce many benefits for the company (Strach and Everret, 2006) even enhance the perception for the core brand (Aaker, 1991).There are two types of diversification strategies concentric diversification or conglomerate diversification. Concentric diversification is the one where the product class remains the same. This strategy is to add related products or markets from that of the stream line of business. On the other hand, conglomerate diversification is where the firm diversifies into areas that are unrelated to the menstruum product range.SynergySynergy is the ability of two or more instruments to work together to create something more than what they would have created enlightenly. In a firms case, a synergy would be the extra benefit acquired by two different governances working together, as opposed to what they would have acquired if they worked separately (Ellwood, 2002). In the Russian Standard brands case, the avering industry and the vodka industry are two unrelated industries. However, the Russian Standard brands aim to establish both these businesses under a single brand name could have been to benefit from synergies. This is dominance if the bank and the vodka business together can give a stronger brand equity or profitability as opposed to their working as separate businesses under two different brand names (Aaker, 1991).Conglomerate diversification Benefits and ProblemsThe possible motivations for conglomerate diversification include profitability, reducing firm particular proposition risk, and limited growth in the current business along with other benefits of diversification in general. As observed by Martin and Sayrak (2001), the diversified organization may benefit from a larger tax liability than the sign business. Moreover, there may be other be nefits from diversification such as risk from suppliers can be reduced, overhead costs can be distributed amongst a larger business (economies of scales), and the debt capacity may increase as well (Lewellen, 1971 as cited in Martin and Sayrak, 2001). Furthermore, the additional business can become a source of internal financing for the combined brand, which can easily reduce the firms financing costs. This can be done by the circumspection of the combined organization, by redistributing resources within the organization, where a larger amount of coin can be placed in the areas where there is potential of a higher gain than some other department (Stein, 1997 as cited in Martin and Sayrak, 2001).On the other hand, conglomerate diversification may create a number of riddles for the existing firm. There are chances of administrative problems arising with an increase in the scale of operations (VanAuken, 2011). There can be managerial issues, i.e. an intensification of the principle -agent problem in an organization. Along with this, there can be an inadequate level of experience for the existing firm in the new industry. There may be requirements of the new industry that the current management is completely unsuspecting of. New marketing mix, technical equipment, personnel and a lot more will be required for the new business which the current management may not be able to obtain.Support for and against Conglomerate variegationIn conglomerate diversification there are cases where the diversification has been highly successful as well as cases where diversification was a source of loss in shareholders value in the initial business (Martin and Sayrak, 2001). Maksimovic and Philips (2002) in their research found out that conglomerate diversification reduces shareholder value, whereas in Martin and Sayraks (2001) work they have given a wide range of musical accompaniment as well as opposing arguments, without a significant close as to whether conglomerate diver sification is beneficial for the initial firm or it actually dilutes its initial shareholder value. However, it has to be noted that most of this literary works is on merging or acquiring conglomerate businesses and not establishing a new business like the Russian Standard brand did.In case of the Russian Standard brand, (Grigorian, 2000) the bank was met with immediate success. Therefore, the success of the bank could be belongingsd to the existing brand name of the Russian Standard Vodka, but even if it was not because of that then there was definitely no dilution of the brand because of the conglomerate diversification.However, it may be difficult to measure in the Russian Standard brands case whether the success of the bank was because of the credibility of the brand or the right marketing mix for the bank itself. It can be the case that the bank may still have had the same success without the Russian Standard brands name associated to it, because the strategies to establish t he bank were appropriate and the marketing mix was correct for the respective environment. This may be very much possible considering the fact that most of the people did not associate the Vodka and the Bank even with the same brand name few customers made a heart-to-heart link between the two businesses (Grigorian, 2000).Another aspect in this land site could also be the fact that the owner of the company, Roustam Tariko, had established much credibility for himself as well by being successful very early. His sense of strategic business thinking made him successful in creating a brand image of Russian Standard. The aim to meet international quality standards and improve the image of his country reflected well in his branding strategies. The Russian standard vodka and bank, though both were quite different in terms of relativity but as both were being run by Roust their relativity was somehow subsided by the credibility of the parent company (Ellwood, 2002). both(prenominal) the brands were leveraging on the Russian Standards image. So the brand could very well diversify instead of considering to be diluted.Therefore, it can be said that even when the banking and vodka businesses are not compatible and few modern businesses actually go for conglomerate diversification, the Russian Standard brand was able to handle the two businesses well. As reputation (Ali, 2008) is one of the main factors that can affect the results of brand extension, the Russian Standard brand had a strong brand equity because of its vodka business which could very well afford to withstand any brand extension.Market ExtensionAnother diversification strategy is to extend ones existing business into new markets. As can be seen in the Ansoff matrix (appendix 2), the market extension (Jewell, 2000) is when the existing product is introduced in some new market. This is another extension strategy that the Russian Standard brand was pickings into consideration, i.e. extending its vodka into th e US market. The benefits of market extension include profitability, an opportunity to reap economies of scale as the basic product will remain the same and growth of business and operations (VanAuken, 2011). Whereas, the market extension process may cause difficulties for the existing firm, because the new market may be completely different from what the firm has been working in initially. An in depth analysis of the potential market, information of the competitors and consumers, legal regulations, economic and social environment, all are required before the extension may be made. An entirely new marketing mix is required for the same product for it to be introduced in a new market. If the product is launched in the new market with the same marketing mix, then the probability of its success may be reduced considerably. This is because, consumers in each market have distinct requirements and the social, economic and legal part is also different from the existing market. Moreover, t he potential market may already be saturated with competition, as is the case with the US market for Vodka (Sahani, 2008). The US market already has a number of well positioned, distinct local and foreign brands. Each of the brands available in the market is distinct in its own way, i.e. each has a specific segment of the market that it is very well catering to. Therefore, it can be said that introducing the Russian Standard Vodka in the US market is a difficult task, however with the quality product that it has, it may as well be successful to dig a section of the market. In order to do this, a new marketing mix will be required for the Russian Standard Vodka to be successful in the US.The Russian Standard Vodka in the US marketThe Russian Standard Vodka was hugely successful in Russia not just because of its quality, but also its appeal to the nationalist sense in Russia along with its privileged distributional channels. These are the attributes of the Russian Standard Vodka that may not be present when the vodka is introduced in the US market. The US market which is todays largest consumer of vodka, is already very saturated in terms of premium vodka brands. The consumers will not be attracted to the brand merely because of its Russian communication channel, nor will the brand be able to acquire advantaged distribution channels (Sahani, 2008). Also considering the fact that the relationship between the two countries have always been on a verge of disagreements (Graham, 2008), this can act as creating a certain biasness for the origin of the brand. Based on the market analysis the super premium to premium segment already includes a lot of imported brands. For Russian Standard to create its space the super premium segment will have a benefit in terms of no competition from local brands, since the super premium segment only includes the imported variety. So if Russian Standard vodka changes its market strategy they can be noticeable in the US market. Change in the strategy will have to be emphasized in new and creative ideas of marketing and advertising, for this purpose it is very essential for the Russian Standard management to carefully study the US market, understand what the customers need and want, and what does the other vodka brands offer them, whether is there any loopholes or any gap between the customer requirement and brands offers and if Russian Standard vodka can overcome that gap. The American market is completely different from the Russian market, therefore Russian standard faces a great challenge in first capturing the attention of the American and consumers and then providing them with a better vodka than its competitors. The Russian Standard vodka can be launched in US market, but for a successful launching a lot of literature review and plan is required. From the discussion above it can be said easily that the Russian Standard will have to adapt to the US market to make their space. Many aspects of the Russian Stan dard vodka advertising and management campaign will plays vital role, among which pricing is the most crucial of all. The price should be appropriate enough to capture the attention of the Americans and maintain class as well. The quality of the Russian Brand vodka will ensure brand loyalty from the customers, but the real challenge is faced in actually making space in already so brand crowded market of the vodka in the US.The Russian Standard Vodka marketing mix for the US market will have to have a significant media campaign as well. This is because, all other competing brands in US have noteworthy amounts of money washed-out on advertisement, and are using user profiling (associating celebrities to add value to the brand) to their advantage. This is one place, where the Russian Standard Vodka will have to focus to establish a brand image that will appeal to the respective consumers. With the current scenario going pretty well for Russian Standard at phratry a global encroachme nt will add to the equity of the brand. As far as the image and global inconsistency is concerned in order to supposition into a foreign market the characteristics must be understood. Since the US is a big market and the people are very accustomed to freedom and rationality Russian Standard will have to adapt to the culture in order to create the brand image (Deresky, 2006). This might impact global consistency of the brand but in order for it to be associated exclusively to Russia the Russian Standard brand has to be put up as a brand for the elite. One the brand recognition will be spontaneous and second it will enjoy cost effective global positioning (Sahani, 2008). As the current situation of the brand is leading in the Russian Market the intervention in the US market will not be a victimize decision.Another aspect in consideration with the adaptation to the US market involves the brand name Russian standard itself (Deresky, 2006). This can have a positive as well as a negativ e impact while branding in US. The word Russian associates the Russian traditions with the brand. This can impact in the unique positioning in imported vodkas market. The name will give the product a Russian trait and the market does consist of people inspired more by brands with foreign attribute associated to them. However, the market also consists of people who can be biased in terms of foreign associations. Since Russia has been on major disagreement terms with US in history, some sort of biasness or stereotyping might result in the undermining of the brand (Graham, 2008).Launching Russian Standard Brand vodka in the unite State would be challenging but not entirely an out of the question job. With change in strategies and with new concepts of brand equity that will be according to the US markets, the Russian Standard Brand may be able to make their space in the strong world of vodka in the United States.ConclusionTherefore keeping these aspects in mind the adventure into the US market can be risky at some points since it is the largest vodka market in the world. On the other hand it can also provide Russian Standard the global position it is looking for. It will add to the equity at home and in other markets it plans to venture into. The loyalty will increase and so will the company reap economies of scale by pricing it in the super premium market.ReferencesAaker, A., David 1991, Managing brand equity capitalizing on the value of brand name, New York, Maxwell Macmillan International.Ali, T. 2008, How Do Consumers Evaluate Brand- Extensions A Five-Factor Approach, Routledge.Anselmsson, J., 2007, Understanding price premium for products a conceptual model of customer based brand equity, Journal of Product Brand management, volume 16, issue 6, pp. 401-414, Emerald Group Publishing Ltd.Aziz, N. A., and Yasin, N. M., 2010, International Journal of trade Studies, volume 2, issue 2,Deresky, H., 2006, International Management Managing Across Borders and Cult ures, 5th Edition, Pearson nurture Ltd.Ellwood, I., 2002, The essential brand book over 100 techniques to increase brand value, Biddles Ltd.Graham, T., 2008, US-Russia Relations Finding Reality Pragmatically, CSIS, Washington D.C.Grigorian, V., 2000. Russian Standard Vodka Strategies for Global Branding and Expansion into the US Market INSEAD. Available at 27 February 2011.Jewell, B. R. 2000 An compound Approach to Business Studies, Pearson Education Limited.Keller, Lane K., 2008, Strategic Brand Management, ternion edition, Pearson Education Ltd. pp. 246-260.Maksimovic, V. and Phillips, G. 2002, Do Conglomerate Firms Allocate Resources Inefficiently Across Industries?