Brand value increases across categories

Part 4 | The Fast Growing Markets
Russia
RUSSIAN BRANDS IMPROVE
IN qUALITY, COMMUNICATION
WTO entry, Sochi Olympics add urgency
126 BrandZ Top 100 Most Valuable Global Brands 2013
FOR TWO WEEKS next February,
during the 2014 Winter Olympics,
audiences worldwide will focus attention
on Sochi, a Black Sea resort—and
potentially on Russian brands. They
should be surprised and impressed.
Russian are becoming more sophisticated
brand marketers, integrating traditional
and online communication to develop
brand experience beyond simply a logo.
They’re applying these advances across
both consumer and business categories.
Russian consumers often prefer local
brands and, because of an increase in
quality and range, they usually can
find them in almost any category. The
government encourages the growth of
Russian brands to enhance the country’s
stature and help differentiate it from
the West.
This brand evolution is urgent.
Russia’s entrance into the World Trade
Organization (WTO) in 2012, after 18
years of negotiations, will over time lower
tariffs on imported goods and make
global brands more competitive with
Russian brands.
These developments come at a time when
the Russian economy, growing at 4-to-5
percent annually, has so far managed to
avoid the recessionary pressures felt by its
European neighbors. Russian disposable
income continues to grow and consumers
prefer to spend rather than save.
Increased branding sophistication
The response to WTO membership has
been most noticeable among the businessto-business
organizations that had not
focused attention on branding until now.
Not only are the largest B2B companies
investing in their brands, but so are
Brands in Top 100 Russia
Category Brand Brand value
2013 $M
some of the small- and medium-sized
Russian brands as well. The Russian
brand Chemline had dominated Russia’s
industrial cleaning products industry,
for example. The market entrance of two
major US brands forced Chemline to
refresh its brand.
On the consumer side, an innovative
mobile device brand called Yotaphone
drew media attention. Launched at the
Consumer Electronics Show in Las Vegas
in December 2012, the two-sided Android
phone is expected to be widely available
by the end of 2013. The combined
smartphone and e-reader has an LCD,
liquid crystal display, on one side and
an EPD, electronic paper display on
the reverse.
Another development that happened late
in 2012 also should influence the Russian
evolution of brand and, specifically, online
retailing: Apple launched its online iTunes
store in Russia, amid rumors that a full
line online Apple store soon would follow.
Improving online presence
Brands in most consumer categories,
especially retail, focused attention on
improving their online presence.
Svyaznoy, an electricals retailer with over
3,000 outlets, reported a 162 percent
increase in online sales to 9.2 billion roubles
($300 million), a rapidly growing—but
limited proportion—of total revenue.
DIY retailing drove a lot of online
activity on retailer websites and in social
media. Some Russian brands were active
along with many of the international
players, including Leroy Merlin from
France; Castorama, owned by the UK’s
Kingfisher, and Germany’s Obi.
Retailers also understood that competing
Brand value %
change 2013 vs 2012
70 Regional Banks Sberbank 12,655 19%
82 Telecoms MTS 10,633 11%
(Source: Milward Brown Optimor (including data from BrandZ and Bloomberg)
Russia
effectively often requires operating
more than one branded format. Many
complemented their big box stores with
smaller outlets more appropriate for
particular locations.
Eldorado, which operates about 700
consumer electronics and home appliance
superstores, opened smaller formats and
offered online ordering with click and
collect or home delivery options.
Enter, a new retail brand from Svyaznoy,
introduced a type of catalog showroom,
similar to the UK’s catalog merchant
Argos. Consumers can order goods
in store and online and retrieve the
merchandise from pick-up locations or
have it delivered to their homes.
Branding and innovation
Last year Russia placed 14th in
Bloomberg’s Global Innovation Index
Top 50. This reputation for high tech
innovation and entrepreneurship is
partially due to the Skolkovo Innovation
Center, a research campus, located
outside of Moscow.
Russia’s Silicon Valley, Skolkovo is
devoted to technological research and
development in IT, energy, biomedicine
and other areas. The government
provided strong support for Skolkovo
to encourage growth of science and
technology companies in Russia
The center has attracted both venture
capitalists and major technology
brands interested in encouraging and
commercializing the work of Russian
scientists. Partners include both Russian
technology companies and many of
the technology leaders ranked in the
BrandZ Top 100 Most Valuable Global
Brands, such as Cisco, GE, IBM, SAP
and Siemens.
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