Global Marketing Management: Russian Standard Vodka - Case Study Example

15 July Global Marketing Management Positioning, Branding, and Competitive Advantage Russian Standard vodka was initially designed to target middle-class and premium segment consumers. With its price exceeding the average price of other vodka brands in the Russian market, Russian standard had a goal to familiarize Russian consumers with superior quality vodka products and show them that Russian vodka manufacturers could deliver a product, which reflected the continuity of Russian alcoholic traditions, while also looking forward into the future. The choice of target consumers was not accidental and contributed to the Russian Standard brand’s continued success in Russia. First, vodka has historically been a predominantly male product, and targeting males in their 30-40s would let Russian Standard cover the most attractive customer segment (Grigorian). Second, following the collapse of the Soviet Union, a premium and super-premium quality segment was virtually absent in the Russian vodka market; imported brands like Finland and Absolute were simply unaffordable (Grigorian). Consequentially, Russian Standard was positioned to occupy a market segment, which was mostly free of competitors but offered unlimited brand expansion opportunities. Eventually, Russian Standard vodka did not merely rely on its superior quality but sought to sustain a prestigious name and brand image: in this way, Russian Vodka brand would become appealing to both groups of customers – those who respected its quality and those, who were fascinated with its prestige (Grigorian). Unfortunately, brand positioning of Russian Standard vodka in Russia was not without controversy. The numerous attributes of the Russian Standard brand failed to create a complete and comprehensible picture of its most advantageous features. Simply stated, the brand message sent to customers fell short of comprehensibility – customers could not understand what exactly Russian Standard vodka was and would become if they chose to drink it. Furthermore, with the emphasis on the historical traditions and orientation toward the future, the advertising and brand positioning campaign for Russian Standard failed to develop a sense of pride in Russian consumers (Grigorian). Many of them reported difficulties with understanding the Russian Standard brand and its underlying message. Many others felt that, instead of priding the legacy of vodka traditions in Russia, the Russian Standard campaign sacrificed historical traditions for the sake of progress (Grigorian). Finally, Russian Standard brand positioning campaigns failed to communicate a message of prestige; for this reason, most advertising campaigns were prematurely terminated. Nonetheless, Russian Standard vodka remains one of the most competitive brands in the Russian market. Russian Standard demonstrates a number of competitive advantages. First, the quality of its vodka is difficult to overestimate: the product is manufactured in accordance with the premium vodka recipe created by Mendeleev and approved by the Czar’s government in 1894 (Grigorian). Birch charcoal filters are used to distill vodka, whereas only “deluxe grain spirits from Central Russia” are being used in manufacturing (Grigorian). It goes without saying that quality is the main criterion of any brand’s success. The use of pure undistilled water from northern parts of Russia adds value to Russian Standard vodka products; it is because of its premium quality that Russian Standard managed to achieve Russian market excellence without extensive advertising (Grigorian). Second, after the collapse of the Soviet Union, the Russians have become particularly sensitive to their traditions and heritage. Years of communist pressures denied the Russians their right for self-actualization, self-expression, and historical memory. Russian Standard was one of the first to remind the Russian people of historical values and traditions, immediately creating a strong bond between consumers and the history of their nation. Those traditions were also expressed in packaging, which comprised the features of a classic onion dome so widely used by Russian orthodox churches (Grigorian). Finally, after the end of the Soviet Union, Russia witnessed the emergence of a new, premium segment of consumers, who earned more than $1,000 per month and sought quality vodka products (Grigorian). Russian Standard became that very brand which filled the void in the premium market segment and gave middle-class Russian consumers a product, which could boast superior quality but was cheaper than imported premium-class vodka brands. Strengths and Weaknesses of Brand Extension Strategy Russian Standard initially targeted consumers of the premium segment, emphasizing the importance of the historical traditions in Russia. With this in mind, the brand extension strategy for Russian Standard vodka had to communicate a simple and explicit message of “embraced past and inspired progress” (Grigorian). The strengths of its brand extension strategy were obvious. To begin with, the strategy had an extensive coverage, using advertising and mass media that were available for and popular among middle-class and affluent Russians. Those included glossy magazines like Harper’s Bazaar and Vogue, Marie Claire, and others (Grigorian). The Russian Standard brand had to become visible and noticeable, placed where middle-class consumer movement was high, for example airports and duty free areas (Grigorian). From its inception, the brand extension strategy for Russian Standard Vodka relied on functionality and the quality of the product itself. That is, the campaign had to advertise the benefits of the product, its superior quality, and the benefits it offered to consumers, including its purity and neutral taste. Another strength of the brand extension strategy for Russian Standard was in that the campaign relied on the importance of progress and future growth in Russia without disrupting the value of its past. Actually, Russian Standard had to become an intricate link between Russian’s past and its future, turning into a relevant element of Russia’s cultural image and a representation of its blossoming cultural traditions. The brand extension strategy was strong in the sense that it incorporated knowledge and experience of western advertising strategies – knowledge and experience that had been absent in Russia after the collapse of the Soviet Union. Western advertising agencies were believed to have capacity needed to turn Russian Standard vodka into the most popular vodka brand in Russia. Yet, the brand extension campaign for Russian Standard in Russia fell short of explicitness and completeness in its advertising message. Consumers failed to recognize the important link between past and future. The brand extension strategy did not support but, on the contrary, denied the validity of the Russian cultural heritage. Consumers were reluctant to accept a brand that lacked a strong cultural basis. Moreover, that the brand extension strategy was developed by westerners also posed another cultural risk: few westerners would ever be able to capture the intangible elements of the Russian culture, its uniqueness, and the place of vodka in it. Eventually, at that time, electronic media of advertising were mostly unavailable to advertisers (Grigorian). For this reason, despite extensive coverage, the brand extension strategy lacked an electronic impetus. It is possible to assume that middle-class and affluent Russians, whose lives were concentrated around serious business matters and importance of earning good incomes, would not always have time to read glossy journals. Electronic media could have a serious advertising potential for Russian Standard but could not be used for objective reasons. The brand extension campaign ended up in the midst of consumer frustration and disappointment. The company had to shift emphasis to on-site and off-site promotion of the product – the brand extension instrument that proved to be extremely successful and efficient in Russia, which its eternal commitment to familial relations and friendships. An ideal brand extension strategy for Russia would have to exemplify a combination of quality, functional characteristics, and a perfect understanding of the Russian culture. However, Russian Standard pursued standardization and used one and the same strategy for international and Russian markets. That was one of the main reasons why the brand extension strategy for Russian Standard failed in Russia. Expanding Russian Standard to the United States Despite numerous brand extension fallacies, Russian Standard should be launched in the United States. Several important factors justify this decision. First, the United States remains the world’s biggest premium vodka market (Grigorian). Vodka is gradually replacing the prestige of other alcoholic drinks, including whisky, and Russian Standard with its reliance on quality and functional characteristics has a potential to win hearts and minds of American consumers (Grigorian). Second, Russian Standard has a unique opportunity to find way to the hearts and minds of Russian immigrants living in the United States. Undoubtedly, many of them experience the sense of nostalgia about Russia, and Russian Standard could become a reliable link between their present lives in the U.S. and their commitment to the values of the Russian culture. Third, the United States is witnessing an unprecedented rise in super-premium vodka brand segments, but many vodka brands continue neglecting these trends (Grigorian). The growth of a super-premium vodka segment in America has a potential to give Russian Standard a competitive edge and a unique chance to outperform its foreign competitors. With unique packaging, superb product quality, and commitment to premium segment consumers, Russian Standard can become the most popular Russian vodka brand in the United States. Marketing Plan Outline Segmentation, targeting, and positioning. In distinction from Russia, Russian Standard vodka in the United States must target predominantly young consumers, with a special emphasis made on its superior quality, functional attributes, and fun (Grigorian). Vodka in the United States lacks a historical angle but is used by youngsters as an easy-to-drink, refreshing, and fun drink. Vodka is also used for cocktails, and the Russian Vodka brand in America should be positioned to reflect these market tendencies. It is possible that the marketing strategy for Russian Standard in America will target two distinct groups of customers – (1) Russian immigrants and children of Russian immigrants, creating a sense of pride, national self-identification, and cultural belonging, and (2) American customers who seek fun and easy-to-drink alcoholic beverages of premium and super-premium quality. Branding. Years of the Cold War and the legacy of the political conflicts between the United States and Russia, including the iron wall between the two countries, have caused sustained unawareness of Russian cultural traditions in America. Thousands of Americans keep an outdated view of the Russian reality, with its forests and bears but no technologies and economic affluence. Brand extension strategies for Russian Standard in America should utilize the principles that were used but failed in the Russian campaign. More specifically, Russian Standard as the link between the Russian past and its future will attract American customers to choose the Russian Standard brand. The brand extension strategy should position the Russian Standard brand not merely as an intricate link between past and present but as the source of knowledge about Russia’s present and future. Russian Standard Vodka in America must become the representation of Russia’s innovativeness and progress which nonetheless do not sacrifice the intangibility of Russian cultural traditions. Russian Standard must familiarize American consumers with the best features of Russia, its people, and its history. It must become a fundamental element of Russia’s new, progressive and successful image in the West. Packaging. Russian Standard vodka’s packaging has always been one of its principal competitive advantages. However, the shape of the bottle inspired by the Giant Bell in Kremlin may not be as appealing to American consumers as it is in Russia (Grigorian). The fact is that not all Americans realize and recognize the importance of this symbol. Before Russian Standard enters the American market, a broad survey of American consumers needs to be performed, to estimate the scope of knowledge about Russia and choose Russian symbols that are familiar to American consumers. Possibly, the main features of the Kremlin buildings could give Russian Standard vodka a competitive edge in the U.S. With American commitment to functionality, the new packaging must be equally “cultural” and convenient. The packaging must add to the image of easy-to-drink Russian vodka, which exemplifies a long-standing tradition of purity and functionality at different times. Works Cited Grigorian, Vadim. “Russian Standard Vodka: Strategies for Global Branding and Expansion into the US Market.” INSEAD Cases, 2002. Print. Read More