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Cracking Russia: Focusing on critical success factors - EY - Global

Cracking Russia: consumer product approaches in 2011

Focusing on critical success factors

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Talent, operating model, value proposition and pricing strategy are all key to success if companies are to perform well in Russia during 2011.

What have companies got to get right if the second half of 2011 is to be better than the first half?

Determine the right value proposition

Local consumers were undoubtedly hit hard by the recession. While they still value the quality and image of Western brands, they are much more demanding, challenging and sophisticated — in many ways more like their European neighbors. Understanding how these changes are affecting the consumer basket is fundamental to building the right value proposition and adopting a successful pricing strategy.

  1. Establish the product price (and consumer price perceptions) of new products at a premium level early on to maximize financial returns over the life cycle of the product.
  2. Develop or reposition brands to fill "white space" within the category price ladder. This can facilitate long-term category price leadership.
  3. Position a brand at the lowest price point in the mid-tier category — just above the value brand price points. We have seen a growing trend of consumers "trading up" the price ladder, and positioning the brand to capture a significant amount of this upward movement is crucial.

Manage talent effectively

  1. Focus on cultural and market sensitivity interventions to help expatriates be more effective and create attractive propositions for Russian talent in senior positions across the globe.
  2. Think beyond salary to make the "total package" more attractive — incorporating benefits that play to the Russian psyche and tailoring talent management accordingly.
  3. Strengthen the talent pipeline by working with universities early on, leveraging global mobility programs and getting more women into the workforce.
  4. Adapt working practices by focusing on how to hire and grow managers who are collaborative, motivate others, communicate effectively and create a flexible operating environment.

Choose the right operational model

The challenge is to get the balance right between local autonomy and global scale and efficiency. Hybrid models are emerging as the best solution.



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