Abstract:
Since the advent of globalization in the last two decades, market oriented companies has intensified competition to pursue internalization strategy for their supply management, human resources, and product policy. Because of the cutthroat competition at the global stage, aspiring companies must make decisions where their companies can attain competitive advantage over other corporations in the country that they want to explore. Several factors determine the choice of location. First, the company must have an edge over its rivals in terms of technology, distribution system, market base, and efficiency. Companies must have efficient organization skills and distribution skills to realize competitive advantage. Most importantly, a company pursues formidable product policy as it engages in a highly globalized market environment. Several factors determine why a company requires a global product policy. This research examines the trends in Consumer Behavior Variables In Emerging Economies using the example of Russia
1.0 BACKGROUND AND RATIONALE FOR THE RESEARCH:
Gale (2010) reported that today people around the globe are more connected to each other than ever before. Information and money flow more quickly than ever. Companies can now sell standardized products efficiently and effectively all over the world and this has widened the global marketplace at a faster rate. This is in essence that goods and services produced in one part of the world are increasingly available in all parts of the world as nations converge more every year. While the affinity for global trade has increased in the recent past, researchers have often questioned consumer behavior variables in different economies. For this research, I am exploring the behavior of the Russian consumer. I am also examining factors that affect the consumer to be loyal to a particular brand.
Russia is an important economy. Russia is the world’s largest nation in size and the ninth most populous country in size with an approximate population of 143, 4000,000 people. Besides Russia’s huge population, the country also boasts of its massive natural gas and oil reserves. Russia is Europe’s number one producer of gas and oil. The Heritage Foundation. (2013) report Russia’s increasing geo-political influence as well its seat at the G-20. The G-20 membership makes Russia an important emerging economy worth of exploration. With ever increasing energy demands, Russia finds itself growing wealthier by day. The Russian consumer has just recently gotten off an economic recession thanks to the collapse of the Soviet Union and a successful introduction of free market enterprise (Ganske, 2008). The research is made possible by the immense role played by Russia in international market. The consumer culture is taking off making it realistic to explore the motives behind consumer culture in Russia (Idov, 2011).
I am taking this research because of my commitment to the growth of consumer culture and of the economies of the developing world. I am a believer that a peaceful world would only be possible by increasing networks of trade. In order to effectively penetrate the emerging markets, it is important to understand the consumer behavior. Understanding consumer behavior and brand loyalty offers an opportunity to do business in a profit-making manner. I have the competency required for this research having done a research on consumer behavior and brand loyalty for an emerging market in Armenia. In the previous research, I argued that although the incentives and growing needs of population implement the huge needs and more prospects in emerging markets, it is however; becoming more complicated for Multinationals or any other businesses to target the right sized market and makes a segmentation of right population. These and more issues are tightly correlated with the recognition of consumer behavior, a relevant market analysis and appropriate marketing management, which seems to be more complicated nowadays. The main purpose of the research is to: deeply analyze the key understanding of buyer behavior in developing countries and identify brand-building issues in the selected economy.
- Hypothesis: Problem of Research
While understanding the complexities of the international market, we also understand that global corporations of our time are increasingly complex with contradicting conditions across the globe (Nuttall, & Pervan, 2013). Most companies operate in a dozen of political and cultural settings engaging with people of huge diversity. It is the requirement of the leaders to be able to deal and balance with increasing diverse interests and expectations. The goal for this research is to identify key issues related to customer behavior and evaluate appropriate measures in Russia. We question for modalities that could be implemented to enhance customer loyalty on specific brands in the Russian economy. Our goal is to realize an effective system that best meets the cultural, political, economic, and taste of the Russian population.
- Importance of the Research
Like most of the countries in Eastern Europe, Russia has been affected by the difficult transition from communism to Europe. The Russian economy began the process of privatization shortly before 1989 during the Gorbachev reform process. After the process of transformation to a liberal market economy, Russia had to grapple with an economic downturn in the 1990s leading to massive contraction of the economy (Idov, 2011,). Russia has now revamped and the economy is doing relatively well. The question for most corporations is how to effectively understand the Russian consumer in manner that creates loyalty and mutual understanding between the two.
Perhaps one of the most realistic ways of observing consumer behavior that enhance effective international competiveness is called the purchase behavior system. Emerging new values and behaviors can test the purchase behavior system. Using this method, we reckon that some cultures may change faster than others. Emerging new values and behaviors changes the consumer behavior and subsequently the purchasing patterns. With time, this new purchasing model turns into a culture of the society and reinforces the idea of brand loyalty. Perhaps one example is the emergence of MacDonald fast food restaurant in Moscow in 1988 and the eventual growth of competition in the fast food industry in the country. In this research, I make a case that understanding of consumer behavior requires an understanding of human behavior (Mooij, 2004).
Just to give a broad outline, this research focuses on the requirements that must be met in order to satisfy the loyalty of customer in Russia. Based on this general law, businesses’ venture into the Russian market will require that the companies standardize it products to meet the Russian need. First, the products sold to Russia must adapt to Russian requirements as well as the taste of the Russian populace
Second, many people in Russia speak Russian instead of English as an instruction language. It is essential for corporations to manufacture products that have Russian instructions instead of English. This way, the Russian consumers will have enjoyed using the products as their own instead of feeling that the products are foreign.
- Previous Research Carried out
Lewis (1938) argued that human consumer behavior is a function of the interactions of personal influences, as well as the pressure exerted on the interactions by the environmental forces. Cunningham & Anderson, (1972) made a claim that perhaps the central question affecting corporate management is the relationship between the visibilities of social activism as a short run marketing strategy. They argued that while social activism does not yield any viable economic sense, it affects customer’s perception of business and their understanding of reality. Because of social activism, winning of customer brand loyalty requires the company to associate with the sentimentality of the customer through cultural relative methods and appeals towards nationalism.
In another research, Riesman (1953) depicted three groups and hence different types of consumer behavior. The three groups include people who are inner directed, tradition directed, and other directed. The first group indicates self motivated individualistic people who are likely to behave as consumers on the basis of self reliance as well as self conducted consumer research. The second type of people includes people who are attuned to group behavior; Individuals who are influenced by others. This group of people is more likely to purchase things because others have them. The third group of people is difficult to please because of their connection to tradition and nationalism. While conducting a research on how to target the Russian market, it is important to focus on the second group. They are the ones who are most likely to create brand loyalty.
Dunn (1976) explored the effect of nationalism in Western Europe that had an effect of multinationals choices for products sold in Western Europe. Multinational corporations selling popular products had to change strategy and sell products that reflect national symbols that reflect identity for most people Europe. Similarly, Han (1989) discovered that American consumers were affected by significant levels of patriotism. The obsession with made in America was particularly more poignant in the automobile industry. Contemporary research has further explored some effects of country of origin on product purchasing. While most consumers have nationalistic affinity towards products made from their country, consumers living in countries that have lower standards of living or emerging economies are mostly concerned about cost. It is important to understand nationalism in Russia before embarking on modalities of designing brand and customer loyalty.
- LITERATURE REVIEW
Burrow (2008) wrote that because of many functions and activities that are inherently part of marketing, it is not easy to develop a definition that effectively describes the process. The American Marketing Association described marketing as “ the performance of business activities that direct the flow of goods and services from producer to consumer or user” (Burrow, p.81). For the purposes of this paper, I define marketing as the creation of and maintenance of satisfying exchange relationship. Nuttal & Pervan (2013) defined consumer behavior as the process where individuals are in the process of acquiring, using and disposing of products, services, ideas, or experiences. Consumer behavior includes search for information and actual purchase includes an understanding of consumer thoughts, feelings, and actions. One of the biggest incentives for studying consumer behavior is perhaps for the sole reason of ensuring that company is able to attract and retain customers. The following paragraphs explore some of the modalities considered appropriate for this modern day and age.
Schein (2009) reasons that the barrier to effective customer engagement is “organizational and conceptual.” A change in the organization of farm from the traditional methods of customer engagement to more comprehensive marketing system that includes all stakeholders in the product will go a big way in stimulating success. implementing this decision is discussed by Chui et all (2012) Chui and company gives instructions on how a company can apply the use of information analysis to increase access to consumers. The first aspect includes monitoring the behavior of persons, data through space and time by applying presence based advertisement and payment based on locations. The other way is with inventory and supply monitoring and management. The second way is through achieving real time awareness of the physical environment that applies simple detection using directions among other methods. In order for companies to be successful while carrying out this new inventory method, there is a need for reorganization that focuses on developing a plan for creating a formidable design a customer engagement plan. Designing an outstanding customer engagement plan requires that companies understand the manner in which the customers interact with the company. The process also includes having the resources to deliver and allocating responsibilities accordingly while operating the new customer engagement plan. This will be formidable in ensuring success of the new model.
Atsmon et all (2013) wrote that the growth of emerging markets since the beginning of the new century has ushered a new constituency otherwise called the “ emerging markets in countries such as Russia, Mexico, Brazil, India, China and others. As such, different strategies for meeting this new customer base must be explored. In attempt to find the solution Court et all, (2009) argued for a method called consumer decision journey that is distinct from the old method. Court et all make a case for a change in the system used to target consumers. They argue that although marketers in the media industry have been witnessing tremendous changes in the manner consumers become aware of products and buy them; marketers have failed to change approaches that defy the traditional concept. Evidently, the shift in consumer’s decision making requires that marketers realizes the apparent increase of consumer power and choice variety to make a marketing approach that is tailored for the new environment. Court et al argues that while marketers would like to meet the consumers now that most influence their decisions, the possibility of realizing this softness has diminished with due the nature of the multiple choices available for consumers. A new marketing strategy that explores the consumer’s decision-making process is essential for effective marketing.
The article proposes that marketers must aggressively go beyond the conventional communication with customers and learn to influence the consumer driven touch points. It is possible for firms to combine traditional methods such as word of mouth with more sophisticated consumer based loyalty practices such as reviews, development of broadband communications, after sale services and development of quality for the products.
Similarly, Magill et all (2010) discounted advertising as the epitome of marketing in business. Instead, the writers argue that although advertising plays a key role in the success of firms and the sale of products, there is a need for firms to go beyond the ordinary confines of traditional marketing. Contemporary customers have limited distinction between marketing and the product. Successful marketing of a product depends on the reputation that the company builds in terms of quality of its products. The company is thus embodiment of a successful marketing operation. Underscoring this new meaning of marketing is the belief that quality is not a function of the company and a leading agent of advertising and marketing. In essence, the article argues that companies must act as vessels with the engine of the vessel being the marketing organization and the customer engagement wing that works in the process of building priorities and simulating dialogue with all sectors in the enterprise. The development of the customer engagement process are the pillars that determines affective marketing from the traditional approaches used by companies such as social media, mainstream media and all other strategies. In essence, the argument in the article is that successful marketing originates from the firms organization and its delivery of quality products and not massive costs in advertising
2.1 THE KEY DEBATES: HOW CAN A COMPANY SUSTAIN BRAND LOYALTY?
Weinstein & Johnson (1999) write that successful companies do not only satisfy customer they work hard to please them too. Superior customer values mean continually creating a business experience that exceeds the ordinary expectations (p.4). In their view, value is the strategic driver that most multinational corporations utilize to differentiate themselves from the rest in view of customers. In the abstract form, values mean the excellence usually based on the desirability or usefulness (Weinstein & Johnson, 1999, p.5). An effective customer value system makes an enormous difference between a successful firm and an average firm. It is every company’s benefit to have a clear strategy on developing customer values. For a company to create brand loyalty in Russia, it must aim for quality that supersedes the already available in the Russian market.
With regards to customers, they tend to be attracted to companies with running programs for social responsibility. Analysts have argued that businesses that have been branded as socially responsible tend to have an edge over their competitors (Đorđević,2008). It differentiates one company from another and becomes a basis for customer preference. Acting socially responsible does not only imply having the programs in place, but businesses can also decide to make products that add values to the society as well as the environment. Customers would prefer to purchase goods that are environmentally friendly. Customers are increasingly becoming more educated and informed about different products (Đorđević,2008). The contemporary society requires that businesses are savvy with societal issues. With this nature of customers being targeted by businesses, corporations are left with little option but to focus their operation on social responsibility. Corporate social responsibility provides customers with a sound reason to buy a good or a service from one business (Đorđević,2008).
2.2 RESEARCH QUESTIONS
Research questions:
- Is the purchasing behavior system a competent modality for examining consumer behavior in the Russian economy?
- What are some of the methods that a company can use to be fully embraced as a brand in the Russian economy?
- Is social responsibility a realistic strategy for business in Russia basing on the history with communalism?
2.3 RESEARCH METHODOLOGY
I intend for this research to be different. I will use a priori of discussion of literature that formulates the hypothesis, details of research situations, details of sampling techniques, statistics. I will also use detailed discussion of transcripts of recordings of verbal interactions and the devices used by the participants. I intend to develop a research design that is highly interactive.
I also intend to use audio or video recordings of the usual conversations of people. These situations are usually non-experimental and function as primary data. Transcripts made from primary data are convenient forms that represent the written materials of the recorded documents Further transcripts function as an important component of reports by giving the reader a method of analyzing the analysis presented that is absent from other methods. In addition to the use of methodology as techniques, I intend to use questionnaires, fishbowl discussions, and surveys to have a general idea of the whole population. The stakeholders involved in this discussion include the customers as well as the corporation’s owners. My sample size would be an estimate of 100 Russian families from two main Russian cities of St. Petersburg and Moscow. I will ensure that we have a variation in incomes of the families in the projects, tastes and preferences as well as variation in ethnicity.
2.4 Secondary research
For the secondary report, I intend to use both the basic data format at the market needs report. Basic Data Document provides readily available information that are required for effective marketing such as quantity demanded and the price range. Market Needs Report uses the information garnered from the basic data document to present a more detailed report of the market situation. The disadvantage of secondary is that the primary research many be doctored to fit some needs so that it loses validity. The manipulation can sometimes manipulate the variables thus making the research invalid. Using such research leads to wrong conclusions.
2.5 Primary research
Information Analytics is widely employed in the study of business data with a comprehensive amalgamation of statistical analysis of data mining techniques that are required to be used in the data collection and analysis centers. This type of mergers in the collected data therefore ensures reliable identification of trends that would result into a proper action in the data collection and analysis. Often among statisticians, they identify any form of pattern or behavior that would be considered interesting in the data analysis and collection. For the sake of this research, my primary source of information would depend on my information analytics. Also, I will also depend on already carried out research for the purposes of trend as in Lewis, Riesman, and others.
2.6 Limitations
Cooper & Sandi-Urena( 2009) argued that in psychology, research is a requirement component of determining whether a given instrument is effective to show if the current understanding of human behavior is accurate. For accuracy, the instruments used for research must be valid and accurate. If the instruments are not, the study is likely to be termed biased or flawed. Validation of research instruments is a thus an essential part of legitimate research. In order to validate instruments, a researcher must protect all the four segments of validity. Construct validity is protected by precisely defining the construct. A construct is the subject of study and should be measured so that there is no ambiguity in the research. Internal validity is measured by ensuring that the research work accommodates for differences and external influences. In addition, external validity ensures that the study is applicable to a diverse group of people or individuals and finally conclusion validity which is achieved by avoiding typing errors, missing words and other minor details that my create factual technicalities. In this research, our validity would be compromised by language barrier, time constraint, political problems and income differences across the country.
- PLAN OF SCHEDULE
References
Anderson, W & Cunningham, T. (1972). The Socially Conscious Consumer. Journal of Marketing, 36(1), 18-29.
Atsmon Kloss, M. & Smit, S. (2012, May). Parsing the growth advantage of emerging-market companies. Retrieved September 7, 2013, from McKinsey Quarterly website: http://www.mckinsey.com/insights/strategy/parsing_the_growth_advantage_of_emerging-market_companies
Burrow, J. (2008). Marketing. Cengage Learning.
Chui, M., Loffler, M., & Roberts, R. (2012). The Internet of Things. Retrieved September 12, 2013, from McKinsey Quarterly website: http://www.mckinsey.com/insights/high_tech_telecoms_internet/the_internet_of_things
Cooper, M. M., & Sandi-Urena, S. (2009). Design and Validation of an Instrument to Assess Metacognitive Skillfulness in Chemistry Problem Solving. Journal of Chemical Education, Vol 2(No. 86), pg 240- 121.
Court,D., Elzinga, D., Mulder, S., & Vetvik, O. J. (2009, January). The Consumer Decision Journey. Retrieved September 10, 2010, from McKinsey & Company website: http://www.marketingritson.com/documents/theconsumerdecisionjourney.pdf
Đorđević, D. (2008). The role of corporate social responsibility in contemporary business. scientific review article, 151-165.Business ethics: ethical decisions making and cases. South Western: Cengage Learning.
Dunn, S. (1976). Effect of Nationalism on Promotion of Strategy. Journal of Marketing, 40.
Ettenson, R. (1983, January). Brand Name and Country of Origin Effects in the Emerging Market Economies of Russia, Poland and Hungary. International Marketing Review, 10(5).
Gale, B. (2010). Managing Customer Value: Creating Quality and Service That Customers Can See. Los Angeles, CA: Simon and Schuster.
Ganske, C. (2008). Putin's Regional Policy and Its Impact on the Political Economy of Partial Economic Reform in Russia's Regions. European University, Budapest, Bulgaria: GRIN Verlag.
Han, C. M. (1989). Testing the Country of Origin in Consumer Behaviour. European Journal of Marketing, 40(1).
Kotter, J. (1992). Corporate Culture and Performance. London, UK: Simon and Schuster.
Lewis, H. (1938). The Present Status of Reciprocity as a Sales Policy. Harvard Business Review, 16(3).
Magill, P, French, T., & LaBerge, L. (2010, February). We’re all Marketers Now. Retrieved September 8, 2013, from McKinsey Quarterly website: http://www.mckinsey.com/insights/marketing_sales/were_all_marketers_now
Mooij, M. D. (2004). Consumer Behavior and Culture: Consequences for Global Marketing and Advertising. Chicago, IL, USA: Sage.
Nuttall, P. N., & Pervan (2013). Transformative Consumer Research and Social Marketing. Journal of Consumer Behaviour, 1(1). JournalofConsumerBehaviour
Ofek & Wathieu, L. (2010, July). Are You Ignoring Trends That Could Shake Up Your Business? Retrieved September 10, 2013, from Harvard Business Review website: http://hbr.org/2010/07/are-you-ignoring-trends-that-could-shake-up-your-business/ar/1
Riesman, D. (1953). The Lonely Crowd: A Study of the Changing American Character. New York: Yale University press.
Pride, W., & Ferrel, O. C. (2004). Marketing. Cengage Learning.
Schein, E. (2009). The Corporate Culture Survival Guide. Chicago: John Wiley & Sons.
Seong,, Kuentz, & Atsmon,. (2013, June). Building Brands in Emerging Markets. Retrieved September 10, 2013, from McKinsey Quarterly website: http://www.mckinsey.com/insights/winning_in_emerging_markets/building_brands_in_emerging_markets
Terterov, M. (2003). Doing Business Wth Russia. Moscow: Kogan Page
The Heritage Foundation. (2013). 2013 Index of Economic Freedom (Publication No. 2013). Washington, DC: The WalllStreet Journal.
Weinstein, A.& Johnson, W. (1999). Designing and Delivering Superior Customer Value: Concepts, Cases, and Applications. Miami, FL: CRC Press.
Weaver, N. (2007). Explorations in cultural competence: Journeys to the four directions. Belmont, CA: Thomson Brooks/Cole
