Russia PROMOTION CHRISTOPHE NAVARRE HEC ULg Charles de Pontevès – September 10th.

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Russia PROMOTION CHRISTOPHE NAVARRE HEC ULg Charles de Pontevès – September 10th

Transcript of Russia PROMOTION CHRISTOPHE NAVARRE HEC ULg Charles de Pontevès – September 10th.

RussiaPROMOTION CHRISTOPHE NAVARRE

HEC ULg

Charles de Pontevès – September 10th

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AGENDA

HISTORICAL MILESTONES

RUSSIA TODAY– Geography– Demographics– Social Mutation– Values Mutation

THE 5 KEY FACETS OF RUSSIAN LUXURY CONSUMERS

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Historical Milestones: Imperial Russia

1547 Ivan the Terrible – First “Tsar of all Russia”-Conquered wide new territories-Beginning of the Russian Empire

1703 Peter the Great modernizes Russia- Opens Russia to European culture- Founded Saint-Petersburg, which becomes the capital- World’s 3rd largest empire, from Poland to Alaska

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Historical Milestones: Soviet Russia

Feb 1917 - 1921 1924 - 1953

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Historical Milestones: Soviet Russia

1953-64

1964-82

1985-91

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1991-2008, the difficult re-birth of Russia

1991-99

2000-2008

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But in 2008, the end of the “Russian miracle”

• March 2008 : Despite his excellent ratings, Vladimir Putin must step down as PM and accepts to share power with Dmitry Medvedev (the Russian Constitution forbids three consecutive terms).• August 2008 : War with Georgia • Nov-Dec 2008 : Commodity dependent Russian economy is severely hit by global crisis, ending 10 years of rapid growth and consumers’ lavish spending.

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Putin-Medvedev:

Real tandem or underground competition?

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Russia Today

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• The biggest country in the world (Russia is 70 times bigger than UK): 17 M km²• 9 Time Zones (Moscow + 2 hours vs. Paris)• 143 M Inhabitants (-2 M in 10 years), at least 12 M in Moscow (the only “growing” city)

Russian language and culture are strong unity factors in a multi-ethnic country.

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Russia Today - a large country with big Metropoles

1 Moscow 11,800,992

2 Saint Petersburg 4,900,520

3 Novosibirsk 1,397,191

4 Yekaterinburg 1,332,264

5 Nizhny Novgorod 1,272,527

6 Samara 1 164 900

7 Kazan 1 143 600

8 Omsk 1,129,120

9 Chelyabinsk 1,093,699

10 Rostov-on-Don 1,048,991

11 Ufa 1,024,842

12 Volgograd 1,021,200

13 Perm 985,794

14 Krasnoyarsk 947,801

15 Voronezh 843,496

16 Saratov 830,953

17 Tolyatti 720,346

18 Krasnodar 710,686

19 Izhevsk 611,043

20 Yaroslavl 606,336

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Russia Today : Imbalanced demographics

• Very low Birthrate • High Mortality• Ageing Society (seems to stabilize lately)• Strong movements from Rural to Urban population

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Russia Today : Economy

• GDP per Capita $16,000 (45% of France or UK)• Stable Rouble (1€ = 40 RUR), 4% GDP growth, but high inflation (9%) and huge capital outflows• After 1998 Crisis => return to growth but very relian on oil prices

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Russia Today

• New Growth levers needed…strong competencies and opportunities

• Good global level of general education• Heritage of Soviet Union• 13% of State Budget• More then 50% of adult population with tertiary education (OECD average x 2)• Literacy rate 99%

Photos d‘universites

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Russia Today

• From a “now society” to an “investment in the future” society

• New priorities:• Philanthropic Projects• Culture• Education• Real Estate

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A wealthier Russian society due to a continuous growth (except for 2009)

Growth rate2000 + 10%,2001 + 5%,2002 + 4.7%,2004 + 7.2%,2005 + 6.4%,2006 + 6.7%,2007 + 8.1%,2008 + 5.6%,2009 - 7.9%,2010 + 4% (source: IMF)

The Putin and Medvedev years (2000s) saw the return of growth and a feeling of stability.

Party on a McLaren Mercedes yacht during the Millionaire Fair -

Russia 2010

Hence the emergence of an urban middle class which is the most dynamic within the Russian society

Social mutation: emergence of the middle class

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The middle class represents ¾ of the population of the 15 most important cities in Russia

Social mutation: emergence of the middle class

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Upper Middle Class + Upper Class = a potential of 12 million people who are younger, open-minded and western lifestyle oriented

Social mutation: emergence of the middle class

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Values mutation: emergence of new consumption aspirations

An evolving system of values: from materialistic to human values

Recent data from the FOM Institute, the public opinion database, on Russians’ preferred values convey a clear return to so-called “bourgeois” values:

Family value preferred by 62% of respondents, Love (46%), Friendship (40%)

VS.

Money (38%), Career (28%),Work (16%).

Under Yeltsin, Money was the social value.

The successful international Patek

Philippe campaign on the theme of Father-to-Son transmission among wealthy Russian males.

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Values mutation: emergence of new consumption aspirations

An evolving system of values: from materialistic to human values

An evolving system of values: from individualism to patriotism

Holy Russia Exhibition in Paris

Religious both stated and public is back

President Medvedev, shown accompanied by his wife at church; an image which went round the world

Orthodox church-going is on the increase in Russia

The Holy Russia exhibition opened by Medvedev in Paris.

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Values mutation: emergence of new consumption aspirations

An evolving system of values: from materialistic to human values

An evolving system of values: from individualism to patriotism

A patriotic preference for Russian brands if the quality’s right“Even if Russians are becoming patriotic again and prefer local products, especially staples, if they’re poorer quality or don’t work as well as foreign products, they’ll have no qualms at buying the import if they can afford it” - GFG

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Values mutation: emergence of new consumption aspirations

An evolving system of values: from materialistic to human values

An evolving system of values: from individualism to patriotism

An evolving system of values: from social to cultural distinction

UNDERSTANDING RUSSIAN ATTRACTION TO ART AND CULTURE

• Cultural roots• Deregulation in the consumption of works of art… …. and liberalization of forms of expression

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This explain the emergence of news aspirations in luxury consumption = the unique model is over

Values mutation: emergence of new consumption aspirations

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Values mutation: emergence of new consumption aspirations

NOWMULTIPLE LEVERS

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This explain the emergence of news aspirations in luxury consumption = the unique model is over

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The 5 Key Facets of Russian Luxury Consumers

1. Lack of Aristocratic Heritage

As a result, the class has a desire for ennoblement, expressed in highly elitist behaviors copied from countries where a real aristocracy does exist:

• Belonging to members-only clubs, with very complex codes,

• International schools for the children,

• Purchasing certificates of nobility,

• Consumption of unique, bespoke products

• Consumption cultural goods (Art),

• Charity business.

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2. Patriotic LuxuryExpressed by:

• Re-launching brands of Russian origin, and valuing the latter, • Launching specifically Russian models for imported brands,• Using local celebs,• Rekindling interest in your own country (trips in Russia).

The 5 Key Facets of Russian Luxury Consumers

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3. Western Style Snobbery

The 5 Key Facets of Russian Luxury Consumers

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4. Defiance towards Luxury Goods

As a result, the brands that well-off consumers and upper middle classes love are indeed those belonging to the stable of big prestige brands (Chanel, Gucci, Dior,Hennessy,Rolex…).

New Brands entering the game has to prove before being adopted

The 5 Key Facets of Russian Luxury Consumers

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5. Looking for learning about Luxury

The 5 Key Facets of Russian Luxury Consumers

This would be conveyed by:

Introductory courses (wine-tasting, perfumes)

In-situ demonstrations (restaurants)

Websites with tips and advice for consumers

Discovery voyages to sites of production.

In TSUM, Dior created the Perfume Ceremony for one week: defining the

archetypal perfume for its clients, make-up sessions, shows, and

champagne

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Business in Russia

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