BUYING BEHAVIOR
The recession made buyers more careful about their purchases. In the past, government projects almost always used top brands. After the economic crisis, more of that investment is shifting toward the mid- to low-end. “For government projects, their priority is cost,” said Yamauchi of CBC. “If the project has enough budget, they are concerned about quality and functions.”
While buyers are more cautious, they are still concerned about quality. Branded products are preferred over unknown or Chinese products. “They buy brand names like Bosch or made-in-Japan ones,” Yamauchi said.
Even though branded product sales are picking up, there remains demand for good price performance. In light of this emphasis, top brands are rushing to produce midrange products that hit the price sweet spot. “We introduced this year our new portfolio for the midpriced range,” Hampe said. This includes cameras that start from 120 euros. “Bosch is competitive on midpriced products. It's recreated from high-end solutions.”
Panasonic has also launched a midend line for IP and analog solutions, along with modules and components for local manufacturers. “After the crisis, the government hesitated to spend so much,” Akahane said. “The majority of the market changed to the midend products. Most of our customers were government users, and now their budgets have shrunk. This is true even for private customers, such as banks.”
While brands dominated in the beginning, a growing demand for value leaves room for Korean players priced in the midrange. “People are considering value much more thoroughly,” said Christophe Guillot, EMEA Marcom Manager, Honeywell Security. “They want to get more value for the same money in the past. We have three-in-one or four-in-one solutions as more economic options.”
LOCALIZATION
Success in Russia means mastering the Russian language. Breaking into the market means translating all materials into the Cyrillic alphabet. Sales and support staff must be local, with different regions requiring multiple branches nationwide.
ITV expanded to 10 offices throughout Russia last year. “Every strategy in each office is different,” Ostrovskaya said. “We from headquarters support them but we don't dictate how they do things. “We support, watch and help them for localization and features,” Ostrovskaya said. “Some features are popular in one country but not another. We need industry people who can understand the needs of the customer.”
Bosch provides a Russian 24-hour hotline for technical support. “It doesn't matter if you call from Vladivostok at 8 or from Moscow at 10,” Hampe said. Grandprix's distribution network extends throughout Russia, requiring Web media such as webinars and teleconferencing to span vast distances. “The Internet is necessary for many companies because this country is very big and people need to understand our products,” Ekaterina said.
However, being local is not enough to succeed. Distributors or manufacturers must spend time with clients to build trust and develop a good reputation, Kabanov said.
While low prices are attractive, cultivating customer relationships requires continued support and mutual trust. “If any company tries to steal from another company, it will be known very soon,” Osipov said. “The security market in Russia is stable because we trust each other.”
Local Russian distributors maintain close relationships regardless of their business dealings. “For me, a competitor is a good friend,” Osipov said. “We are very friendly and ready to hear from each other if we have any business problems.”
Since some distributors carry the same brands, business is bound to overlap. However, Russian distributors do not aim to drive their competitors out of business. “It's not fierce competition as it is with Korean brands, who hate each other, like Samsung and LG,” Osipov said. “Russians are different. They are not involved in these products and don't get angry with each other.”
The Russian market is not for fly-by-night companies out to make a quick buck. It requires hands-on communication with partners and customers. Fair and honest dealings will reward providers who are committed to stay for the long term.