Igor Kuzentsov can`t identify the brand names of any of the dozens of brightly colored jackets he is trying to sell. All he knows is that they are imported from Europe and China-and for him, that`s enough.
”To most Russians, the brand doesn`t matter,” he said, straightening an oversized orange parka prominently displayed in his cramped sidewalk stand.
”What`s important is that it`s imported. As long as it`s more or less attractive and well-priced, they`ll buy it.”
Kuzentsov`s confidence is an exception these days. Just a few years ago,
”imported” was a magic word, and Russians eagerly snapped up all Western-looking goods.
But as more foreign products have found their way to Russia, consumers are becoming more discriminating. Vendors complain that unfamiliar brands don`t sell, and tourists find that gifts are welcomed only if they bear a popular brand name.
No longer able to count on instant success, foreign companies are starting to worry about how to build name recognition in a market of 280 million, according to Tristan Del, the American president of Russian Television International and an adviser to Russian economic authorities.
Del has spent the last 10 months designing a plan to help Western firms gain a foothold in Russia`s vast, and often chaotic, market. To entice manufacturers to export consumer goods and food, he is offering them a ready- made distribution system and a chance to advertise on television.
Under Del`s plan, a foreign company would trade about $200,000 worth of merchandise for a saturation advertising campaign on Russian Television, which reaches most of the former Soviet republics.
The Soviet company Rosinvaluttorg, which owns a chain of 100 hard-currency stores known as Beriozkas, would act as middleman, distributing the product to its shops and negotiating with the TV station.
If the initial investment proved successful, Rosinvaluttorg would begin importing the merchandise in bulk, selling it retail through Beriozkas and wholesale to industries. The foreign exporter could continue buying advertising time on Russian Television. A minute-long prime-time spot costs $4,000 to $6,000, and 30-second slots start at about $1,000.
”Right now, Soviet consumers will buy any Western product you put out there, but that`s only short-term,” said Bruce Macdonald, director-general of BBDO Marketing, a New York firm that will produce commercials for Rosinvaluttorg from its Moscow office.
”People will eagerly snap up all the Pepsi they can find for 45 kopecks a glass (less than 1 cent at the current exchange rate), but will they still buy it when it costs two rubles? And will they still buy Pepsi when other Western soft-drink brands start appearing?” Macdonald asked.
There was concern that the prices of western goods would increase along with Soviet products after Jan. 2, when Russian President Boris Yeltsin`s plan to eliminate most price controls takes effect.
In the last few months, Avon, Golden Lady and an Italian hosiery manufacturer have signed contracts with Rosinvaluttorg.
”Especially now, in the midst of a recession, American companies are looking for external markets,” said Del. ”If you have good advertising support in Russia, you can basically set up the market for yourself.”
Yet skeptics note that Del`s plan actually restricts the market for imported products.
Rosinvaluttorg deals only in hard currency, so its goods are out of reach for the average Russian. Even those who own hard currency may find it more cost-effective to change their dollars into rubles and buy imported products from sidewalk ”commissary stores.”
When translated into dollar equivalencies, the prices for liquor, candy, cosmetics and clothing are usually cheaper in these curbside kiosks than at Beriozka shops. But the selection in the kiosks is limited. Big-ticket items such as washing machines, stereos and refrigerators are usually available only in Beriozkas.
”If you have a lot of hard currency, you don`t need to see TV commercials; you`re already shopping at Beriozkas,” said Alexei Banishikov, whose kiosk sells imported lipstick and winter coats for rubles. ”But we have lower prices, and the people who buy from us won`t ever go to the Beriozkas. They`ll buy what we have here.”
”Our goods are cheaper, so the Beriozka ads won`t affect us,” agreed Aleksander Shestrov, another sidewalk vendor. ”Not everyone has hard currency, and many Russians have no desire to go into a Beriozka.”
