Rich Garcia
Stephanie Llinas
Zack Meyers
Under Armour in Russia
Target Market
We have identified our target market as the active athlete but also the consumer who is simply looking for
comfort and casual clothing. Russian consumers are spending more on active wear due to increase in the
popularity of fitness. There has been a 20 to 30 % increase annually. This is an opportune time to enter
the Russian market as it is forecasted that low and middle price segments are expected to have dynamic
growth.
http://www.austrade.gov.au/Consumer-goods-to-Russia/default.aspx
Price
Our product symbolizes innovation and high quality. We believe in offering the best quality products at a
higher yet reasonable price. Our pricing strategy will be skimming. Like in the US our intention is to go
after the innovators and early adopters, as well as gain large profits and recoup R&D costs. Russia’s
currency is the Ruble also known as Rouble. As of July 31, 2012 1.00 US Dollar equals 32.2820 Russian
Ruble.
Environmental Influences on Pricing Decisions
● Currency Fluctuations
Russia expects no more significant fluctuations in the ruble exchange rate following its recent
depreciation versus the U.S. Dollar. The Russian currency weakened as much as 15 percent in the
last month, according to data compiled by Bloomberg. If the ruble-weakening trend prevails longterm, it may boost prices of imported goods and increase inflation in Russia by as much as 1
percentage point, Siluanov told Echo.
http://www.bloomberg.com/news/2012-06-05/russia-sees-no-further-ruble-fluctuations-siluanov-tellsecho.html
●
Inflationary Environment
The inflation rate in Russia was recorded at 4.3 percent in June of 2012. Historically, from 1991
until 2012, Russia Inflation Rate averaged 160.3 Percent reaching an all time high of 2333.3
Percent in December of 1992 and a record low of 3.6 Percent in April of 2012.
http://www.tradingeconomics.com/russia/inflation-cpi
Country
Value
Country
Value
South Africa
5.96
United States
2.48
Russian Federation
13.32
India
6.15
United Kingdom
1.98
Germany
1.55
Canada
2.08
Australia
3.14
http://www.theglobaleconomy.com/Russia/indicator-FP.CPI.TOTL.ZG/
●
Government Controls
According to the 2010 U.S. Trade Representative's National Trade Estimate, Russia continues to
maintain a number of barriers with respect to imports, including tariffs and tariff-rate quotas;
discriminatory and prohibitive charges and fees; and discriminatory licensing, registration, and
certification regimes. Discussions continue within the context of Russia's WTO accession to
eliminate these measures or modify them to be consistent with internationally accepted trade
policy practices. Non-tariff barriers are frequently used to restrict foreign access to the market
and are also a significant topic in Russia's WTO negotiations. In addition, Russia’s lax
enforcement of intellectual property rights had led to large losses for U.S. audiovisual and other
companies and is an ongoing irritant in U.S.-Russia trade relations. Russia continues to work to
bring its technical regulations, including those related to product and food safety, into conformity
with international standards.
http://www.state.gov/r/pa/ei/bgn/3183.htm#econ
●
Competitive Behaviors
Sporting Goods Stores in Russia are doing pretty well. Industry experts believe that the actual
size of the Russian sporting goods market is about US$2 billion, and ball sports are worth over
US$ 600 million with an annual growth rate of 10%. This is a good indicator that people need the
right attire and that there is indeed opportunity to go into the market and compete with other
players within our industry.
http://www.taiwantrade.com.tw/MAIN/en_front/searchserv.do?method=listNewsDetail&information_id=
28502&locale=2
Product
Our brand's moisture-wicking synthetic fabrications are engineered in many different designs and styles
for wear in nearly every climate to provide a performance alternative to traditional natural fiber products.
The product lines we intend to emphasize in our store will be the ColdGear which is the best for weather
between 0 and 55 degrees, as well as our AllSeasonGear for weather between 55 and 75 degrees. Such
lines will be extensively available for the months from September thru April. Our product line items will
be as follow:
ColdGear
AllSeasonGear
Winter jackets
Short Sleeve
Sweatshirts
Polos
Sweat pants
Long-sleeve
Long sleeve t-shirts
Graphic T’s
Compression tops & leggings
Hoodies & Sweatshirts
Thermals
Shorts
Gloves
Pants
Hats
Jackets & vests
Winter boots
Outwear pants
Warm-up Jackets & pants
●
The products will be available for males and females. The winters in Russia are long and last
from beginning of November to the end of March and the temperature usually ranges from 14
degrees F to 32 degrees F. This climate is ideal for entry into Russia with our Cold Gear line of
apparel since Russia tends to experience colder weather 8 months out of the year. We believe that
cold gear will be our biggest seller in both of our own three initial retail stores and the preexisting stores we sell our clothing through. We also believe featuring our all season gear will
help our brand in Russia become well rounded and appeal to casual Under Armour clothing
purchasers.
● According to PMR estimates, the clothing and footwear market in Russia was worth US $56
billion in 2010.
● The following sport category products won’t be available due to their lack of demand:
o Football- It is not practice in Russia
o Surf-or any other aquatic sport that is mostly practiced outdoors
o Golf-is not yet widespread, not only because of adverse natural conditions, but also
because the construction of golf courses requires large capital investments.
http://www.uwtledger.com/2.13122/top-five-popular-sports-in-russia-1.1701994#.UBmH5xwvARA
http://en.wikipedia.org/wiki/Golf_in_Russia
Promotion
The Russian retail market can be described as sophisticated, responsive to rapid changes in consumer
demands and highly differentiated, with targeted retail shops and business models adapted to meet the
different income levels of various social groups. Russia’s richest consumers are known for their
expensive and exotic tastes, evidenced by a strong emphasis on prestigious designer brands, luxury goods
and lavish spending. Many marketers view the prospects of the Russian market optimistically and foreign
consumer goods suppliers active in the market traditionally report excellent results.
http://www.austrade.gov.au/Consumer-goods-to-Russia/default.aspx
Due to the fact that we are new to the Russian market, we will have to intensively create awareness of our
products so that people can familiarize with the brand. We will mainly focus on advertising and building
public relations that can help us positively with publicity.
1. Advertising
As clothing line we want to show our product. The best way of doing such is via print
publications.
○ We will have images around our stores with well-known athletes in action.
○ Billboards placed in key locations to aware the market of a new brand with an
exceptional product that’s comfortable and of good quality.
○ Images will be mostly athletes that are related to cold weather sport as well as the
markets preferred and most common sports.
○ Very detailed and deep illustrations of our products.
2. Public Relations
PR is a key element that can help us with positive publicity
○
○
As in the US we will sponsor young athletes, local teams and schools.
We can help provide as well for those teams that need help obtaining sportswear due to a
lack of economic resources.
3. Sales Promotions
○ We will offer free shipping on orders that are equal or greater of a certain amount.
4. Personal selling
○ If we use this technique we will make sure our personal selling team is highly trained to
accompany the high context Russian culture and is able to speak Russian fluently to
avoid cultural barriers.
○
5. Direct Marketing
○ We will perform the following marketing strategies as we obtain data from our clientele.
○ Telemarketing Email
○ Direct Marketing
○ Direct Mail Marketing
6. Internet
○ As Many online retailers use their web site to drive transactions and push out a constant
sales message. We additionally want to show who, how, why that person (a known
figure) is using the product, we want to build our brand.
○
7. Sponsorship strategies
○ As in the US we will sponsor athletics associations, sports or any related events. This is
an excellent way of drawing media attention
8. Product Placement
○ We will lend or donate our products to famous Russian celebrities or public figures this
will help generate awareness of our brand.
○ We could also arrange to have our product appear in different types of entertainments
such as movies, TV shows, magazines, etc.
9. Infomercials
○ Cardiovascular disease is a major cause of Russia's demographic woes. We want to go
after those innovators who can influence and persuade the majority of the population
about adapting to a healthy living.
○ Russian women and young consumers prefer to buy modern and branded
clothing.(austrade.gov.au)
10. Seek Local Consulting
○ We could hire a local marketing firm to assist us with our ad campaigns; this will allow
us to understand the Russian culture better without offending or taking our message out
of context to our consumers.
Place
We believe going into Russia as an athletic apparel company we will need to have both our own retail
stores and sell our clothing through pre-existing ones as well. To meet the appeal of Russian consumers
we will need to have at least one modern Under Armour retail specialty store of our own in highly
populated areas to be effective. Under Armour should initially start selling its clothing in top three
populated areas of Russia being Moscow (11,514,330), Saint Petersburg (4,848,742), and Novosibirsk
(1,473,737). (2010 Census) These three cities will we be initial target markets in Russia where we will
have one Under Armour store in each city and sell our clothing through pre-existing retail stores as well.
The three Under Armor stores will sell mostly cold gear merchandise, jackets, gloves, hats, socks and
sunglasses all to appeal to the leisure sports market of Russia with skiing, snowboarding, hockey,
climbing and biking without having to worry about the cold weather. We will also sell our all season gear
clothing in our own stores and other distribution channels to sell shirts and shorts to the casual/athletic
Russian consumers in more mild weather conditions. We will have our products sold extensively through
department stores in these major cities some department stores could be Bolshoi Gostiny Dvor,
Moskovsky and Narvsky. All of these department stores have a wide variety of merchandise with a deep
assortment of products including sporting goods/clothing.
We will also sell our cold gear clothing through specialty stores such as Bosco Sport which is a branch off
of Russia’s leading fashion House Bosco di Ciliegi. Bosco Sport has been known for outfitting members
of the Russian Olympic team since 2002 showing that their reputation is viewed highly in the Russian
culture. Having our cold gear wear featured in this store would be perfect for our target market and their
focus on “qualities like being waterproof, breathable, and allowing for optimal movement.” (Bosco Sport)
Their focus aligns with our products features allowing us to tap into their consumer market and compete
among other brands. Another specialty store we could use in Russia is SportCourt Boutique. These stores
have the concept of presenting themselves with modern and fashion lifestyle collections of sportswear and
accessories. They currently feature famous brands that we compete with in the United States like Nike
and Adidas. Having our line of Under Armour cold gear apparel and all season gear in these stores can
help the Russian market realize who we are among our other competitors and how we have exceptional
quality as they do.
http://www.hauteliving.com/2010/12/motivate-your-workout-the-top-5-athletic-apparel-stores-inmoscow/
Other things to consider could be:
● We also will be selling our apparel through our website www.underarmour.ru
● Russia is the second most attractive destination for retail after India.(rncos.com)
● Russia is currently the fastest growing market for luxury goods. (PWC)
● “The Russian retail market demonstrated solid growth-rates over the last several years, making
the sector one of the most actively developing markets in the economy.” (PWC)
http://www.pwc.com/gx/en/retail-consumer/shopping-future-russian-retail-market-survey.jhtml
Process
Many Russian consumers still nowadays use cash when making their purchases whether it’s online or in a
physical retail store. According to Techland.com Russians spent $8.5 billion when shopping online but
compared to the U.S $32 billion spent, Russian consumers are not as online friendly. According to a
report by BBC 80% of these online transactions were through Ozon.ru (similar to the megaseller site
Amazon.com) were done with hard currency. Russians haven’t fully adapted to trusting online ecommerce transactions they would rather go get their purchases physically, inspect them and then
purchase them.
In our Under Armour retail stores we will have several registers/ checkout lanes to accompany the
frequent cash use of Russian consumers. All retail stores will be advised to have a back up bank of money
to help breakdown currency when needed without any hassle during store operation. We will also have
great amounts of our cold gear/all season merchandise on display so consumers can touch and see the
comfort and quality of our product.
Physical Evidence
We will be opening our Russian flagship store in Moscow and two smaller stores in Saint Petersburg and
Novosibirsk. The color red will be incorporated throughout our stores as the color red represents beauty in
Russia. We will use images of professional Russian athletes within our three store locations.
Ex.(Alexander Ovechkin/ Pro hockey player, Adrei Arshvan/ Pro soccer player, Vera Zvonaryova/ Pro
tennis player & Aliya Mustafina/ Olympic gymnast). Some ideas of Russian athletes are a big portion of
the Russian culture likes fashion and luxury items. We want to give the perception of modern and
luxurious with our stores but at prices the middle class can afford. Under Armour is innovative and we
want to show this through image advertising.
People
In entering the Russian market our focus is to provide the best possible customer service and experience.
We will be hiring several consultants from Russia in order to further understand and learn their culture
(Acculturation) while at the same time incorporate our Under Armour corporate culture. We believe that
this can be done by initially sending a U.S. team over to Russia to help with the hiring and training of the
Russian management staff. The consulting firm would help us with the culture differences, translation,
and hiring/training of staff. We also want to focus on the retention of our employees and creating a great
work environment/experience.
Hofstede’s Cultural Typology- (Analysis)
●
Power Distance- is high in Russia. We would want an extremely knowledgeable Management
staff because with a high power distance subordinates would not question their superiors so we
would want to make sure our management staff was top notch and extremely polished.
●
Relation-Oriented Culture- when Under Armour enters the Russian market they must remember
that Russian people are a highly relation-oriented culture. Russians don’t ignore informal
communication and relationship nourishing showing that personal selling maybe a great tactic
when speaking to consumers in the marketplace. Under Armour should also be aware that a
contract in Russia is more like “a letter of intent” rather than a document of fulfillment like we
view in the United States.
●
High-Low Context Culture- Russia is a high context culture placing emphasis on their culture
rather than being said. Russia has an importance on word choice and word usage thus making our
training for our sales force much more important when engaging consumers. We must make sure
as a company that we have a smart choice of words in our advertising when we present our
company to the Russian market.