Every country in the global community has numerous products sent for export and numerous services expanding their influence abroad. While choosing a product or service to be marketed in a foreign country, it is essential to conduct a carefully analysis of both internal and external environments and emphasize cultural differences of two countries, because it may significantly influence the success and financial performance of the product or service. The following paper will analyze the entrance of Gatorade, sports beverages, to Russia, and the steps United States should undertake in order to market this product in such a different culture.
Gatorade was born in the year 1965 in Florida and now it represents a “precisely balanced carbohydrate – electrolyte beverage that would adequately replace they key components lost by sportsmen through sweating and exercise” (Gatorade.com). The very first step for the successful marketing of Gatorade in Belarus is getting prepared for it and conducting a thorough market feasibility study of the internal atmosphere, which will include the analysis of planning, leading, organizing, implementing and controlling.
Planning, leading, and organizing processes are essential in the preparation to the actual activities and therefore they go before implementation. Those processes should take a big chunk of time, because during the planning stage the company that is going to import the product will evaluate all the alternatives, will chose entering and marketing strategies, and will measure the investments and potential returns. It is necessary to start with planning the Gatorade entrance in Russia, which should first recognize whether there is a need for such a product in this region and look at the substitutes that are available in the retail stores. One of the emerging trends in Russia is health and wellness trend, which implies that more and more people started to take care about the physic shapes and inner body condition and they try to eat clean and go into sports. In fact, in Russia there is a significant growth of the sales of health and wellness foods and beverages, because several years ago this segment had low demand and low sales. Moreover, the expansion of supermarkets and hypermarkets underlines the higher variety of the products and different sections that would meet the need of every possible customer. However, some people are still very skeptic towards the nutrition facts of sports drink and they are looking for an option that would satisfy their needs in terms of ingredients and useful properties (Euromonitor International, 2014). Therefore, sports beverages keep gaining their popularity and demonstrate growth. The most influential beverage companies in Russia are Coca-Cola and Pepsi Co., which have also started to promote sports drinks, such as Powerade and Adrenalin Rush (Export.by). Thus, the awareness and sports beverages keeps gradually growing in Russia, creating a free room for the new player, such as Gatorade, in this market.
After concluding that Gatorade can play a positive role and bring benefits to Russian market, thus satisfying customer needs, it is important to identify potential distribution channels and volumes of sales. There can be two most appropriate way to sell Gatorade in Russia, and they are through big retailers, signing contracts with supermarkets and hypermarkets, and through specialized sports nutrition stores that will sell Gatorade, thus expanding the product line they are offering. Gatorade can use both of those distribution channels, because each of them has potential demand and can generate sales. We have already mentioned that currently there is a growth of modern retailers in Russia, and, therefore, Gatorade should focus its attention on the ones that have recently opened, because they might be more willing to sign agreements with international companies. Specialized sports nutrition stores, in turn, are quite difficult to reach, and before actually working with this distributor, it will be more beneficial to start with supermarkets and hypermarket, expanding into sport nutrition stores with time.
The next important step is looking at the implementation process and at the future controlling. The implementation process should include actual contact with distributors and coming to the consensus after negotiation about the terms of sales and marketing strategies. Gatorade company should find marketing agencies in Russia that will be engaged into marketing of this sports beverages and will raise awareness among consumers that new sports beverage is available in the particular stores. Online social media can actually become one of the most influential marketing portal for Gatorade in Russia, because the spread of social media is continuously growing and many people started to rely on online reviews and online social platforms advertising. The largest Russian social network is Vkontakte, and this network gets bigger, attracting more than 2 million visitors in the age of 12-34 every day. Vkontakte has different online communities based on interests, which can be beneficial for Gatorade marketing in Russia, because the marketing agencies can work on marketing the sport beverages to the potential target market in health, wellness, and sports communities. In addition, in a modern world young people and young adults rely more on online news, many of which individual, companies and news portals publish in Vkontakte and Facebook. Thus, marketing Gatorade in online social platforms that are popular in Russia should become an integral part of Gatorade spread within Russia (Kozlovsky, 2014).
In terms of controlling, Gatorade should hire a team of one to three professional, depending on the scope of the product spread within Russia with time. Those professionals should precisely look at the performance of the product, which implies the marketing techniques, merchandising, demand level, pricing strategies, sales volumes, and profits. The working team in Russia should report to the head office of the company and the company should generate the reports that would give an overall picture on the Gatorade products in Russia and their performance.
The next step in marketing Gatorade in Russia is external analysis. Political situation between Russia and United States is not very favorable now due to the situation in Ukraine. In fact, all global community is talking about the relationships of the U.S. and Russia and their impact on the Russian economy. As far as United States imposed sanctions on Russia because of Crimea, the relationships between two world powers went negative and the businesses between two countries are not in the best position right now. Political activists do not see very optimistic future for the US – Russia relationships, and many state that it depends on how Russia will do things with Ukraine (Ibragimova, 2015). Still, on the sports beverages market segment political situation does not have a strong impact, and, therefore, Gatorade can move with marketing its beverages in Russia.
Another essential point is the economic situation in Russia. Due to the political situation with Ukraine and United States Russian, economy is in the slowdown and one of its characteristics is the declining purchasing power. Due to high inflation and insufficient increase in salaries, people are becoming more price sensitive and they start to reduce their spending and purchase only necessary things, trying not to spend money for the products and services without which they will be able to live normally. Thus, economic slowdown in Russia can have an impact on the sales of Gatorade, because the prices for the healthy sports beverages are quite high, and not everyone can afford these things due to the price-sensitivity, leaving the purchase of sports drinks to the consumers with high incomes (Euromonitor International, 2015).
The next point in the external analysis in the marketing of Gatorade in Russia is the evaluation of cultural and religious characteristic of the region, which may have an influence on the perception of the products by the society and on the product’s performance. Orthodox Christianity is the dominating religion in Russia and most of the country’s population identifies themselves as Christians, who believe in God, but not necessarily visit church services, rather believing inside (Pew Research Center, 2014). In such a way, religion will not impose any barriers on such a product as sports beverage, because it does not go against the postulates of Christianity. Russia represents a very diverse and rich culture, on which historical events and the national diversity within the region made a crucial impact and contributed to the shaping of the modern image of Russia culture. Many have stereotypes about Russia people that they live in constant winter, have bears and tend to drink vodka. However, the modern world in Russia has a diverse industrial and convenient environment with numerous leisure and working fields and with all possible products and services that respond to the emerging trends in the country. One of the passages above has mentioned that health and wellness trend is getting spread in the Russian culture, which means that Gatorade is welcomed in the country, because it offer another possibility for those who are engaged in sports to balance their sport nutrition and use the positive features and influences of the powerful sport drink.
Furthermore, it is essential to look at the competitive environment in Russia. We have already talked about the suppliers of sports beverages in Russia, which are the greatest soft drinks suppliers within the region, Coca-Cola and Pepsi Co. Though those transnational companies are very large and have a strong power in the Russian non-alcoholic beverages market, the segment of sports drinks did not get appropriate development for the moment and has a big room for expansion. Currently the number of sports beverages that the retailers offer is very limited. Such drinks as Powerade and Adrenalin Rush has gained their popularity, but the consumers always want something new. Moreover, gym clubs often offer their own sports beverages and shakes that members of the club can purchase before or after workout, depending on the ingredients of the drink. This segment also represents the substitutes for Gatorade, thus creating competition. However, the level of competition in the sports beverages market in Russia is not that high, and Gatorade still should carefully implement its products in the market, bringing value to the consumers and creating a strong image in the eyes of the potential target market.
Moving forward, the introduction of Gatorade in the Russian market should also consider the fact that Gatorade will be an import good in Russia, and the company based in the U.S. should carefully observe all the legal regulations and licensing requirements. As the members of the World Trade Organization (WTO), the engaged parties should remember about the tariffs imposed on the import and export tariffs on the non-alcoholic beverages. There is a favorable change in the tariff for the Gatorade market entry in Russia, because, according to WTO, the tariff on sports beverages will significantly decrease by the year 2016 from €0.6 per liter to around €0.1 per liter. This change offer a more favorable situation for Gatorade, because it implies lower export costs for the product and opens the doors for greater volumes of the product in Russian region (GAIN Report, 2012).
Gatorade will entry Russia as an import product in supermarkets and hypermarkets, which implies that American company will send Gatorade sports beverages for export to Russia. Because of the current political situation between United States and Russia, obtaining all necessary licenses in order to send the product for export to Russia is a very challenging and time-consuming process. Many news articles state that Russia has banned import from Western countries production in respond to the sanctions that United States imposed on the country as the result of Crimea referendum. Thus, in the year 2014 Russia started to ban food imports, which most of all concerned agricultural products. This ban had a significant impact on the variety of products in Russian supermarkets, while not a big portion of food products went to export to Russia and those bans did not have a dramatic impact on American agricultural exports (Bachman, 2014). Sports beverages do not fall under agricultural category, which implies that it is still possible for American company to get a license and export its production to Russia.
Throughout the paper, we have discussed the process of implementation of Gatorade to the Russian market, which includes various organizing, transportation, research and development and accounting activities. As we have mentioned before, the Gatorade marketing in Russia will need a team of professionals that will respond for the product’s performance. In such a way, Gatorade Company based in United States will create a team of professional on the territory of Russia who will sign the contracts with such retailers as supermarkets and hypermarkets at first stages and who will supervise the whole process of Gatorade entrance to Russia. They will work with marketing agencies and they will ensure that marketing companies use online social marketing or will hire a separate online social media specialist who will promote Gatorade among Russian followers of sports lifestyle.
In addition, Gatorade specialists in United States will carefully supervise the whole process by looking at the reports and at the financial indicators of Gatorade’s performance in Russia. It is also important to mention that after conducting an analysis and receiving the licenses, but before hiring employees, a specialist, who has been working for the company for several years, will have to go to Russia and supervise the recruitment process. It is crucial, because a significant chunk of success depends on attracting right people who really love what they do and show commitment to their work.
Finally, the crucial pat is the financial part, because it directly measures the financial measures of the success of the product and gives a picture on whether the product’s sales on the country’s territory are profitable or not. Thus, the planning stage of marketing Gatorade to the foreign country should include the calculation of all of the investments associated with the process. As far as the entry mode of Gatorade in Russia does not require the construction of manufacturing facilities or separate stores in Russia, it significantly minimizes the investments. However, data gathering and research before the implementation phase will require significant financial and human resources. There might be the situation that after thorough analysis the company may decide not to market the product in the foreign country, which implies that the company will just lose money invested into the research and data collection stage. Thus, planning process plays an important role, and the company has to evaluate carefully whether it is worth to market the product within another country.
It is also necessary to estimate the potential sales volume based on the research conducted during planning phase. The calculation of investments and the estimation of the sales and profits will help to calculate the Return on Investments, which will help to analyze the benefits of the investments and the returns from the sales of the product. ROI includes all the investments that the company has made in order to introduce the product in the country. Gatorade in Russia will have to sum up all of the resources, which should also include the salaries for the specialists who are working on the process. After the calculation of the resources, the Return on Investment for the company will be:
ROI = (Net Profits) / (Invested Resources) x 100 (Forbes.com).
This percentage number will give a representation on how Gatorade is doing in Russia and whether it is profitable and the company should expand the exports of this beverage to the country.
Overall, the sports beverages market in Russia will benefit from the introduction of Gatorade, because due to the emerging health and wellness trends people feel the need in sports nutrition supplements and are constantly looking for new interesting foods and beverages in this field. Marketing techniques play essential role in the success of the product, and Gatorade should keep in mind strong emphasis on online social media advertisement. The process of marketing Gatorade in Russia require thorough preparation and hard work of the specialist. Careful implementation of all the necessary steps and careful evaluation of alternatives along with the calculation of all the risks and all the financials can bring positive results to the company, providing a successful market for its product and demand growth among the customers.
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