EmErging markEts, ConvErging opportunitiEsi s s u e 1

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Smarter and Sooner: how technology can help brandS entering emerging marketS

3e-commerce in china: Social media iS the fuel

6every challenge iS an opportunity: manufacturing and marketing pharmaceuticalS in india

8brazil’S perSonal-care boom: room for more?

10private label in ruSSia: tradition trumpS innovation – for now

12ScreenS, connectivity and the neweSt conSumerS

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Today, new markets don’t simply emerge: they converge with marketers’ experiences in established regions, with personal technologies that enable mind-boggling communication and with business technologies that enable tremendous process clarity. This issue of schawk Patterns examines these converging opportunities in several emerging markets and across several key product categories.

PATTERNS

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Smarter and Sooner: how technology can help brandS entering emerging marketS

3 New research has uncovered two distinct trends: brands that have entered emerging markets wish they had known more about a market when they entered it, but they also wish they had entered the market sooner. There’s an inherent contradiction here: wouldn’t waiting longer to enter a market guarantee better intelligence upon entry? But brands can’t wait today, and that’s where two brand-management technologies play a huge role: graphics lifecycle management systems and cloud-based print quality management tools can gather crucial intelligence from the moment a brand starts operating in a new market. The data that’s collected can quickly drive process and supply chain improvements that shorten the time it takes for a brand to be truly “up to speed.”

e-commerce in china: Social media iS the fuel

6 The e-commerce category in China is exploding, and with hundreds of millions of Chinese consumers expected to become digitally savvy in the coming decade, the sky’s the limit. But Western companies looking for opportunities here have to remember these things: the Chinese are skeptical of traditional authorities, and that includes the kind of above-the-line advertising that’s a staple of Western societies. This is where social media, social marketing and other consumer-controlled forms of digital interaction become crucial. Here are details from one of schawk, inc.’s e-commerce experts in China.

every challenge iS an opportunity: manufacturing and marketing pharmaceuticalS in india

8 With more indians seeking healthcare, and more providers available, the need for a reliable supply of high-quality therapeutics in india can only increase. That’s a growing opportunity. But historically, brand marketers in india and across the entire APAC region have developed their own workflows, asset libraries and quality control systems. Today and tomorrow, the most successful brand marketers will be taking digital control over these elements with the goal of bringing all packaging, wherever it’s produced, up to a global standard. Here are details on the challenges and opportunities for pharmaceutical companies in india today.

brazil’S perSonal-care boom: room for more?

10 if you had to make a daily decision to either eat food or bathe with soap, which would you choose? That’s a decision that tens of millions of Brazilians no longer have to make, having recently crossed the threshold of $2,500-per-year earnings, which enables a Brazilian to afford a home, a car, modern appliances and even luxury travel. Central to this new lifestyle is an emphasis on personal care and personal care products. if non-Brazilian brands can develop innovative ways to manage the high cost of doing business in Brazil, there’s tremendous revenue potential for them in the personal care category.

private label in ruSSia: tradition trumpS innovation – for now

12 Private label products don’t qualify as an “emerging market” in most Western countries today – they’ve been a staple of the u.K. for decades and in the u.s. and continental europe for 20 years. in fact, those regions are facing the challenges of a mature private label market: how to develop products that aren’t simply viable lower-priced alternatives but are category-definers in their own right. Russia, on the other hand, would appear to be ripe for a private label boom. The trouble is, systemic issues are making it a tough process to enact. But that’s not stopping Russian and Western retailers from trying. Here are the details.

ScreenS, connectivity and the neweSt conSumerS

14 smart brands realizing that in marketing to younger consumers, it’s not about share of voice but about “share of conversation.” Children today grow up with digital interactivity, so brands must engage in a dialogue with them and their parents and remember these principles: eager to learn shouldn’t mean easy to exploit. New technology can support age-old principles. And the youth market is the future of every market. As Anthem Worldwide’s Bruce Levinson puts it, “Younger consumers are rethinking their choices not only on the value or benefit of the product, but also the reputation of the company. Brands that are seen as positive influences build their reputations, and social media enables that.”

PATTERNSin briEf

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Smarter & Sooner

how technology can help brandS entering emerging marketS

smarter and sooner: How Technology Can Help Brands entering em

erging Markets

The question facing ambitious brands today isn’t whether to enter emerging markets, it’s when and how. And fortunately there’s plenty of research emerging that provides answers. The quick answers are often “As soon as possible” and always “With as much information as possible.” But therein lies the challenge. As the rest of the articles in this issue explain, there are steep challenges in extending brands into new, foreign markets, and recent research shows that companies that have made the leap share the following experiences: they wish they had had better intelligence about new markets when they entered them and they wish they had started sooner.

At first, these experiences seem to embody a contradiction: companies tend to hold off entering markets until they feel they have enough information to do it successfully; but their wishing they had started sooner suggests that they now realize that some information can only be gained by having “feet on the ground” in a market and learning as you go.

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Recent research by Global intelligence Alliance, “Consumer & Retail Business Perspectives on emerging Markets, 2012–2017,” generated these interesting numbers:

When asked what single aspect of their emerging market strategy they would have done differently, 35 percent said “adapted better to local market/prices,” 23 percent said “entered more quickly” and 21 percent said “conducted better intelligence/due diligence.”

62 percent said that “information on emerging markets is not readily available in their organizations and 77 percent doubted “the accuracy and completeness of the information.” And 44 percent said that “decisions on emerging markets are delayed due to lack of information.”

Taken together, these numbers suggest that companies delay entry into new regions, suffer from lack of up-front knowledge and continue to suffer as decisions are delayed because of a lack of knowledge before and after entry. And yet 70 percent of the companies responded that their reason for entering was “to gain a foothold for long-term success.” in other words, they do understand that the process takes time. That’s where graphics management and print quality management technology and processes can break the logjam.

Graphics management technology (including digital asset management, online proofing, workflow management, performance (KPi) management and copy management) is proven to increase the quality and fidelity of branded packaging while shortening cycle times, improving right-first-time performance and reducing use and waste of resources. Brands in developed countries around the world use it every day. But many of these brands adopted this technology only recently and now wish they had done it sooner.

so how can companies overcome the real concern about not knowing enough so that they can enter a country more quickly and avoid the regret of having waited too long? One answer might be in having key brand-deployment functions in place right from the start – such as processes and technology that streamline and tighten the artwork and printing stages of the brand lifecycle.

This might seem like putting the cart before the horse: companies tend to feel that branding and marketing plans must lead the charge into a new region, along with a firm sense of materials sourcing and delivery logistics. And this is true, to a point. But there are specific processes and technologies that are a crucial “bridge” between marketing and logistics that can ensure that marketing plans are executed optimally. These center on graphics management and print quality management, and they are proven in developed markets to generate packaging and collateral that’s on-spec, on-budget, and on-brand.

in emerging markets, these technologies not only can allow a brand to get clear early results on the effectiveness of their marketing plans and logistics decisions, but they allow for much better, faster decisions “on the fly” that create a “virtuous cycle” of information gathering, knowledge and improved results. if these processes and technologies are viewed as crucial and implemented from Day 1 rather than phased in as a brand’s efforts become more sophisticated, a brand might not find itself wishing it had started sooner and feeling that it didn’t know enough going in.

how technology can help brandS entering emerging marketS

smarter and sooner: How Technology Can Help Brands entering em

erging Markets

Smarter & Sooner

35%

62%

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What if brands entering emerging markets had this technology in place from the start? Brand developers’ decisions about design and presentation would reach the shopper as intended and, as a result, could be tested accurately. Resulting adjustments to brand packaging could be done more quickly and confidently. Overall savings in time and resources could be re-allocated into the intelligence gathering that brands in emerging markets crave. And the KPi reporting function would immediately help a brand determine if its production employees, contractors and vendors are performing optimally. And because all this technology functions online, the brand could monitor everything remotely.

Cloud-based print quality management technology now allows brands to monitor the quality of print runs around the globe in real time and gather data that not only makes individual print runs more accurate but quickly coalesces into a picture of which print vendors are doing the best job. in emerging markets, as the research above suggests, supply chain challenges are a serious concern; print quality management technology enables brands to identify superior vendors and make quick, confident decisions as market opportunities or materials challenges arise. Clearly, a brand entering a new market will start with little or no data on printers; but with this technology, all data from Day 1 can be leveraged, and the enterprise’s learning curve can be shortened.

Graphics management and print quality management technology has developed over the past 15 years, so virtually every major brand using it in developed markets has had to integrate it into current workflows and replace less-efficient processes. Brands entering developed markets have a unique opportunity to benefit from this technology from Day 1. in the Global intelligence Alliance survey, fully 97 percent of the respondents said they would do at least one thing differently if entering an emerging market today. With graphics management technology like schawk’s BLue™ and print quality management technology like schawk’s ColorDrive™, that number could be significantly lower, and brands’ forays into new markets could be significantly more successful.

“These technologies are specifically designed to deliver projects on-spec and on-budget,” says stephen Kaufman, Chief Technology Officer for schawk, inc. “But ‘on-brand’ is a slightly different process. if people with the the right brand knowledge see artwork designs early enough in the process to have a significant impact – for instance, if you incorporate a review by local ‘consultants’ who can offer insights and comments on an early launch – then the technologies can help leverage this knowledge across other launches and other brands and be collected and built upon. This concept of a ‘knowledge center’ that is centered in and around graphic lifecycle management tools can then be a critical pillar to a viable strategy.” ⬢

how technology can help brandS entering emerging marketS

smarter and sooner: How Technology Can Help Brands entering em

erging Markets

Smarter & Sooner

“ theSe technologieS are Specefically deSigned to deliver projectS on-Spec and on-budget.”

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e-Comm

erce in China: social Media is the Fuel

e-Commerce in China: social Media is the FuelChina is booming. Or is it set to explode? in 2012, we saw signs of sweat, as the Chinese government’s infrastructure spending was just a quarter of what it was four years before, to avoid overheating the economy. But today, some experts are expecting a rally through 2013 – with growth at more than 8 percent. As Beijing wanted, growth increasingly is coming from domestic demand, as CNBC Money noted. And as online marketers are happy to note, e-commerce is enabling a large and growing segment of this demand.

China will soon be the world’s largest online marketplace; a Barclays Capital report noted that sales jumped by two-thirds between 2010 and 2011. The McKinsey consultancy has predicted that the market will grow by more than 300 percent by 2015, reaching $420 billion a year – more than eight percent of all retail sales.

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THe ViRTuAL WORLD LiGHTiNG uP THe ReAL WORLD

Here are some Chinese examples.

• show.QQ.com lets consumers to try out clothing and shoes virtually. The results are shown with a link back to Taobao selection is displayed on the bottom of the page with a link back to Taobao for final purchase

• Taobao Mall in Beijing offers an “experience center” for home decoration, bringing together e-shopping and offline sampling to help the consumer make better choices when shopping online.

• Yihaodian, the famous online supermarket, offers QR code shopping in every big shanghai metro station, facilitated by giant LeDs and the shopper’s mobile phone

• The Yishion clothing brand has launched an online fitting activity. After purchase, consumers are invited to use augmented reality online to try out new outfits. Their sessions are recorded and advertised live in-store.

CONsuMPTiON GuiDe PLANNeRs

• The Qunar.com aggregation site allows shoppers to compile information on products and services from multiple sources.

• Taobao experts will respond to user-published photos of products they’re looking for, providing information on other relevant products.

GRAss-ROOTs DeCisiON-MAKiNG

• in Volkswagen’s People’s Car project, consumers can vote on potential design features and strongly influence the final design of a new model.

With Chinese e-commerce and its promotional extensions ready to boom, and with outside brands already committed to making inroads in the Chinese market, now is the time to for ambitious Western brands to gain expertise and experience. But this can only happen through effort. China is a complicated market for Western brands to operate and grow in, thanks to bureaucracies, logistics and more. But it’s reassuring to know that the road to success might go through the very people of China themselves. ⬢

References:“World’s No. 2 Economy Is Setting Itself Up for Solid 2013,” CNBC.com, Jan. 2, 2013. “E-commerce in China: How the World’s Biggest Market Buys Online,” Mashable.com, June, 20, 2012. “China’s social-media boom,” McKinsey Quarterly, May 2012. “The Power of Word-of-Mouth in China,” Harvard Business Review, April 2010.

e-Comm

erce in China: social Media is the Fuel

several associated phenomena help account for the growth. Delivery logistics, while far from ideal, are improving. Chinese cities are taking on more population from rural areas. And mobile phone use – and use for retail – are booming. For proof of the potential, consider that on singles Day in 2012 (an increasingly popular occasion akin to Valentine’s Day in many countries), the Chinese e-commerce juggernaut Alibaba and its subsidiaries did just over $3 billion in sales in a single 24-hour period – nearly three times what Black Friday netted in the u.s. this year – according to many reports.

And this might just be scratching the surface. Forrester Research has reported that only 40 percent of Chinese with internet access shop online right now; compare that to Japan, where the number is closer to 70 percent.

so where do retailers fit in? unlike in many countries, the Chinese are not traditionally trusting of news and advertising. This, according to the Harvard Business Review, makes social media a crucial piece in the e-commerce puzzle. McKinsey has reported that 95 percent of internet users living in Tier 1, 2 and 3 Chinese cities are registered on social media sites, and the average social user spends 46 minutes a day on those sites, which don’t include Facebook and Twitter; instead, the focus is on more locally oriented sites like Qzone, sina, Renren and Weibo.

Anh-Huan Tan, Director of Brand strategy/Asia Pacific for Brandimage, part of the schawk, inc. brand development practice, offers these examples of how social media and other kinds of direct digital interaction are driving commerce in China today.

FROM CLusTeR-ORieNTeD CONsuMPTiON TO Me-CONsuMPTiON

The Chinese used to shun “individualism.” Not so today: the rise of personal media is proof. each individual, and thus each consumer, is now a source of information and is becoming the hub of his/her sphere of influence. The power is moving from brands to consumers, and consumers online are embracing unique kinds of self-expression.

China will soon bE thE world’s largEst onlinE markEtplaCE.

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every Challenge is an Opportunity: Manufacturing and Marketing Pharmaceuticals in india

every Challenge is an Opportunity: Manufacturing and M

arketing Pharmaceuticals in india

People make markets. To speak of an emerging market is to speak of newly empowered people with ability to face new challenges and with the resources to turn those challenges into new opportunities.

The indian pharmaceutical industry is a case in point.

india has become one of the world’s fastest-growing economies. With GDP growth at over 6 percent, middle-class wealth is rising and the government is stepping up its efforts to alleviate poverty. That’s all good, but it leads to a problem many Western nations are all too familiar with: longer lifespans and more sedentary lifestyles lead to more chronic disease. That’s a growing challenge.

The same economic development is also bringing healthcare to more people thanks to rising incomes, better insurance and government incentives to bring clinical services to rural areas. With more people seeking healthcare, and more providers available, the need for a reliable supply of high-quality therapeutics can only increase. That’s a growing opportunity.

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every Challenge is an Opportunity: Manufacturing and M

arketing Pharmaceuticals in indiaindia’s pharmaceutical

industry has the potential to sustain 15 to 20 percent growth through 2020.

The Patents Act of 1970 eliminated product patents and reduced process patents to a period of five to seven years. indian manufacturers became expert at reverse-engineering drugs that couldn’t be copied or marketed as generics in countries with conventional patent laws. indian pharma companies gained a head-start, while citizens gained better access to affordable medications.

in recent years, however, india has sought to become more competitive on the world stage and has moved to adopt international standards. Most notably, product patents were reinstated in 2005 to comply with the WTO Trade-Related Aspects of intellectual Property Rights agreement (TRiPs). This means indian companies can no longer copy patented molecules, and have had to develop new competitive strategies.

poised for global growth

A large number of drugs have recently gone off-patent, and a strong pipeline of first-to-file opportunities will likely continue for the next few years. FTF status grants six months of exclusive rights in the u.s. market for drug makers who are first to mount a successful patent challenge. With solid engineering and manufacturing, many indian companies are ideally positioned to win FTF status and gain market share before other players are allowed to compete.

Other trends include regulatory measures in europe and elsewhere to contain healthcare costs, an increasing shift from branded to unbranded commodity generics, and growth in OTC market segments. All these trends produce pricing pressures that favor indian companies for their proven ability to manufacture a variety of high-value drugs at advantageous prices.

Due to strengthening domestic and international markets, india’s pharmaceutical industry has the potential to sustain growth in the range of 15 to 20 percent per year through 2020 according to the latest Cii-PwC Pharma summit report.

building and protecting brands

india has largely proven it can build the manufacturing capacity and sustain the quality needed to meet the growing demand. One of the biggest emerging challenges – and opportunities – will be to improve packaging and marketing to protect and maximize the value of branded pharmaceutical products.

Consider the problem of counterfeiting. With so much money to be made, more counterfeit drugs will flood the market, and packagers will need to play an active role to assist in detection. embedding RFiD tags can provide relatively effective assurance, but the tags substantially raise packaging costs and require implementation of tracing technology across the supply chain.

An easier and more cost-effective measure is to incorporate counterfeit-resistant packaging materials and graphic elements into cartons, foils, seals and labels. But these components can be easier to counterfeit compared to RFiD. Manufacturers need to be looking at ways to thwart counterfeiters without substantially altering packaging processes or material costs.

For example, multiple packaging features could be designed to work together to provide more reliable identification. Or different anti-counterfeiting codes could be printed on cartons at different times, with a simple digital system for verifying the correct code at any supply or distribution point. Packaging innovations like these have the potential to create a strong anti-counterfeiting advantage.

Packaging also needs to provide assurance of brand consistency and quality. Historically, brand marketers in india and across the entire APAC region have developed their own workflows, asset libraries and quality control systems. Today and tomorrow, the most successful brand marketers will be taking digital control over these elements with the goal of bringing all packaging, wherever it’s produced, up to a global standard.

the biggest Challenge, the biggest opportunity: people

The indian pharma story is about encountering new problems to solve, and devising new tools to solve them. To see the problems clearly and use the tools effectively, people need to adapt. That’s what indians in pharmaceutical manufacturing and marketing have been doing for more than 40 years.

Progress is rarely easy or rapid in any difficult endeavor. But when people are empowered to solve new challenges and create new opportunities, progress is all but assured. And that’s the principle reason for india’s emerging prominence in the world’s pharmaceutical marketplace. ⬢

from importer to Exporter

india is not alone. Many developing countries have a need for more and better drugs – but they don’t have india’s manufacturing capabilities. That’s why a number of multinational pharma companies look to indian manufacturers for reliable supplies of high-quality bulk and branded generics.

Before 1970, india was a net importer of drugs. Today, india is a major exporter to the rest of the world, especially to poor and emerging markets. Major policy changes have accompanied this shift.

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Brazil is by far the largest Latin American market for soap, bar and shower products.

Brazil’s Personal-Care Boom: Room

For More?

Brazil’s Personal Care Boom: Room For More?if you had to make a daily decision to either eat food or bathe with soap, which would you choose? Before Brazil’s economic blast-off of the past decade, a majority of its population had to make that decision. And when you live on $1.29 per day, eating takes precedence.

That’s a decision that tens of millions of Brazilians no longer have to make, having crossed the threshold of $2,500-per-year earnings, which enables a Brazilian to afford a home, a car, modern appliances and even luxury travel. Central to this new lifestyle is an emphasis on personal care and personal care products.

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Brazil’s Personal-Care Boom: Room

For More?

FROM NO MAKeuP TO A FuLL VANiTY

With the rapid emergence of a large middle-class, Brazil has a huge new group of consumers. But why are they so focused on personal care? With 67 percent of its population between the ages of 15 and 64 and the median age around 30, Brazil is a young population. even before the internet, its fashion culture looked to europe more than in other Latin American countries, and many cultural observers say that Brazilians are very appearance-conscious, sometimes unhealthily so, even though attractiveness is taken as a sign of good health there.

These powerful emotive drivers along with exposure to products that consumers never needed before have led to an explosion of consumption. Today, Brazil is by far the largest Latin American market for soap, bar and shower products, at just over $1.5 billion in 2010, more than three times its nearest contender, Argentina. shampoos have seen a 6 percent growth year-over-year for the last five years. And anti-aging treatments account for 60 percent of facial-care sales.

iT’s A sLiPPeRY sOAP

With such a promising market, why haven’t all the personal care brands jumped on the bandwagon? Because Brazil is expensive for businesses. Not only is the cost of goods higher, but also the cost of doing business is almost double that of the united states – especially if you’re importing goods. That’s why a few of the major personal care brands have decided to set up shop in Brazil itself. Manufacturing in-country helps offset extremely high import costs, although producers still have to deal with inflated government taxes versus other countries and a higher cost of doing business overall.

But it’s a smart strategy for a piece of a billion-dollar market. Brazil is a somewhat closed-off country due to high import taxes and tight-knit culture, which make it hard to compete with local businesses. But brands like unilever and Avon have set up manufacturing and made a statement that they’re here to support and contribute to the Brazilian economy with jobs and more. it’s their way of becoming a local name with a premium product.

ReMOViNG THe MAKeuP

Can Brazil sustain such success? The signs aren’t all good. Right now, Brazil’s economy is on pace to grow by only 1 percent in 2013 – a dramatic shift from the 4 percent year-over-year average for the last five years. The government is already looking at ways to keep people spending while keeping banks healthy by not lowering interest rates.

it’s not all red flags, though. Brazil continues to work on lowering the cost of doing business there, opening the door a bit wider for new brands to enter the market. Brazil’s long-term investment in infrastructure is a bright spot as well. A study by export Development Canada noted that Brazil will spend more than $25 billion on the 2014 World Cup and 2016 Olympics, much of it for new roads, airports and railways. And blockbuster sports events in a country that touts its health – material and physical – to the rest of the world are a good context for marketing personal-care products.

No matter how you look at the ride of Brazil’s economy, one thing is certain: the programs and efforts put in place by the government gave new opportunity to those living with less. The government realized that promoting the growth of Brazil’s children is an investment that will pay substantial dividends in a more prosperous Brazilian culture and country. And from there, successive generations will want to look better, live healthier and look more to the benefits of personal care products. ⬢

MOViNG ON uP

As a university of iowa Center for international Finance and Development report put it, “The prudent leadership of Presidents Fernando Henrique Cardoso and Luiz inácio Lula da silva has resulted in quick growth, declining poverty and an increased say in international affairs.” Brazil has seen the emergence of a middle class through policy changes, lower interest rates and stimulus programs.

For example, the study explains, approximately 46 million people across 11 million families have benefited from the Bolsa Familia (“Family scholarship”) program, in which 94 percent of the funds have targeted the poorest 40 percent of Brazilian society, lifting millions out of poverty, boosting rural economies and creating a trickle-up effect that has benefited producers of goods and has improved tax bases at the federal and state levels.

brazil has sEEn thE EmErgEnCE of a middlE Class

References:“Why is Brazil an emerging Market economy?” university of iowa Center for international Finance and Development, 2011. “Betting On Brazil,” Money.CNN.com, Oct. 15, 2012. “Doing Business in Latin America” (PDF presentation) Hughes Hubbard, 2009. “Brazil” (on Heritage.org), The Heritage Foundation.

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privatE labEl in russia: t r a d i t i o n t r u m p s i n n o vat i o n – f o r n o w

Private label products don’t qualify as an emerging market in most Western countries today – they’ve been a staple of the u.K. for decades and in the u.s. and continental europe for 20 years. in fact, brands in those regions are facing the challenges of a mature private-label market: how to develop products that aren’t simply viable lower-priced alternatives but are category-definers in their own right. Russia, on the other hand, would appear to be ripe for a private label boom. The trouble is, systemic issues are making it a tough process to enact.

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Private Label in Russia: Tradition Trumps innovation – For Now

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But that’s not stopping Russian and Western retailers from trying. At larger chains, private label now accounts for up to 15 percent of revenues, according to a recent Moscow Times article. At mature Western retailers, this number can reach 35 percent or more. But Russian retailers would appear to have plenty of room for growth: private label overall accounts for just three percent of the national retail market, and despite a recent dip in Russian consumer confidence, the country has been in a sustained economic upswing.

This is reflected in recent trends that indicate Russian retailers are paying some attention to Western models. According to a recent PMR report, Russian private label brands are launching into the medium and upper-medium price points, a trend that manufacturers have contributed to by offering their own lower-priced national-brand products. so there’s been solid competition at these price tiers, and Western-based Russian retailers have been instrumental, according to PMR. For example, German-based Metro Cash & Carry reported that its medium price bracket now accounts for 60 percent of revenues, with sales up 42 percent in 2011.

barriers to Entry

still, in a country where private label accounts for only three percent of store revenues, there clearly are barriers to entry for retailers. There are few if any companies that manufacture only private-label goods, unlike in the West. Thus retail chains buy private label products from manufacturers that also produce national brands, and these producers only accept orders from chains that buy their national goods.

in addition, manufacturers don’t sell to smaller chains because of the higher cost per unit, and the Moscow Times article noted that a retail chain must have 50 stores even to qualify as a viable purchaser of private label products. Many manufacturers won’t do this business anyway for fear of cannibalization, and at the same time, some big chains are not convinced about quality. The result is a vicious cycle with many perpetuating factors.

And there are more, according to Hans Muysson, a Vice President in the Brand Development Practice of schawk, inc. There are strong nationalist strains in Russian history and culture, he says, which have encouraged shoppers to align with national brands and their heritage. This is very similar to the case for many decades in the u.s. and unlike the case in the u.K., where shoppers have traditionally identified with the retailers themselves and their own brands. The private label boom in the u.s. was fueled in part by the growing cachet of brands like Target and Walmart, a development that hasn’t happened in Russia yet. And unlike China, Russia doesn’t look naturally to the West for new retail paradigms, which also inhibits ambitious private label ventures.

Where product portfolios are concerned, many Russian categories – such as vodka – are marked by a few high-priced offerings and literally hundreds of low-priced local or regional offerings. Muysson says this has discouraged experimentation at the middle and upper-middle price ranges.

inflexible supply Chains

And this less sophisticated overall landscape is preserved by additional innate factors. For one, Russian retail adheres to a traditional supply chain structure wherein creative agencies handle all premedia and print supervision, which greatly reduces the retailers’ ability to drive quality and efficiency through oversight and the consolidation of premedia vendors. Western private label, in contrast, is realizing significant benefits today by unbundling adaptive design and premedia from its agency or printer partners and consolidating it with one expert provider that can ensure brand consistency, cost-efficiency and a more transparent cost structure.

so for many reasons, Russia is awake to the possibilities of private label and is making some headway. But every country has its own traditional attitudes and structures around retail, and currently Russia’s are inhibiting a private label boom. Russian and global retailers will welcome significant change when they can make it happen. ⬢

Private Label in Russia: Tradition Trumps innovation – For Nowrussian rEtail adhErEs to a

traditional supply Chain struCturE whErEin CrEativE agEnCiEs handlE all prEmEdia and print supErvision.

References:“Private label in Russia 2012. Market analysis and development forecasts for 2012-2014,” PMR Publications, October 2012. “Why Aren’t Private Label Goods Catching On in Russia?” Vladimir Lupenko, Financial Consulting Group, in The Moscow Times, Oct. 25, 2011.13

ScreenS, connectivity and the neweSt conSumerS

understand your customers – the contours of their lives, the ways they behave, their needs and wants. show that what you offer can make their lives better. That’s how brands succeed in emerging markets.

Children have always been the largest, most dynamic emerging market. Wherever they grow up, children share the experience of developing into a distinct personality with connections, responsibilities and choices. Just as emerging geographical markets move toward economic independence and exploration of possibilities, so do emerging generations.

What’s new is the connectivity today’s youth enjoy as they explore their growing freedom. A kid’s identity and preferences are being shaped not just on the playground, but across an entire world of potential interactions and choices.

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screens, Connectivity and the Newest Consumers

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something else is sure to emerge tomorrow, but this is what’s emerging today: Kids have interactive screens of all kinds, wherever they go. They’re connected in the classroom and at home, with their friends and on the move. And they’re not passively watching; they’re choosing what to consume and with whom to engage.

eAGeR TO LeARN sHOuLDN’T MeAN eAsY TO exPLOiT

Youth marketing consultant James McNeal believes that developed societies are defined by the consumer behavior that enables and shapes virtually every activity – working, worshipping, schooling, housekeeping, playing and more. Additionally, McNeal sees the development of consumer behavior as inextricably tied to the sense and presentation of self. Children as young as two begin identifying with brands as part of their self-image.

screens, Connectivity and the Newest Consumers

Many laws and self-regulatory organizations prohibit ads that exploit the credulity of children under 12. For example, Article 18 of the international Chamber of Commerce Code of Marketing and Advertising bars communications that:

• undermine positive social behavior, lifestyles and attitudes

• exploit inexperience or credulity, such as exaggerating a product’s performance

• Portray or encourage activities that may be mentally, morally or physically harmful

• suggest that a product conveys physical, psychological or social advantages

Anyone who has ever been pestered by a child or teenager to buy something will recognize these as sensible rules – but also that they don’t solve everything. Protecting kids will always require effective supervision.

Today that supervision is becoming much harder to provide as marketers now have the power to create highly personalized and interactive experiences. With a smartphone or tablet, youth can download apps, play games and share personal information with friends and marketers alike – all without mom’s approval or even her knowledge.

some brands have exploited this interactivity. The u.s. Federal Trade Commission reports that most mobile apps aimed at kids fail to provide any information about what personal data is collected and how it is used. Many collect information such as device iD, geolocation and phone number, and many contain interactive features such as advertising, in-app purchases and social media links – all without any disclosure to parents.

NeW TeCHNOLOGY CAN suPPORT AGe-OLD PRiNCiPLes

Fortunately, the enduring values of childhood still matter. And the same tools that can be used to deceive can also be used to deliver responsible brand messages, as well as to spread the word about brands that fail to meet their social obligations to vulnerable populations such as children and youth.

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“ younger conSumerS have become more open to the brandS they buy.”

ScreenS, connectivity and the neweSt cuStomerS

Although children begin to form consumer preferences at an early age, it takes time to achieve intellectual, emotional and financial independence. By age nine or 10, most kids have their parents’ trust to make some independent purchases. But they don’t always have the best judgment, and brands can get into trouble when they take unfair advantage of that fact.

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screens, Connectivity and the Newest Consumers

Fortunately, the enduring values of childhood still matter. And the same tools that can be used to deceive can also be used to deliver responsible brand messages, as well as to spread the word about brands that fail to meet their social obligations to vulnerable populations such as children and youth.

“social media changes things,” notes Bruce Levinson, Anthem Worldwide VP of Brand strategy. “A brand’s reputation is increasingly important, and they need to be seen as transparent in the way they market their products.” More than ever, the emerging market of connected youth requires brands to have a strong, motivating purpose.

With interactive control over a world of possibilities, “Younger consumers have become more open to the brands they buy,” according to Levinson. “They’re rethinking their choices not only on the value or benefit of the product, but also the reputation of the company. Brands that are seen as positive influences build their reputations, and social media enables a lot of that.”

The most successful brands stand for something that transcends their product category. it’s not just about the “share of voice,” as in the children’s TV model of advertising, but about the “share of conversation,” Levinson believes. Although brands can curate or moderate the conversation, they can’t own it. everything the brand says, and everything youth or their parents say, becomes part of the social discourse.

Brands need to take advantage of every opportunity to shape that discourse – and it has to be about more than driving sales. smart brands use social engagement to promote values that help parents feel good about bringing the product into their home. That means giving children and teens opportunities to express creativity, humor, freedom, belonging and fun. And it means helping parents feel in control.

it’s also wise to remember that today’s youth can talk back to brands, whether to express a personal aspiration or register a very public complaint. even kids without the money to spend on a product can influence its success through online reviews, facebook discussions and tweets.

THe YOuTH MARKeT is THe FuTuRe OF eVeRY MARKeT

The personal, connected screen is not like a billboard or TV. it’s a portal to relationships. With young people today, the first principles are more important than ever before: understand your customers. show how you can make their lives better.

That’s the advice we’d give for engaging with any emerging market where people are gaining new resources and forging new communities of shared interest. But this market – the global youth market – is unlike any other. They’re all around us, they’re linked together, and they’re the future. Let’s raise them well. ⬢

Smart brandS uSe Social engagement to promote valueS that help parentS feel in control

ScreenS, connectivity and the neweSt cuStomerS

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WANT TO KNOW MORe?

talk to us.

Call: barbara glass at 203.918.4052 Email: globalnewbusiness@schawk.com

Schawk, Inc. is a leading provider of brand development and deployment services, enabling companies of all sizes to connect their brands with consumers. With a global footprint of operations in 26 countries, Schawk helps companies create compelling and consistent brand experiences by providing integrated strategic, creative and executional services across brand touch points. Founded in 1953, Schawk is trusted by many of the world’s leading organizations to help them achieve global brand consistency. For more information about Schawk, visit www.schawk.com.

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