Russian perfumery and cosmetics market is demonstrating positive dynamics and today it is one of the biggest markets in Europe. For the past couple of years when all industries have experienced decline in production and sales, perfumery and cosmetics market has made it through crisis without serious losses. According to Discovery Research Group, the volume of perfumery and cosmetics market in Russia in 2009 was 9,9 billion USD, which is up by 2-3% comparing to previous period. By experts’ estimations, per capita spending in cosmetics is expected to reach 100 USD per year by 2014.
The research of consumer preferences on perfumery and cosmetics market, conducted by “AMIKO” company, has shown that 61,33% of customers use both Russian and imported cosmetics, while 37,33% use only imported products. Russian customers’ perception of foreign manufacturers’ production is associated, first of all, with high quality, and that makes it easier for international players to enter the market and start active expansion. However, every company entering a new market is facing new challenges. One of the key factors of success of foreign companies is to find a good distributer. Cooperation with Russian distributor gives an insight on local market realities and helps to satisfy individual clients’ needs.
We have interviewed the leading distributors and cosmetic companies, which present Swiss cosmetics in Russia, on the matter of their business success in Russia and Russian customers’ attitude to Swiss cosmetics.
Dankova Elena, Brand-manager of CELLCOSMET&CELLMEN, “Valleks M” company: In each presented product Valleks M is a leader in its every offer, both in its positioning and customers’ loyalty. Due to company’s precise ability to catch new tendencies of the developing market more than 10 years ago, the company managed to arrange a business-portfolio of a number of very strong brands – the leaders in their categories. The well-known Swiss brand Cellcosmet&Cellmen – leader of cellular cosmeceutics, is the only product on the market that contains stabilized biointegral cells.
Cellcosmet&Cellmen has a wide range of loyal customers in Russia and is recognized and loved for its high effectiveness and safety in skin care and renovation. The effectiveness of the products is evident and proved by the fact, that the sales did not stop their growth during crisis period, but even boosted significantly.
No doubt, “made in Switzerland” mark on each product has always been the synonym of the quality. But since recently the customers are surrounded by lots of products with Swiss flag on them or even marked as “Swiss product”. The customers are easily deceived in the origin of products, as well as in their quality. Concerning this problem the main Swiss cosmetics manufacturers have formed ASSOCIATION FOR THE PROTECTION OF THE ORIGIN OF SWISS COSMETICS – SWISSCOS.
SWISSCOS association was founded to protect the rights of genuine Swiss cosmetic producers and provide a guarantee of quality for their customers. “SWISS GUARANTEE COS” mark, printed on each product, proves that it was originally produced in Switzerland. Licensed mark “SWISS GUARANTEE COS” is used on the packaging, promotional materials and even on the windows of the stores, which sell the products of companies-members of the Association.
Usage of “SWISS GUARANTEE COS” trademark is strictly controlled by The Swiss Department of Trade. The Association will not hesitate to attack any company which uses the designation SWISS for its products illegally, deceiving the customers. SWISSCOS is supported by federal authorities and the World Trade Organization.
Svetlana Potehina, National trade director of ZEPTER Cosmetics&Luxury in Russia: What do Russian customers think of when they hear the word “Switzerland”? Of course, it is fresh air, alpine fields, perfect ecology and complete harmony with nature. Switzerland is the synonym of prestige and quality. As to cosmetics, produced in this country, according to our research the customers, first of all, talk about the flawless quality, mentioning also “natural” and “exclusive”. It is worth pointing out, that there are almost no negative aspects in customers’ perception of Switzerland as a cosmetic producer country.
Positive perception of our production significantly simplifies its promotion. People who buy our cosmetics are completely sure of its quality, safety and high consumer characteristics. We merely have to tell them about the certain advantages, unique ingredients and features of our cosmetics, about the innovations that ZEPTER International is ready to offer them.
The company has its own R&D and production base, which really helps our work. Due to the fact that ZEPTER cosmetic is produced on the basis of natural ingredients, the company strictly controls the raw materials recourses, the production process and the quality of products. The R&D center of ZEPTER uses the tightest compliance standards when choosing the plants and extracts for ingredients.
ZEPTER Cosmetics brand was founded in 1996; it was presented to Russian market in 2001. Today we have a wide range of goods, consisting of 8 lines, which include several skin care lines for women of different age categories, kids’ and men’s lines, sun protecting products and make-up. Company’s wide experience and know-how allow ZEPTER International to manufacture revolutionary novelties every year. All of them become demanded and popular among our clients due to high quality and customer characteristics. For example, our 2009 novelty –Intensive anti-cellulite cream – got in top-10 products of our range by sales volume and today it has the 3rd biggest sales share.
Annual positive sales growth dynamics of cosmetics in Russia is a result of highly effective direct sales method, as well as loyalty programs, popular among the customers. So, the number of loyal Beauty-club members of ZEPTER International Russia is constantly increasing. Members of the club get such advantages, as discounts on cosmetic products, free cosmetologists’ consultations, information about new products, participation in special actions etc.
Maya Hugaeva, brand manager of “Perfume Palace Group” Ltd.: We present SWISS LINE by Dermalab – Swiss paramedical cosmetic luxury products, an expert in anti-aging cosmetics. The economic crisis is still a hot problem for many market segments, but luxury cosmetics segment was not seriously affected by the crisis (at least as proved by our experience). As prices of Swiss cosmetics are high, our target audience consists of well-off customers. That is why, luckily for Swiss brands distributors, even if the women, used to pamper their skin with the best creams and masks on the market, were affected by the crisis, the effect was not serious enough to make them switch to mass-market cosmetics. Of course, we did not see the growth of financial results on the peak of the crisis, but there were no declines either. This stability is due to our own efforts and our clients, who have been loyal to the brand for many years.
No doubt, the distribution of premium product is paired with certain difficulties. Selective distribution imposes financial limitations on the means of potential customers’ attraction. So, the direct advertising is not one of our main brand promotion tools. That is why we take to less costly but more effective methods to tell our potential customers about our brand. The main emphasis is put on professional sales-consultants and marketing events in points of sales. A brand consultant is the last, and therefore, the most important link in the chain of product promotion to the customer.
Almost all of Swiss Line consultants have medical degree (because they are working with paramedical brands) and they have an exclusive knowledge about each product, which is offered to our clients. We have to be self-rigorous and that is why the educational process in our company is on top-level. We offer a very complicated product and have to be able to answer all customers’ questions. People will hardly pay more than 5 000 roubles for a cream just because it is “good” and, of course, they will want to know “how it works”. And it is obvious. But from the other side, we systematically initiate creative activities in points of sales, often using non-standard approach not to make it look boring and strictly medical. We are doing our best to make our clients happy with the quality of their purchases, and to make the process of purchase comfortable and entertaining. It is a careful and time-consuming process, because it implies individual contact with each customer. Nevertheless, slowly but stably it is bringing its pay off.
The competition, as to say “pseudo-competition”, causes certain difficulties, as recently the market has been filling up with “Swiss” brands which really have nothing to do with Switzerland. And the problem is not only in the number of such products (which, from our point of view, makes selective Swiss skin care products less selective than they really are), but also in their quality, which reflects on all original Swiss cosmetics. Nevertheless, the competition is necessary, because being the only Swiss brand on the market would have been boring and unfair to the customers. Our main competitor brands on the market are Cellcosmet, La Prairie, and Valmont. All products under these brands have powerful anti-aging effects: they correct the present skin deficiencies and minimize their future appearance. The age-related skin changes are the main concern of our clients, and they are eager to pay a lot for cosmetics that will help them to fight these changes.
When producing cosmetics, Swiss laboratories use only the most effective and safe ingredients from precisely chosen raw materials, employ the most complex and expensive technologies. Each product is a result of fundamental scientific research. And each brand has its own “know-how”: licensed ingredients and technologies, which are the “heart” of the brand. For example, Cellcosmet uses animal cellular extracts, while Swiss Line uses plant cellular extracts in its Cell Shock line. I think our clients must have the right to choose: and no matter what they choose, the choice should be worthy!
Marina Vlasova, Commercial director of “Amarilis” Ltd.: Mavala brand appeared in Russia in 1997. At the present moment the products are presented in all specialized retail chains, such as Rive Gauche, L’Etoile, Ile de Beaute, Articoli, Stokmann, Elizee etc. We continue the authorization of the federal retail chains, which proves customers’ confidence in our brand. The brand is well-known and appreciated by the customers. The level of brand loyalty is high enough.
During the crisis period we noticed the decrease in demand for Malava products, especially vivid among the customers with middle and low income. For example, clients of “Elizee”(Moscow) started perceiving Mavala as a premium brand. It is also significant, that the sales of hair sprays in low-price brand categories of these chains have grown from 48%(2009) to 54%(2010).
Considering sales of Mavala in several specific stores during the crisis, they have decreased by 5-15% (the figures are higher in regions). For example, in “Bon Jolie” (regional chain) the decline in sales is more than 20%. The sales of parapharmaceutic products (including Mavala brand) have also declined in pharmacies.
The retailers take “anti-crisis” steps by holding marketing activities, such as discounting top products, professionally balancing runoff products in the stores, leading aggressive advertising campaigns to attract the customers to the stores etc. All these actions have positive effect on sales, including Mavala’s products.
As an example, the purchasing power in Rive Gauche has decreased by 20-30%, but Mavala sales are on pre-crisis levels and have even increased in some stores by 10-15%.
The results of the first 4 months of 2010 have shown positive dynamics in sales growth of Mavala comparing to the same period last year. This fact gives the confidence in the future development of the brand in Russia. The company plans to continue authorization, expansion of the clients’ base (including web-store sales), active participations in retailer’s marketing activities, Malava promotion in points-of sales, sales consultants’ trainings etc.
As to the professional series of Mavala, beauty-salon specialists using the brand, also mention high quality of the products. The loyalty of end-consumers is high enough. Almost all the products from the range are sold equally well. The specialists started buying mini-sprays. Today the sales of Mavala through professional stores are on 2008 level.