Marketing Strategies in the Russian Market

Strategic planning in business is closely linked to the dynamics of the external environment.

What is important is not so much the high rate of change, but their unevenness and unpredictability. The integration of external factors with the company's internal environment is the responsibility of the marketing strategy, and therefore the marketing function acquires special significance in situations of turbulence and near bifurcation points.

Macro-Analysis as the Basis of a Marketing Strategy in an Unstable Market

Business practitioners, with rare exceptions, do not like to analyze macro-factors, considering it a thankless task due to weak applicability to specific management decisions. This approach has a basis when the company operates in a relatively stable environment and can navigate by market factors – the tactical behavior of competitors, customers, suppliers, etc. That is, taking into account the analysis of the so-called external micro-environment of business – the circle of direct or indirect, but close contacts. In addition to market stability, it is important that it is characterized by growth or at least stagnation, but does not shrink sharply, damaging most of its players.

Otherwise, to maintain business efficiency, macro-analysis will become the only alternative, which is quite simple to explain.

First, let's consider how changes occur in the market. First, a qualitative change in macro-factors is noted, which provides grounds for adjusting the behavior of the most sensitive and passionate market players (who are usually the so-called innovators), i.e., the external macro-environment influences the external micro-environment.

Gradually, the passionate players (these are not only competitors but also, for example, customers who have developed new demands and behavior patterns) form new trends leading to changes in the market, which the other players can no longer ignore if they want to maintain, let alone increase, the efficiency of their operations. Thus, changes penetrate the internal environment of any or almost any company in the market.

Thereby, a sequence of changes is observed: macro-environment → micro-environment → internal environment.

If the dynamics are too high and uneven in a falling market, then many of its players can no longer be sure that they can wait until effective solutions become mass and noticeable to implement them. Simply put, one can go bankrupt or, at a minimum, significantly worsen one's market position by not increasing passionarity and not responding sensitively to macro-factors.

Secondly, this is what can be called "justified risk." When a business operates in a stable, especially growing market, the risks from advanced strategic decisions can be too high. Of course, if such decisions are incorrect. Therefore, it is quite reasonable that the management of companies, which justifiably assesses its internal environment negatively in terms of competencies for analyzing macro-factors, does not strive to excel in "innovativeness."

The decreasing effectiveness of decisions made in response to the behavior of market players, and the feeling of the need for "justified risk" push strategic-level management to look broader in attempts to develop a more perfect behavior model in an unstable market. But making any decisions, even those we call intuitive, is based on processing a large amount of input data. A significant part of which is now collected at the macro level.

To simplify and systematize this process (and also increase its speed, which is important in a volatile market), ready-made strategic marketing tools and practices can be applied.

Perhaps the most well-known in this regard is the familiar, simple, and simultaneously very complex SWOT analysis. However, let's not get ahead of ourselves. Macro-analysis cannot start with SWOT; it should end with it, acting as a link between analysis and goal setting as universal stages of developing a company's strategy.

To substantially fill O (opportunities) and T (threats), it is important to work through the business macro-environment qualitatively, highlighting what can become a point of support in the future or, conversely, destroy the business. For such complex work, in turn, strategy specialists recommend PEST analysis, which gradually evolved into PESTLE.

If the company's management is using this tool for the first time, it is possible to stop at PEST. Briefly about this abbreviation.

P – political factors of the macro-environment, which also includes legislation, separated in the PESTLE model under L. If until recently business representatives, especially non-systemically important ones, often thought that analyzing the state's political system and legislation (and law enforcement can be added here) was not about or for them, then recent events have clearly indicated the importance of preemptive actions in response to certain decisions of authorities at all levels (including foreign countries).

E – economic factors of the macro-environment, which characterize the structural and dynamic parameters of the development of the economic system as a whole and its individual elements (industries, markets, territories, etc.), which are especially important in a particular type of business.

S – social factors of the macro-environment, starting from demographic processes affecting the prospective number of consumers, and ending with cultural and behavioral aspects of the development of society and its segments (for example, children or pensioners), which strongly influence entrepreneurs' business models.

T – technological factors of the macro-environment, which can include, essentially, all types of technical solutions, including engineering, managerial, tools for information analysis and data transmission, etc. Here it is extremely important to be able to see promising technologies not only within one's own industry or market but also in other areas if they can be successfully (with commercial effect) adapted to business tasks.

When analyzing information about the macro-environment, one should approach it from the standpoint of the principle of necessity and sufficiency. One should not delve too deeply into specifics (at this stage), but it is fundamentally important to ensure a sufficiently broad coverage, far beyond the industry and market of presence. When everything important is considered and recorded, it is recommended to rank the factors by each type (P, E, S, T), and then select no more than 5 of the most significant in each block, while they should be assessed as positive or negative. In this form, they can be used to form a SWOT matrix.

Selecting Priority Market Goals in Conditions of Uncertainty

When information about the macro-environment is collected and systematized, one can begin to think about setting goals. But if following the established mechanism of strategic goal setting, it is better to use a ready-made tool – SWOT. The external environment in it is only half of the initial data; it is necessary to fill in the S and W fields – that is, the strengths and weaknesses of the company (its internal environment). This task is relatively easier than analyzing external factors because all the initial data is "at hand" – various types of reports, opinions of persons managing the organization, assessments of counterparties, etc. The main difficulty here is to select the factors that are truly important (both in positive and negative contexts) for the future development of the company. It is also necessary to speak honestly and record weaknesses, as overestimating one's resources will not allow setting achievable goals.

After selecting and systematizing the factors of the internal environment, the basis of SWOT is ready. But the model does not end here (as is often written on the Internet); the most interesting part only begins. It is necessary to compare each factor of the external environment with each factor of the internal environment and determine the degree of their connection – strong, weak, or no relationship. For example, take one internal environmental factor – weak financial leverage (as a consequence, operating mainly on prepayment). Different external environmental factors will have different types of connections with it. Thus, an increase in the share of government orders in the market – strong connection, an increase in tax burden – weak connection, tightening of regulatory technical regulations – no connection.

Of course, for further goal setting, the identified strong dependencies between external and internal factors are of interest, and there should be a significant number of them. Otherwise, the analysis was conducted inefficiently – important internal and external business factors were not identified.

All these dependencies should be carefully studied. They can be of four types: S-O, S-T, W-O, W-T. The consideration of combinations of the first (S-O) and fourth (W-T) types of strong connection is most prioritized, as they provide an idea of potential "breakthroughs" in development and critical failures that the organization may suffer. If additional analysis confirms that this is the case and the conclusions are correct, then we move on to goal setting here. For each such situation (combination), goals should be set and framework solutions outlined.

As we considered above – a company's weakness (operating mainly on prepayment) overlapped with a negative external environmental factor (an increase in the share of government orders in the market, providing for post-payment). The company cannot ignore this combination – a goal must be set and ways to achieve it outlined. For example, attracting external financial resources to conclude a volume of government contracts for a certain amount. Otherwise, the company will lose market share by not responding to new challenges related to changes in its structure.

If the basic S-O and W-T combinations have been worked out in terms of goals and objectives, then, if free resources and opportunities are available, one can move on to goal setting for S-T and W-O combinations. The potential positive effects in them are not as great, and the risks are not as dangerous, so these options are more interesting in stable markets. In conditions of external turbulence, it is critically important to respond promptly at least to the basic combinations, which can change at high speed. At the same time, by improving the internal business environment through such work, the company increases its competitiveness and resilience in general.

Possible Marketing Strategies in the Russian Market

Justified and adopted goals and objectives of market presence in their unity (and they can be either aligned or competing) de facto constitute the company's marketing strategy. Depending on the results of goal setting, it can be classified in one way or another (offensive or defensive, differentiation or niche focus, etc.), but this is more interesting for theorists than for businessmen, especially since in modern conditions there are more and more hybrid strategies combining elements of various classical ones.

What factors in the external environment should be paid attention to in order to find the most relevant goals in the current reality? This question concerns any somewhat responsible top manager.

If we talk about universal processes that affect all or most industries and commodity markets, then, of course, first of all, one should look at the exchange rate. Currently, it is beneficial for businesses tied to imports and negatively affects exporters. However, when shifting to an import orientation, one must take into account the possibilities of domestic consumption, and they are not growing. Rather, now is the time to prepare for export expansion, as in the medium term (6-12 months) the ruble will weaken, which will also positively affect import-substituting industries.

Continuing to talk about companies focused on external markets, it is necessary to especially carefully monitor the political group of factors. This will allow, with minimal losses, and sometimes with increased profitability, to optimize both financial and logistics flows. In the future, a tightening of sanctions is expected, including the development of a system of secondary sanctions, which will reduce the throughput of traditional corridors and also increase risks for large companies, especially those acting as official partners and distributors of manufacturers from unfriendly countries. The few European countries maintaining active trade with Russia, like Serbia, will face increasing pressure. Barter systems of "settlements" between Russian and foreign companies can also be effective, especially when working with such specific geographic markets as Iran.

As for domestic markets for goods and services, here in the medium term, both the low and high segments will grow while the middle segment substantially contracts. This will require improving the assortment policy. In the high segment, import substitution strategies can be successful, as parallel imports will not compensate for all losses, and a reduction in the income of the upper strata of society is not expected, at least in terms of ensuring their consumer spending. For the low segment, price will become an even more important factor for market success, and therefore it makes sense for manufacturers who do not plan to leave the Russian Federation market but will continue to build their presence here to invest in reducing the cost of goods.

In individual markets for goods and services, specific factors and behavior patterns will manifest more brightly than is characteristic of stable times. Tracking them falls within the competence of industry marketers. Also, for marketing research, outsourcing will be appropriate, especially for B2B markets, where special analysis tools are required. Searching for interesting opportunities and a proactive orientation in an unstable market is a necessary, though insufficient, condition for an effective marketing strategy.