Magazine article Marketing

Emerging Markets: In from the Cold

Magazine article Marketing

Emerging Markets: In from the Cold

Article excerpt

With Britain and the US both facing up to an escalating economic crisis, the balance of power in pan-European campaigns is shifting toward emerging markets, and Russia is right at the head of the queue, writes Nicola Clark.

While British consumers are beset by headlines detailing the value being wiped off their homes, last month Elena Baturina, Russia's richest woman, allegedly shelled out pounds 50m to purchase Witanhurst - the second-biggest house in London behind Buckingham Palace. Baturina's purchase reflects Russia's emergence as one of a number of relatively nascent markets benefiting from sustained growth and comparative economic strength as the UK slides into a downturn.

Russia's growing importance to brands was illustrated by BMW's decision to build on its presence there by launching its 7 Series in Moscow's Red Square last month. The country is the car manufacturer's third fastest-growing market, in stark contrast to the relative stagnance of the UK's high-end car sector.

The automotive brand, which sold 121,577 cars in the UK in 2007, aims to sell 20,000 in Russia this year, and has set itself a growth target of 20% a year from 2009. Meanwhile, it is trying to reduce the number of vehicles on sale in British dealerships to minimise costs during the downturn.

Jan-Christiaan Koenders, head of brand communications and group marketing services at BMW, says that 'dynamic growth rates' are making emerging markets more important for the group. 'In the first six months of 2008 our BMW and Mini brands have seen a 33% increase in Russian sales. China has risen by a quarter and India has leapt 269% from a base of just 424 vehicles,' he adds.

With the constant research and media focus on the impact of the credit crunch on consumer spending, it is easy to overlook the fact that premium markets have held up well. This is particularly true in the automotive sector, and BMW estimates that the sector will grow by 40% between 2005 and 2019. The volume (non-premium) market will grow 20%.

'The premium segment is affected by the economic climate, but not as much as the volume segment,' explains Koenders. 'The development of the Russian economy has boosted the whole automobile market, but high-end BMW models, such as the 7 Series, the X5 and the X6 are particularly well-known in Russia.' Compared with other countries, BMW's market share is very high in the country.

Indeed, the luxury market as a whole is buoyant in Russia. …

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