9.1 Introduction


Most studies dealing with the massive changes in the economies and societies of the reforming countries of Central and Eastern Europe (CEE) in the years since the fall of the Iron Curtain focus on macroeconomic aspects, namely institutional reforms , their economic effects and the overall progress of the transition from a centrally planned to a market economy. Little attention has been paid to the consumer revolution that grasped the region, particularly in the more economically advanced countries of Central Europe. The economic opening of the region was followed by an influx of Western multinational corporations (MNCs), which flooded the markets with their international brands and products and introduced Western marketing methods . Developments that unfolded in Western Europe over a period of 30 to 40 years happened in CEE in just a few years. Consumer choice, in the Western sense, had not existed before: no real brands had been available, buyers had not been able to make informed choices about products or judge prices and quality, and the mere availability of a product had often been the main buying incentive in times of scarcity in the communist era. The media had been controlled by the state and contained no advertisements.

Today these markets have become “ or at least on the surface “ more similar to West European markets. The increased product offering, the strong presence of Western brands in supermarkets and shopping centres , mostly owned and operated by well-known foreign retailers, and Western-style advertising is noticeable when one travels through metropolitan areas of Central Europe. However from the consumer s perspective the differences from the West are still striking. Although average household incomes have risen, purchasing power is lower than the West European average. This limits the disposable income of households and leads to very price-conscious shopping. Brand loyalty is relatively low and value-for-money is the most important criterion for consumers in CEE (Shama, 1992; Schuh and Damova, 2001). This raises the pressure on Western marketers to find ways of offering their quality products to lower-income mass markets without tarnishing the brand image and selling at a loss. The desire to attract the relatively small group of consumers who can afford Western brands is heating up competition between international firms (Dahm, 1996) and CEE markets are now among the most competitive in the world. For instance 11 firms are offering 14 brands in the Polish detergent market at 30 per cent less than the West European price and marketing is far more active than in comparable West European markets. In technology-driven product markets (for example detergents, cosmetics and body care products) the competition is mainly international, but local producers are major actors in the food and beverages sector, where local tastes and a strong affection for traditional (and cheaper) local brands are challenging the marketing efforts of Western firms.

Against this background we shall now analyze the market entry and marketing strategies of Western consumer goods firms in CEE and investigate the business logic guiding these moves. Based on published studies and empirical evidence we shall focus on three issues:

  • What are the right modes of entry and operation for Western firms?

  • Can marketing strategies be transferred from Western markets or should highly localized strategies be adopted?

  • How should Western firms organize their marketing activities in CEE?




Change Management in Transition Economies. Integrating Corporate Strategy, Structure and Culture
Change Management in Transition Economies: Integrating Corporate Strategy, Structure and Culture
ISBN: 1403901635
EAN: 2147483647
Year: 2003
Pages: 121

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