Sofa analytics №273. The strength of the brand in Russia is depreciating. new reality

Hello.

Marketers know for sure that the strength of a brand is built not only around

product, but also around advertising.This is clearly seen in the example of Chinese companies, which, often without a sane product, have learned how to build a campaign to promote it. A good example is the Nothing Phone, which has some funny glitches but costs the same as a good quality smartphone. Expectations and reality are completely different.

The other day I came across a sign that describes the changes in factors when choosing a product (food) in Russia.

NAFI conducted a study in July 2022, the methodology was a survey of 1,600 respondents, you can learn more about it here.

Parallels with electronics are possible here, although it is necessaryclearly understand that these are different groups of goods. Food is a commodity of daily demand, and habits here are formed over the years. At the same time, the issue of habit is also relevant for electronics, but we do not buy such goods so often, and therefore the changes are not immediately visible, they appear gradually. Therefore, it is not worth transferring this data completely to the market of the same smartphones, but we will try together to figure out what is happening and why the power of the brand ceases to operate.

The survey showed that the importance of suchparameters like country, appearance, manufacturer's popularity. For electronics, these moments also play a role. To speak objectively, let's remember that for many years the leader of the Russian smartphone market was Samsung, its share fluctuated around 30-36% in unit terms. Just like at Apple, sales were driven by direct advertising—television, the internet, outdoors, plus partner placements with product ads. Without advertising, sales are impossible, and the fact that Samsung has suspended work in Russia hits hard on the brand's perception, plus there is no fullness of the shelves. And here we get a cumulative effect.

Miscellaneous

Affiliate material

Reality and prospects of the IT professions market

What professions are the most popular and highly paid?

Saturday coffee #213

Pour a cup of invigorating Saturday coffee andcheck out the news of the week. Samsung introduced new foldable smartphones, Xiaomi also showed its device with a flexible screen, and Motorola did not stand aside by presenting the RAZR 2022…

Volkswagen Passat Alltrack test. Interesting station wagon

The Volkswagen Passat sedan has been discontinued, but the model itself remains on the market. For Europe, the car is available in a station wagon, and for us they offer its modified version of Alltrack ...

Warranty service for parallel imports. Underwater rocks

Parallel import product warranty, where to look for support and what to think about when buying. Repair difficulties.

Previously, coming to any electronics store evenin the smallest city, you have seen on the shelves a lot of smartphones from different companies, including the same Samsung or Apple. And not only different models, but also a choice of different body colors, you could immediately turn the devices in your hands and buy. Advertising played a simple role - it introduced new products, what had changed in them, and brought people to the stores, created the feeling that there was progress and that one must constantly stay on its edge. Yes, of course, the value of the constant change of the same smartphone has fallen, as well as its life cycle has grown to 4.5 years and continues to grow. But people bought accessories, like wireless headphones, glued glasses, and bought cases for their smartphones. It is important to understand that it was advertising that brought them to stores and formed sales. Often, people, having seen an advertisement, simply came to the store to look at the new product, did not see any point in buying it, but wanted to satisfy their curiosity. Now there is no advertising, and sales are redistributed in favor of those brands that are inexpensive (price / quality ratio), and are also present on the shelves. Let's look at MTS estimates for smartphone sales in July 2022 in Russia, here are the top 10 positions:

Xiaomi Redmi 9A (32 GB)
Xiaomi Redmi Note 10S (128 GB)
Xiaomi Redmi 9C (128 GB)
Tecno Spark 8C (64 GB)
Xiaomi Redmi 9C (64 GB)
realme C21Y (64GB)
Xiaomi Redmi 10C (128 GB)
Xiaomi Redmi Note 11 (128 GB)
Xiaomi Redmi 9C (32 GB)
Xiaomi Redmi 10C (64 GB)

All lines of the rating, except for twopositions - for Xiaomi, the reason is not the market halving in unit terms, but the fullness of the shelves with goods. Xiaomi, realme and Tecno are on them, but Samsung is present in other volumes, its models cannot be touched and immediately bought.

Interestingly, we are seeing a change in behaviorbuyer, which occurs very rarely and under the influence of external factors. People realize that there is a crisis in the world, including in Russia. They do not understand what will happen to the prices of equipment, what equipment will be available. But people know how to count and understand that the same Apple iPhone costs about 80-100 thousand rubles, and some Chinese offers comparable opportunities at half the price. Hence the rise in the consumption of Chinese brands - they are available on the shelves, their prices are much lower compared to the same Apple.

This is clearly seen in the examples of laptops, for the first timeChinese brands soared so high, and the same MacBook in all variants failed in sales, it became too expensive, a sort of luxury. It is easier to buy a Windows computer that resembles a MacBook, as the savings will be about half of its cost - while the Chinese offer a larger diagonal, more memory, and so on. That is, it seems that the offer is more profitable. But the most important thing is that even if the laptop does not last five or seven years, like the MacBook, then in 2-3 years it will be possible to buy a new model with improved characteristics, since you will still have the money saved on buying a MacBook.

Rationality involuntarily became the main driving forcemotive for the market. And here we can say that the country of electronics production now does not play any role at all. Even before that, it played a small role, people chose a specific brand, but now the country of production is completely a thing of the past. One continuous China, and people understand it.

Another curious factor, a kind of anti-crisis fromordinary person. Sales of both Apple and Samsung worldwide show that for the first time there are buyers who have never used these products. That is, they buy smartphones that are quite expensive for themselves, because they believe that for such money everything is better in them, and most importantly, they will last a very long time. This is anti-crisis behavior, which is common for any crisis, but we have never seen such a scale before. Tim Cook boasted in a Q2 report that the company's first-time iPhone buyers had grown. And this record is associated with the crisis, but it is temporary - that short moment when people have money, they can somehow collect it. Usually this is done not by those who have significant financial resources, but by those who are accustomed to thrift with money. Oddly enough, these are rational buyers, the purchase is not emotional.

Most people today arerational, so the value of the brand for them begins to decline. My friend always preferred high-quality equipment, she chose the same Samsung. When buying equipment for a new apartment, she asked me about my attitude to the Haier brand. My surprised question was answered - it looks decent, it costs much cheaper, and most importantly, you can choose from different models. That is, the same availability of goods, the possibility of choice, and most importantly, that prices are low compared to the same Samsung, play a role here. And I think that the fact that the marketing load has always decreased is also playing a role here - now you don’t stumble across Samsung ads everywhere, it has ceased to be an eyesore and act on the subcortex. And rationality began to emerge.

Roughly the same story with Apple advertisingdisappeared altogether, as a result, sales fell three times in unit terms. Appliances from Apple are a luxury product, and for this category it is important to maintain the image, including through constant and large advertising injections. As soon as they were gone, the image faded, the reason to buy a phone like on this shield disappears. The funny thing is that most people vehemently deny that advertising can somehow affect them, it is always their conscious choice, and they can list dozens of reasons that prompted them to make such a choice. But you take marketing out of the equation, and people's choices become completely different.

Interestingly, in 2021 at Appleconsistently increased the volume of advertising in Russia, which by February 2022 led to an increase in market share - to a historical maximum of 17% in pieces for the smartphone segment, but sales of MacBooks also grew, there was a shortage!

Without advertising support, the market share will befall, but the worst thing for brands is something else: people try an alternative and suddenly discover that there is no horror-horror, and these devices are quite functional, they can do a lot. And this opportunity makes purchases rational, people begin to convince their associates of the correctness of their choice, the rejection of expensive devices that are not worth their money in their eyes. Word of mouth begins, which in the absence of opposition from brands, in the absence of their advertising, captures the minds. Changes gradually increase and become to some extent irreversible.

The main question is how quickly suchchanges? I think that at least a year is needed for us to see a drop in loyalty to large companies, which can be measured instrumentally. In two or three years, new brands will be established, they will dominate the market. And in this aspect, the Russian market is an excellent testing ground. What is happening in our country today will happen in some time everywhere in the world.

And here you need to ask yourself a question:Am I a brand loyal person or a rational buyer who always chooses the best option on the market? Until recently, we were all hostages of certain brands, now we are becoming freer, as life is actively pushing for this.

Sofa analytics №272. Plan B, or why you need to think about the failure of the project

Why business believes only in success, and does not estimate the cost of failure; playing in a casino or calculated options in business.

Sofa analytics №271. How a $250 Swatch Boosts Omega Watch Sales

The bestseller from Swatch is the “moon” watch, the collaboration with Omega is the hit of this season. The way to save the “mechanics” from the Swatch Group, interesting business decisions.

Sofa analytics №270. Why do buyers intentionally spoil goods?

How and why do people spoil good quality goods; soiling clothes or tearing a sleeve, scratching the TV for the sake of a discount are the methods of consumer extremism.