Rus News Journal

Russian and World News

BUSINESS - DECISIONS

SUPEROIL With PROBLEMS

to you has had the luck to become the Russian distributor of a superproduct who is known for the highest quality and on 15 - 20 % are cheaper than production of competitors. Its manufacturer, one of the largest world companies, annually spends millions dollars only for scientific researches. And here in one and a half year of work you find out: volumes of your sales in 2 - 3 times more low, than at competitors.

the Product
Here the Russian company (Distributor) selling production of a foreign brand (Manufacturer) has faced what problem. The brand is present in the market about 80 years, has a wide world fame and high reputation. In Russia officially is on sale since 1999. The basic consumers - the extracting companies, the companies - autocarriers, service stations, wholesalers, motorists.
the Brand is positioned and adapted on technical characteristics for operation severe conditions (low temperature, continuous work of mechanisms and etc.) . The most part of oils and greasings under the given brand concerns the quality highest category, however is on sale at rather moderate price which is essential below the price of the basic competitors for similar products. At high quality own patented technology improving properties of a product at low expenses allows to keep the low price.
the manufacturer enters into the five of the largest companies on extraction and oil refining, is vertically integrated (extraction, processing, sale of lubricants). In Russia the Manufacturer works through the Distributor - the official distribution company which receives deliveries directly and sells wide assortment of production of the Manufacturer through the dealer network.
advertising strategy of the Manufacturer all over the world - strict economy of means for brand promotion. A position approximately the such: our production - superoil, and advertising is not necessary to it.
In the Russian market advertising support of a product is spent with moderate intensity. The basic directions of advertising - printing special editions, outdoor advertising, industry shows, polygraphic and souvenir production. And expenses on advertising are born in common by the Manufacturer, the Distributor and regional dealers.

relations with the Manufacturer
Russia - the country of paradoxes. Right after crisis in our country have appeared a little oil the marks unknown in the world. They have quickly won huge popularity and have typed great volumes of sales. However the known world brand about which there is a speech, in one and a half year of official sales in Russia on - former considerably lags behind competitors. Thus it is impossible to name work of the Distributor unsuccessful. For the first year the Distributor has sold 70 % from that volume which has sold one of its competitors for the sixth year of work in Russia.
the Manufacturer remained is very happy with the Distributor and has suggested to increase for 2002 the plan. However the Distributor took the raised obligations and has decided to finish sales to 2500 t. Those rates of increase of sales which the Distributor shows from the beginning of year, testify to feasibility of such plan. In what the reason of anxiety of the Distributor? It would be desirable more. As there is a sensation of a reality of such claims.

the market
the Market of lubricants can be divided conditionally on two big categories - legkomotornye oils, that is intended for cars, and oil for the heavy industrial technics. In the market of the first category among leaders are present about ten western manufacturers - Exxon, Mobil, Shell, Chevron, Castrol, etc. it is essential to expand the share in this market extremely difficultly.
other market - oils for heavy machinery - is presented in the basic three companies: Shell, Teboil (the Finnish brand) and Chevron. Other little-known marks of oils (no name) occupy in Russia, according to experts of the Distributor, no more than 20 %. The Distributor also tries to get into the company of three leading brands. It is the huge and very favourable market. If the market legkomotornyh oils sezonen (automobile owners usually change oil twice a year - in the autumn and in the spring), at the enterprises absolutely other operating mode. Especially in the north, where the technics works 22 hours a day. If at 50 - gradusnom a frost the motor is muffled more than two hours, it then will not get.
at work in this market the main thing - to achieve entering of your oil into the enterprise register. Each of them defines, what lubricants of firms is admissible to use for service of the technics. Important and that unlike the market of oils for cars in this market little-known marks (and first of all domestic) cannot use the main competitive trump - the low price. On the contrary, import oils of industrial function have in Russia the grateful consumer, as almost all heavy extracting technics at us import.
today oils of the Manufacturer use a number of divisions Sibneft Tatneft and other extracting companies. Some consumers passed to this mark from others, cheaper, having convinced that it is a better product. For any head clearly that if the technics works on this oil not 300 motor-hours, and it is twice more, expenses pay off storitsej.

Sale
Relations of the Manufacturer with distributors radically differ from the marketing policy of its competitors. The position of principle of the Manufacturer is that: not to open firm representations in the countries of the presence. The role of representations is carried out by the local companies - the distributors, which will organise a dealer network on the country. By the way, the Distributor has received the official status after some time worked in the Russian market with a brand of the Manufacturer vseruju . The offer of the Manufacturer to become the official distributor the company has apprehended as the happy ticket and after that its work left on new, more scale level.
but such way of advancement of the goods on the new market has also the inconveniences. Work through a dealer network does not give possibility to trade directly as it is done by the Russian representations of the companies - competitors of the Manufacturer. The distributor should share the profit with the dealer, thus deliveries are carried out on the terms of the commodity credit.
strategy of work of the Distributor with dealers for one and a half year of work has seriously changed. First requirements to regional sellers were excessively rigid - the dealer contract consisted only with those who could guarantee enough great volumes of sales. Later the decision on decrease in the minimum sales volumes was accepted. Certainly, to work with a small network from large sellers is much easier in the organizational plan. However it became soon clear that it is more favourable to have branched more out network. Today the dealer network of the Distributor is 24 regional companies. Six of them take large parties on realisation, and among the others is also such who sells on two - three tons.


the Assumption of Council of Federation that a competition to official deliveries of oils of the Manufacturer dealers can make the preliminary analysis, carrying out in parallel grey deliveries, was categorically otmeteno. The situation in the market of oils and lubricants is that that the dealer anywhere will not buy these goods more cheaply, than from the official distributor (in difference, say, from home appliances which frequently imported from the United Arab Emirates vseruju official dealers).
the assumption that the damage to sales is put by a tactical position of the dealers giving bolshee attention to more untwisted marks of competitors has not justified also. As representatives of the Distributor have explained, the dealer contract does not provide exclusive relations with the supplier, however all dealers in this market have a specialisation. And if you trade in oil Mobil, you know as seller Mobil, it is more favourable to the dealer (other marks stand on a regiment or in a warehouse is faster for assortment).
At the same time interlocutors of Council of Federation from the company of the Distributor recognised that in their representation about the market is white stains . So, the serious analysis on regions and branches would not prevent. We will tell, in Tyumen one dealer serves a part of divisions of the large oil-extracting company. Probably, there is a sense to expand number of dealers in this region, to diversify deliveries and not to put sale in dependence on one client.
it is important to know and about ways rastamozhivanija the goods competitors (legal or illegal) to manage to predict their price policy in case of situation change at customs. At last, the Distributor recognises also necessity of the analysis of work of the marketing network.
however interlocutors of Council of Federation understand that high-grade research of the Russian market is a half a year works and very big money. Certainly, the part of these expenses can be shifted on dealers (the dealer contract besides profit section provides also joint expenses for marketing and advertising). However even in this case financial loading will be too great for the local trading companies.
all would be much easier, if these expenses were incurred by the Manufacturer - for it it is the insignificant sum. However the status of the Distributor (unlike official representation) does not allow to request from parent organisation of additional means.
VLADIMIR GENDLIN