Consequently for viability, the marketing mix hinges on the 4P components: Product, Price, Promotion, and Place. (Kotler, 2003).
Currently the Russian marketplace is one with great potential for international investment given its natural physical and human resources, as well as political development of the last few years. As a result this paper will focus on a market plan for entering this market with Australian gourmet wines, and the subsequent sections will address the different components of the mix as it applies to Russia.
Russia is a large country in terms of geography and population size with almost two thirds of the population living in big cities far away from each other and surrounded by vast and little populated areas, often with poor transportation connections between these cities. Over the last decade there has been some political stability and improved standard of living with the passing of a new constitution and a selection of a new government. Notwithstanding, there continues to be widespread crime and corruption as well as deteriorated urban infrastructure.
In terms of businesses, although there are retailers and suppliers, these are fragmented, and the few chain stores are not under any organized umbrella. On the socioeconomic front, whereas the greatest purchasing power of the society is concentrated among the minority who are business people living in the large cities, pricing is a very important factor to all consumers. Those with limited purchasing power are mainly older citizens who are interested in the reliability and the quality of goods, especially in the health care sector. Despite this, the leisure preferences displayed currently are sport activities and eating out at restaurants, and for shopping, they prefer large centers.
The economic and financial environment of Russia is conducive to foreign investment for the following main reasons. The country has a well-educated labor force with substantial technical proficiency; and at the same time, these are underutilized because of lingering Soviet-era management practices, inefficient supply systems, a decaying infrastructure, and the slow development of innovation due to limitations concerning applied research. Also, the cultural environment has seen a shift from a socialist perspective to a more consumer-oriented attitude.
For more than half a century all economic activities were under state control, and it is only now that the market is open and the consumer is free to choose. In the same breath, given the new political developments there are constant changes in the business environment and this situation could pose a challenge to investors. For example, taxes in Russia are high but some reforms are implemented in order to lessen the amount of tax paid by companies. There have also been adjustments including the regulations governing a value-added tax (VAT) and profit tax. According to these regulations no special provisions are made since January 2002 for some areas, and excessively high tariffs are imposed on several areas including motorcycles, and some food items as well as alcoholic beverages. Foreign businesses operating locally are subject to withholding tax between 10% and 20%.
In addition, the