BACKGROUND
- Characteristics of the fictional company

JD Hair Solution is a company founded by two childhood friends which specializes in hair products for men, women, and kids. The company sells products for: Hair colors, hair restoration, hair wash, hair moisturizing, hair shine, hair protection, and hair growth. The company is currently reaching sales of more than 200,000 million per year. Our products are sold in The US (New York - Headquarters), Dominican Republic, Colombia, Mexico, and Morocco. JD Hair Solution products can be found in any local pharmacy, discount stores, salons, supermarkets, and online. Our products are created with pre-determined formulas and measures that have already been tested and experimented on people from various cultures. We target all markets ranging from upper class to lower class income customers.

JD Hair Solution is recognized worldwide and has demands from other countries for potential business. People even come from other countries to purchase our products in high amounts to bring back home. Our products have been featured in movies, commercials, magazines, amongst other sources of recognition channels. Recent studies show that nine in every ten house hold in America has one of our products. We have 80 million followers on Instagram, twitter, and Facebook combine (that about 50 million more than Kim Kardashian). Our brand is recognized for our famous JD Hair Solutions Grower (men hair growth product) and JD Hair Solution Colorful (women hair dye collection).

- Briefly describe the product you want to export.
The products we will be exporting are JD Hair Solution “Colorful”, “Restored”, “Shampoo”, “Shampoo Kids”, “Conditioner”, “Conditioner Kids”, “Shine”, “Protect”, and “Grower”. Our products are highly trusted by our clients for their efficiency and satisfying results. The prices vary depending on product type and size. Our prices range from $3.99 to $89.99.

2. BUSINESS ENVIRONMENT
- Physical environment

Russia is the largest country in the world with an area that measures more than 6.5M square miles with a population of almost 143M. It has major deposits of timber, petroleum, natural gas, and ores. Russia holds the greatest reserves of mineral resources worldwide. The largest Russian cities with the population greater than 1M are Moscow (Capital - more than 10M), Saint Petersburg (more than 5M), Novosibirsk (more than 1M), Yekaterinburg (more than 1M), Nizhny Novgorod (more than 1M), Samara, Kazan (more than 1M), Omsk (more than 1M), Chelyabinsk (more than 1M), and Rostov-on-Don (more than 1M).

Moscow, the capital of Russia is located on the river Moskva in the western region of Russia. It has five airports and their streets are lined with department stores. Red Square is the place to visit as is in the heart of the city.

Saint Petersburg today is one of the most important cultural and industrial cities in Russia, housing several hundred of museums and exhibition halls. St. Petersburg offers luxury accommodation, and can be easily reached from the capitals of Europe.

Samara is situated in the southeastern European part of Russia in the Midstream of the largest river in Europe. As a fact, many famous people worked and lived in Samara.
Nizhny Novgorod is the 4th largest city in Russia with a population of over 1 million. Nizhny Novgorod is making a visible effort to catch up with the rest of the world by renovating, constructing, and restoring the city.

Kazan is a very large industrial, commercial and cultural center in Russia. It is located in the center of the European part of Russia on the banks of the Volga and the Kama Rivers.

- Political environment

Russia is a federation and semi-presidential republic. The President is the head of state and the Prime Minister is the head of government.

The President can enforce laws without legislative reviews, although the constitution states that these laws should not affect other laws in place. In 2012, Vladimir Putin returned to the Presidency.

The Prime Minister is appointed by the president. It requires Duma approval and can replace the President in case of absence.

State Duma is the lower house in the Russian Federal Assembly. It is the most powerful house and all bills must be reviewed by them. The Duma has 450 members known as deputies. It is headquartered in central Moscow.

The Federal Council is the upper house in the Russian Federal Assembly. It consists of 170 members known as senators.

The main political party is called United Russia which was mostly created by Vladimir Putin.

The Judicial consists of 19 judges, one being the chairman and the other being the deputy. The Judges are appointed by the President with the consent of the Federation Council.

Legislative is a two house power of the Federal Assembly of the Russian Federation.

- Socio-cultural environment

Russia is the largest country in the world in terms of territory. It is also the 6th largest economy in the world. Life expectancy for male is 53 and for Female are 73. The ethnic of the Russian population is 82% Russian. Ballet is one of the most notable art form in Russia. The largest minority group is Tatars; natives of the Volga.

The official language spoken is Russian; however, many Russians speak English as a second language. While Russians make up more than 80% of the population and Orthodox Christianity is the main religion, there are many other ethnic and religious groups such as Catholics, Protestantism, Judaism, and Buddhism.

- Economic environment

The country has natural resources, including oil, natural gas and metals. Russia is heavily dependent on oil and gas exports which accounted for 16% of the GDP, 52% of federal budget revenues and over 70% of total exports as of 2012. Public debt declined from 8% to 7.9% in 2013. Also, the economy has grown since 1999.

Russian industry sectors include mining, energy, automotive, defense, manufacturing, and communication. Moscow is the center for many manufacturing industries like cars and steel. The energy sector has played an important role in the Russian economy. The fuel and energy sector provides over 25% of GDP and almost 30% of the country consolidated budget. Studies show that by year 2040, energy demands will account for 65% of world GDP and 69% of world energy demand.

Sales are reported to have grown an average of 57% for U.S. companies that designate Russia as their largest international market. This compares with India at 38%, China at 26% and Brazil with 19% growth.

- Trade blocks and regulatory environment

Russia’s entry into the WTO in 2012 will over time lead to lower tariffs on imported goods and make global brands more competitive with Russian brands.

Trade blocks – Imports to Russia face business licensing, registration, and inspections difficulties. They also have to deal with corruption and organized crimes. In Russia, taxation is often limited on what you can debate. Transaction costs of operations are high.

Regulatory Environment – There are restrictions and orders to follow when importing a product to Russia. You may face high tax fees, discrimination, or corruption.

3. MARKET POTENTIAL

- Competitors

Procter and Gamble – Have been operating in Russia since 1991. They are now one of the fastest developing subsidiaries of the P&G Company. It launched in Russia a new Shamtu shampoo. P&G contributed more than 1.2 billion US dollars in taxes and duties to federal, local, and regional budgets. It also made over 6 million USD in charitable contributions.

Unilever – Since 2011 Kalina, the leading producer of cosmetic products on the Russian market has become part of Unilever. They have a hair product called Clear also targeting men and women with shampoo and conditioner lines. A second hair product they have out in the market is called Sunsilk; it is primarily aimed for women and is ranked as a “billion dollar brand”.

Himalaya – Also offers a shampoo in Russia. It is an organic product which attracts more upper class markets.

- Barriers to entry

In 2013 Russia placed a respectable 18th in Bloomberg’s Global Innovation Index Top 50 after placing 14th in 2012. Russian companies are fast becoming sophisticated marketers able to compete effectively at home and abroad.

In many sectors, the principal barriers on entry by new private firms in Russia are the anticompetitive market structure and the anticompetitive conduct of existing dominant firms, which is often sanctioned or supported by local governments.

Barriers to entry include: 1- the lack of competition in and poor quality of infrastructure services, as well as blocked access to warehousing and distribution channels; 2- weak mechanisms for resolving commercial disputes; 3- the lack of access to seed capital and competitively priced credit; 4- the difficulty of obtaining business premises and real estate; 5- the absence of rules-based procedures for, and the complexity of, business licensing, registration, and inspections; 6- corruption and organized crime.

- Indicators of market potential (expected sales, expected market share)

According to the Market Potential Index (MPI), Russia ranks at 15th overall for market potential among the emerging markets. Russia ranks 4th in market size and have 5th highest market growth rate and 16th in consumption capacity. This proves that Russia is a growing urban middle class and increasing consumption demand.

Russia can improve its market receptivity, economic freedom and market Intensity since the country ranks low when comparing to the other emerging markets in these categories.

Overall, Russia has maintained its self in the teens rank. This shows us that their market is pretty table and we can to some extent know what to expect.

4. MARKETING PLAN

- Positioning strategy and target market

Russia is the largest country in the world with a population of over 142M. All these people have heads (some with hair other without) which they want to keep clean and strong. This requires them to buy hair products. The target market for JD Hair Solution is everyone. Some of our competitors only target men and women, but we believe that kids are also an important factor in this market – so we also offer kids products.

Russians are attracted to foreign products, believing them to be higher quality. Since we are an American brand, we fall under this category. Our products are made to satisfy our customer needs. That is why we carry a policy of “If it does not do its job, we give you your money back. No questions asked.” People like to be guaranteed a product someway. This also shows reliability and dependability from our customers to us. They feel safe.

Retail Segment – Our products would be sold everywhere. They will be easy to find at any close to home store. Also, we offer online services in case delivery to home is preferable.

- Pricing strategy

We will be using Geographical pricing. Being that Russia is a different country and the dollar value is higher than a Russian Rouble. We will also use Penetrating Pricing since we are a new business trying to penetrate the market (lower Prices than competitors).

- Distribution strategy

We will be using two distribution strategies. First is a short distribution channel; products will be offered online. Second is long distribution channel; we will enter the market in Russia to gain market awareness. We will offer our products through local stores such as pharmacies, salons, supermarkets, and discount stores. Being that these types of stores are already stablished, it would be easier to place our products in the market. Since we plan on placing our products in most, if not all, cosmetic stores, we will not need much direction from locals. We will provide samples to our customers as sign of welcome our products to your home.

Expectations – Short Channel: We expect to sell our products online on an order basis. Products would be shipped the same day for prompt arrival. We will establish contracts with major drug stores to place our products in their websites.

Long Channel: Customer would be able to have physical interaction with our products. They would also be able to test them as samples would be given out. Once we gain the trust and loyalty of the customers, we can go ahead and focus on acquiring other start-up or existing brands to minimize competition.

- Promotional strategy

As a company that operates in many different countries, we have experience with promoting our products. To reach customers in Russia, we will need to make our product known in the market. The way we promote our products will determine how successful we will be at the end of the day. We need to give incentives to our potential customers to purchase our products. We can start by promoting to the environment that our competitors are already targeting.

Being that we have online access for purchases, we will need online advertising as well. We can use social media, online television and video watching. We can also go with advertising in websites. Russia is the largest internet marketing audience in Europe with over 53 million. Mobile phone penetration is among the highest in the world.

Reports indicate the Russian media market grew by 13% and global media market increased by only 4.6%. These numbers tell us that the methods of advertising we want to use are very convenient and will gain greater value in days to come.

Promotions – Since we are a new product coming in the market, we will be doing things that our competitors will not. We will be giving out free samples to our clients. Our sales would top our competitors. Deals will be constant to those customers that are interested. Deals would be constant on newspapers and magazines, which helps with awareness and attracts more customers. Frequent buyers can also receive coupons at home or email.

5. EXECUTIVE SUMMARY

- 2-slide executive summary (including detailed notes) that summarizes the key points of your international marketing plan.

JD Hair Solution mission to become the best hair product in the world market can be accomplished by entering markets like Russia. Russia is the largest country in the world, and sales have grown on average of 57% for US companies as oppose to other BRIC countries. Russia is the world’s 6th largest economy. By penetrating the Russian market, we benefit from high profits to better our company and get closer to completing our mission. The strategies we will be using to enter the Russian market are as following:

Marketing Plan – Our Company will market products using many different sources. We will use online sites, social media, online video ant TV, and emails. Our website will be user friendly and everything would be accessible with search capabilities or browsing preferences. We plan to introduce our products in the summer time which is when people take the most showers and their hairs get mostly sweaty and in need to wash. One of the major places to sell and use our products is in hair salons. We plan to market contracts with local salons to use and sell our products. We will be targeting men, women, and kids. This will enable us to have a bigger market dependency. Being that Russia has the highest growth rate of US companies amongst the BRIC countries, this gives our company confidence to go ahead and invest in Russia.

Distribution Plan – We will give our customers many options to purchase our products. They can visit their local stores and purchase, or go online and purchase from the comfort of their home. Same day shipping would be guarantee.

References

Michigan State University, G. E. (2015). Country commercial guide. Retrieved from http://globaledge.msu.edu/mpi

History Today. (September 2007). Russia’s Climate and Geography. Retrieved from http://www.historytoday.com/john-etty/russia%E2%80%99s-climate-and-geography

Geography of Russia .Retrieved from http://novaonline.nvcc.edu/eli/evans/his241/notes/geography/geography.html