Communication Strategies

Executive Summary
This marketing plan analyzes the Russian market and how Soup Plantation can effectively enter into the market. The Russian hotels and motels industry is one of the most competitive in Europe and is mainly driven by the local consumers. The industry has experienced rapid growth since 2004 and is expected to maintain the momentum through 2013. The objective of the marketing plan is to increase target customers through promotion, increase revenues, and open up more chains.  Since Russian market is labor intensive it would be advisable for the restaurant to enter into franchise and acquisition to reduce the cost of market entry. The restaurant will use below and above the line marketing strategies including web strategies. The report concludes that there is a high likelihood of the restaurant prospering in the Russian market.

Situation Analysis
Russia is one of the most attractive markets in Europe.  It is a transcontinental country that occupies both Europe and Asia and has an attractive market compared to other European countries with comparative population since Russia is an emerging market that presents a lot of opportunities.  With a population of more than 140,041,247 people and a vibrant growing liberalized market that is emerging from era of communism, Russia presents an opportunity for any business. The following is the SWOT analysis of Russia

Strengths
Russia is an emerging democratic political regime where the government has overwhelming support. The country had political stability that provides enabling business environment.

Russia has experienced strong economic growth over the last few decades with the economy driven by natural resources and service industry. Russia has maintain surplus current account, very little foreign debt, and excess reserve which provides financial stability.

The period after 1998 economic crisis was followed by economic reforms which reduced personal and business taxes to the lowest in Europe, making Russia the most attractive investment destination in Europe.
Russia has a large labor force of 75.1 million with literacy level standing above 99 for the whole population.
The country has a large market with more than 140,041,247 people.

Weaknesses
Russia is weighed down by high levels of corruption in the government and bureaucracy in business registration.

The country economy is much dependant on oil which account for 37 of the GDP

The country has done less to restore its crumbling infrastructure
There is systematic political activism that is directed towards foreign firms that greatly limits the power of foreign investors in the market

Opportunities
As an emerging market, Russia has a growing domestic market that has many investment opportunities compared to other countries in Europe

Government has set aside more than US1 trillion to overhaul the infrastructure and modernize business environment which is likely to spur economic growth and create enabling business environment.

Russia has been selected to host 2014 Winter Olympic and this will boost tourism and hospitality industry.

Threat
Russia is susceptible to terrorist attacks that may destabilize businesses environment. In 2009, Nazran attack that cost lives of 21 people and another that derailed Express train to Moscow has been a big blow to investors confidence.

Russia has long held political and business conflict with Georgia  and European neighbors over gas supply threatens business environment

Unlike other developed countries in Europe, Russia has an emerging a growing hospitality and tourism industry. The hotels and motels sector has been growing at a higher rate compared to growth in other countries in Europe. For example between 2004 and 2008, Russian hotels and motels sector experienced highest growth in Europe.

The following is a PEST Analysis of Russian hotel and motels industry

Political
Strong public support of Russian parliamentary government has provided growth in the business environment.  The business environment has stabilized over a long period of time, with less political upheavals, and this has spurred growth in hotel and motels sector.  There are not government barriers for entry into the industry although high handedness of the executive poses a threat to new investor in the industry. However, lack of government transparency and high levels of corruption have inhibited growth in the industry, although this is cited in specific cases only rather than for the whole industry. Russian government is committed to invest more than US1 trillion to overhaul the business environment and this will present opportunities for investors in the industry.

Economical
Russia strong economic growth with a GDP that reached 2.117 trillion in 2009 has corresponded to growth in hotels and motels industry. Between 2004 and 2008, the industry recorded a CAGR of 12.47. This was the highest growth in the region compared to other countries like France and Germany which recorded 2.3 and 2.4 growth respectively in the same period.  In 2008, the industrial turnover was 10.3 billion.  The industry is expected to growth by 12.4 between 2008 and 2013 and the total turnover by 2013 will be 18.5 billion.  These figures confirm the vigor for growth in Russian hotels and motels industry and projected future growth presents more opportunities for investors. Furthermore, compared to other countries, Russia industry can be considered young and in growth phase presenting more opportunities for investors.

Social
Russia is an expansive country. The country has a large population of 140,041,247 people which represents a large market base.  The country has diverse social cultures which have a lot of influence on the food culture.  Research shows that Russian people are major consumers of service from hospitality industry. Due to expansiveness of the country, people are not able to cover distance from one city to another in one day and most have to seek hotel services in between their journeys. In 2008, Russian domestic consumers accounted for 64.6 of the total industrial revenues. This means that domestic consumers are major drivers of the industry. On the other hand, domestic business consumers accounted for 18.7 while international consumers including tourist accounted for 16.7 of total industrial revenues. The market is highly segmented according to social demographics with many hotels that are serving the upper social strata but research identifies a gap in the low and middle strata which is not well served.

Technical
Like other industries, hotels and motels industry in Russia is influenced by modern technology. Gradually, there has been increased introduction of modern production technologies which is become a competitive edge in the industry.  Most important, the industry has been influenced by internet technology as it is becoming one of the important marketing strategies. Currently, Russia has more than 45.25 million internet users.

Key marketing objectives
To reach more than 10 million potential customers  within the first 12 months through promotion which will use US200,000

To increase sales turnover to US 5 million in the first 12 months
To increase number of customers to 1 million within the first 12 months
To open and operate 10 hotel chain within the first 24 months

Marketing strategy
Russia is an expansive country which means the market entry strategy used and the marketing strategy must be suitable to cover large area. Most important, the market entry strategy must be carefully chosen to assist in penetrating large area of the country.

The hotels and motels industry in Russia can be considered to be capital intensive.  This implies that to have a successive market entry, a company requires to have large capital outlay.  Datamonitor data shows that for successful venture into the market, a company will be required to inject large amount of capital in building, dcor, laying down ICT infrastructure, and in others areas which means one must have large capital to venture into Russian market. Due to bureaucracy and legal structure, a company will require hiring layers and other professionals when purchasing properties and in other process of development. Considering the above conditions, the most appropriate strategy for the business to venture into Russian market would be through use of franchising and acquisitions. This would ensure that the business operate under a laid down structure and with an already existing customer base, the business would not incur huge expenses to venture into the market.

Marketing mix

Product
Soup Plantation offers varied in menu items.  The restaurant offers a variety of salads, soups, pasta dishes and others. However, the company must first understand the Russian market and tailor their products to Russian market. Food preferences for Americans are quite different from that of Russian and hence intensive market research would have to be carried out on Russian foods in order to come up with a menu that is really Russian but with an American touch.

Price
To succeed in the market, the restaurant will be required to use different pricing strategies to ensure that it attracts and retains customers.  It is recommended that since Russia is a new territory the restaurant use penetration pricing. In this case, the restaurant will set artificially low the prices of menu items for the acquired or franchised restaurants to make customers feel presence of the new company. Later on, when the company acquires customers, it can use economy pricing where it will keep production and marketing expenses low to serve the low and middle target market.

Place
Due to expansiveness of the country, the restaurant will be required to set up different chains distributed in major town. The hotel is mainly targeting domestic travelers who are the main drivers of the industry but it will also target tourists. Therefore, the restaurant will be required to set up operation in different parts of the country, especially in major towns. It is recommended that the restaurant base its operation in Moscow but meanwhile have restaurant chains in major towns. Within the first 24 months, the restaurant should have about 10 restaurant chains in all major towns of Russia.

Promotion
The restaurant targets to use US200,000 within first year on promotion. The restaurant will use different marketing strategies. It will employ below and above   the line marketing strategies.  This will include advertising the mass media, billboards, discount coupons, off street sampling, and others like personal selling using emails, letters, and sales agent. Most important, the restaurant will have to employ web based strategies. Interne penetration is quite high in Russia with more than 45.25 million Internet users.  The company will set up a website in Russia language through which customers can make orders and book reservation for dinners.

Recommendations
Compared to most countries in Europe, Russia presents a unique investment opportunity for hotels and restaurants. It has a young growing industry that presents a lot of investment opportunities. The country economy is growing and the hotel industry corresponds to this growth.   Future forecasts show that the industry will record increased growth since it is yet to reach saturation.  This report would recommend Soap Plantation to take up the investment opportunity in Russia. Through franchising or acquisition, the restaurant would incur less market entry expenses but it will have to commit huge capital in promotion.