Marketing Strategies in Changed Circumstances: Observation from Farmers in NovosibirskOblast', Russia

Abstract

Recent changes in the food distribution and marketing systems in Russia are described. Findings from a survey of the marketing strategies used by directors of joint-stock companies (JSC) and private farmers in Novosibirsk oblast' to cope with these changes are presented and compared. These farmers have adopted different strategies. JSC directors withdrew from value-adding enterprises (VAE) complaining of poorly regulated markets — which remove incentives to create product distinctiveness — problems with bad debts, unstable markets and low profitability. As a result many JSCs have reverted to their core production activities, strategies that suggest they are prioritising longevity rather than profit maximisation. However, the larger private farmers, later entrants into farming and food production, had no apparent complaints in any of these areas. Unlike the JSC directors, they did not welcome more government intervention but wanted a stable macroeconomic climate within which to conduct business. To re-couple JSC directors with VAE and markets, the Russian authorities need to tighten regulation over competition, branding and food quality, and provide better access to market information. These changes will let the federal food corporations reduce their role as farmers, able to extract full benefit from investments made to create distinction, will develop their products and vertically integrate along the food chain.