The development of information and communication technologies, the growth of the internet and online consumption, tense geopolitical situations, and sanctions are reshaping the informational, content, and communication environments. This leads to changes in the overall market dynamics as some companies close down, others undergo rebranding, and new ones emerge.
Against the backdrop of geopolitical events, four key trends continue to characterize the modern business situation:
• Changes in consumer behavior;
• Changes in revenue models;
• Changes in working methods;
• Acceleration of digitization.1
All of this necessitates and has required market participants to adapt all business processes to the new reality in the Russian market.
Following the commencement of military operations in Ukraine, the United States, the European Union, and their allies implemented sanctions targeting various sectors of the Russian economy, enterprises, and businessmen.2 Since the beginning of March 2022, approximately 3,000 foreign companies have suspended their operations in Russia. These companies are devising intricate schemes aimed at preserving not only their reputation in the global community but also their established channels of distribution. The contemporary situation surrounding Russia is virtually unprecedented. A comparison can be drawn with Iran, which has long been subjected to sanctions; however, disparities exist, as noted by ONE STORY partner Olga Sumishevskaya3 4: differing levels of maturity and integration into global processes at the time of sanction imposition.
The current scale of restrictions imposed on Russia surpasses all preceding global experiences, as affirmed by Dmitry Desyatnichenko.4 It is evident that until the sanctions are explicitly and legally lifted, major international corporations will not return to the country. Nonetheless, conditions are artificially engineered to compel a more active utilization of the country's internal resources, the pursuit of new allies and partners, and the establishment of viable schemes and mechanisms to circumvent sanction constraints.
Anna Buylakova, an analyst at FG Finam, notes that foreign companies that left the Russian market due to pressure from shareholders and political and social communities in their home countries, may decide to return if they see that their actions will not be condemned.5 6 7 The Russian market has been attractive to Western businesses due to its growth potential. For many companies, the income from their activities in Russia has not been significant compared to other regions, and a premature return to Russia could put revenues from their main markets at risk without ensuring adequate profits. In addition to growth potential, foreign companies may also want to return because of lost investments. When they entered Russia, they invested in infrastructure, logistics, and other fundamental assets, and although fewer specific investments have been made, they have laid the foundation for future growth. For example, McDonald's, when it entered the Russian market, hired agronomists to help farmers with growing new potato varieties and livestock specialists.6,7
As Natalia Belyakova, partner at the HSE Center for Strategic Consulting, highlights8, once the risks of facing significant backlash in European markets diminish, Western companies are expected to initiate their comeback to the Russian market. Currently, corporations are meticulously examining potential strategies and exploring diverse operational avenues within the country. The fact that many companies are persisting in compensating their employees signals ongoing interest in the Russian market. It is probable that global enterprises with steadfast long-term interests will lead the way in re-establishing their presence in Russia.9 Therefore, it can be inferred that departed brands that wish to return, if such a scenario occurs, may face a dilemma given the increasing competition each year. They may consider launching their business alongside rebranded competitors, taking over (buying back) existing brands, or forming partnerships.
...
Rebranding is a multifaceted undertaking that necessitates planning and meticulous execution. In this diploma thesis were identified key loyalty factors valued by customers of Starbucks (now known as STARS COFFEE) and McDonald's (now operating as Vkusno i Tochka/Tasty & That's It) chains in Russia, both prior to and following their rebranding endeavors.
Based on a comprehensive analysis of survey data and in-depth interviews, this research has yielded important insights into consumer perceptions and how rebranding affects customer loyalty. The results show that rebranding carries risks if core values and quality are neglected, even while it might revitalize a brand's image and draw in new customers.
The research highlighted that, regardless of brand changes, factors like product quality, pricing, and service continue to be crucial to retaining customers. Significant roles are also played by visual identity and range of services, particularly in maintaining client attention and guaranteeing a smooth brand transition. It has been shown that secondary and tertiary factors including brand heritage, advertising style, and effective communication strengthen and support the core drivers of loyalty.
Through practical implications for companies planning comparable initiatives, this study highlights the dynamics of rebranding in the Russian market. Businesses may more successfully manage the challenges of rebranding by emphasizing how important it is to maintain key values and guarantee consistency in quality and service. To help companies with strategic decision-making and retention efforts, the suggested model offers a structured framework of estimating and prioritizing loyalty factors.
In summary, rebranding is a strategic initiative requiring an extensive knowledge of market dynamics and customer expectations, not just a name or logo change. In a competitive market, companies may achieve long-term success and increase consumer loyalty by focusing on the key factors defined in this thesis.
