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ROMANIAN CONSUMER BEHAVIOUR

ROMANIAN CONSUMER BEHAVIOUR. Dr. Mariana Nicolae, The Academy of Economic Studies from Bucharest School of International Business & Economics 17 April, 2007, Nitra. Overview. Introduction General information What makes Romanians different?! The Romanian Economy/Market Legal environment

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ROMANIAN CONSUMER BEHAVIOUR

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  1. ROMANIAN CONSUMER BEHAVIOUR Dr. Mariana Nicolae, The Academy of Economic Studies from Bucharest School of International Business & Economics 17 April, 2007, Nitra

  2. Overview • Introduction • General information • What makes Romanians different?! • The Romanian Economy/Market • Legal environment • Culture: Romanian highlights • Romanian Consumer Behaviour • Romanian consumer categories • Tourism & the Romanian tourism consumers • Questions

  3. Introduction • first decade of the 21st century - the majority of world’s total trade growth will occur in the emerging markets: • development of infrastructure • opportunities for foreign investors • spectacular growth of the consumer market. • Dept of Commerce of the USA predicts that BEMs will be a considerable import market by 2010

  4. Introduction – ctd. • Still common stereotypes: • the market is not ready for this • the people are too poor • A London securities firm  in developing countries • a person earning $250/yr can afford Gillette razors, • at $1,000 s/he can become a Sony television owner. • at $10,000 income - a Nissan or Volkswagen could be possible. • Whirlpool estimates: • in Eastern Europe a family earning: • $1,000/yr can afford a refrigerator and • $2,000 they can buy an automatic washer as well.

  5. GeneralInformation

  6. General Information • Second largest and most populous country in Central and Eastern Europe after Poland • 238,391 sq. km, comparable to Britain's and Ghana's, which makes it rank 80th in the world and 13th in Europe. • Capital: Bucharest • Population: 21,680,976 (2003) • NATO member (2004); EU member (2007). • President + Parliament (485 members): Senate + Deputy Chamber • GOVERNMENT. Republic with two Houses of Parliament. The President, Senators and Deputies are elected through universal, equal, direct, secret and freely expressed vote.

  7. General Information Population structure by nationalities Population structure by religion Language: Romanian (Latin based) Literacy rate: 98%

  8. What makes Romanians different?!? • Current complaint of the media: Romania has turned into a country of consumers • What is the consumer profile of Romanians? • Who are the Romanians?

  9. What makes Romanians different?!?-ctd. • A party statement in 1964 confirmed Romania's independent policies, including closer ties with the West. • August 20, 1968, Romania - the only country of the Warsaw Pact not to invade Czechoslovakia. • an unofficial ally of the West, Ceausescu received lavish praise from U.S. presidents Johnson, Nixon, and Carter. Carter called him a freedom fighter. • the only Eastern European country to recognize both Israel and Egypt, Ceausescu helped to arrange Egyptian President Anwar al-Sadat's historic peacemaking visit to Israel in 1977.

  10. What makes Romanians different?!?-ctd. • 1971 Ceausescu visited the People's Republic of China (an unprecedented step within the Soviet bloc) • 1972 Romania joined the International Monetary Fund and the World Bank • 1975 the US granted Romania most-favored-nation status • 1976 a ten-year economic pact was signed by the two countries • 1976 signed the first formal pact (on textiles) between the European Economic Community and an Eastern European nation • 1980 Ceausescu refused to endorse the Soviet invasion of Afghanistan.

  11. The Romanian Economy • Industries:textiles and footwear, light machinery and auto assembly, mining, timber, construction materials, metallurgy, chemicals, food processing, petroleum refining • Agriculture - products:wheat, corn, sugar beets, sunflower seed, potatoes, grapes; eggs, sheep • Currency:leu (RON) – • 1 RON = 0,29 EUR • 1 EUR = 3.34 RON

  12. Economy – CPI & earningsIn comparison with January 2006, net nominal average earning increased by 11.1%, while real earning index registered a growth of 6.8%.

  13. Legal Environment • Public and Civil Law. • French Type Legal System. • No juries in the courtroom. • The sentences do not add (the biggest sentence takes effect). • Taxation: No income tax return; VAT (value added tax). • Medical services: free for population.

  14. Culture • A salad? • Dracula country? • Where East & West meet?

  15. Romanian highlights • Amazing Romania: http://www.youtube.com/watch?v=YEdPoPkUsYc • http://www.youtube.com/watch?v=mQ7jp04V2iQ&mode=related&search= • http://www.youtube.com/watch?v=RwVxrIO_A9s • Dacia Logan

  16. Romanian consumer behaviour (RCB) • buying & consumption behaviour have changed a lot: • queues to buy products at the old price • consumers are now psychologically ready to realize that price growth is almost a daily problem • but RCB is still different from the consumer behaviour in very developed countries  marketing surveys about the Romanian consumers behaviour are very important especially for (multinational) companies which want to introduce themselves on the Romanian market.

  17. RCB – ctd. • after 1989 a buying and consuming behaviour totally different from the one previously existing : • deterioration of the economic and social climate of Romania: • depreciation of the national currency • uncertainty of the jobs • rapid expansion of the underground economy • inflation and unemployment growth and • use of an outdated technology • an old and unproductive management in the industry sector

  18. RCB – ctd. • In the 1990s the opening of the borders facilitated an intense traffic of products: firstly at the Hungarian, ex-Yugoslav and Bulgarian borders, and afterwards with rather far away countries like Turkey, Poland, Greece as well as some countries from the Near East and Asia. • The wholesale syndrome  “en-gross” warehouses which sold mostly Turkish, Chinese and Arab products. • The “boutique” syndrome  small street-vendors • Luxury shops were established by some Western entrepreneurs • Romanians quickly adapted to the newly created situation

  19. RCB – ctd. • in 2000: • 70% Romanians preferred imported cigarettes, cosmetics, perfumes, electronic and electric home appliances • 56% Romanians preferred foreign cars. • 46% Romanians preferred imported electric goods. • 43% Romanians preferred foreign detergents. • 40% Romanians preferred foreign paints and polishes. • 31% Romanians preferred foreign medicine. But: • 71% Romanians preferred domestically produced crafts • 57% Romanians preferred domestically produced furniture • 52% Romanians preferred domestically produced food products, oil products and financial and banking services.

  20. Romanian consumer categories the Romanian population was divided into 5 large categories [buying power (the regional GDP), life styles, the consumption of products (brands) and media]: • Active professionals: 14.4% - an active life, career-oriented to gain a better social status. Image is very important: goods and services according to their status. • Sophisticated consumers: 2.6% - successful people, recognized as such by the others, self-confident, display a luxurious life style. • Passive traditionalists: 26.5% - conservatives by definition, apply traditional values in their own family, nostalgic, distrustful when it comes to new, innovative things; • Sedentary family people: 20% - spend most of their time and activities in the family, often in front of the TV, value the security of the group, tend to buy quality products, but also compromise, especially when it comes to price; • Resignedly nostalgic people: 36.5% - admirers of the past, do nothing to change the present state of facts.

  21. Romanian consumer categories – ctd. • only the first two categories and the sedentary family people can actually be taken into account for purchasing brand products, especially from the EU, that is approx. 37% of the total number of buyers. Inside the 5 categories there is stratification according to income: • only 2% have a high monthly income (general managers, heads of departments, owners, managers) • 5% have an average monthly income (executive directors, professionals with post-academic studies and specialization abroad, free-lancers) • approx. 10% are people with high education, working for private IT firms, consultants, doctors, lawyers, notaries who have a good, but not very high monthly income.

  22. Romanian consumer categories – ctd. • the vast majority of Romanians are well aware of the quality of a product or service, their origin and the trademark under which they are sold. • a survey carried on by Daedalus Consulting (September 2003) among Romanian consumers showed the following patterns: • they placed Germany, Japan and USA among their preferences for products that include technology; • Italy, France, Germany and USA for clothing and footwear; • USA, Japan, Germany, Holland for electronic and electrodomestic appliances; • Germany for cars and beer, • France for cosmetics and wines, • Russia for vodka, • Holland for dairy products, • USA for cigarettes and • Brazil & Columbia for coffee. • The Romanians remained faithful to the domestic fruit and vegetables (1st place), dairy (2nd place), some spirits (tuica, palinca) and medicine (3rd place).

  23. Why Tourism? • Tourism is one of the most efficient tool in inter/cultural development • Tourism is a huge generator of business revenue, accountable in 2004 for revenues of USD 476 billion in the world economy and is the dream of less developed countries to strike gold • The European Commission called for an EU-wide drive to enhance the economic, social and environmental sustainability of European tourism ever since 2003. • http://europa.eu.int/comm/enterprise/services/tourism/policy-areas/eu_schemes.htm - EU SUPPORT FOR TOURISM ENTERPRISES AND TOURIST DESTINATIONS - AN INTERNET GUIDE • CEE tourism - at present a niche for the people of the region  we know more about Japan and China than about Slovakia, Romania, Hungary or Bulgaria

  24. The Romanian tourist behaviour • In the 1990’s Romanians were not good holiday-planners: they were going to the travel agencies to look for offers at the very last minute. • In 2005-2006 many travel agencies confirm the fact that 50 - 70% of the New Year’s offers, for example, are sold since November every year. • Romanian tourists expectations have changed: there is now demand for higher quality services, tourist assistance and cultural programs, in comparison with the 90’s when they were looking for very low prices and afterwards they were unsatisfied with the conditions. • Romanian tourists have raised their expectations due also to increased travelling abroad. • According to the hospitality industry professionals one of the biggest problems of Romanian tourism is lack of trained personnel and low standards of infrastructure. • Romanian tourists prefer to spend their holidays abroad.

  25. Questions? • Thank you!

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