Russian-American Market

Will Snob Magazine Shut Down? [Updated]

2011-11-19T12:24:00.001-08:00

Vladimir Yakovlev, the prolific founder and EIC of Snob magazine, was abruptly fired by the magazine's owner, Onexim Group. (Onexim is controlled by the same Mikhail Prokhorov who owns NJ Nets). Both Yakovlev and Onexim state that Yakovlev's dismissal is related to the mismatch of the parties' views on development of the project. Mismatch my ass!

A well-placed source close to Onexim, who requested anonymity because he was not authorized to discuss the situation in public (as they'd say in a serious media), said that Yakovlev was laid off because he effectively blew $100 million that Prokhorov invested in the project, without showing even remote signs of profit and breaking even. Do you think that's a fair ground for dismissal? Yeah, we say. For dismissal and torture.

Now, with Yakovlev gone, what's going to happen to Snob, both in Moscow in the US, where the media group opened an office last year, threw a $500,000 kick-off party and sold about 500 subscriptions?

Prokhorov will probably try to sell Snob -- that has been confirmed by the new CEO, Mr. Lovrukhin, who also runs RBC media group. The cash sale is unlikely, because nobody in the right state of mind will pay even 10% of the apparent $100 million price tag for the project, so the sale would not make sense for Onexim. Another option is to merge Snob with another media company, such as TV Rain, and demand a $100 million valuation.

But once a decent media manager is in charge of Snob, she will have to cut costs. That's when, we think, Snob's US and UK operations will get the axe.

Check back here in a month or so and we'll have an update.

[UPDATE 1]
Here is the treatment of the issue in the Financial Times.

Russians Are Buying Luxury Homes In the US, Now More Than Ever

2011-11-19T12:08:00.001-08:00

Cash-rich Russians are responsible for some of the record-breaking luxury homes purchases lately, and more are coming, so you, our friendly realtor, should learn some Russian. Bistro! (That means "fast").

BusinessWeek reports: Russians and other overseas shoppers are buying some of the priciest homes in America as the broader housing market slumps and a weak dollar makes U.S. property more of a bargain, according to real estate brokers who handle luxury properties. International buyers purchased an estimated $82 billion worth of U.S. homes in the 12 months ended on Mar. 31, a 24 percent increase from the previous 12 months, the National Association of Realtors reported in May. Jed Smith, managing director of quantitative research for the association, says the number of overseas buyers for multimillion-dollar homes is increasing, helped by the rise of emerging markets such as Russia, Brazil, China, and India.

It is clear now that more apartment-hungry Moscovites will come to New York in 2012. Not only they probably expect an economic armageddon in their country after the presidential elections (you know, Putin is back in power, campaign promises exhaust the country's budget, Russians start protesting, the hell opens up), but also they have an inherent distrust in Euro. Therefore, they will need some decent place to park their money, and what place might that be? You are correct if you think that it's the area of Manhattan where Carrie Bradshaw lived.

Russians are coming...again.

2006-09-24T15:27:00.001-07:00

"FMP employs about 300 people and is among a growing number of enterprises from Russia and other former Soviet Union countries looking for customers and partners in America," writes Pitsburg Tribune-Review in a recent article about Russian-American businessmen reinventing US as a business partner.

PT-R writes more...

New Slavs in the New York Times

2005-10-24T13:44:00.000-07:00

The New York Times in the article "New Slavs" talk about the latest trend in New York: Russian theme.

http://prgroup.info/pressc16.html

Appendix 2. Russiaphilia

2005-09-17T15:55:00.000-07:00

Russian-American market is certainly underdeveloped, yet it enjoys a very loyal following from Americans who by some sort of way feel related to the Russian culture. They speak perfect Russian with slight and amusing accent and they occupy the most important positions in the country, ranging from Secretary of State to Edtior of The New York Times.

http://nycslav.blogspot.com/

§ 3. Back to the Roots

2005-09-11T14:36:00.000-07:00

What happens to Russian-speakers after they come the US? Do they become Americanized very soon or they mostly remain within the Immigrant subculture and can be reached by Russian-language media?

Well, a little bit of both: Russian immigrants are proven to be fast learners. In fact, more than 75% of the immigrants (both legal and illegal) hold a university degree. They quickly become part of the American social and media landscape and many of them tend to distant themselves from the Russian immigrant community. Or at least it used to be the case.

At this moment we witness a dramatic shift in the attitudes of new immigrants towards Russian identity. They tend to hold on to it, and even previous generations of immigrants, those who came here in the nineties and those smoothly became Americans, tend to rediscover Russian identity and its communications and culture derivatives, such as books, music, media, cuisines and, most importantly, language.

Actually, for the marketing purposes, the Russian-speaking population in the US is growing not only because of in-flow of immigrants, but also because of increasing participation of former immigrants in the community.

§ 2.2. Magic Appendix (How many Russians read Harry Potter?)

2005-07-09T23:23:00.000-07:00

Russians are considered one of the most reading nations in the world. Due to lack of entertainment during pre-capitalism times, books (as well as some films and songs) became the archetypes of the community.

One of the recent "must read" books, among with Boris Akunin's collection of detective stories about charming 19th century detective, there is Harry Potter.

Press Release Group conducted a survey on how many Russian-Americans will read the new Harry Potter installment.

July 16, 2005 might become the biggest book-selling day in history, as the seventh installment of Harry Potter series hits the stores. Scholastic, the US publisher of the series, is set to deliver more than ten million copies to the bookstores. More than 75% of the books might be sold within the first 24 hours.

Harry Potter Books are very popular among Russian-speakers. Its Russian translation broke all records. However, Russian-Americans are also reading Harry Potter, in Russian and in English. Study conducted by Press Release Group in 2004 has showed that more than 40% of the Russian-speakers have read at least one Harry Potter book.

A recent PR Group survey asked Russian-American respondents whether they intend to read the seventh book in Harry Potter series, “Harry Potter and the Half-blood Prince”.

27% of respondents indicated that they will most definitely buy and read the book. 16% said that they are likely to buy the book as a present for children, but are not planning on reading it. 12% said that they will wait for the Russian translation of the book, which is likely to follow the English release. 45% of the respondents indicated that right now they don’t plan on buying the book.

The study has been conducted by surveys of randomly selected individuals within demographic proportions according to the Ethnic Population Estimator Index. The sample size of 934 gives a standard error of 4%. For more information on Russian-American market, please visit www.prgroup.info.

§ 2. Are Russian-speakers all the same?

2005-06-17T13:25:00.000-07:00

All customers are alike and all customers are different. There are aspects in which all consumers across all ethnic groups are the same. They all require outstanding service, for one. And it is imperative that the product or service that is being marketed should be superior. However, the subject of this chapter is to identify sub-groups within the broad segment.

There is a Russian joke: Three Japanese tourists get into a cramped elevator at the hotel in Moscow. There are already three other people in that elevator: a very big Ukrainian steel factory worker, tiny Moscow accountant and an older alcoholic. The Japanese tourists are dressed exactly the same: white shirts, black ties, black trousers and black shiny shoes. They look exactly the same – short, thin and smiling. When the elevator reaches the top floor, Russians come out of it and say to each other:

- Those Japanese tourists are so alike.

Japanese tourists, coming out of the elevator, say to each other:

- Those Russians, they are so alike. How can they tell each other apart?!

The joke points on a very important marketing challenge: How to identify your target market in a group which seems very uniform? Russian-Americans are in fact a very uniform market, they share common language, cultural values, literature preferences and sport likes. (For more on Russian-American archetypes look in the forthcoming Russian-American Cultural Values Chapter). However, they are also very different in many ways: Age groups differ greatly among each other, waves of immigration, income groups and education also provide frameworks for differentiation.

There are four major distinctive segments within the Russian-American market:

1. People who were born before World War II (Before 1940).(Same age group as fathers and mothers of baby boomers in the US).
2. People who were born in the 1950-60s (Same age group as baby boomers)
3. People who were born in the 1970s (Generation X) and who immigrated in the US when they were in their teens
4. Same age group, but who immigrated in the US in the 1990s
5. People who were born in the 1980s (Generation Y)

To follow: § 2.1. Generation Gap in Russian.

§ 1.2. Statistical Appendix: Russian-American Spending

2005-06-16T12:18:00.000-07:00

Russian-Americans, as many other ethnic communities in the US, tend to congregate in certain cities. There are cities and towns, which have large Hispanic population, like Los Angeles, or large Chinese population, like San Francisco. New York is home to the largest Russian-speaking community in the US – approximately 1.5 million people in the Tri-State Area and 560,000 in New York City.

There are reasons to that: See Waves of Immigration. See § 3 (forthcoming)

According to the most recent US Census data, total population of New York City is 7.8 million. Russian-speakers constitute approximately 6% of the city residents. However, it is estimated by Press Release Group (for Methods see methodology appendix), that Russian-speakers account for 10% of net retail spending. Why is that?

First of all, Russian-speakers have more money to spend. They have the highest income among all ethnic groups – $49,000 per year, vs. $19,000 per year of African-Americans and $23,000 among Hispanics. (for more details on spending trends see forthcoming chapters). Also, Russian-speakers have the highest marginal propensity to spend – that is that they save even less than Americans, who are known as big spenders. “You live only once” – says a Russian proverb and many Russian-speakers go by it.

§ 1.1. Statistical Suppliment: Immigration to the US

2005-06-15T19:11:00.000-07:00

In the last five years immigration to the US from Russia and other Russian-speaking countries has increased substantially, which might come as a surpise given that economic conditions and quality of life in Russia are on the rise. However, the change in the social and economic structure of the new wave of immigration provides the explanation - disposable Income of immigrants who
arrived in the last five years is on the average 64% higher than US average.

§ 1. Why Russian-American market?

2005-06-15T15:46:00.000-07:00

There are approximately 5.5 million Russian-speakers in the Unites States. It is not much compared with 270-million population of the country. It is not even that much when compared with the Hispanic community, the largest ethnic community in the United States. So why should companies and advertisers look into the Russian-American market?

Maybe they should not. At least, some corporations should not. For example, a local service company operating in the area where few Russian-speakers reside. Or an advanced high-tech production company with know-how and high demand for its unique product. But what about an average large US corporation – why should it try to approach the Russian-American community?

Few global companies have an answer to this question. Western Union, leading world’s money transfer company, knows that Russian-Americans are an excellent market segment, because they are very family-oriented and send money from the US back to their home counties and often rely on Western Union because their relatives don’t have bank accounts. Daimler-Chrysler, the maker of Mercedes cars, considers Russian-American market a primary target because Russians are very brand-conscious and purchase Mercedes vehicles without thinking twice. Tiffany and Co, one of the leading world’s upscale jewelry makers, knows that Russian tourists come to their flagship store in New York City to buy gifts to take home and that is why Tiffany always has Russian-speaking sales people.

The reason to approach the Russian-Americans is that they represent a big, often untapped, market with high purchasing power, high propensity to consume and distinctive ethnic properties which often require consumption of certain goods and services, like alcoholic beverages, or brand-name clothing, or expensive jewelry.

When companies make a decision on whether to consider the Russian-American market, a good tool for making a decision could be a simple calculation. For example, Cingular Wireless, the biggest US wireless services provider, as of June 2005 has 50 million subscribers. Would the Russian-American market make a difference? The shareholders would not hesitate for long to answer – yes – if all Russian-speakers residing in the US bought a service from Singular, its revenues would increase 10% or even more, given the fact that Russian-speakers tend to spend more time on the phone than any other ethnic group, including Hispanics.

If every Russian-speaking family would pre-order “Harry Potter and the half-blood prince”, the sixth volume in the J.K. Rowling’s hugely successful Potter series on Amazon.com, the pre-order sales record would increase tree-fold from 500,000 to almost 2,000.000.

To follow:

Chapter 2: How many Russian-Americans, or “Skolko”?
Chapter 3: Do you speak English?