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A Breakdown of The Romanian Consumer Market

Much the same way in which politicians are not the only problem in Romania, because there are voters on the other side of that coin, the businesses that thrive despite their sub-par products or services tend to survive only because they continue to retain customers who, in their ignorance, sustain a sub-standard offering.

Romanian businesses have come a long way over the past several years. Owners are now looking outwards and willing to invest (a bit) in branding and marketing, they make an attempt at differentiation beyond the price point, and they at least pretend to pay lip service to the notion of customer service. The resulting increase in competition has left the businesses who do not adapt in an an existential limbo, with an archaic business model focused on being everything to everyone but in reality being nothing to nobody.

I say that these business are in a limbo because they continue to exist while, in developed markets, most would have died out long ago. We can credit their continued existence to the unsophisticated Romanian consumer profile, which finds itself in a long transition period that's bound to last another ten or so years. Maybe longer.

To clarify, my points are based on general observation and they are not specific to any particular industry. But this outlook is applicable across the board in Romania. From corner stores, to restaurants, real estate companies, private security firms, manufacturers, all the way up to large national companies and banks. This chaotic and anachronistic approach is, all too often, 'the way of doing business' in Romania. The Romanian consumer has a lot to do with it.

A recent article, published by Romanian sport magazine, Lead.ro, tackles the issue of sponsorship in Romanian sports with a view to explain why local teams are unable to attract strong sponsors. The article provides an analysis of Romania's five main consumer groups and their roles as catalysts of market trends. In examining these groups' behavioural tendencies, it becomes more apparent how each of these foster business relationships that are at times more adversarial than collaborative in nature, given the mismatch between expectation and outcome across these various segments and the businesses they come across.

The Lost in Transition group makes up about a fifth of the Romanian consumer market. These are people who live as most Romanians did 20 or 30, even 50 years ago. In addition to their limited social and economic context, they tend to have very little disposable income and only basic education. They come from rural or working class backgrounds and they rarely adopt new trends or technologies. They like simple, familiar, experiences and have low expectations with regards to quality or service. They spend much of their leisure time watching TV.

This is the type of person you never see in a city-center restaurant, at a cultural event, and perhaps not even at the mall. It is the kind of person who is mostly invisible to the younger, savvy, urban dwellers, and is therefore unlikely to matter to marketers except to those who specialize in selling staple products and basic household goods.

The Conservatives come next. These types of consumers are not necessarily limited in life experience and circumstance, but, much like those who are lost in transition, they are unlikely to adapt to new trends and technologies. In fact, they may even display resistance to change. They stick to the brands they know, are highly cynical of the alternatives, and are unwilling to spend their disposable income. They are rigid in their opinions, values, and traditions. They put an accent on the ethics of work and discipline and are not impressed by innovation or the opinions of specialists in new fields. They prefer things, 'as they've always been' and they, too, spend much of their leisure time watching television.

These types of people tend to be in their 50s and above, mostly our parents' or grandparents' generation. They've grown and formed themselves as adults and professionals under Ceausescu. They may not have enjoyed communism but they don't think much of the free market either. In my view they are also 'lost' as far as marketers are concerned. They are not typically well-off, but, even if they are, they are stingy with their money and unlikely to spend it on new and interesting products or experiences

About the third group, the author say the following, "Family is important for all Romanians, but there is one consumer group which defines itself through their attachment to family." The family-oriented consumer type is defined by the familial moments which drive many of their spending habits; birthdays, baptisms, anniversaries, and any other moment that tends to bring the clan together. They are full of life, embrace both the old and the new, and do all that they can for their children, parents, and other close relatives. This is Romania's largest consumer market segment. 

The size of this group says a lot more about Romanian culture than anything else. Several people I know came to mind after reading the description. Romanians do tend to put family above all else. We are not good at building communities, cities, or the country, but we all understand the dynamics of the tribe. It is a quaint and old-fashioned cultural trait but it explains why family-oriented types would make up the largest consumer segment in Romania, and also why it is so varied in its consumption habits. Anyone from any other group can also belong to this segment, along with their individual consumption preferences. Seems like the key distinction here is that when they do like a product (or a brand), they'll just buy more of it.
 
The Independents are defined by their desire to live a life which allows them to acquire and to experience a variety of things. They are the first to embrace what is new and modern. For them brands are very personal; they speak to their lifestyle, to their values, and they adhere to the higher standard of quality that they expect and for which they are willing to pay. They spend little time watching TV choosing niche entertainment instead (think Netflix binges). Time is their most precious asset (ironically, given the Netflix binges).

This one hit close to home because it checks off several boxes pertaining to my own consumption habits - as if that's hard to guess. That said, I would imagine that in the West this is an even larger group than the family types. Although it suggests a universally appealing lifestyle, the group is proportionate in size to Romanians' purchasing power. It will therefore grow along with the country's GDP.

The smallest of these groups, the Sophisticated consumers, are made up of individuals with sufficient disposable income to hop on a plane only for the pleasure of attending a live sporting event and, on the way there, buy an expensive watch at the airport duty free. Their key words include 'lounge', 'hospitality', and 'preferential treatment'.

These are the types who make me think of Gigi Becali, corrupt politicians and their kids, real-estate magnates, and even of lawfully wealthy Romanians who don't flaunt their wealth making it difficult, and uncharacteristic, given the accent on social status in Romania, to spot them in a crowd. Some may be educated and refined shoppers, others are sheepherders with a Maybach. 

Over the past 15 years, the author goes on to say, there has been significant growth among the family-oriented, independent, and sophisticated consumer segments. This is indeed reflected in the modernizing Romanian society and even in the modern approach forward thinking business owners are taking towards marketing and service improvements.

But one thing which unites all five of these groups is consumerism. Romania's recent economic growth, among the highest in the European Union, has been driven by consumer consumption. In other words, rich or poor, simple or sophisticated, Romanians love spending money. Just head out to a mall on a weekend and try to find parking.

This tendency to spend money rather freely might also help explain why it is that sub-par businesses survive. As long as you have something to sell to consumers, you will find Romanians interested in buying. Service, atmosphere, and top quality considerations are still far behind the price to value ratio in the minds of many Romanian consumers.




Comments

  1. Well said couldn't agree more I am a Canadian living here in brasov .And I see everyday a non existing customer service and product's very sad.very disappointed.

    ReplyDelete

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