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By John Helmer

MOSCOW — This may be the year, according to President Boris Yeltsin,
when the Russian economy starts growing from the grassroots.
It’s already the year in which Russians have been sold on an idea they
never had before about the hair-roots on their heads. The idea is that a
healthy head of hair shouldn’t suffer from dandruff.
Selling that to Russians, who have never thought of dandruff as a
problem, are two U.S. corporate giants, Johnson & Johnson and Procter &
Gamble.
How they are managing to create a multi-million dollar market
opportunity from scratch illustrates what one Western marketing
executive in Moscow calls “the uniqueness of Russian consumer demand
that rewards marketing ingenuity, if you’ve got it.”
The case also provides lessons for other exporters of consumer products
targeting the Russian market, including the profit to be engendered by
introducing newer technologies and marketing Western images while
sidestepping the pitfalls of ignoring Russian tradition.

Home cures

Russians know their word “perkhot” means the white scalp flakes that
everyone can recognize in hair — and on collars and coats.
If they didn’t ignore it, Russians used to massage their scalps with
slices of black bread or home concoctions of egg-yolks and fermented
milk. Soviet-produced shampoos were available by the bucketful, with a
big selling-point being the naturalness of the ingredients. Market
research conducted for both Johnson & Johnson and Procter & Gamble last
year showed that, while Russians recognized dandruff, they didn’t think
it was a problem that warranted spending money to solve.
“That’s not quite true,” says Tatiana Turitsina, an actress whose
waist-length tresses are a vital part of her professional equipment.
“I tried Russian shampoos, and they never helped. Our dermatologists
didn’t know how to deal with dandruff.” Ms. Turitsina says she now uses
a Procter & Gamble product.

The hair-raising truth

Johnson & Johnson and others estimate that Russian demand for hair-care
products currently creates one of the least satisfied, fastest-growing
shampoo markets in Europe, valued at about $50 million a year. Stephen
Cruty, a director of the Russian Market Research Company, has
interviewed Russian consumers and found their preferences parts the
hair-care market into roughly four segments.
There is the traditional consumer’s preference for natural ingredients,
which tends also to lead these Russians to suspect Western imports of
containing potentially damaging chemicals, dyes and drugs. Schwarzkopf,
the German manufacturer, has a shampoo competing in this part of the
market.
Another segment focuses on the feminine qualities of the product.
Colgate-Palmolive of the United States is doing well, market surveys
indicate, with Palmolive-branded products with this appeal.
A third segment of the market looks for shampoos that promise hair will
look luxurious and Western in style. Vidal Sassoon, Elsevier and Wella
are the brands capitalizing best on this demand at the moment.
Finally, Mr. Cruty’s research identified a segment of the market that
both suffers from dandruff and is willing to spend relatively large sums
to get rid of it.

Staying ahead of competition

Related products set to hit the Russian market include Nizoral, from
Johnson & Johnson, and Head & Shoulders, from Procter & Gamble.
A marketer from Saatchi & Saatchi acknowledges there is always the risk
that in stimulating demand for a new product, Procter & Gamble would
open the market to a string of lower-cost competitors.
P&G is spending millions of dollars on television commercials, and, by
the latest count, there are 15 imports widely available in Moscow.
Anton Andreyev, a brand manager for P&G in Moscow, concedes that before
his company came along, most Russians didn’t think of buying shampoo to
cure dandruff.
Although company spokesman Yury Molozhatov declined to say how much
Procter & Gamble is spending on its Russian campaign, he did say, and
his competitors agree, that Head & Shoulders is, well, head and
shoulders ahead of its competitors.
Johnson & Johnson brand manager Yekaterina Leparskaya acknowledges this
lead but claims that while his company’s Nizoral is a medication, P&G
markets a cosmetic.

Touchy client base

Until now, there has been little control over such distinctions in
advertising. But new legislation to tighten standards regarding medicine
currently await President Yeltsin’s signature.
Market researchers and brand managers say consumers are intensely
curious about trying new products, especially imports, but are also
quick to grow suspicious and react negatively.
Ms. Leparskaya says Procter & Gamble may have erred in using popular
entertainment stars to promote the curative properties of its
anti-dandruff product. Johnson & Johnson says the big buyers of
hair-care products — and the most amenable to imports — are the
20-somethings who “are more concerned with how they look.”
Johnson & Johnson is betting, though, that young Russians can be just as
suspicious as their elders, especially when it comes to rock stars
acting as dermatologists.

Journal of Commerce
23 July 1997

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