Buy Generic or Buy Brand

Some trends are emerging, but the conventional wisdom from the West often won't work here because the underlying fundamentals, like distribution, are still shaky.
"In the West, you would set up a distribution system for your product and then advertise. You couldn't do that in Poland," says London-based marketing consultant George Swirki.
"You advertise first - to store owners, to create an awareness of your product, to make them get it for their stores," he said.
Swirki developed the Frito-Lay chips market for E. Wedel nearly two years ago and then shaped a "money-in-a-bag" campaign to create a bottom-up demand for it after wholesalers initially were reluctant.

No soft sell

Also no blueprint exists for measuring the next step because no historical circumstances parallel what is unfolding here. Billions of dollars are being spent on advertising products today, only five years after the collapse of a system where Marxist dogma railed against the very principle of advertising and marketing as a wasteful capitalist practice.
That backdrop means the rules may change in the middle of a campaign, due to suspicion about advertiser intent. That was the case several years ago with a heavily advertised Wash 'n Go shampoo.
Rumors spread that the hard-sell ad campaign was because the shampoo was flawed: too much washing made your hair "go" - literally.
Damage control required big-name celebrities - with lots of hair intact - to put the shampoo back on track.
Too little promotion can be a problem as well, as a major personal-computer distributor discovered last year when they slacked off on advertising and "... lost two-thirds of their market share very, very quickly," says Christopher Pied of Bain & Co.
"This is a complex market," Pied says. "It is becoming more sophisticated and more professional. Consumers are becoming more educated."
Even two years ago, he said, two out of three people asked to name a high-quality car would have named a German brand "and if you had mentioned a Japanese car they would have said 'are you joking?' Now it is completely different because the brand presence, the selling of the products, has changed the perception.
"Now you see the Camrys and the Carinas and they are seen as having good value," Pied says. "You have to fuel the imagination with new information."
In the past system, the state controlled nearly all production and distribution. Consumers couldn't show preferences for one product over another because, often, there was only that one product - when it made it to store shelves.

A market for history

Partly to capitalize on the strong Polish patriotism and sense of pride in a rich history that the West seems rarely to appreciate, some brand names and some of the most successful product advertising have drawn on Polish literary or historical names.
Unilever not only kept the name "Pollena," an almost generic grouping from the past that included both detergents and cosmetics, but it has promoted its Pollena 2000 detergent with TV ads that are continuing sagas based on Henryk Sienkiewicz's historical novels. Polbita, a distribution company which also is testing out the generic-product market as well as developing some branded products, has a line of shaving equipment called Husarz, the knights who fought under King Jan Sobieski.
Consumers definitely are still shopping around. One Procter & Gamble focus group had a participant who was trying out 36 different brands of detergent. A top marketing manager says the latest brand to hit the stores has huge sales.
"But tastes are starting to cement a little bit," says Robert Maciejko of McKenzie & Co.
"It's not enough to be the new brand on the shelf," he says. "The customer has to buy your brand and not somebody else's. This month, everybody is going crazy with contests - buy five of this product and compete to win a car. The money-in-a-bag has been used with great success.
"Generally, branded food markets are extremely competitive," Maciejko says. "There are a few categories where you can come in as a new brand and everybody buys you because you're so interesting. Take chocolate. Many companies had been here a couple of years. Jacob Suchard tried to reposition themselves. Now Cadbury has come onto the market, but they're going to have to spend an awful lot to establish themselves. They're doing that, with price promotions in supermarkets and pamphlets. But it is very hard to get market share."

Distribution first

E. Wedel is strengthening its position, not just because of its parent PepsiCo and the introduction of Western marketing techniques, but also because of the nationwide distribution system it now has in place for its full range of products. Its competitors, Goplana and Wawel, have regional, not national systems.
Only three years ago, Wedel distribution was mostly done by individual truck-driver entrepreneurs who lined up to buy what they could, sometimes waiting 48 hours, and then selling Wedel chocolates across Poland. The company had difficulty tracking this ad hoc distribution system.
Today, Wedel is creating many new branded products, some of which had been made but without specific product names.
"They've created a full line of what we call 'counter-line snacks' - those near the checkout counter, which is in direct response to (competitors) of Mars and Master Food's Milky Way and Snickers and others," Maciejko says.

Money-in-a-bag

But getting the product on the shelves and in reach of customers is a challenge, says Swirki, who developed the salty snacks market for Wedel. When Frito Lay premiered, Chio and Bahlsen were already strong players in the market. TV ads pushing Frito Lay chips didn't seem to make store owners place orders. Without that, the wholesalers didn't want the chips taking up truck space.
"I said 'I'm sick of those TV ads. I'm putting money into the bags,'" Swirki says. "In the United Kingdom you'd put a voucher in a bag and the customer would redeem it to a store. There was no culture of that here - and no store mechanisms to deal with coupons."
So, with guards standing by, he and others stuffed a half million dollars' worth of zlotys into nearly 60% of the Frito Lay chip packages. Prizes ranged from (old) zl. 500 to zl. 50,000 ($0.02 to $2.10) bills - to the heavily advertised five notes worth (old) zl. 100 million ($4,200) each.
It had a sensational impact, with word of mouth reinforcing the "everyone is a winner" advertising campaign. Suddenly, shop owners began demanding chips from wholesalers and factories worked overtime to meet the demand.
"From December through March 1994, volumes went through the roof," Swirki says. "We ran short of domestic potatoes." The key, he says, was that "we created suction in the marketplace. If there were four markets n the neighborhood and three stocked our competitors and one stocked us - as well as milk and bread and cheese - you'd go to that one to get the chips.
"It created a vacuum at the consumer end that sucked our product into the stores, in huge volumes. And once you're in, you don't fall out that easily."
The lesson learned: "There has to be a compelling hook behind every marketing situation," Swirki says. "You've got to have innovative marketing and a good distribution."
"Then you have one opportunity to get the product before the consumer," he says. "Unless you deliver the quality and meet their expectations, you won't get repeat sales."

Buy Poland returns

Unlike in the years immediately after 1990, Poles not only are more choosy - not automatically buying anything and everything Western. They have more choices of homegrown products which are getting marketing and packaging savvy and are now competing both on price and quality.
"What we have seen in the past year and a half is a gradual swing back toward Polish brands," says Polbita's Richard Engel. "The initial infatuation (with Western brands) is wearing off and Poles are beginning to realize that the quality is not that much higher than for Polish products, not enough to warrant the differential in price."
Polbita distributes cosmetics and Engel says: "Four years ago, we were strictly handling imports; today we are only half imports."
Pollena Ewa, a cosmetics and cream company in *ode, was the first to emerge with its new sophisticated image. Now, four or five of the other "Pollena" beauty care companies are evolving their own private-sector niche and brand recognition.
In the past, there had been brand names, of a sort, but they usually spanned an entire category of products: Winiary for sauces and spices, Hortex for juices (and ice cream shops), the Pollenas for everything "chemical" from detergents to face creams and lotions, the Polfa pharmaceutical manufacturers which were further identified by addition of the respective factory-town such as Polfa Kutno.
Polish auto maker FSO was not so much a brand name as initials that stood for "passenger car factory" and the FSM ("small-capacity car factory") had a similar lineage.

Nurturing name recognition

"Where the names are known well, those products actually by default emerged as strong 'brands' without any marketing, from dozens of years of exposure," says Michal Rusiecki, vice president of the Polish-American Enterprise Fund (PAEF), who recently spearheaded PAEF's investment in the Polfa Kutno pharmaceutical company. One of the company's products is Vibovit, a multi-vitamin powder that produces a drink for children.
"It sells well. It is one of those products that everyone is used to," says Rusiecki. "When someone goes and buys a vitamin supplement, they almost by default go after this. Rusiecki says Vibovit has about 15% of the overall vitamin and compounds market for children.
"The option is to nurture this brand," Rusiecki says. "It came in plain vanilla flavors. The company has added banana and orange and pineapple flavors - so it extends the same brand to four related products. If you have a powder, why not a pill? And why not for adults?"
Another example of a product from the past which still prospers - with some inadvertent help from a Unilever ad that backfired - is the Ludwig dish washing liquid. In the past, the cooperative Inco-Veritas sold Ludwig from huge vats at state department stores with customers bringing in plastic bottles for refills.
It still commands more than half of the liquid detergent market against the multinationals, especially after Unilever's ad several years ago which used a heavyset frumpy housewife as the person still attached to Ludwig, in contrast to a frivolous young filly who had switched to the Unilever brand.
This became a cause celebre, a multinational giant ridiculing a long-standing Polish product from the communist era, which was one of a handful of products that retained its credibility - and consumer loyalty - in the free market era.
Similar consumer suspicion was evident in some other high-visibility sales of well known companies to western investors: E. Wedel to PepsiCo., Amino, a powdered soup company, to the U.S. food giant CPC; and Alima SA and its Bobo fruit juice for infants and children to Gerber Foods.
"The fear was that somehow Gerber, and the same was true with PepsiCo and Wedel, would have some strange desire to replace the products produced locally with some universal American product," says Rusiecki. "And in addition, in the whole privatization process, people mixed up brands and trade names a lot. They wanted to keep whichever was better known."
International rules of marketing were no help here. It was another example of seat-of-the-pants brand name politics, part of what makes this such a challenging and intriguing market for all concerned - including consumers.