COO perception and Consumer ethnocentrism in ex-Yu

1. COO perception and Consumer ethnocentrism in ex-Yu Rok Sunko 29.10. 2008

2. Leading group of local agencies for marketing research in the ex-Yu. region Valicon, marketing consulting and research company PRIZMA • Directly present on 5 markets (Croatia, Slovenia, BIH, Serbia, Macedonia) • Coverage of wide region (SEE) • In total above 60 employees; highly qualified in marketing research and consulting • Fast growth rate PGMCONSULT

3. Valicon Group timeline 2007 the year of

4. Consumer Marketing strategy Asortiman Execution PGM – Product Group Manager • Product Group Manager (PGM) is a syndicated marketing tool for brand and category management, including a broad insight in consumer profiles. • Single-source data on: • brand and category strength (inside various consumer segments) • consumer habits • The basis of PGM is a continuous syndicated marketing research • field research • n=2000 / country – national representative • Fully automatised software application

5. Quantity How to riseprofit? + Loyalty Price Consideration How to achieveusage? Experience Model used in PGM Usage Recognition

6. Population & consumer profiles Socio-demography • Sex • Age • Status • Education • Income Values&lifestyles Free time • Activities • Frequency Consumer habits • Shopping habits • General FMCG consumption • Expenditures • Consumer indicators • Retail chain loyalty Eating habits • Eating habits indicators Consumer Ethnocentrism Country of origin

7. - ...in CRO + ...in BiH, SER The perception of ex-Yu brands within the region n=8.000, SLO, CRO, BiH and SR together.

8. + The perception of Euroregional brands in ex-Yu ...in RS (&Republika Srpska) n=8.000, SLO, CRO, BiH and SR together.

9. The perception of ex-Yu brands within Slovenia n=2.000, Slovenia

10. Slovenians highly value quality of domestic brands n=2.000, Slovenia

11. So what ? • Slovene and Croatian brands have positive perception in the ex-Yu region • Croatia has a relatively uniform perception Croatian brands also relatively equally successful function in all ex-Yu countries • Slovenia has very positive perception in quality (!) and being worth the money, but is perceived expensive (not as “out-of-the ex-Yu” region) • Slovenia has a very negative perception in CRO • BiH has no COO image, there hardly are domestic BiH brands • Serbia is perceived as low quality but worth the price. Republika Srpska (northern part of BiH) is very similar to Serbia • The perception of Italian brands is biased in the direction of Prestigious, Attractive, Expensive (but not as expensive as Austrian) and quality • Austria is being perceived as high quality, but extremely expensive

12. Consumer ethnocentrism in the ex-Yu region Not C. Ethnocentric C. Ethnocentric

13. Does consumer ethnocentrism perception translates also in consumer behavior? 10 strongest FMCG brands in Slovenia in 2007 (n=2000) on: Consumer characteristics connected with Ethnoc. • Age • Education • Tradiotionailty • Income Not-Ethnocentric consumers Ethnocentric consumers 1. 1. Milka (chocolate) Barcaffe (clasiccoffee) 2. 2. Barcaffe (clasiccoffee) Milka (chocolate) 3. 3. Orbit (chewing gum) Orbit (chewing gum) 4. 4. Barilla (pasta) Alpsko mleko (milk) 5. 5. Laško (beer) Laško (beer) 6. 6. Alpsko mleko (milk) Paloma (toilet papers) 7. 7. Aquafresh Aquafresh 8. 8. Barilla (pasta) CocaCola 9. 9. Gillette (razors) 1001 cvet (tea) 10. 10. Paloma (tissues) Prill

14. But is the connection the same for all brands? High Premium product (perception of the Ethnocentric consumer) Ethnocentric Consumer Not-Ethnocentric Consumer Mainstream product(perception of the Ethnocentric consumer) Ethnocentric Consumer Not-Ethnocentric Consumer

15. Low impact of Ethno centrism High impact of Ethno centrism Mercator kitchen towels Brands that generate added value are less affected by Consumer Ethnocentrism Perception of the position of some brands in Slovenia in 2007 (n=2000): Illy coffee Premium Vitalinea yoghurt Barilla pasta Becel Jacobs coffee Mainstream EGO yoghurt Mercator edible oil Budget Low market share High market share

16. Is all this relevant ? ? Kosovo

17. Ex-Yugoslav region is ’’on the radarscope’’ but countries do differ Slovenia • Very high consolidation of the retail sector • Process of category ’’cleaning’’ • Moderate consolidation / fast development of the retail sector • Very successful transfer of experiences from other countries Croatia • Big potential of SR retailers • Focus on ‘’domestic’’ expansion • Big appetites for regional expansion/cooperation's • “Jumping” development phases Serbia BiH • Very low consolidation of retail sector • Very important role of distributors • Abrupt end of domestic expansion, no real COO Macedonia • Extreme fragmentation of retail, high importance of foregin players • High instability

18. No. of domestic brands within ex-Yu region TOP 20 TOP 100 9 SLOVENIA 3* 17 CROATIA 3 0 BIH 0 19 1 SERBIA 0 0 MK 55 13 Internatio.

19. Slovenia in the broader context of former Yugoslavia • 2 mio people • Average gross income 1370€ • Strong domestic competition with high qualitative standards Slovenia • 4,5 mio people • Average gross income 998€ • Very nationalistic attitude to domestic brands, which are succesfull overall the region Hrvaška Srbija • 7,5 mio people / but Serbian market starts in RS • Average gross income 560€ • 4 mio people but in three different entities • Average gross income 554€ • Absence of domestic competition BiH Comon... • Fragmented market where strong distribution is very important • Growth potential, but...

20. Conclusions... • .... • attractive • prestigious Italy • expensive • advertised • quality Austria multinationals Slovenia Croatia Serbia Bulgaria • poor execution • worth their money • rather don't buy them BIH Macedonia

21. Rok Sunko rok.sunko@valicon.net