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. Last Updated: 07/27/2016

Going Full Steam on Rough Seas

As Russia's financial slump is prompting other health-care marketers to taper off advertising spending, SmithKline Beecham is raising its budget under the direction of new marketing director John Sayers.

Sayers joined the Moscow office of the world's fourth biggest healthcare marketer in March, convinced that Russia was one of the most promising markets for the company's Aquafresh, Panadol and Oxy brands.

"Russia is on the company's radar screen as a big opportunity," Sayers said in his office at Riverside Towers, a bright row of pills and acne medications sitting on a shelf over his shoulder. "It's a big consumer business, and that's why I wanted to come."

SmithKline Beecham's sales of over-the-counter medicines and health-care products in Russia should hit $100 million in 1999, or 2.5 percent of the company's worldwide consumer health-care sales of $4 billion.

That may be a small figure today, but market share data shows the company's brands are growing in every product category, giving SmithKline Beecham incentive to keep feeding its advertising budget.

"We've more or less kept as much marketing effort going as possible despite the financial outlook, and that has worked for us," said Sayers, a 39-year-old Englishman. "It hasn't been an easy year for a lot of manufacturers in Russia. We track [marketing spending], and definitely some of the major and minor manufacturers have reduced their spending."

Panadol was SmithKline's first brand to enter the market, in 1991, and has become the top-selling analgesic pain reliever in Russia. Sayers is particularly pleased with the brand's worldwide television advertising, which features a mother elephant helping her baby along as a way to express the strength and gentleness of the medicine.

Too often, medical advertisements offer a problem-solution scenario, showing a person with a pain rescued by a particular medicine, he said. The elephant ad stands out and helps consumers remember not just the product, but SmithKline Beecham, a corporate brand that lacks the household recognition of competitors Procter & Gamble and Colgate.

"I don't think consumers really realize what SmithKline Beecham do here," Sayers said. "We tend to promote our brands more than our company. I think we would be adding value to say that a big health-care company is behind all of these brands."

Building the corporate brand will become more important as Russia's retailing market consolidates and products begin to fight for shelf space.

Pointing to the advent of big supermarkets such as Ramstor, a mammoth 6,000-square-meter market built by Turkish developers, Sayers said it will become increasingly important to establish good sales contacts with key retailers to ensure SmithKline's products a place on supermarket shelves.

Today, however, pharmacies and smaller markets remain SmithKline Beecham's main sales outlets. About half of its products -- mostly over-the-counter medications -- are sold through pharmacies, and half in supermarkets or smaller grocery stores.

While about 80 percent of marketing budget goes to traditional media advertising, 20 percent is spent on direct advertising to pharmacists.

Sayers would not put a figure on SmithKline's marketing activity in Russia, but given that sales here represent 2.5 percent of worldwide sales, ad spending could equal a proportionate amount, or about $16 million of a total $640 million.