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. Last Updated: 07/27/2016

Who's Broke? West Hawks Home Appliances

Russia is mired in an economic depression and consumer buying power has been slashed sharply. So what.

Sweden's Electrolux, Germany's Bosch Siemens Hausgerate and Merloni Elettrodomestici of Italy are launching advertising campaigns for expensive home appliances that equal or surpass in scope their marketing drives last spring.

"It is quite clear that the major international suppliers of durables experienced difficult times last fall and this winter, but now the time to talk to the customer has come again," one industry insider said.

Foreign producers have every reason to advertise, not only because early summer is a favorite time to renovate apartments but because the market for goods such as washing machines, refrigerators and vacuum cleaners is showing signs of revival, experts said.

"There are certain categories of people who do not suffer from the crisis, and one cannot say that the market is gone," Merloni Elettrodomestici spokesman Eduard Yermilov said.

About 6 million home appliances are expected to be sold in Russia this year, the industry insider said on condition of anonymity.

Nevertheless, the market for such goods has shrunk 10 percent to 30 percent and the sales volume has fallen to 1995 levels, he said.

Proportions have been realigned as well. During the first two months of 1998, washing machines were the best-selling home appliance, accounting for 33 percent of sales, and refrigerators followed with 29 percent, Mobile marketing agency said.

Refrigerators gained the top spot in January and February this year with a 47 percent share and washing machines swelled to 35 percent. Other appliances saw shifts in sales as well, such as vacuum cleaners (from 14 percent in 1998 to 6 percent in 1999), ovens (13 percent to 12.5 percent) and microwave ovens (from 11 percent to 4 percent).

The figures are not scaring off Merloni Elettrodomestici, which sells durables under the Indesit brand name. But reality is not being ignored either. So when the Italian giant kicked off its media drive last week, it tied a contest into the advertisements. Contests are considered to be a relatively inexpensive and highly effective way to capture the attention and wallets of Russian consumers.

Indesit buyers qualify for a lottery to win one of 80 Lada cars, and the first drawing was held Friday.

"The reason we chose Ladas is our desire to support local production," Yermilov said. Ladas are produced by Togliatti-based AvtoVAZ.

Merloni spots are being broadcast on major television channels such as ORT and NTV and printed in the Argumenty i Fakty and Moskovsky Komsomolets newspapers.

Not to be outdone, competitor Electrolux is offering prizes of 18 Skoda Felicia cars and 200 Clario vacuum cleaners. Under the in-store promotion being held at 50 Moscow stores including Partiya and the Tekhnosila chain until the end of May, a purchase entitles a customer to a lottery ticket and either a 5 percent discount on the item or a free gift.

Electrolux is supporting the campaign in its first stage with leaflets and radio spots on major national stations Europa Plus and Seven Hills, said Mikhail Golvin, manager of Art-Promotion, an affiliate with DDB-Needham's Russian office Navigator DDB.

BBDO ad agency is responsible for the second stage, which will include the broadcast of 200 commercials on television stations NTV, TV-6 and STS starting in May.

Also in May, Bosch Siemens Hausgerate will start a month-long drive for its new MAXX washing machine with agency Adventa. Ads will appear in leading magazines Cosmopolitan, Good Housekeeping, Parents, the television guide Seven Days and on television, said Natalia Bobrowa, advertising director at Bosch-Siemens-Hausgerate.

Not including the latest campaigns, advertising by the big appliance producers is either up or even with last year's levels, said the Gallup AdFact marketing agency, which tracks media trends in Russia.

Merloni Elettrodomestici aired 232 television commercials from March 1 to April 19 in comparison to 77 ads during the same period last year, the agency said. Electrolux has broadcast 44 of its own ads and 129 in a cross-promotion with Unilever, compared to 277 and 31, respectively, last year. Numbers for Siemens were not available.