FOCUS - MONGOLIA: Small markets, big impact - Rivals might be few and far between, but now is the time to build brand foundations

<p>With the new government of Nambariin Enkhbayar promising to connect </p><p>his country to the Internet, Mongolia's introduction of democracy and </p><p>economic reform towards market economy in the early 1990s have helped </p><p>build a working media infrastructure that aims at linking its 2.5 </p><p>million citizens. </p><p><BR><BR> </p><p>For marketers, however, the fact 50 per cent of Mongolians live on the </p><p>vast grass steppes and the Gobi desert continues to limit potential </p><p>returns. </p><p><BR><BR> </p><p>Along with the advent of democracy in Mongolia has come the concept of </p><p>freedom of the press. </p><p><BR><BR> </p><p>A number of newspapers, radio stations and television stations have been </p><p>founded, while several cable networks in Ulan Bator supply 25,000 cable </p><p>homes with satellite channels in a range of languages, including </p><p>Russian, Japanese, Chinese and English. </p><p><BR><BR> </p><p>Today, even nomads in remote parts of the nation watch satellite TV </p><p>channels via portable satellite dishes, receivers and electricity </p><p>generators available at the Chinese border. </p><p><BR><BR> </p><p>However, the growth in access to media has not been mirrored by similar </p><p>increases in the size of the consumer market. </p><p><BR><BR> </p><p>To date, there are only 5,300 mobile phone and 4,500 Internet users in </p><p>Ulan Bator. </p><p><BR><BR> </p><p>Shops are filled with a variety of products from Russia, Korea, English </p><p>speaking countries and Germany. </p><p><BR><BR> </p><p>There are notably few Chinese goods, a result of the bad reputation </p><p>China has earned for supplying counterfeit products. </p><p><BR><BR> </p><p>Strong ties to Germany dating back to the days Mongolia and former East </p><p>Germany were communist brothers help fill the shelves with German </p><p>products bought by Mongolians living in Germany and who, once in a </p><p>while, fill a container and send it back home. </p><p><BR><BR> </p><p>Other products are brought in over the border from Russia by the </p><p>suitcase. </p><p><BR><BR> </p><p>On the steppes, young men were all clad in bright coloured tank tops, as </p><p>a suitcase vendor had recently made his rounds. </p><p><BR><BR> </p><p>The limited range of products and potential consumers naturally limits </p><p>the volume of advertising on the new media outlets that are serving the </p><p>people. </p><p><BR><BR> </p><p>As there is no fierce competition for products, distributors have not </p><p>yet seen the necessity of big advertising budgets. </p><p><BR><BR> </p><p>Advertisers, meanwhile, can still take their pick of choice media venues </p><p>at low rates. </p><p><BR><BR> </p><p>A 30-second TVC at prime time costs about US$50, while newspaper </p><p>ads sell for between US$15 to US$60. </p><p><BR><BR> </p><p>At just US$15 per spot, radio is still the cheapest medium </p><p>available. </p><p><BR><BR> </p><p>According to a survey conducted by the Press Institute of Mongolia in </p><p>1998, advertising does affect buying habits. </p><p><BR><BR> </p><p>The survey found that more than half of all respondents believed that </p><p>advertisements have a "significant" impact on people's daily lives, </p><p>while 53 per cent also said it affected their own purchasing </p><p>decisions. </p><p><BR><BR> </p><p>Commercials were also seen as a time saver and method of helping </p><p>businesses save money. </p><p><BR><BR> </p><p>At that time, the most popular commercials were for alcoholic beverages, </p><p>well ahead of health care and consumer products. </p><p><BR><BR> </p><p>These findings are confirmed by David Reiner, manager of Mongolia Star </p><p>Melchers, which represents Johnson & Johnson and Mercedes Benz in </p><p>Mongolia. </p><p><BR><BR> </p><p>"When we tell people how to use a product in the commercial this has a </p><p>big effect on sales. This works well for baby oil, but is more difficult </p><p>for women's hygiene products though," he said. </p><p><BR><BR> </p><p>As the launch of new newspapers and TV stations increases media </p><p>competition in the short term, ad rates are not increasing. </p><p><BR><BR> </p><p>"This is still very much an advertisers market," Mr. Reiner said. </p><p><BR><BR> </p><p>"TV stations and newspapers come to us to offer discounts to get us to </p><p>advertise with them." </p><p><BR><BR> </p><p>As may be expected in such a young market, when professional advertising </p><p>campaigns are conducted, the influence on sales is marked. </p><p><BR><BR> </p><p>"When we advertised Johnson & Johnson Baby Oil, sales revenues increased </p><p>50 per cent the next month," he said. </p><p><BR><BR> </p><p>An example of how smaller advertising budgets can take you a long way in </p><p>Mongolia is Konica Film, which has carved out a 70 per cent market share </p><p>in the photo film, camera and photo album market after five years of </p><p>marketing activities. </p><p><BR><BR> </p><p>Konica is one of the pioneers of the Mongolian advertising market, </p><p>posting a series of "firsts", including the first outdoor 3D billboard </p><p>in Ulan Bator, the capital city. </p><p><BR><BR> </p><p>"We wanted this market and we have successfully pushed out Kodak and </p><p>Fuji with our marketing campaign over the last five years," said </p><p>Singaporean Francis Lee, manager of Konica Film in Mongolia. </p><p><BR><BR> </p><p>General distributor for Konica MIC Mongolia P/L has spearheaded </p><p>advertising development in Mongolia, and Konica signage is visible all </p><p>over Ulan Bator. </p><p><BR><BR> </p><p>Konica concentrates on traditional advertising, including billboards, </p><p>trolley buses, newspapers and TV. It also sponsors special contests, </p><p>including a children's photo contest and the Ms Konica Beauty </p><p>pageant. </p><p><BR><BR> </p><p>"You have to be first in business, like we are in many areas," said </p><p>chairman and CEO of MIC Mongolia P/L Battulga Khaltmaa, not only </p><p>Konica's local partner but also main shareholder of the Bayangol Hotel </p><p>and the country's main meat factory. </p><p><BR><BR> </p><p>"We introduced the first billboard, the first disco, the first fitness </p><p>studio and the first discount card," he said. </p><p><BR><BR> </p><p>"It's all about having new ideas; otherwise it's too late because others </p><p>follow suit." </p><p><BR><BR> </p><p>While Konica is lining Ulan Bator's streets with large outdoor </p><p>advertisements, the billboards themselves are still produced outside the </p><p>country. </p><p><BR><BR> </p><p>"We produce our billboards in China or Singapore," said Mr Lee, "as the </p><p>facilities are not good enough in Mongolia yet." </p><p><BR><BR> </p><p>However, in a sign that poverty is still widespread in the country, </p><p>Konica has recently taken down a large billboard on the airport road </p><p>because "street" children were stealing the metal to sell, according to </p><p>Mr Lee. </p><p><BR><BR> </p><p>With the gap between rich and poor widening, the newly-elected prime </p><p>minister has promised to address the serious issues resulting from </p><p>radical privatisation of state enterprises and an economic path mainly </p><p>dictated by the IMF, which has led to the closure of eight out of 10 </p><p>newly-privatised companies. </p><p><BR><BR> </p><p>But with growing interactivity with the outside world, Mongolia is </p><p>continuing to integrate into the international community. </p><p><BR><BR> </p><p>For now, a small advertising budget will still go a long way to </p><p>achieving brand recognition with a growing consumer base and help build </p><p>the media to deliver it. </p><p><BR><BR> </p><p>* Source: CMM Intelligence*. </p><p><BR><BR> </p>

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