Pioneering in Central European Markets: Lessons From Top FFCG Brands

Sven H. Becker
and
Michael J. Baker
University of Strathclyde, United Kingdom

1. INTRODUCTION

Manufacturers of branded fast moving consumer goods (FMCG) have been following growth strategies for a long time now, particularly through different forms of expansion and penetration strategies.

As long ago as 1957 Ansoff developed a product/market expansion grid which provides a framework for the most common strategies. Over time this matrix has been used as a 'common route' for expansion through policies of: 1. Market penetration, 2. Market development, 3. Product development and finally under 4. Diversification (Baker 1992). The reasoning behind this route is risk reduction as it is perceived as least risky to penetrate the known market with the known product and most risky to do the opposite in bringing new products to new markets. At the end of the last decade, a time when brands were given status as major assets and the notion of global brands still seemed attractive, the political changes in central and eastern Europe opened a vast new market almost over night. With many of their home markets in recession with stagnant sales the question for most FMCG companies was not whether or not to enter these markets but when. This position was furthermore strengthened by the apparent euphoria central European consumers demonstrated for western brands manifesting itself in extensive shopping sprees into Austria and Germany after the liberalisation of foreign travels.