ROMANIAN CONSUMER

BEHAVIOUR
Dr. Mariana Nicolae,
The Academy of Economic Studies from
Bucharest
School of International Business & Economics
17 April, 2007, Nitra
 Overview
Introduction
General information
What makes Romanians different?!
The Romanian Economy/Market
Legal environment
Culture: Romanian highlights
Romanian Consumer Behaviour
Romanian consumer categories
Tourism & the Romanian tourism consumers
Questions
 Introduction
first decade of the 21st century - the majority of worlds
total trade growth will occur in the emerging markets:
development of infrastructure
opportunities for foreign investors
spectacular growth of the consumer market.
Dept of Commerce of the USA predicts that BEMs will be
a considerable import market by 2010
 Introduction ctd.

Still common stereotypes:

the market is not ready for this
the people are too poor
A London securities firm in developing countries
a person earning $250/yr can afford Gillette razors,
at $1,000 s/he can become a Sony television owner.
at $10,000 income - a Nissan or Volkswagen could be possible.
Whirlpool estimates:
in Eastern Europe a family earning:
$1,000/yr can afford a refrigerator and
$2,000 they can buy an automatic washer as well.
General Information
 General Information
Second largest and most populous country in Central and Eastern
Europe after Poland
238,391 sq. km, comparable to Britain's and Ghana's, which makes
it rank 80th in the world and 13th in Europe.
Capital: Bucharest
Population: 21,680,976 (2003)
NATO member (2004); EU member (2007).
President + Parliament (485 members): Senate + Deputy Chamber
GOVERNMENT. Republic with two Houses of Parliament. The
President, Senators and Deputies are elected through universal,
equal, direct, secret and freely expressed vote.
 General Information
Population structure by
Population structure by religion
nationalities

Language: Romanian (Latin based)

Literacy rate: 98%
 What makes Romanians different?!?

Current complaint of the media: Romania

has turned into a country of consumers
What is the consumer profile of Romanians?
Who are the Romanians?
What makes Romanians different?!?-ctd.
A party statement in 1964 confirmed Romania's
independent policies, including closer ties with the West.
August 20, 1968, Romania - the only country of the
Warsaw Pact not to invade Czechoslovakia.
an unofficial ally of the West, Ceausescu received lavish
praise from U.S. presidents Johnson, Nixon, and Carter.
Carter called him a freedom fighter.
the only Eastern European country to recognize both
Israel and Egypt, Ceausescu helped to arrange Egyptian
President Anwar al-Sadat's historic peacemaking visit to
Israel in 1977.
What makes Romanians different?!?-ctd.
1971 Ceausescu visited the People's Republic of China
(an unprecedented step within the Soviet bloc)
1972 Romania joined the International Monetary Fund
and the World Bank
1975 the US granted Romania most-favored-nation
status
1976 a ten-year economic pact was signed by the two
countries
1976 signed the first formal pact (on textiles) between the
European Economic Community and an Eastern
European nation
1980 Ceausescu refused to endorse the Soviet invasion
of Afghanistan.
 The Romanian Economy
Industries:
textiles and footwear, light machinery and auto assembly, mining,
timber, construction materials, metallurgy, chemicals, food
processing, petroleum refining
Agriculture - products:
wheat, corn, sugar beets, sunflower seed, potatoes, grapes;
eggs, sheep
Currency:
leu (RON)
1 RON = 0,29 EUR
1 EUR = 3.34 RON
 Economy CPI & earnings
In comparison with January 2006, net nominal average earning increased by 11.1%,
while real earning index registered a growth of 6.8%.
 Legal Environment
Public and Civil Law.
French Type Legal System.
No juries in the courtroom.
The sentences do not add (the biggest
sentence takes effect).
Taxation: No income tax return; VAT (value
added tax).
Medical services: free for population.
 Culture
A salad?
Dracula country?
Where East & West meet?
 Romanian highlights

Amazing Romania: http://www.youtube.com/watch?v=YEdPoPkUsYc

http://www.youtube.com/watch?v=mQ7jp04V2iQ&mode=related&search=
http://www.youtube.com/watch?v=RwVxrIO_A9s
Dacia Logan
 Romanian consumer behaviour (RCB)

buying & consumption behaviour have changed

a lot:
queues to buy products at the old price
consumers are now psychologically ready to realize
that price growth is almost a daily problem
but RCB is still different from the consumer
behaviour in very developed countries
marketing surveys about the Romanian
consumers behaviour are very important
especially for (multinational) companies which
want to introduce themselves on the Romanian
market.
 RCB ctd.

after 1989 a buying and consuming behaviour

totally different from the one previously existing :
deterioration of the economic and social climate of
Romania:
depreciation of the national currency
uncertainty of the jobs
rapid expansion of the underground economy
inflation and unemployment growth and
use of an outdated technology
an old and unproductive management in the industry
sector
 RCB ctd.
In the 1990s the opening of the borders facilitated an
intense traffic of products: firstly at the Hungarian, ex-
Yugoslav and Bulgarian borders, and afterwards with
rather far away countries like Turkey, Poland, Greece as
well as some countries from the Near East and Asia.
The wholesale syndrome en-gross warehouses which sold
mostly Turkish, Chinese and Arab products.
The boutique syndrome small street-vendors
Luxury shops were established by some Western entrepreneurs
Romanians quickly adapted to the newly created
situation
 RCB ctd.
in 2000:
70% Romanians preferred imported cigarettes, cosmetics,
perfumes, electronic and electric home appliances
56% Romanians preferred foreign cars.
46% Romanians preferred imported electric goods.
43% Romanians preferred foreign detergents.
40% Romanians preferred foreign paints and polishes.
31% Romanians preferred foreign medicine.
But:
71% Romanians preferred domestically produced crafts
57% Romanians preferred domestically produced furniture
52% Romanians preferred domestically produced food products,
oil products and financial and banking services.
Romanian consumer categories
the Romanian population was divided into 5 large categories [buying power (the
regional GDP), life styles, the consumption of products (brands) and media]:
1. Active professionals: 14.4% - an active life, career-oriented to gain a
better social status. Image is very important: goods and services according
to their status.
2. Sophisticated consumers: 2.6% - successful people, recognized as such
by the others, self-confident, display a luxurious life style.
3. Passive traditionalists: 26.5% - conservatives by definition, apply
traditional values in their own family, nostalgic, distrustful when it comes to
new, innovative things;
4. Sedentary family people: 20% - spend most of their time and activities in
the family, often in front of the TV, value the security of the group, tend to
buy quality products, but also compromise, especially when it comes to
price;
5. Resignedly nostalgic people: 36.5% - admirers of the past, do nothing to
change the present state of facts.
 Romanian consumer categories ctd.
only the first two categories and the sedentary family
people can actually be taken into account for purchasing
brand products, especially from the EU, that is approx.
37% of the total number of buyers.
Inside the 5 categories there is stratification according to
income:
only 2% have a high monthly income (general managers,
heads of departments, owners, managers)
5% have an average monthly income (executive
directors, professionals with post-academic studies and
specialization abroad, free-lancers)
approx. 10% are people with high education, working for
private IT firms, consultants, doctors, lawyers, notaries
who have a good, but not very high monthly income.
 Romanian consumer categories ctd.
the vast majority of Romanians are well aware of the quality of a product or
service, their origin and the trademark under which they are sold.
a survey carried on by Daedalus Consulting (September 2003) among
Romanian consumers showed the following patterns:
they placed Germany, Japan and USA among their preferences for products that
include technology;
Italy, France, Germany and USA for clothing and footwear;
USA, Japan, Germany, Holland for electronic and electrodomestic appliances;
Germany for cars and beer,
France for cosmetics and wines,
Russia for vodka,
Holland for dairy products,
USA for cigarettes and
Brazil & Columbia for coffee.
The Romanians remained faithful to the domestic fruit and vegetables (1st
place), dairy (2nd place), some spirits (tuica, palinca) and medicine (3rd place).
 Why Tourism?
Tourism is one of the most efficient tool in inter/cultural
development
Tourism is a huge generator of business revenue,
accountable in 2004 for revenues of USD 476 billion in the
world economy and is the dream of less developed
countries to strike gold
The European Commission called for an EU-wide drive to
enhance the economic, social and environmental
sustainability of European tourism ever since 2003.
http://europa.eu.int/comm/enterprise/services/tourism/po
licy-areas/eu_schemes.htm
- EU SUPPORT FOR TOURISM ENTERPRISES AND TOURIST DESTINATIONS -
AN INTERNET GUIDE
CEE tourism - at present a niche for the people of the
region we know more about Japan and China than
about Slovakia, Romania, Hungary or Bulgaria
 The Romanian tourist behaviour
In the 1990s Romanians were not good holiday-planners: they were
going to the travel agencies to look for offers at the very last minute.
In 2005-2006 many travel agencies confirm the fact that 50 - 70% of
the New Years offers, for example, are sold since November every
year.
Romanian tourists expectations have changed: there is now
demand for higher quality services, tourist assistance and cultural
programs, in comparison with the 90s when they were looking for
very low prices and afterwards they were unsatisfied with the
conditions.
Romanian tourists have raised their expectations due also to
increased travelling abroad.
According to the hospitality industry professionals one of the biggest
problems of Romanian tourism is lack of trained personnel and low
standards of infrastructure.
Romanian tourists prefer to spend their holidays abroad.
 Questions?
Thank you!