Branding and Competitive Analysis of Romania [Research and Analysis in support of Brand Morocco Project]

Marketing Strategy EMBA Potomac Cohort

Introduction

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The purpose of this paper is to review the background and brand image of Romania with respect to its desirability to American business interests. Both Romania and Morocco are going through massive economic reforms and are attempting to raise their profiles as potential global trading partners with the United States, Europe and elsewhere. Both countries went through tremendous changes in the 20 th century just after World War II. Romania has emerged as a fledgling free market economy only in the last decade after the end of the cold war. During this period Romania has transitioned from communism to a democratic government. Morocco has also been going through reforms for many years, but these efforts have accelerated since the beginning of the reign of King Muhammed VI in 1999. In order to do a full brand audit or assessment, a great deal of research and several surveys would be required. For the purposes of this paper, I will use a combination of research, a SWOT analysis and some concepts from the brand assessment framework introduced by Pravin M. Shah. 1 In addtion, I will use concepts from Aholts Brand Nation methodology to compare Romania with Morocco. Finally, I will conclude with an analysis of some of the actual and apparent branding strategies implemented by Romania. Perceptual Identity of Romania When Americans think about Romania, various images often come to mind: o Count Dracula o Famous Gymnasts (Nadia Comanenci) o Eastern Europe (Poor developing country) o Soccer - Gheorghe Hagi o Nicolae Ceausescu (Oppressive Leadership, Communism, Cold War) These mind bytes help to shape the view that Americans have of Romania and how they perceive the Romanian Brand. Background and Demographics Before delving into the brand history and analysis of Romania, it would be useful to review some of the background information and the demographics of the country: o Population: 21,673,328 o Languages: Romanian (Official), Hungarian, German o Communism Ended in 1989 o Labor Force Approximate Split: - 31.6% Agriculture - 30.6% Industry - 37.7% Services o 25% of Population is below poverty line o Roads/Rail System: Among the least extensive in Europe o Telecom: Among the fastest growing IT markets in Europe Where is Romania today and where is it going? One of the main goals for Romania is to become a full member of the European Union (currently scheduled for 2007). However, many structural reforms are still required before accession can take place. One of Romanias challenges is privatization of large businesses which is lagging behind peer countries as well as higher than average inflation for the region. Romania is also a member of CEFTA (Central European Free-Trade Agreement) with Hungary, Poland, Czech Republic, Slovakia, Slovenia, Croatia and Bulgaria. CEFTAs ultimate goal is to form a free trade zone in Eastern Europe. In 1999 Romania became a member of NATO which provides it with military ties to Europe and the United States. Romania has an uphill battle with respect to its improving its country image. Much of this is due to the way the global media has portrayed the country since the revolution in 1989. Romanias transition from communism has been challenging and it is a nation where 25% of its people still live below the poverty line. The government is marked with in fighting and known for widespread corruption. These negative images reinforced by the media remind western Europeans and Americans of Romanias communist past and the cold war. This tends to breed less trust and a poorer view of the country as a whole. According to Simon Anholt, Their brand is still strongly tainted with negative imagery acquired under Soviet influence, and the majority of foreign publics have not yet updated their perceptions. This is in contrast to other former Eastern Bloc nations such as Bulgaria and Poland, countries that are better organized and are doing a better job in purveying and controlling their country images. According to Anholt, This is a better country than most people think, so the world can be persuaded of the reality.2 o Median Age: 36.6 years o Political System: Republic o Population Growth -0.12% o Literacy: 98.1% o Sec. Ed. Enrollment: 70.1% o Airports: 3 Intl. 16 Domestic o Internet: > 4 million users o Inflation rate 8.6% o Large Scale Oil/Gas Reserves o Rich in coal deposits

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On the positive side, Romania has a growing middle class and has had some success in the automotive arena with its home grown Dacia brand. It is poised for opportunity as it readies itself to join the EU in the year 2007. However, how will Romania remove itself from existing perceptions and reinvent its image? As Jack Yan asks on the Branding Romania site, What is the real Romania?10 SWOT Analysis of Romania with Respect to Morocco and Attractiveness for Foreign Business
Strengths Government support of developing the Knowledge Sector efforts began in 2001 investing over 700 million Euros to promote the movement of technology from universities to industry. 50 Universities versus only 18 for Morocco. In general, European Universities are regarded much more than African Universities. Romania is strong in the areas of Computer Science and Software Engineering Romania ranks well ahead of Morocco in a National Center for Education Statistics study and only 5 positions behind the United States13 Hierarchy of social values: (Family environment is supportive and creative, competence and innovation are stimulated in society) Wide range of accessible e-services Success in Automobile industry with Dacia and Logan Brands Religious background is Christian (Catholic/Eastern Orthodox) and may be perceived by Americans as much more similar to western European countries than Morocco. High penetration rate of cable TV Member of NATO Labor Rate: Romania is ranked 72 in terms of labor rate by the World Bank which makes them a fairly cost effective country. However, Morocco is ranked at 100. Opportunities Growing relationship with EU, potential member of EU in 2007 will open markets with Europe further and legitimize Romania as a solid trading partner Increase collaboration between universities and companies to spur innovation Expansion in foreign markets outside of Europe such as the United States Tourism Image: Typically Romania was not known for tourism. However, with their Simply Surprising campaign, this is changing and Romania is rated as the 4th fastest growing tourist destination9 Weaknesses Corruption index is 88, worse than Morocco at 78. This is the level of perceived corrupted practices by government and businesses Potential social dissatisfaction due to low rate of improvements in quality of life Unstable economic development and slow progress with EU Low progress in political stability to satisfy EU requirements Aging population versus Moroccos very young population Skill shortages in technical professions (although the situation in Romania is better than Morocco) Roads and Rail System are among the least extensive in Europe Lack of tolerance of ethnic diversity (anti-Semitism and anti-Hungarian sentiment) Overall Morocco is more tolerant of other religions Poor environment for foreign investors5 Inadequate protection of intellectual property rights Tourism Image: Typically Romania was not known for tourism (see opportunity) Self-perception of population: In a recent survey only seven out of 1,076 Romanians said that what happens in their lives is the result of their own actions. Many people feel that fate or external factors are in control. This is most likely a by product of 50 years of Communism and lack of freedom. Inconsistent government support for private sector growth. The government has vocalized a policy promoting privatization, however, due to instability and leadership change, coupled with a culture that grew up under communist rule; support for privatization has been haphazard at best. Threats Potential social dissatisfaction due to low rate of improvements in quality of life Unstable economic development and slow progress with EU Low progress in political stability to satisfy EU requirements Competing globally, lack of efficiency, disconnects between education system and industry needs Loss of top researchers, scientists and engineers to other European countries

Anholt Comparison

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The following table is an estimate of the survey responses of Romania versus Morocco utilizing Anholts main dimensions on a scale from one to ten: Exports - Level of satisfaction with the products and services within the country Tourism - Image of the country as a tourist destination People - How welcoming are the people of the country perceived to be Culture - Perception of nations cultural heritage Investment and Immigration - Personal willingness to live and work in a country for a substantial period Governance - Respect for their governance, respect for human rights, decisions that uphold international peace and security, and international contribution to improving the environment and poverty reduction
Romania 5 Need to build external image Morocco 7 solid in specific areas Commentary Morocco rates highly for what it produces today (Citrus, Mining Products, Automotive etc.) Romania is emerging and very capable with Dacia Automobile for example Romania is 4th fastest growing country for tourism so their image is rapidly improving People in both countries are warm and welcoming. However, Morocco has an edge in this area. Romania is perceived as more weary and emerging from a repressed past Morocco is largely an Arab country and also has many Berbers who are largely unheard of in the US. Americans have some images of Romania from memories of the Olympics and soccer fans are familiar with Romanian players. Romanias religious and cultural heritage is closer to western Europes than Morocco Romania is emerging, but is still a dangerous country to live in. Romania has better universities than Morocco, but Morocco still dominates the Investment and Immigration category due to government support of reforms and new business Moroccos constitutional monarchy is very stable and focused on economic growth whereas Romanias Republic is struggling to reform itself from its communist past and trying to convert Romania in flourishing Free Market Economy.

Attribute Exports

Tourism

7 but growing very quickly, successful branding campaign 5 Fatalistic, formerly oppressed

9 known as exotic location

People

7 Hopeful, united around King

Culture

7 Christian, European

5 Muslim, varied Arab, Berber

Investment and Immigration

4 Dangerous country, good universities, lot of potential for investment

7 Government support is very strong, infrastructure is excellent, universities are improving

Governance

4 Not consistent, in transistion

8 Stable, Business Friendly

Past and Current Branding Campaigns in Romania Since escaping the grip of communism in 1989, Romania has embarked on a long and arduous journey towards a free market economy. In 2001 after a difficult decade of reforms, Romania launched and internal Open Doors

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Campaign that served as an umbrella brand for a set of coalitions aimed at improving economic conditions and fostering interaction of private enterprise and the government. 11 This made a lot of sense because of the prior history of 50 years of a closed government. Each coalition had a sub-brand: Tourism for Today and Tomorrow, Tech 21 and Pro Globe. This three pronged approach (Tourism, Technology, Global Trade) spawned a number of initiatives. One campaign Made in Romania came out of this program. Made in Romania had some initial success in gaining direct investment and educating private industry on branding. However, this campaign was not very effective. The concept is very plain and does not differentiate Romanian products. Made in Romania has no inherent message, either or good or bad. It is also likely to be accidentally copied by people so there is little control over the brand image. For example, we found one reference on website that said, Made in Romania stands for shame. A second branding effort launched as part of Open Doors was Romania: Simply Surprising. The website: http://www.romaniatravel.com/ is an example of the Simply Surprising Campaign targeted for tourism. However, this campaign was less effective as an international campaign for attracting foreign investment. There were many objections by industry to the adjective Surprising. Simply Surprising while appealing to a Tourist who wants to find the unexpected is exactly what a businessperson or investor does not want. First, when it comes to business, surprises are not always good. Second, by saying Simply Surprising, Romania may be portraying itself in poor light e.g. Well, you dont expect much from us, so anything you get will be a surprise. In contrast the campaign my team is proposing for Morocco Opportunity Unleashed is one that should appeal both to business people who want to gain some advantage from working with Morocco and to the Moroccan people themselves. The message delivered by Opportunity Unleashed is that working with Morocco is advantageous to businesses. Likewise the campaign speaks to the people of Morocco who should see the campaign as a positive signal that they will gain opportunities. In addition the campaign should tell the people that are intrinsically valuable to businesses looking to invest in their country. Stefan Liute of branding firm Grapefruit says of the Simply Surprising campaign that it was a campaign for campaigns sake. Not part of a bigger strategy. There were no long term objectives. No more campaigns followed afterwards. In actuality, a campaign did follow Simply Surprising and can be found at http://spirit.ro. This campaign The Spirit Romania: Liberation of the Moment is a very poor concept that fails in its ability to invite prospective businesses and even tourists. In an attempt to appeal to the sophistication of the west, Romania failed to transmit a positive and energetic message, thus losing and opportunity to attract attention. Conclusion Romania is country with a lot of potential, but it is hindered in its branding campaign due to the factors discussed in this paper. Specifically, the state of the current government, legacy of communism and the effect this has had on the overall culture of the country puts it at a disadvantage as compared with Morocco. Romania should do more to market its population of scientists and engineers coupled with its network of universities to attract new business investment. Its branding strategies need to be more encompassing and stronger while conveying a confident message. Romania should not be portrayed as a Surprise, but rather as real Bonus. In terms of perception, Romania may be perceived by Americans as an emerging country with a background and culture compatible with western values. However, many Americans and Western Europeans may have tainted views of Romania based on its past connections to communism and the former Soviet Union. For example, according to Iona Manea, managing partner at branding firm Loco, Many free citizens of Europe are confused between Budapest and Bucharest and Romania and Bulgaria. Romania has a long way to go in order to educate the world and change its global image. In contrast, while many westerners may not perceive Morocco as an emerging country suitable for new business ventures, its governmental support for growing global trade and aggressive implementation of reforms, enable Morocco as a brand to have more power than Romania. Furthermore, Romania seems to be too focused on gaining acceptance into the European Union, treating this future event as a panacea for their economic woes. British Journalist Tom Wilson sums up the situation in Romania as follows: Like most people who visit from the west, theyre struck by just how great the gap between Romania s international reputation and the reality of life in the country really is. A land of alpine mountains and medieval traditions, of deserted beaches and unending hospitality, no other European nation is so desperately in need of a PRtransfusion. The west still views the country through a frozen mythology that failed even to capture the countrys situation ten years ago.

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Bibliography 1 -The Brand Assesment, The Process to Evaluate Current and Future Brand Equity, McGraw-Hill, 2001 2 -http://www.brandingromania.com/?p=75 (Permission to Brand: Article by Michael Bird) 3 -Future Prospects for Romania: Scenarios for the Development of the Knowledge Society in Romania. Constantin B. Zamfirescu, Florin G. Filip, Boldur E. Barbat, EFFECTIVE DECISIONS; http://effectivedecisions.com 4 -www.transparency.org 5 -http://www.fdimagazine.com/news/fullstory.php/aid/1480/In_Dispute.html 6 -http://www.webometrics.info/university_by_country.asp-country=ro.htm 7 -Doing Business in Romania, Adam Jolly and Nadine Kettaneh, Kogan Page Limited, 1999 8 World Bank Rankings of GDP, Per Capita GDP 9 - http://english.hotnews.ro/Romania's-tourism-potential-no-4-worldwide-articol_42231.htm 10 - http://www.brandingromania.com/?p=16 11 Rebuilding Romania Through Private Sector Development, Center for International Private Enterprise (CIPE), ECONOMICREFORM Case Study, No. 0501 February 25, 2005 Washington, DC 12 http://www.thediplomat.ro/features_0106_2.htm, Romanias Makeover Strategy, Permission to Brand - The Diplomat, Bucharest, February 2006 13 National Center for Education Statistics, Slide 28 of 63, Proposed Strategies For Moroccan ICT Companies, Mehdi Sif, International Executive Service Corps

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