University of Chester: Apex Hotel's Russian Market Expansion Report

This report, prepared for a university assignment, examines the international marketing strategy for Apex Hotel's expansion into the Russian market. It begins with an introduction to the concept of international expansion and then conducts a PESTLE analysis to assess the political, social, economic, and technological factors influencing the Russian market. The report identifies franchising and joint ventures as suitable market entry methods, recommending a merger with Four Seasons Hotel Lion Palace St. Petersburg. The marketing mix is then discussed, focusing on product adaptation to cater to both Western and local tastes, promotional strategies using various media channels, and place considerations, including leveraging new trends to target the younger demographic. The report concludes with a summary of the key findings and recommendations for Apex Hotel's successful entry into the Russian market.

Marketing

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Contents
Introduction.................................................................................................................................................2
PESTLE Analysis........................................................................................................................................2
Market entry method...................................................................................................................................6
Recommendation.........................................................................................................................................7
Marketing Mix.........................................................................................................................................7
Conclusion.................................................................................................................................................10
References.................................................................................................................................................12

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Introduction
Expansion refers to the process of becoming greater or spread the business on high level.
(Windolf, 2018). It is require for the company to examine the foreign marketing environment
while expanding it to another market. After analyzing the marketing environment, the company
has to build the strong relation with the consumers. In the paper, the discussion is made on the
concepts of expansion for which “Apex Hotel” has been selected as it wants to expand the
business in Russia.
Apex Hotel is a hotel that offers the accommodation services to consumers (Apex Hotels,
2019). It operates the business in United Kingdom and now it wants to expand the business in
Russian market.
PESTLE Analysis
PESTLE Analysis is a tool that has been used to study the macro-environmental factors
that affects the organization performance (Rastogi, & Trivedi, 2016). It is best tool to evaluate
the cultural and marketing environment of Russia market which is require to evaluate while
expanding the business.
Political:
Russia is a largest country in terms of area. The government of Russia is also strong just
because of strong president. Russia is seeking to develop an adverse political and economic
environment. It always takes initiative to attract the investors to invest in their economy
(Kovaltchuk, Dedusenko, Blinova, & Miloradov, 2016). The hotel industry is also highly invited
to invest in the economy by establishing their business. It has been found that Apex Hotel has the

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best opportunity to expand the business in Russian market. There are many branches of Apex
Hotel in United Kingdom now it expands the business in Russia (Heritage, 2019).
Social:
Social defines the cultural, taste, and behavior of consumers towards the products and
services of the market. In Russia, the consumers profile is defined in different categories such as
consumer profile, purchasing power, and consumer behavior. The behavior of consumers is a
major factor for the hotel for operating the business. As the behavior of consumers affects the
business of hotel due to this is required to keep in mind the behavior of consumers while
operating the business.
Consumer Profile:
Russia is mixed population country where the media has been increases from 38 to 39.8
in the year 2018. The 24 years age of people contribute in the economy with the percentage of
26.6% and 55 years old people contribute by 29%. It is observed that 74.4% of population lives
in urban areas and the population of Russia is highly focuses on western culture (Trade Markets,
2018).
Purchasing Power:
The purchasing power of Russian people is not too stronger. The GDP per capita in
Russia is 721936 that mean $10743. The average annual salary is predicated at 440 952 roubles.
The rise in VAT affects the purchasing power of consumers in negative terms. Russia has
experienced a net decrease in consumption in January 2018 which has been arises again the next

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3 quarters such as 9.22%, 3.98% and 7.27% in first, second and third quarters respectively
(Trade Markets, 2018).
Consumer Behavior:
It has been seen that Russia is becoming the consumer society. The main purchasing
factors for the Russian consumers are brand, quality and the longevity of the product. Price is the
second preference of the consumers as these mainly focuses on quality and brand name of
product. Promotion usually attracts the people of Russia with the 57% as they visit several
outlets to make the best deals. About 49% of consumers refer the foreign product over local
products but somewhere, goods produced in Russia attract more and more people (Trade
Markets, 2018).
Economical:
Economic defines the economic situation of the country. It has been examined that the
economy has been growing with the 7% during the year 1998-2008 as oil prices raised rapidly
(Morder Intelligence, 2019). Russia does not have strong GDP and strong economy situation as it
have mix upper and middle economy in the market (Aris, 2019). Mixed economy may create the
challenges for the hotel related to cultural.

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(Source: Puffer, & Braithwaite, 2016)
Apart from it, the current GDP rate of the country is $1.65 trillion and it is ranked at the
11th number in countries in terms of GDP. It depicts that people of country have moderate level
of willingness to spent the money due to which the demand of guest to stay in hotel has been
reduces. But it is also observed that the tourist comes to visit the place helps to enhance the
number of guest for the hotel. As the country faced the economy challenges in past few years so
that the hotel have the chances to face it in the coming future as the economy of Russia is still
not stable (Puffer, & Braithwaite, 2016).
Technology
Technology describes the innovation related to the technology which helps to expand the
business or also helps in operate the business smoothly. It is observed that Russia is famous for
inventors, engineers as they have good skills related to IT, nuclear technology, space technology,
communication technology and the others. It is one of the largest IT market and the government

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of Russia also invest in technology (Export. Gov., 2019). It is beneficial factor for the Apex
Hotel as they can easily expand the business in Russian hotel industry but also operates the
business smoothly and effectively in it. The advance technology in attending the guest makes
their experience more wonderful due to which the number of guest has been increases.
Market entry method
As per the above discussion, it is observed that Apex Hotel has the opportunity to expand
the business in Russian market. It has been seen that the consumers of Russia prefers the local
products but 49% of people have high interest in foreign services. It depicts that the Apex hotel
has the good opportunity to enter it. There are many market entry methods that help the hotel to
enter the market such as Joint venture, partnership, sole proprietorship, franchises and the others.
It is suggested that the company can enter the market through franchises and joint venture.
Franchises:
According to the discussion, it is noticed that the economy of Russia faces the challenges
in 1998-2008 (Lane, 2018). The government of Russia always prefers that foreign investors
invest in the economy. It is an opportunity for the hotel to open the franchises of hotel in
different locations. The Hotel can open its franchises in Russian market but somewhere it faces
the challenges because the Russia is a mixed economy due to which they always prefers the
different culture and also have different taste due to which they have the chance to face the
challenges. It is observed that open the franchises in different locations with the different
concepts according the culture and environment to Russian people as it helps to grasp the market
share and also attracts the guest to take its facilities in easy manner. Franchise is a best option for

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the hotel as the visitors does not face any challenges in finding the hotels for accommodation
facilities (IFA, 2019).
Joint Venture:
Joint Venture defines the merger of hotel with the other hotel for the profits and the other
advantages (Sullivan, 2019). According to Russian technology, it is determined that Russia is a
number one market in terms of IT markets. There are existing hotels that offers the similar
services and also have high brand image in the market due to which the hotel face the challenges
related to competitors. It has been seen that Apex Hotel has high brand image in the market in
United Kingdom but in Russia it has to take care of some things that is why; it is suggested that it
has to merge with the other hotel. It has been evaluated that Apex Hotel has to merge with the
Four Seasons Hotel Lion Palace St. Petersburg as it have high brand value in Russian market due
to which 51% of people who prefers the Russian services will attract towards it and company can
attain the high success in business (The Luxury Travel Expert, 2018).
Recommendation
Marketing Mix
Marketing mix is a strategic tool that can be used by the companies to perform all the activities
effectively as it is a long term plan to survive in the market. It also helps the company to gain the
competitive advantage in the market. It contains the four elements such as product, price,
promotion, and place.
Product:

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It has been found that the Russian consumers are mainly follows the western culture and
their willingness power of spending the money is not high. It is a challenge for the company to
provide the luxurious services with the low prices so that the guest gets attracted towards it. The
best opportunity for the hotel is that the visitors come to visit the Russian market due to which
the chances of guest have been increases. The hotel provides the services to customers. The hotel
services are quite similar with the existing hotel of Russia and the difference in hotel is always
depends on the luxurious or poor services. It is suggested that the hotel has to offers the quality
of services to guest according to western culture with the local taste of consumers. Although,
49% of people prefers the foreign services but rest of them refers the local product of Russia that
is why; it is suggested that the company has to follow the both the culture foreign and local to
satisfy the guest. It has to allocate or assigned the different duties to the department so that they
attend the guest without any issue such as accountant department, reception, cleanliness, chefs
and the others. It has to use the new technology for payments, also for cleanliness, and the
others. It also has to provide some extra services such as free breakfast in the luxurious
environment. It can provide the small market facilities, bar, theater and also organize the
concerts for their entertainment and it also helps to grasp the market share (Liu, Li, Chen, &
Balachander, 2017).
Promotion
Promotion defines the awareness which is spread among the people. It is observed that
the hotel has to promote the services in the Russian market. As per the above analysis, it has
been seen that the hotel has to promote the services according to the new trends so that the age of
24 years gets attracted towards it. The hotel has to use the different marketing tools to promote
the services such as media channels, message strategy, target market and the others. There are

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various media channels that can be used by the hotel such as social media, mobile applications
and the others. Message strategies are also used by the hotel to promote the services in the
market (Stead, & Hastings, 2018). According to this strategy, the hotel has to send the messages
to guest through their mobile applications so that the customers gets the information about their
bookings, offers and vouchers so that they book their holidays with the hotels. It helps to
enhance the number of guest towards the services.
(Source: Wiggle, 2019).
Place
Place defines the area and distribution channels that can be used to distribute the services
from one place to another place. According to the above discussion, it has been seen that the
people of 24 years old contribute 26% in the economy (Aris, 2019). In this age, the demands of
consumers are fluctuated because they are also updated with the new trends. The demand of
customer will fluctuated due to which the hotel will face the challenges in the expanding the
business in Russian market. There are two or three channels that are used by the companies of
the other industry to distribute their services. It is suggested that the hotel has to update with all
new trends so that it get the success in business. The hotel provides the accommodation facilities

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due to which it does not require any distribution channel to place the services from one place to
another. It uses the technology to provide the services such as online bookings, different online
vouchers and many options to select for their holidays. Online Booking helps the visitors to book
their rooms before their visiting so that they did not face any challenge. Online website of the
company should be prepared in a manner that the guest check its entire requirement and imagine
the wonderful experience with the hotel.
Price
As per the above discussion, it has been seen that economy of Russia has been fluctuated.
The current situation of GDP has been decreases due to which the hotel will face the challenges
in the coming future. The purchasing power of consumers of Russia is not good and they mainly
focus on western culture. It is suggested that the company has to set the prices according to the
purchasing power of Russian people so that it attract the large number of consumers towards it.
Attracting the more guest towards the hotel helps to earn the more revenue due to which the
challenges that the hotel face will be reduces. It is suggested that the hotel has to implement the
cost leadership strategy. According to the cost leadership strategy, the hotel has to set the price in
order to become the leader in the market. It is recommended that the hotel has to adopt the cheap
price initially after getting the brand image in the industry; it has to implement the premium price
strategy to gain the competitive advantage and also to achieve the high success in the business
(Išoraitė, 2016).
Conclusion
At the end of the report, it is concluded that Apex hotel has the opportunity to enter the
Russian hotel industry. In the paper, the analysis has been done on the Russian market by using

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the PEST Analysis tool. According to analysis, it has been found that the some of the factors are
favorable but some of them affect the hotel in their business. The hotel face the economy
challenges, cultural challenges that is why; it is recommended that the hotel has to enter the
market with the joint venture, and franchises. The marketing mix is also suggested for the hotel
as it helps to gain the competitive advantage and reduces the challenges that it can face in the
coming future while expanding the business in Russian Hotel Industry.

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References
Apex Hotels. (2019). What We're About. Retrieved From: https://www.apexhotels.co.uk/about/
Aris, B. (2019). The Russian Economy Is Stagnating. Retrieved From:
https://www.themoscowtimes.com/2019/05/27/the-russian-economy-is-stagnating-
a65760
Export. Gov. (2019). Russia - Information Technologies. Retrieved From:
https://www.export.gov/article?id=Russia-Information-Technologies
Heritage. (2019). Russia. Retrieved From: https://www.heritage.org/index/country/russia
IFA. (2019). What is a Franchise?. Retrieved From: https://www.franchise.org/faqs/basics/what-
is-a-franchise
Išoraitė, M. (2016). Marketing mix theoretical aspects. International Journal of Research–
Granthaalayah, 4(6), 25-37.
Kovaltchuk, A. P., Dedusenko, E. A., Blinova, E. A., & Miloradov, K. A. (2016). Concept and
procedures of crisis management in Russian hotel enterprises. Journal of Environmental
Management & Tourism, 7(3 (15)), 473-480.
Lane, D. (2018). The political economy of Russian oil. In Business and State in Contemporary
Russia (pp. 101-128). Routledge.
Liu, Y., Li, K. J., Chen, H., & Balachander, S. (2017). The effects of products’ aesthetic design
on demand and marketing-mix effectiveness: The role of segment prototypicality and
brand consistency. Journal of Marketing, 81(1), 83-102.

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Morder Intelligence. (2019). About the Market. Retrieved From:
https://www.mordorintelligence.com/industry-reports/market-entry-tourism-and-hotel-
industry-in-russia
Puffer, S. M., & Braithwaite, K. (2016). The Russian Management Revolution: Preparing
Managers for a Market Economy: Preparing Managers for a Market Economy.
Routledge.
Rastogi, N. I. T. A. N. K., & Trivedi, M. K. (2016). PESTLE technique–a tool to identify
external risks in construction projects. International Research Journal of Engineering
and Technology (IRJET), 3(1), 384-388.
Stead, M., & Hastings, G. (2018). Advertising in the social marketing mix: getting the balance
right. In Social Marketing (pp. 29-43). Psychology Press.
Sullivan, D. (2019). Joint Venture Accounting Methods. Retrieved From:
https://work.chron.com/joint-venture-accounting-methods-28514.html
The Luxury Travel Expert. (2018). Top 10 best luxury hotels in Russia. Retrieved From:
https://theluxurytravelexpert.com/2018/06/18/top-10-best-luxury-hotels-russia/
Trade Markets. (2018). Russia: Reaching the consumer. Retrieved From:
https://santandertrade.com/en/portal/analyse-markets/russia/reaching-the-consumers
Wiggle. (2019). Mobile Application Design. Retrieved From:
https://www.wiggledigital.co.za/mobile-app-design/
Windolf, P. (2018). Expansion and structural change. Routledge.