RIGA - In 2009, the world experienced unprecedented economic developments that affected literally every nation on the globe. Stock markets collapsed triggering the demise of some of the most revered financial institutions worldwide. The financial crisis, which erupted in July of 2007 with the collapse of the sub-prime market in the U.S., reached its peak in 2009. As outlined in the March 2009 report by the Council on Foreign Relations, some of the reasons leading to the near-collapse of the international capital markets included an abundance of inexpensive capital, the issuance of mortgages to borrowers with a high risk of default, the securitization of these mortgages into complex assets, and the extensive use of leverage by financial institutions.
Stabilization of the financial sectors was finally achieved largely thanks to massive injections of taxpayer funds into the world’s biggest financial institutions. While the longer-term ramifications of the crisis are unknown as of yet, countries worldwide have drawn very different conclusions from the economic turmoil.
While U.S. Federal Reserve Chairman Ben Bernanke has said that the American economy will “emerge from this period with renewed vigor,” German Chancellor Angela Merkel and French President Nicolas Sarcozy have struck a more moderate and cautious tone, urging toughening of market regulations today and tomorrow, as “the day after tomorrow will be too late.”
In the fourth quarter of 2009, Latvia was not in the best economic shape. Deutsche Welle, Germany’s international broadcaster, has recently called the Baltic country “Europe’s most extreme, dramatic economy.” Apparently, Latvian businesspeople have all the reasons to put Frank Sinanta’s lyrics “If I can make it here, I can make it anywhere” above their office doors. However, despite many challenges, there are more than a few success stories in the Latvian business community. Entrepreneurs have learned hard lessons and are looking to the year ahead optimistically for growth and recovery.
Olga Kazaka, Partner and Managing Director at the Riga-based PR agency A.W. Olsen & Partners/ Scholz & Friends Riga, believes that the company’s current success is largely based on the strategic business decisions made in the past. In 2008, A.W. Olsen & Partners became an independent partner of the Scholz & Friends European Network, thus combining in-depth local expertise with access to the broad pan-European partnership network. The team at A.W. Olsen & Partners respects deeply the traditions and communication philosophy established by the founding father of the firm, Alexander Williard Olsen.
“2009 was quite a successful year for us,” says Kazaka, “That was a year of challenges and a year of experiments. We’ve participated in one of the biggest marketing campaigns in the history of the European Union – the European Parliament election campaign that was realized in 27 member states of the EU. The aim of the campaign was to encourage EU citizens to take part in European Parliament elections that in Latvia took place on June 6, 2009. This campaign was really interesting for its innovative approach: orientation on feedback from the audience, wide use of social media, huge 3D installations, multimedia technologies and other innovative elements. Our agency was responsible for the realization of the campaign in Latvia.”
Speaking about doing business in 2010, Kazaka underlines the importance of drawing on the firm’s international expertise, “For us next year will be the year of international cooperation development. Many of our clients are going to expand their businesses in new markets, for example, in Russia or in European countries, so we will use more actively our international resources. At the present moment there also is an idea to develop a communication network for the companies who operate in Nordic and Baltic countries. Clients of this network would receive highly professional, effective, integrated and economic communication solutions in all the target states.”
Kazaka believes that the main methods of customer attraction and retention in 2010 will be based on experimenting with social media, viral and guerrilla marketing. “Modern consumers positively react on interactive, personalized and non-standard communication,” she says. “A very important question to deal with for the communication specialists will be the preservation and increase of trust in brands, since in a crisis situation many brands lose their position in the hearts and minds of consumers.”
Kazaka is confident that 2010 will be just as successful for A.W. Olsen & Partners as was 2009. “I would say that our “big secret” is that we are flexible. In a period of economic crisis, that is very important. Today many clients are expecting fast results out of the communication process. This trend remains real in 2010. Our advantage in this situation will be an ability to offer individualized, effective and low cost solutions. One more important moment is that we offer solutions for the clients’ needs, not just PR, advertising or a marketing campaign. Our clients expect us to be focused on the results, not the process.”
Speaking about the future prospects of the PR sector in Latvia, Kazaka remains optimistic. “Communications today is important more than ever before. Smart companies are investing in communications and relationship development with their target audiences. They will be the winners during the crisis period, as well as after the economy recovers. Then the profit margins will be narrowing; it is very important to re-evaluate the effectiveness of the communications investment strategy. In 2010, businesses will have to clearly formulate their priorities, be more selective and targeted in their communication. Inside the communications field, culling the weak players from the marketplace will continue, leaving the stronger businesses to capitalize on the abundant opportunities that will emerge after the economic shakeout.
Kristine Guseva, Sales and Marketing Manager at the Baltic Beach Hotel Spa and Resorts, one of the hospitality sector leaders in Latvia, is happy to share the secrets of the hotel’s success in 2009, “Our success is partially based on the wealth of natural resources that the Jurmala resort is famous for - mild climate, beautiful sea, white sand, healing air, different types of mud and mineral waters.”
In 2010, the hotel will continue to rely on the mix of healing natural resources, innovative spa technologies and high professionalism of the hospitality team. Having a unique offer and diversifying the range of services will be essential to maintaining leadership positions in 2010, underlines Guseva, “We offer a wide spectrum of services that are flexible to accommodate a variety of customers and needs, i.e. business, health, spa, events and conferences, recreation for families or a romantic escape.”
Going forward, the hotel will continue to build upon growth opportunities and modest improvements in growth figures are expected. “2010 will be a challenge - the test of our adaptability and pro-activity. In its approach Baltic Beach Hotel has become more individual with customers and partners. We have become more outward looking as well – we’ve been learning from the mistakes of others in the industry. Our team is working hard on retaining the loyalty of existing customers and partners, seeking opportunities in new niches, developing new markets and reviving currently inactive customer segments.”
Evija Majevska, Commercial Director of Trade Centers, Linstow Center Management, was pleased to underline that business development and growth is feasible even in these economically challenging times. The company manages shopping centers in Latvia with total floor space of 228,000 sq. meters, and in Estonia with floor space of 48,000 sq. meters. Last year over 43 new stores opened at the Galactico shopping centers managed by the company. According to Majevska, the shopping centers and their tenants have successfully adapted to customer needs. As a result, the turnover of shopping centers exceeded the median industry indicators for 2009. “Quality marketing and effective property management aimed at the tenants’ cost optimization is very important in the shopping center management sector.
Linstow is the pioneer in offering innovative solutions in both of those fields,” says Majevska. Even in the crisis Linstow continues to invest in its shopping centers (energy efficiency programs, innovative electronic products), as well as in new projects. In 2010, the company will continue designing and planning works, and the building of the projects will depend on the market situation.