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Russia: Polaroid Faces Dilemma Of Too Much Success

Moscow, 23 July 1997 (RFE/RL) -- Nobody understands the Russian market curve quite as well as Rick Winter. He's been in charge of Polaroid sales in Russia since 1993. He witnessed the 24-month climb of Polaroid's instant-camera sales from zero to the equivalent of $200 million in 1995, as Russia zoomed to the largest market for Polaroid in the world after the United States.

But today Winter has a problem. Polaroid's success in penetrating the Russian market was so huge, there are fewer and fewer Russians who don't already have the camera. After the flash, Polaroid has to wonder, how to go on selling?

Polaroid's story in Russia starts a little earlier than the collapse of the Soviet Union in December 1991, when the Russian market opened up to most American products. Soviet scientists had invented an instant camera of their own, but it was much too bulky to be attractive to amateur photographers. In Cambridge, Massachusetts, Polaroid executives decided to invest in Soviet camera technology by manufacturing printed circuit boards at a plant in Obminsk. These were then exported to Polaroid camera assembly factories around the world. That venture started in 1987, and it's still going strong.

The revolution occurred for Polaroid in 1993. That's when sales exploded, Winter remembers. There were lines outside the building from early in the morning of people waiting to buy cameras. The company's immediate problem was to turn these unruly crowds into a manageable distribution network.

Winter was already warning that a downturn was inevitable. By the end of 1996, sales were already dropping, and this year they are likely to be $100 million.

The sales surge was accomplished with little promotional spending. Now advertising is necessary to try to stabilize demand. According to independent media surveys, Polaroid spent $2.1 million on television and print advertising in 1996. Kodak spent about $1.9 million.

Winter says Russians rushed to buy Polaroids -- paying $45, almost double the price U.S.consumers pay -- because of the novelty, and also because cities like Moscow had very few accessible, reliable photo laboratories for processing film.

The passport which every Russian must carry as a domestic I.D. is actually a booklet, like the standard foreign passport, and supplies from Soviet stocks are close to exhausted. That's potentially big new business for Polaroid, but only if the government can agree with Russia's parliament on a laminated photo-card to replace the old document.