UPMARKET BRANDS OVERVIEWMoscow, August 2007

UPMARKET BRANDS GROUPS

LUXURY BRANDS

Motorola D&G editionDolce & GabbanaLouise VuitonHermesLexus Land RoverHugo BossBulgari Vogue Cigarettes

CONNOISSEURSHIPBRANDS

Dunhill CigarettesLonginesAmerican ExpressMartell

LUXURY BRANDS OVERVIEW

Motorola was the first company which made the designer edition of cell telephones. For development of new stylish design Motorola engaged the most famous fashion designers Dominico Dolce and Stefano Gabbana.The campaign started in Russia in 2006 year. The design of telephone made in gold color. Specially for this edition were written the music for phone ring.In advertising campaign also took part the designers Dominico Dolce and Stefano Gabbana.

MOTORAZR V3i DOLCE & GABBANA unites the elegance and unique design of Motorola with the individual style and attitude of DG. This distinctive gold handset comes with a fashionable lanyard and is loaded with DG ringtones, screen savers & wallpapers. Available for purchase in the same exclusive collection are a DG gold eel skin carry case, S200 gold headphones and matching compatible Bluetooth® enabled H700 headset. MOTORAZR V3i DOLCE & GABBANA, perfect marriage of design and technology.

Motorola

Dolce&Gabbana is the Dream: a luxury brand that owes its incomparable appeal to superior sartorial content and stylistic originality.

Dolce&Gabbana evolves but never changes radically.An unmistakable, timeless style standing for an unconventional luxury which, season after season, combines innovation with the

strong mediterranean flavour of its origins.A brand whose essence lies in its contrasting yet complementary features.

The Dolce&Gabbana man and woman are individualists who know how to get the most out of life, and see clothes as an expression of their personality and lifestyle.

Dolce&Gabbana

Since it was founded in 1854, Louis Vuitton has been a byword for stylish, elegant luggage. LV has fashioned its legend for travel adventure by creating luggage, bags and accessories that are as elegant as they innovative. Today, as in the past, the House cultivates its prized craftsmanship, the passion for skilled handwork and the most exquisite materials to create products whose unique value is recognized worldwide.

Each stunning detail and signature element respects this long tradition of excellence.

Within LV’s workshops, extraordinary leather craft is handed down from master to apprentice, generation after generation.

There is a certain sleight of hand and keenness of eye that no machine could ever replace. It is this unique quest for perfection that guaranties the lasting quality of LV products.

Louis Vuitton

LexusEstablished in the early 1980s and launched in 1989, the Lexus marque soon became associated with quality, luxury and superior customer satisfaction. The brand reputation grew quickly until, barely a dozen years after its founding, Lexus became America's best-selling line of luxury motor vehicles

Slogans: Aspiring to the perfection, changing to betterAspiration for perfect motionPositioning Statement: The car with unsurpassed driving performance

Land Rover

In the mid 1960s, Land Rover became convinced that the market for a more luxurious four wheel drive vehicle was about to take off. And so began Land Rover´s mission to develop a vehicle which would combine saloon car levels of performance, handling, ride comfort and refinement with all the ruggedness and 4x4 ability of a Land Rover. In 2001, New Range Rover was launched. It is easily the most capable luxury vehicle in the world, with new chassis, new suspension, new drivetrain and new styling. New Range Rover is continuing the remarkable story of a remarkable vehicle.Slogans: From the top of positionThe highest value – is inspiration. Look at the world newly.Positioning Statement: the car which confirm the status of its’ owner and inspire on new level achievements

Land Rover

Hugo Boss The strengths initially generated by thesubstantial and sustained success of the BOSSbrand – first introduced as a classical men’sbusinesswear line in the 1970s – have beenextended to a range of other fashion segments. Today the BOSS image is transported by fourindependent and distinctively positioned linestargeting various needs.

The menswear collections are focused in BOSSBlack on elegant businesswear, with BOSSOrange providing up-to-date casualwear and theBOSS Green collection offering performancesportswear. Those who demand exceptionalmaterials, craftsmanship and exclusivity willappreciate the luxurious tailored fashions ofBOSS Selection.

At the same time, the womenswear segment hasbeen expanding both systematically andsuccessfully. The refined looks of BOSS Blackand the hip, creative fashions of BOSS Orangeare now available for women as well. The HUGO brand, launched in 1993, addsunconventional accents and uniquely differentstyles. The line has included womenswear sincethe end of the 1990s.

Bulgari

Quality and excellence are the basis of Bulgari’sculture. The corporate philosophy reflects thesame commitment within the workingenvironment with the aim of achieving anorganization aimed at the full satisfaction o thecustomer.Excellence for Bulgari means the perfect balancebetween top quality products and impeccableservices worldwide.The concept of Excellence is based on four mainpoints:

- Outstanding Quality;- Distinctive Style;- Outstanding Products;- Customer Delight.

Vogue Cigarettes

As the result of junction of BritishAmerican Tobacco with his Americancompetitor Rothmans International in 1999the brand portfolio of the united companieswas enlarged with the line of amazingvariations of Vogue cigarettes.The first appearance of the famous VogueSuperslims and Vogue Superslims Mentholtook place in 1987. In Russia thedistribution began since 1990. The Voguebrand has become a leader of “women”cigarettes in Russia. From year to year thebrand continuous to increase the sales volume and keeps the leading position inpremium segment among cigarettes forwomen. Success of new brand version –Vogue Arome – exceeds the boldestexpectations. In March 2007 was launchedsuper premium version Vogue Blancheand Vogue Noire. These ultra lightcigarettes are filled with deep, multi-gradetastes. Smoking of Vogue Blanche bringsthe feel of coolness, Vogue Noire giveswarmth.

LUXURY BRANDSCONCLUSIONS• Brand of the “Luxury” group use “Product as the hero”

approach in communication : every creative executions is built as a presentation of a product;

• Brands RTB are mostly visual, based on their appearance/image, visual style of the pictures;

• The most of brands look cold, melodramatic, superficial, stylized and ostentatious. Dolche & Gabbana also looks whimsical.

• Non of the brands have vivid image, is full of human emotions or joy of life. Everyone looks quite egoistic, like saying that its owner will dominate among others who don’t belong to the owners.

CONNOISSEURSHIP BRANDS OVERVIEW

Dunhill Cigarettes

• .Dunhill International brand was launched by Rothmans International Company. World wide famous cigarettes have become an attribute of luxurious life style.

These cigarettes are the subject of preference of high society. The brand distinction is refined taste of American blend, low contents of nicotine and original packaging which is easy to remember and recognize (identify).

In December of 2006 was launched he new brand of super premium segment Dunhill Top Leaf, distinguished by special style and individuality.

Dunhill Top Leaf cigarettes are made of upper leaves of Virginia tobacco sort selected by experts of Dunhill Tobacco House. These cigarettes have a bright taste and aroma.

Slogans: Bright individuality. Individuality of aroma.Taste of the present. Real tobacco.

Martell was created in 1715 and is the oldest of all great cognac houses. Since then, Martell has carefully preserved the integrityand reputation of the cognacs that bear its name, remaining loyal to the inspired and independent spirit of its founder: Jean Martell.

As a result of its blending using the finest eaux-de-vie with a high proportion of Borderies,the specific Martell method of double distillation and the use of fine grained "Tronçais type" oak wood. Martell is a unique cognac wuth a light, floral, round and elegantcharacter.

Martell

Martell

Longines Since its creation in 1832 in Saint-Imier, Switzerland,Longines has played a pioneering role in numeroustechnological breakthroughs while displaying its elegancearound the world.

Longines made history in the world of sports byintroducing in 1912 the principle of an electric wire, whichat the start and finish of a race, activated and stopped thetiming mechanism. It has since been appointed officialtimekeeper for many international sports events, includingmany winter and summer Olympic Games. Longines hasalso been associated with the history of aviation andnavigation. All Longines watch lines offer a uniqueprecision and elegance, as stated in the company’sadvertising campaign, "Elegance is an attitude".Two Russian celebrities are taking part in advertisingcampaign of Longines around the world: Oleg Menshikovand Ingeborge Dupkunayte.

American Express The launch campaign of American Express credit cards started in December 2005. The main idea of campaign that it is an exclusive club for well-to-do people.

In campaign took part Russian celebrities: Tatiana Vasilieva (the actress)Evgeniy Greshkovets (the writer)Arkadiy Novikov (the victualler)

CONNOISSEURSHIP BRANDSCONCLUSIONS• All brands of the group are built on Expertise but differ on the

level of creative approach from each other: • “Product is the hero” is used also, but opposite to “Luxury” brands,

the product itself is used as the brand’s RTB. Its design, pack and qualities assist to deliver proofs of Expertise within the segment/or category;

• “Expert/opinion leader endorsement” is used by brands which are not able to visualize their RTB directly. Branded image of an experts is the RTB for a brand.

• Brands which use “Product as the hero” look noble and stylish, but don’t deliver much of emotions.

• Brand which use “Expert endorsement” have noble image too, but also deliver joy of life and emotions because of people images.

GENERAL CONCLUSIONS

GENERAL CONCLUSIONS• “Luxury” brands dominate in Russian market of upmarket brands.

Main reason for this is the lack of consumer culture because of fast development of the market in a shot period of time (in about a decade) which led to:

• Many consumers aren’t much experienced with such brands: many of them are newcomers who consume such products rarely;

• Many consumer perceive luxury in “old money” way: expensive, exclusive, add status of its owner, appreciated by others;

• Many consumers think that if a brand is upmarket one it must be well-know, easy-recognizable and appreciated in this way by many people;

• Many consumers understand quality of super-premium brand as the mix of price and premium/up-scale image, don’t take in account heritage or products uniqueness;

GENERAL CONCLUSIONS (cont.)• “Luxury” brands are oriented for wide group of consumers

thus more advertised and more know; and because of this there are a lot of fakes in the market that also aims awareness growth.

• Another reason for this domination is Russian consumers’ perception of super-presumes in the Oriental way as the sigh of Power. We assume that it prevents development of New Luxury and growth of consumers’ connoisseurship, because consumers do care about brand appearance and status more than about it’s quality and consumption features;

GENERAL CONCLUSIONS (cont.)• We can assume that brands from the rest two groups are

more demanded by consumers who:

• Either joined the super-premium segment at the beginning of its development and got enough experience by today. These are more people who have a fortune and had been consumed super-premium brand a decade at least.

• Or positioned themselves as unique/independent personalities who settle but not follow the mainstream trends. These are more the new-bourgeoisie or well-paid yuppie who are open-minded, free from social conventions, very self-confidence and can pay for their choice.