Topic 12. Marketing for Socialism

Read: Kravets, Olga, and Özlem Sandıkçı. “Marketing for Socialism: Soviet cosmetics in the 1930s.” Business History Review 87, no. 3 (2013): 461-487.

The Soviet economy has often been characterized as the “shortage economy.” Why did then the Soviet enterprises advertised their consumer-good production? This case study of marketing practices by the state-owned trust TeZhe (ТэЖэ) in the 1930s helps to find an answer. TeZhe was one of the biggest European manufactures of cosmetics and body-care products in the 1930s. The author argues that the firm applied a variety of marketing technologies such as broadening product assortment, targeting prices, setting up a retail network, sales promotion, and advertising. These marketing tactics were similar to those employed by Western firms, such as Colgate Palmolive or Lever Brothers.

Questions for preparation:

1. Why did TeZhe offer a broad product assortment in a country whose population had low purchasing power?
2. What kind of values did TeZhe try to indoctrinate Soviet society into, through different marketing technologies? Please, provide examples, using images of the packaging, advertising, branding, or sales promotion.
3. How did TeZhe build on the imperial experience in marketing the beauty industry? What did the Soviet enterprise inherit, and what did it refuse to accept?
4. TeZhe was a state-owned enterprise and operated in a system of planned economy. How would you explain the pricing discretion and the negotiated prices charged by TeZhe? What does this surprising fact tell us about the Soviet economy?
5. How realistic were the standards set by the Soviet beauty industry through its imagery? What effect did it have on female consumers? How would you assess the overall impact of TeZhe’s activity on consumer welfare?