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FOUNDATION FACTORS OF THE GROWTH OF FAST-GROWING «GAZELLE» FIRMS'
GALINA KOLODNYAYA
Ph. D., Economics, Professor of Department of Microeconomics The Finance Academy under the Government of the Russian Federation
KEYWORDS
Fast-growing firms; «gazelles»; co-creating unique value; quick response to ongoing changes; molecular marketing; non-technological innovation.
The modern Russian economy has recently seen the formation of a number of firms which are called «gazelles» by analogy with the world's most endurant animal able to develop high speed and overcome long distances running for several hours or days. David L. Birch, an American economist, was the first to discover the phenomenon of fast-growing firms in the late 1970s. The world practice is to describe fast-growing firms or «gazelles» as middle or small business firms having the average annual revenue growth of more than 20% during five or more consecutive years. The phenomenon of Russian fast-growing firms was identified during the empirical study undertaken by the Finance Academy under the Government of the Russian Federation the results of which were published in the monograph «Competition in the Russian Economy. The Reasons of Success and Failure» (Moscow, «Intrust» financial company, KnoRus, 2007). In most industrialised countries the percentage of fast-growing firms is not more than 3-5 % while in Russia it ranges from 8% to 15%. It can be explained by a great number of unoccupied market niches in the Russian economy as compared to long-established foreign markets.
Russian fast-growing firms are entrepreneurial by nature because they are phenomenally responsive to the minor changes in the market and able to react immediately to the environment transformation. The ability to «sound out» the market helps the firms to produce the product demanded by the buyer. The success of Russian «gazelles» results from the active use of innovations in developing, producing, promoting and distributing new products. The major success factor in fast-growing firms in Russia is based on the concept of creating the most possibly perceived value for the buyer. The awareness of consumers' preferences enables the firms to produce the product demanded which has a set of properties of great importance for the buyer. The objective of creating a product beyond consumers' expectations as well as the desire to prolong the manufacturer's temporary monopoly makes fast-growing firms continuously apply innovations. «Gazelles» are able to make the basis for the continuous growth of the Russian economy.
ABSTRACT
34
1. INTRODUCTION
Successful operation of modern businesses in the constantly changing environment and under the pressure of market risks is largely determined by their sensitivity to market transformation. To remain competitive on the market a firm is forced not only to react to current changes but also to predict future events. Successful performance is achieved through the firm's realisation of the concept of creating the most perceived value for the buyer, which means that the manufacturer produces a product for which there is a market demand and the product has a set of properties of high importance and significance for the buyer. It enables the firm to grow ultra fast because there are no demand limitations and realisation risks are minimised.
It should be noted that the phenomenon of fast-growing firms, referred to as «gazelles» by analogy with the world's most endurant animal able to develop high speed and overcome long distances running for several hours or days, was identified by D. Birch in the late 1970s in the USA [1]. In his research the American economist attempted to clarify the effect of firms' moving from one state to another on the level of employment. He monitored the development of certain firms by analysing private records of the firms' creditworthiness. The research resulted in sensational findings - most jobs are created solely by small firms. Among these small firms were 5% of those which were the most dynamic and whose functioning provided for 80% of new jobs. «Gazelles» featured high enough average annual revenue growth of more than 20% during five or more consecutive years.
Similar findings were made in the early 1980s in Germany. Analysing the reasons for continued increase of German exports G. Simon, head of strategy and marketing consulting firm «Simon, Kucher&Partners», arrived at a conclusion that it was the activities of middle and small size firms that caused the increase of German exports [2]. Being scarcely known leaders both in German specific market niches and those of many foreign countries (but for a limited amount of customers) they were referred to as «hidden champions».
Evaluating the success markers of «hidden champions» the German economist concluded that there is no magic formula of fast-growing firms. The continued success of most of them is explained by the need of regular concentration on dealing with urgent matters and extensive day-to-day improvements. The detailed analysis of the activities of successful fast-growing firms enabled G. Simon to describe the German «gazelles» as «hidden champions» having the following features:
• being small and middle size businesses;
• having more than 50% share of the world market;
• producing products which are often «invisible» or low-key;
• having fantastic ability to survive;
• having considerable export share and contributing significantly to the national balance of payments;
• actually being global competitors;
• mostly having a family-like form of business organisation;
• being successful but not «wonder firms»[2].
«Hidden champions» are highly specialised firms which have developed long-term confidential relationships with their customers through which they obtain detailed knowledge of the market. Close interaction with customers makes it possible to produce goods of the greatest perceptive consumer value as well as continuously improve these goods to meet the customers' demand.
2. «GAZELLE» FIRMS IN THE RUSSIAN ECONOMY
The phenomenon of Russian fast-growing firms was identified during the empirical study undertaken by the Finance Academy under the Government of the Russian Federation the results of which were published in the monograph «Competition in the Russian Economy. The Reasons of Success and Failure». The specialists of «Expert» media-holding joined this research. Russian «gazelles» are middle size businesses whose annual turnover ranges from 10 to 400 million dollars with a turnover increase of 20% five or more years running. The analysis of Rosstat data covered more than 13 thousand firms for the period from 1999 to 2006 among which 6525 firms were identified as conforming to the criteria of fast-growing firms. The analysis of the activities of 6525 firms showed that the average annual growth of 20% and more (in non-inflationary terms) during the period of seven years was typical of 38.5% of the firms while 7.5% of the firms achieved the growth of more than 70%. The drop in sales (negative growth) was typical of 20% of the firms. The growth of sales from 0 to 10% was featured by 23.5% of the firms while 18% of the firms showed the growth of sales from 10 to 20%. The analysis revealed a high share of fast-growing firms or «gazelles» in the middle size business sector. It should be mentioned that in most developed countries the share of fast-growing firms is not more than 3-5% while the share of Russian fast-growing firms is from 8 to 15%.
Domestic fast-growing firms can be found in different industries of the national economy. Some of the «gazelles» operate in the highly competitive sectors of economy. For example the firm «IPG Photonics» controls 75% of the world market for fiber lasers. Its produce differs from that of its copmetitors by higher capacity and compactness. «IPG Photonics» is growing at the annual rate of 30-40%.
Most Russian fast-growing firms operate in the most vividly stagnating sectors of the national economy such as light industry. For example, the firm «Gloria Jeans» has a 30% share of the domestic market for children's clothes and increases its turnover by 40% a year. Being the leader of the domestic shoe market, the firm «Ralf Ringer» features the annual turnover increase of 40%. The Russian toothpaste producer «Splat - Cosmetics» has the market share of 5% with the average annual sales increase of 140%.
The largest number of Russian fast-frowing firms can be found in the food, textile, shoe, furniture, and chemical industries as well as in the production of non-metal goods, engineering, transportation and communications (Table 1).
Table 1. Small and middle size firms' share of the total group sales of all businesses in the industry [3]
Industry Large businesses in the industry (%) Middle size businesses in the industry (%)
Commerce 36.3 63.7
Food, textiles, furniture 18.6 81.4
Construction 22.6 77.4
Finance, leasing, real estate 71.2 28.8
Engineering 38.2 61.8
Chemicals and non-metal materials 18 82
Electric power engineering 40.2 59.8
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Oil, gas, petrol 92,1 7.9
Transportation and communications 84.3 15.7
Metallurgy and metalworking 8.8 19.2
Science, education, health care 27 73
Other minerals 57.1 42.9
Agriculture, fish industry, forestry 0 100
Others 41.8 58.2
The analysis of Russian «gazelle» firms' operation showed that during the period of economic growth of 1999-2008 they were growing at the rates much higher than those of the national economy in general (the annual rate of growth of the Russian economy was 6.5%). During the crisis year of 2009 the GDP of the Russian Federation decreased by 7.9% and some of the «gazelles» slowed down a little while most of them continued to develop effectively. Most fast-growing firms took the opportunity of the crisis and used it as a stimulus to increase their efficiency and market share. They worked hard at the improvement of their inside business processes, effectively implemented the policy aimed at keeping the customers' goodwill, developed innovative products, produced them and introduced them into the market, used progressive management methods and expanded their production.
Before evaluating the national economy we should note that its growth had long been determined by successful development of large businesses and favourable world market conditions, i.e. high prices for oil and gas. Later the sector of large businesses featured a slowdown in the rates of growth. There was a shift of growth to the sector of middle size firms whose business involved activities other than exploration for mineral resources. Nowadays the national economy is undergoing the formation of a highly competitive sector of firms whose growth rates surpass the average growth rates of national industries. The comparison of summary indicators and the share of large and middle size firms in 2006 shows that the total sales of large and middle size firms in Russia are approximately the same (Table 2).
As can be seen in the table, the share of large businesses in the sales summary indicator is 55.6% while the share of middle size firms is 44.4%. As compared to middle size businesses large businesses are mostly capital intensive which can be proved by a substantial large business share in the fixed assets and intangible assets summary indicators (77.7% and 73.3% correspondingly). However, in the research and development summary indicator the large businesses' (50.5%) and middle size businesses' (49.5%) shares are almost the same, which allows us to state that middle size businesses are highly innovative.
Tabte 2. Summary indicators and the shares of large and middle size firms in 2006 [3]
Indicator Large businesses' share (%) Middle size businesses' share (%)
Sales 55.6 44.4
Fixed assets 77.7 22.3
Intangible assets 73.3 26.7
Net profit 76.6 23.4
Creditors 41.3 58.7
Long-term debtors 70 30
Short-term debtors 49.7 50.3
Research and development 50.5 49.5
The research undertaken by a number of Russian economists provides similar results. For example, the expenses of superlarge Russian businesses on research and development account for 1% of sales while the world's leading pharmaceutical companies' expenses account for more than 20% of their turnover. The extremely low percentage of expenses on research and development prove that innovation has not become top priority for large domestic businesses and has been omitted in their corporate strategies. Superlarge businesses can be referred to as innovators exclusively as opposed to woefully low indicators of the remaining Russian companies. In contrast to the largest international companies large domestic firms have a considerable technological lag.
In contrast, fast-growing firms are highly innovative by nature because it is the innovation that is a part and parcel mechanism of «gazelle» firms' operation. «Gazelles» conceive and implement innovation as a vital necessity to survive and generate high earnings, thus to grow fast and develop effectively. Doing so, fast-growing firms can use both technological and non-technological forms of innovation. The fact of introducing an innovative product into the market enables the firm to receive high earnings for the lack of similar products on the market. Innovation can take the form of ingenious promotion of the product or updated traditional products with a new set of qualities which can only be adequately evaluated by the consumer. The most important point is that «gazelles» bring innovations to a successful business usage, thus converting an idea into a specific consumer value.
Having been introduced into the market the innovative product provides for a temporary or innovative monopoly, thus it ensures high earnings because it is unique and there are no similar products on the market. The prominent representatives of institutional and evolutionary theory R. Nelson and S. Winter argue that the «profit generated by successful innovation is a nonequilibrium phenomenon. This profit is mostly the result of overtaking the competitors due to innovation» [4]. Being aware of the temporary character of competitive advantages, fast-growing firms never stop working at innovations. The desire to ensure high earnings in the future when the innovative product stops being ingenious and is widely used by competitors forces fast-growing firms to improve their innovative products contineously and search for further innovations, which will give them the right to have another temporary monopoly.
Innovations implemented by fast-growing firms can be of a breakthrough character and can be related to the production of new goods and services (according to Joseph Alois Schumpeter) as well as the introduction of new ways of production, breaking into new markets, developing new sources of raw materials, establishing organisations of a new type [5]. Innovations can be of a scale not large enough to cause crucial changes in the national economy. The real value of innovations can only be identified by the consumer because it is the consumer that makes the final decision. «Business is aimed at creating the consumer, i.e. attracting an independent outside party able to make a choice and ready to pay for goods and services. It is the knowledge that ensures a leading position to goods and services in any kind of business which is the major factor of their competitiveness and success» [6]. According to the outstanding American economist Peter Ferdinand Drucker, the significance of innovation is determined by the final result caused by it. Innovation means identifying at least a small group of opportunities which can provide for the best results [6]. In this context the American economist notes that «the quality of innovation is not directly related to its size. Inversely, the smaller the innovation the better. It is a successful attempt to find
and include in its business the last missing element to transform the existing ones - knowledge, goods, consumers' demand, and markets - into a much more productive whole [6].
Fast-growing firms possess a unique property to be sensitive to minor changes in the market and react immediately. The ability «to sound out» the market helps «gazelles» to produce the product demanded by the buyer. Offering a unique product on the market most often provides an opportunity to get into a new niche. Many Russian fast-growing firms are close to establishing new market segments being the pioneers of discovering new profitable areas for business operation. An example could be «Korkunoff» confectionery plant in the town of Odintsovo which gave a start to forming a premium class segment on the domestic confectionery market. Another example could be «Konfael» confectionery company which was a pioneer in creating pieces of art of chocolate [7].
The opportunity of superfast growth of «gazelle» firms is mostly provided by the strategy of making a unique supply. It happens for the following reasons. First, the firms abandon unprofitable for small companies areas where there are traditionally more advantages for large scale production to be performed by large companies. Second, the strategy of making a unique supply enables the firms to break into a new segment which is free of competitors because there are no similar products on the market. The unique supply ensures fast growth and high earnings as compared to large scale production. Third, the recent years in Russia have seen the evolving of a type of consumers featuring a highly qualified demand and willigness to appreciate the producer's creativity and positively respond to ingenious goods and services. Fourth, a decent presentation of the exclusive products to a selected group of consumers through special marketing techniques helps to show up the products, point out their specific properties and attract the consumers' attention to the positive perception of their unique characteristics. Using branding policies the producer establishes trustful communication with consumers which helps the producer to identify the consumers' preferences to work out an educated assortment policy and choose the object for further research and development.
The phenomenal success of domestic «gazelle» firms is directly related to the process of collecting first-hand information about the consumer, i.e. by close interaction with consumers. The direct contact helps to sound out the consumer to determine top priority activities of the firm in the future. Progressive development and growth under crisis conditions in the economy become attainable due to the realisation of the firm's concept of molecular marketing providing for the individualisation of consumer-to-producer relationships with the aim of creating a product of the highest consumer value. Molecular marketing is a process of detailed, continuous, and meticulous monitoring of the constantly changing conssumers' demand, which enables the producer to respond immediately to any change in the market. A perfect knowledge of consumers' preferences allows «gazelle» firms to create a new consumer value - a marketable product comprising a set of properties of major importance for the consumer. Operating in a highly specialised niche fast-growing firms are able to be sensitive to their customers and involve them into the process of developing new goods and services, i.e. the process of joint creation of values.
Russian fast-growing firms operate in close interaction with consumers, which has recently become evident throughout the world economy. Indeed, there has been a recent tendency among producers and consumers to create values jointly on parity principles. The recent developments have been described by many researchers. In his work «Power Shift: Knowledge, Wealth, and Violence at the Edge of the 21-st Century» A. Toffler states the fact of transforming the producer into the major driving force of modern business. More and more often producers involve consumers in designing individually tailored products with a set of functional properties significant for consumers, etc. The growing importance of the consumer
in the producer-to-consumer relationships has been highlighted by the appearance of a new term derived from Consumer + Producer = Prosumer meaning «associate producer» [8].
In their book «The Future of Competition. Co-creating Unique Value with Customers» the American marketologists Prahalad C., Ramaswamy V. referred to the process of growing importance of the consumer in the relationships with the producer as «the process of co-creating unique value». A perfect description of the current processes in modern societies could be quoted from the book of the above-mentioned authers: «Businesses are no longer able to operate offline with little or no participation of consumers in the development of products, improvements of production processes, formulation of marketing messages, and control of the distribution channels. Nowadays people seek to influence business at all levels. Being provided with new instruments and unsatisfied with the choice available they are willing to interact with firms and thus co-create a unique value. The use of interaction as a basis for co-creating a unique value is the keystone of our emerging reality» [9].
3. SUCCESSFUL PERFORMANCE OF RUSSIAN «GAZELLE» FIRMS:
«GLANCE», «SPLAT-COSMETICS», «KONFAEL»
We believe that Russian «gazelles» have managed to consider the undergoing transformation of the modern economy in their work. For example, «Glance» (2004) was the first Russian firm to offer domestic consumers designer clothing at reasonable prices. It focuses its operation on satisfying the individual wants of its customers. The firm identified its target customer cluster. The buyers of «Glance» are modern people who are professionals in their own fields. They maintain their threefold balance of business, family, and friends. They live in harmony with the world, so they understand that many things in their life depend on how they act. They represent the middle class whose active development is one of the main features of the modern national economy. Being well informed of a real and by no means an abstract consumer's preferences the firm of «Glance» developed a new concept of «auther's design at a reasonable price». Not typically of the world's business practice the firm of «Glance» chose to create a multi designer collection. The firm's idea was to develop and offer handmade designer clothing at a reasonable price.
The firm's product line of women's clothing ranges from business, casual, romantic style clothes to elegant evening dresses. The firm employs 10 designers to work out multi designer models of fasion trend to meet different consumers' taste preferences at reasonable prices. As the public confidence in Russia has recently shifted to the domestic producer the firm emphasizes the fact that its clothes are not made at the Chinese factories but at the Russian ones. «Glance» places its orders with 30 Rassian factories.
Individual approach used in the relationships with consumers enabled the firm to cooperate with the popular TV project of «Fashion Verdict» («Modny Prigovor») with the famous Russian designer Slava Zaitsev at the head. The TV program is known to make the viewers aware of the importance of a new professionally created image of the project participant. Cooperation with the TV project in conjunction with concentrating its activities on individual approach to customers gave birth to innovation. During the crisis year of 2009 the firm offered an ingenious product of stylist services to consumers in making their choice of clothes. The customers of «Glance» were given an opportunity to consult a stylist on the choice of a set of clothes. The customers are offered professional advice on the image desired. The management of «Glance» is fully aware of growing competition which makes it emphasize its tailor-made services. The ability to understand the customer's needs helped the firm to design an ingenious product, introduce it into the market to meet the target consumers' demand, and maintain a strong competitive position.
The public confidence achieved by the firm is strengthened by website communication and issuing the firm's magazine informing the buyers of its latest collections, fashion trends, interesting events in art, literature, and culture in general. The customers of «Glance» are invited to mannequin parades organised by the firm on holiday occasions and before the issue of any new collection of clothes to discuss them and put forward their improvements.
For several years' operation on the Russian market «Glance» has managed to achieve customers' good will and loyalty which can be evidenced by the firm's turnover growth during the crisis in the national economy. In 2009 «Glance» opened 70 new shops in Russia. The firm is planning to expand its activities abroad and break into the Ukrainian and Khazahstan markets.
A similar algorythm can be identified in the analysis of the major success factors of another Russian «gazelle» firm «Splat-Cosmetics» (1997). The firm specialises in the field of mouth care cosmetics. It performs the annual growth of 140% and has a 5% share of the domestic toothpaste market. Having set an objective to become the world's #1 firm in its market segment «Splat-Cosmetics» began to work hard to achieve it by developing ingenious products with a highly emotional component and of a quality surpassing that of the world's market leaders. The firm's innovative idea offered to the toothpaste market was to change one's attitude to brushing teeth by transforming it from being dull and boring to pleasant and entertaining.
Having its own laboratory facilities and being well informed of consumers' preferences the firm provides innovative products of high consumer value. The firm's product line comprises more than 20 products based on different medical formulas. «Splat-Cosmetics» develops its innovative products in close cooperation with consumers whose ideas and wishes are considered by the firm in producing goods demanded on the market. For example, the firm has pioneered «eatable foam» for small children. The necessity for such toothpaste was worded by young mothers who found it difficult to teach their small children to brush teeth regularly. Young mothers wrote about their problems on the firm's website, which attracted the attention of the firm's employees. As a result, the firm made a decision to design a new product to meet mothers' needs. The innovative product comprised two major components: children's reluctance to brush teeth and children's love for sweets, which allowed the firm to design Splat's harmless eatable foam. When a child is chewing the sweet foam it brushes his or her teeth.
The firm actively involved consumers in the development of a new product line of toothpaste for the youth. «Splat-Cosmetics» invited its customers on the website to take part in the contest and come up with their suggestions of brandnames, flavours and colours. The best ideas were chosen to design a new product line.
Close contact between the firm and its customers is maintained through the website of «Splat-Cosmetics». The firm organises various contests among which are «The most charming bride», «Healty teeth». The firm's professionals provide answers to the most common questions asked by mothers. The firm's targeted customers are young forward-looking people responsive to issues preoccupying the firm's employees. The discussion of the most pressing social problems facing modern people, e. g.
• lack of communication between humans in the modern ultra-dynamic world
• pollution of environment
• problems of the world financial crisis
• help to children suffering from cancer
• «Splat» toothpaste essential items
Is initiated not only on the firm's website but also by E. Demin (CEO) in his letters to customers who can find them in each carton containing a toothpaste tube.
The firm is realising the concept of social and ethical marketing which persues not only the producer's and the consumer's interests but also those of society in general. «Splat-Cosmetics» is making attempts to help children suffering from cancer. In January 2009 the firm launched a new product - Splat Dream Toothpaste. The firm remits 50% of earnings generated from selling this product to «Life» Charity Fund to render support to sick children.
The firm's focus on cosumers' preferences allows it to design a product of highly perceived value and remove limitations set by the demand side, which can be evidenced by the growth rates of «Splat-Cosmetics» for a number of years. In 2005 the firm's volume of sales grew by 450%, in 2006 - by 270%, in 2008 - 22%. The crisis did not prevent the firm from launching innovative products. In 2009 the firm offerred a new product - an ion tooth brush which combined mechanic brushing and «ion magnet». It was traditionally designed in cooperation with consumers. To streamline the inner business processes the firm outsourced its minor operations.
In 2009 the firm obtained an environmental certificate cofirming the firm's status of environment friendly production. During 2009 the firm managed to reduce continuously the amount of its carbon dioxide containing wastes. The firm has started the construction of a new plant in the district of Valdai which will use the replenishable sources of energy (solar batteries, windmills, biodiesel engines). The new plant is expected to become operative in July 2010 and to use the innovative technology - «carbon dioxide neutral production». The cost of the environment friendly plant is twice as high as the cost of conventional production. The term of payback of energy-saving technologies to be used at the plant is more than 130 years. The management of «Splat-Cosmetics» believe that the costly construction of the environment friendly plant is a peculiar contribution to the future of our children.
The use of strategy of creating the highest perceived value for the consumer has become rewarding for another Russian «gazelle» firm «Konfael» (2001). The underlying concept of its operation is the individualisation of relationships between the customers and the firm. The latter specialises in the production of personified gifts made of chocolate. «Konfael» is a pioneer firm in a fundamentally new sector of producing pieces of art of chocolate and positions itself as a «chocolate studio». The firm produces not only exclusive handmade sweet-stuff under unique prescription but also ingenious collections of gifts. «Konfael» is a peculiar Fashion House which releases new collections of gifts twice a year: in winter and in spring to follow the latest trends in the fashion industry. Being aware of consumers' diverse wants the firm provides for a wide range of chocolate gifts: a collection for a wedding party, collections for children, men and women, a business collection, and a religious collection.
Day-to-day market monitoring and close communication with customers in the process of discussing the particulars of their future orders help the firm to meet the consumers' needs and wants precisely. As most of the firm's produce is made to meet individual requirements the consumers set into a role of active participants of the process of creating a new value. Most of consumers' ideas are further realised in the design of new products.
«Konfael» has developed an ingenious «BIO» collection of «live» sweets specially for customers who control their weight and seek to be physically fit. The collection comprises organic sweets made of natural and wholesome ingredients which strengthen the immune system and restore overall health. The firm informs the consumers of the fact that «BIO» products substitute sugar for fructose, which is a solution of the problem of excess weight. The firm's slogan is «Eat and lose weight, eat and recuperate».
The firm manages to maintain rather high rates of growth (annual growth rate of sales is 55-60%) due to its educated marketing policy. Considering the importance of ingenious promotion of exclusive products in the premium segment, the firm efficiently employs specialised marketing. «Konfael» has chosen patronage and sponsorship as unconventional methods of promotion. The firm cooperates with the Charity Fund of Mstyislav Rostropovich. The firm provides grants on education to gifted students of Russian Music Schools and Universities. The firm supervises well-known national sports and culture projects. «Konfael» provides ingenious gifts and prizes to the participants of these events. The underlying pattern can be identified and described as «classical music - elite audience - «Konfael» produce».
The firm has actively used innovations in producing its ingenious products. Today the firm possesses a great number of patents. The firm remains competitive on the market not only due to its active use of technological innovations in production but also due to its innovative promotion methods. There are few producers in today's world practice that choose love-marks approach to winning the consumers' recognition. There is an explanation to it. Love-marks approach is the concept of the future which is based on cordial relationships between the producer and the consumer, and sustained positive emotions caused in the minds of consumers [11]. According to K. Roberts, the author of this concept, the success of modern business functioning largely depends on how much the producer is oriented to his «inspired consumers». The producer should seek to develop bilateral relationships on the basis of mutual understanding, empathy, and insight. Firms should learn the consumer's dream and bring it to life.
Implementing the project of «master class in chocolate painting» the firm of «Konfael» has chosen children as its «inspired consumers». In one of the firm's chain coffee houses any child may test his or her artistic abilities in chocolate painting under the guidance of a professional artist. The creative process attracts parents to chocolate painting. As a result the firm successfully creates the unforgettable holiday atmosphere which makes the relationships between the producer and the consumer closer and more cordial.
The firm's chain of boutiques is a set of small museums of chocolate which are willingly visited by customers not only to buy the firm's ingenious products but also to admire the real pieces of art - chocolate sculptures and compositions created by professional artists employed by the firm.
«Konfael» products are known beyond the Russian market. The firm's ingenious products can be found on the Ukranian, US, German, and British markets. Specifically for the Chocolate Show in Paris the firm designed a unique collection of chocolate cards in the French language with the views of the most famous sights of France. In Saudi Arabia «Konfael» presented its «Muslim Collection» which the Saudis enjoyed very much.
4. CONCLUSION
The recent years in Russia have seen the development of the sector of fast-growing competitive firms. The underlying concept of the operation of «gazelles» is the creation of the most perceived value for the buyer. The fast-growing firms' perfect awareness of consumer preferences encourages them to develop products demanded on the market and provide them with properties of great significance for the consumer. Fast-growing firms closely cooperate with consumers by involving them in the process of creating a new value. Fast-growing firms are rather quick to respond to any change in the business environment and anticipate future events. They feature high rates of growth not only in the period of economic growth but also during
the period of recession. «Gazelle» firms can meet the customers' demand without any limitations. They efficiently use various innovations both in production and promotion.
The development of a highly competitive sector can lay the basis for sustained progress of the national economy and determine its growth potential as well as its innovative development.
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