Overview
As in any country, successfully marketing and selling goods and services in Armenia requires adaptation to its commercial climate and business practices. Personal contact is key in Armenia. Visits to key contacts in government and customers can go a long way in demonstrating the value a firm attaches to its relationships.
Market research is required to identify opportunities, potential Armenian business partners, and the peculiarities of individual industries and sectors. Government and private sector customers may vary significantly in terms of the information they require to make purchasing decisions, their timelines for making decisions, and the criteria and decision-making processes they use.
Choosing business partners is an important decision and should be done only after conducting sufficient due diligence to determine a potential partner’s reputation and reliability. Exporters should avoid selling on open account until they have developed a well-established track record with buyers. Letters of credit and other secure financing vehicles are becoming increasingly available. Exporters should be prepared to adjust prices according to currency fluctuations.
International exhibitions and trade shows, particularly in Yerevan, are not uncommon and generally take place throughout the year. They provide opportunities for companies to market themselves to local buyers and evaluate and meet competitors. The U.S. Embassy in Armenia supports initiatives to bring U.S. companies to such events where they can interact with Armenian buyers and welcomes the initiative of companies and business associations to organize trade missions. The Embassy similarly promotes the attendance of Armenian buyers at trade shows outside of Armenia, including in the United States and Europe, where they can interact with U.S. companies.
Trade Promotion and Advertising
Radio, television, internet, and print are widely available media for advertising. Billboards and glass stand with flipping ad posters are other common media for advertising, predominantly in densely populated areas. However, television dominates in terms of revenues. Advertising can be arranged through local advertising agencies or directly with television stations, radio stations, and print outlets. Cable and satellite television are expanding their reach and offer additional avenues for reaching consumers. Internet advertising has grown significantly over the past few years as the number of internet users in Armenia continues to increase. Several local companies specialize in designing advertisements for online media.
In 1996, Armenia adopted the Law on Advertising, which defines advertising standards and principles. One key provision of this law is a mandate that makes Armenian the official language for advertising. Armenian text may be accompanied by text in a foreign language, provided the latter appears in smaller script. This provision does not apply to newspapers, special publications, trademarks, and certain other materials that are issued or printed in foreign languages. Advertisements may be copyrighted under Armenian law.
The Ministry of Health’s permission is necessary for advertising pharmaceuticals, medical equipment, or treatment methods. The law prohibits advertisements promoting the stimulating or relaxing effects of alcohol and cigarettes. Advertising for weapons, except sport and hunting weaponry, is prohibited. Specific restrictions apply to advertising for banking, insurance, and other financial services and institutions. Unfair or inaccurate advertising is prohibited, and the Civil Code allows civil action for legal entities or persons whose rights have been violated as a result of unfair or false advertising.
Major television stations in Armenia include Public TV Company of Armenia, Kentron, Armenia TV, and Shant TV.
Logos Expo Center is a leading company responsible for organizing sector-specific national and international exhibitions, congresses, and forums in Armenia and abroad. Since 1999, it has organized over 250 exhibitions, conferences, and forums which were held in cooperation and with the support of various ministries, professional unions, and industry associations.
Pricing
A number of key factors affect the pricing of goods and services in Armenia, including the relatively low purchasing power of many consumers, high transportation costs needed to access Armenia, a 20 percent value added tax, and a broad lack of contestability in many domestic markets. The Eurasian Economic Union’s common external tariff adds additional costs in the form of duties.
The exchange rate of the local currency, the Armenian dram, against the U.S. dollar has been broadly stable in recent years, but it has not been without some sharp movements. Low inflation has kept price changes muted. The Armenian market can be very sensitive to changes in price, and the public is likely to recognize small price differences across similar goods. The prices of high-value items, including automobiles and real estate, may be quoted and paid for in foreign currency, though prices and payments should be indicated and made in the dram.
There are no standard pricing formulas, but Armenian customs officials have made use of reference pricing, which can significantly impact margins on imported products and those made from imported raw materials. The State Commission for the Protection of Economic Competition has on several occasions intervened to address claims of overpricing resulting from local firms abusing dominant market positions.
Sales Service/Customer Support
In Armenia, the concept of customer support for products and services is developing. Most stores, including brand name operations, are reluctant to allow returns of purchased items. There are an increasing number of companies, however, that provide explicit warranty and aftercare services. Phone-based sales service or customer support is not common. In most cases, customers need to approach vendors in person.
Local Professional Services
In Yerevan, there are offices of several major western accounting, legal, and consulting firms, blending the skills of Armenian and foreign professionals. Competent smaller firms also operate under Armenian or western management. U.S. firms can avail themselves of local specialists familiar with issues confronting western firms in Armenia.
Since 2002, the Association of Accountants and Auditors of Armenia has served to improve the professional skills of accountants and auditors operating in Armenia through qualification, continuing education, comprehensive professional assistance, and quality control. PMI Armenia was formed in 2015 as the local chapter of the Project Management Institute (PMI). It is a leading association of local professionals. Since its establishment in 2010, the Armenian HR Association has been focused on developing a specialized HR community in Armenia that can contribute to the development of better personnel management systems and practices.
Principal Business Associations
The American Chamber of Commerce in Armenia (AmCham) was established in 2000 and has more than 100 member companies. Membership includes not only U.S.-registered companies but also those with business ties to the U.S. and distributors of U.S. products. The organization is run by an executive director and 12 board members. AmCham has traditionally focused on improvement of the business environment in Armenia. The Union of Advanced Technology Enterprises (UATE) represents several dozen ICT and other technology-related firms and organizes local industry events. Enterprises Armenia is a government agency focused on attracting and supporting foreign and domestic investment.
Limitations on Selling U.S. Products and Services
Armenian legislation does not limit the right to sell to only Armenian citizens or a sub-set of the population in any industry. Both foreign and local competitors and enterprises in Armenia are subject to the same laws and regulations, though there are some restrictions of the rights of foreigners to take ownership positions in some sectors, notably media and civil aviation, as well as offer some professional services.