Brazil by 7tQSOI

VIEWS: 23 PAGES: 25

									Marketing Lipton Iced Tea in
           Brazil



                       Compiled by
                          Tara Badri
                        Steve Gojak
                       Lilly Nicolen
                    Kathleen Gulitus
                    Stephanie Webb
              Target Market
 Our target market will include the younger
  generation ranging from age 18 to 39.
 This group is the largest segment at 68% of the
  total population (184 million).
 The younger generation is our best option for a
  target market because they are less set in their
  ways, are more open to trying new things, and are
  more easily influenced by the media. These
  characteristics makes them more susceptible to
  changing their preferences from the common soft
  drinks, juice, and coffee to a new aged beverage
  such as iced tea.
           Product
   Brazilians enjoy sweeter tasting beverages
    therefore the products that could be introduced
    include the Brisk product line or a modified
    version of regular iced tea in which it would be
    made sweeter.
    – Unsweetened iced tea would be unsuccessful.
   Due to an abundance of oranges in Brazil the
    development of an orange flavored tea may prove
    successful by adapting to local taste and showing
    support for local industry.
    – Since juices are a large part of the culture, adding
      orange flavor would increase the chance of success
      among the Brazilian people.
                          Packaging
   The label needs to be in Brazil’s official language: Portuguese
   The national colors are green and yellow and are considered offensive
    when used together on products so it is necessary to ensure that they
    do not appear together on the label.
   National law requires easily readable information about the product’s
    quality, quantity, composition, price, guarantee, shelf life, origin, and
    risks to consumers’ health and safety.
     – The current colors and designs of the label can remain the same if
        we carry the brisk lime, but if we use regular Lipton iced tea, the
        colors must change. For both brands, we need to edit the
        information on the product label to conform to national law.
   All units should be metric or show a metric equivalent as this is the
    measurement system that Brazil uses.
   The refrigerator in the average home in Brazil is standard to US sizes,
    therefore no change of the shape and size of the bottle is necessary.
    Packaging Material
 Presently only 75% of the population has trash collection
  services. Recycling is found in minimal areas across the
  country, primarily government buildings.
 Therefore, choosing recyclable materials is not a concern. The
  best material to use to package the product is simply the
  cheapest and most readily available, which narrows our options
  to plastic or paper cartons.
   – Plastic and paper cartons are lightweight and cheaper to
      transport than glass.
   – Paper cartons are more easily packed into a shipment
      because of their square shape.
   – Plastics are more readily available than paper cartons, and
      most manufacturing firms choose plastic.
   – Therefore we have decided to use plastic bottles
              Place: Production
   Produce product in the United States and export.
    – Wait for FTAA (Free Trade Association of the
      Americas), a trade agreement that would make the
      Western Hemisphere a free trade zone.
    – Brazil is hesitant to accept the agreement and allow
      foreign competitors to freely enter the country.
   The benefit of importing iced tea is the ability to use
    current production facilities with the possibility of no
    import tariffs.
   Drawbacks include high freight expenses(25%
    Merchant Marine Tax on Ocean Freight), a general
    lack of knowledge about local practices, and that the
    FTAA is slow moving and cannot be relied upon.
    National Production Facility
   Potential partnership with AmBev, a
    producer of beer, soft drinks, and iced tea in
    Latin America, where they benefit from the
    brand equity of Lipton and we benefit from
    the use of their distribution channels.
    – Possibility of using information gained from
      this partnership to open our production
      facilities and distribution channels in the future.
                           Place
 By using AmBev, we would not need to find storage facilities
  because the entire channel could be outsourced.
   – This would be ideal because of the limited number of trucks
      as well as the limitations of Brazil’s infrastructure.
   – Approximately 20,000 trucks exist, all of which have been in
      use for an average of 18 years.
   – Infrastructure is poor with many of the roads being privately
      owned.
 Iced tea should be stored at room temperature, therefore
  refrigerated trucks are not necessary. However it is important to
  ensure that the product is not allowed to sit in the sun while
  being transported.
           Distribution Centers
   PepsiCo and Unilever recently created a joint
    venture to expand Lipton into new markets which
    include Brazil.
    – Pepsi gains use of Lipton’s R & D expertise along with
      their health conscience brand image.
    – Unilever gains use of Pepsi’s distribution network and
      bottling facilities.
   This is beneficial because the production facilities
    and distribution channels are already in place,
    resulting in lower startup costs.
        Retail Options
   Carrefour is the second largest retail outlet in Brazil.
    –   96 Hypermarkets
    –   122 Supermarkets
    –   100 Discount Stores
    –   7 distribution centers (located in Sao Paulo and Vitoria)
   The Sao Paulo distribution center reaches half of their
    stores.
   Deciding to use Carrefour as a retail outlet would be
    beneficial because of their expansive distribution
    network that reaches hypermarkets, supermarkets, and
    discount stores. The discount stores are ideal because
    of their appeal to lower income consumers which
    accounts for 90% of Brazil’s population.
              Retail Options
 Advanced technology such as barcode scanners
  and radio frequency transmitters have resulted in
  accurate inventory counts and lower costs.
 Carrefour has begun to outsource to Cotia Penske
  as a logistics provider to some of its stores.
 Thus, Carrefour has perfected their distribution
  channels giving it the ability to reach most of our
  market through superstores and hypermarkets, and
  in addition to this, the ability to reach the poor
  market segments through its discount stores.
              Retail Options
 Pao de Acucar is the largest local chain with over
  400 outlets nationwide.
 They have twice as many outlets as Carrefour, but
  both hold 14% of the market.
 Their distribution is handled by Brasilia de
  Distribuicao (also owns the retail chain).
 Being a Brazilian company, they have the trust of
  consumers. They also have the most retail outlets,
  making them a sound option.
              Retail Options
 Wal-Mart currently has 2% of the market share
  but is growing.
 They also have a distribution center outside of Sao
  Paulo that has the capacity to reach 100 outlets.
 Wal-Mart’s discount chain, Toda Dia, appeals to
  the low income level of the general population.
  Their many locations make it more convenient for
  those who cannot travel long distances.
 Although Wal-Mart is new to the Brazilian
  market, it is growing rapidly and has strong
  potential to compete with the other retail outlets in
  the country.
                Distribution
 Cotia Penske, a logistics provider largely
  developed in Brazil, has distribution centers,
  warehouses, and transportation (18,000 trucks)
  available.
 They have developed the distribution channels for
  100 Carrefour outlets.
 Familiar with Brazilian distribution channels, they
  can provide the services that would be needed if
  production were to take place in Brazil.
    – They have connections with local, third
     party distributors.
                     Price
 Currently in Brazil there are 65 million consumers
  with a disposable income of $14,812 per
  household annually.
 20% of the families live on a per capita income
  that is less than the minimum wage. However
  with a population of 178.5 million and a per
  capita income of $4,336, Brazil’s large population
  leaves them with a high market potential.
 The gap between the rich and the poor is one of
  the largest in the world, showing the substantial
  differences in the different economic classes.
                           Price
 This leads us to price our item competitively, but on the lower
  end of the price spectrum. Due to our target market’s wide range
  of incomes, a price on the lower end will include the lower
  income individuals of our target market.
 In addition to our low competitive prices, we will markup our
  product 60% for retailer and 30% for wholesaler depending on
  which distribution option is chosen.
   – For example, if the cost per bottle of iced tea is 40 cents:
       40 (cost) + .6(40) (Retailer) + .30(40) (Wholesaler)
       Then the total price for one bottle would be: 75 cents
          Economic Conditions
 The Brazilian economy has proven to be very unstable over the
  past decade. Inflation rates are volatile.
   – With the introduction of a new currency in 1990, the annual
      rate of inflation was 2,947.73% which severely crippled the
      economy.
   – In the mid 1990’s as the inflation rate stabilized, many
      Brazilians moved from the working poor to the lower middle
      class.
   – Since 1990, the inflation rate has been stabilizing and is
      currently at 8.45%.
 The shaky economy and unstable inflation rates make it risky to
  enter the country’s market. With fluctuating inflation rates, it is
  more difficult to predict price changes, which creates the danger
  of our product becoming too expensive for consumers to
  purchase.
    Security Concerns
   Brazil’s borders with Argentina and Paraguay have
    problems with money laundering, smuggling, arms and
    drug trafficking, as well as fundraising for extremist
    organizations.
   This raises important security issues of product theft when
    transporting goods across borders. Even though iced tea is
    not a precious commodity, it would be a safer alternative to
    produce the product within the country.
   We would be affected if the product were to be stolen, or
    we would have to employ security, price to consumers
    would have to be increased
       Promotion-Media Types
   Newspaper and Billboards
    – With a literacy rate of 86%, print media is an effective form
      of advertising in Brazil.
         Currently 25% of advertising dollars are put into
           newspaper ads. It is the second largest form of
           advertising expenditure.
    – In 1992, the cost for one billboard for one month was $150.
    – With high literacy rates and a relatively cheap cost of print
      advertising, this would be an effective way to introduce iced
      tea.
   Radio
    – Advertising on Brazil’s primary radio station, which is
      already segmented by target market, would make it easier to
      reach our market.
     Promotion-Media Types
   Television
    – 96% of households in major cities own a television.
    – Brazil has the 4th largest television broadcasting system in the
      world.
    – The cost of 30 seconds on prime time television in 1992 was
      $34,000.
    – Though these costs are dated and have most likely increased, it is
      still necessary to create television ads because most households
      have a television.
   Cell Phone Advertisements
    – 60 million cell phones are expected to be in use by 2005.
    – SMS(short message service) and short video clips of
       advertisements have become increasingly popular. This new
       technology is expensive but the price is decreasing as the number
       of cell phones increases. This could be an effective way to reach
       our target market since cell phones are mostly used by younger
       people.
        Promotion-Media Types
   Cinemas
    – Brazil has 408 cinemas that accept advertising.
    – Cinema advertisements reach 21% of the adult population within
      one month.
    – Restrictions require that 2/3 of foreign advertising material must be
      produced in Brazil.
    – In 1992 the cost of a 4 week schedule at approximately 20 theaters
      was $2800.
    – This is a good option because it is relatively cheap and reaches our
      young target market.
   Internet
    – Brazil has the most advanced internet industry in Latin America.
         61% of Latin American websites are Brazilian.
         As of 2002, 14.3 million Brazilians have internet access.

    – On-line ads would be effective with Brazil’s highly accessible
      internet because most users are from the younger generation that is
      included in our target market.
    Sales Promotions
   Event Sponsoring
    – Soccer is the most popular sport in Brazil so purchasing
      ad space in soccer stadiums would quickly and easily
      reach a large number of people.
   Celebrity Endorsements
    – Soccer celebrities could be hired to endorse products in
      commercials and advertisements.
    – Use of models in ads to promote beauty and health
      which are aspects of Brazilian culture.
   Many of the people who attend sporting events
    make up a large portion of our target market so
    this would be a good way to reach them.
                  Message
 Promotion of the product should emphasize it as a
  healthier alternative to soft drinks and a sportier
  alternative to juice due to the growing concern
  over health and body image in Brazil.
 Promote the beverage as a youthful drink since the
  majority of the Brazilian population is younger.
 Due to the Brazilian desire to be fashionable,
  promotion of the product as a trendy addition to
  the new age beverage line could be very effective.
       Language and Dialect
 Portuguese is the primary language.
 Although most people in Brazil are multilingual,
  with English, French, Italian and Spanish being
  popular second languages, Portuguese should be
  used in all ads because it is spoken by the entire
  population and Brazilians find it offensive to be
  spoken to in Spanish, which would be our next
  best alternative.
      Conclusion
 With 68% of Brazil’s population being between
  18-39 years old, they make up a large target
  market.
 The possibilities of joint ventures or partnerships
  would be an effective way to combat the poor
  infrastructure in Brazil.
 The availability of retailers makes it easier to have
  our product available to consumers.
 A struggling economy, high inflation rates and a
  large low income population may make it hard to
  sell a non-necessity good.

								
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