Get documents about "Marketing Liquid Bandaid in Brazil
Document Sample
Marketing Liquid Bandaid in Brazil
Prepared for: Johnson & Johnson
Prepared by: Strategic Global Partners LLC
Date: 11/06/2008
Proposal Outline
1. Strategic Global Partners
2. Supply Chain Management Overview
3. Brazil Overview
4. Risk Evaluation
5. Foreign Currency
6. Johnson & Johnson Overview
7. Marketing Strategy
8. Logistical Complexities
9. Government Overview
10. Market Opportunity
11. Summary
12. Recommendation
13. Resources
14. Contributions
2
About Strategic Global Partners LLC
Today's Presenters
Strategic Global Partners LCC has been 1. Hans Paul
working with international companies for Vice President - Supply Chain Management
over 30 years.
We specialize in consulting companies that 2. Chris Moseley
are growing and in need for global logistic Senior Director of Economic and Risk Evaluation
services.
We collaborate with Fortune 500 companies
that are looking to expand business 3. Gino DeJesus
internationally. Vice President – Logistics & Marketing
We partner with our clients to develop a
specific marketing strategy and supply chain 4. Thomas Tabacchi
method that is tailored to them. Senior Vice President of Governmental Affairs
3
Strategic Global Partners LLC
Mission Statement
Our goal is to help companies make
better forecasting, promotions, pricing
and markdown decisions based on
fact-based insights about customer
demand in the global marketplace.
We strive to be a trusted business
partner and work hard to ensure you
realize significant business value for
your investment-both today and into
the future.
4
Overview of SCM Plan
This proposal details Strategic Global
Partner's overview and
recommendation of Johnson &
Johnson's new product Liquid Band-
Aid's efforts to tap into the Brazilian
market space.
Initial investments are earmarked for
$120 Million for the first year.
Projected returns of $240 million for
first year and exponentially increasing
in year 2 and beyond.
Following the data and research
provided, we will make
recommendations either to take
actions to proceed, re-evaluate, or
abort plan.
5
Supply Chain
6
Supply Chain Management
Supply chain management (SCM) is
the oversight of materials, information,
and finances as they move in a
process from supplier to manufacturer
to wholesaler to retailer to consumer.
Supply chain management flows can
be divided into three main flows:
1. The product flow
2. The information flow
3. The finances flow
Supply chain management involves
coordinating and integrating these
flows both within and among
companies.
7
SCM Complexity: Transportation
The infrastructure of transportation is
very deficient in Brazil.
Most roads are old and have poor
maintenance; ports are old and
operated under obsolete management
techniques.
Brazil's road system totaled 1.23
million miles in 2002 in which only
114,425 miles were paved.
World Bank study in the early 1990s
showed that 28% of the country's
existing highways were in bad
condition, up from only 10% in 1979.
Brazil's railway system has been
declining since 1945, when emphasis
shifted to highway construction.
8
SCM Complexity: Integration
Supply chain integration is most
achievable for those organizations
willing to face the cultural challenge.
Integration requires four elements:
1. availability of good
2. quality data to make planning
decisions
3. corporate willingness to share data
and information between partners
4. competent systems and processes
for both information and product
flows.
9
SCM Complexity: Old Tendencies
At all management levels there is a
lack of vision about the way local
decision-making can have an impact in
the final market.
Time-based and profit performance
are new disciplines, since traditional
indicators focus solely on cost.
With low labor costs, there is a
tendency to retain inefficient working
methods and operating procedures.
Domestic transport and warehousing
operations between factory and port
are fragmented, and a lot of small
operators are involved.
10
Brazil: Overview
It is the 5th largest country by
geographical area, the 5th most
populous country, and the 4th most
populous democracy in the world.
Brazil is South America's most
influential country, an economic giant
and one of the world's biggest
democracies.
But like some of its South American
neighbors, it has a history of economic
boom and bust and its development
has been hampered by high inflation
and foreign debt.
Brazil is the world's 10th largest
economy and 9th largest in purchasing
power.
It is a founding member of the United
Nations.
11
Brazil: Economic Trend
Brazil is the 10th largest economic
power in the world with a GDP of
nearly 800 billion dollars in 2006.
GDP growth rate was 3.7% in 2006
and 4.4% in 2007, with a forecast of
4.0% for 2008 (according to the IMF).
Brazil has made progress but
significant vulnerabilities remain. The
Brazilian government’s debt (largely
domestic) remains high, at 50% of
GDP.
Total foreign debt, while falling, is still
large in relation to Brazil's modest
export base.
The inflation rate has decrease from
6.9% in 2005 to 3.6% in 2007.
12
Brazil: Industry Trend
This Venn diagram, which correlates
land area, population, and GDP
illustrates that only the USA, Brazil,
and China have the economic and
natural resources to be a world leader
in agricultural production.
Agriculture accounts for 10% of GDP
and 40% of Brazilian exports.
Being a big industrial country, Brazil
benefits from its abundant mineral
resources: it is the 2nd largest
exporter of iron in the world and one of
the main aluminum producers.
Most of the big automobile
manufactures have established their
production facilities in Brazil.
The industrial sector contributes nearly
37% to the GDP, while as the service
sector contributes around 52%.
13
Brazil: Ministry of Finance
STRATEGIC OBJECTIVES 2007-2011
1. To ensure compliance with the inflation
targets.
2. To promote the efficiency and to ensure
the soundness and normal operation of
the national financial system.
3. To stimulate competition within the
national financial system and increased
access to financial products and
services.
4. To ensure the currency supply with the
quality and reliability needed to meet the
demand of the population.
5. To improve the regulatory framework so
as to fulfill the institutional mission.
6. To improve and to strengthen the
communication and the relationship with
internal and external stakeholders.
7. To improve the management and
corporate governance structure of the
institution.
14
Brazil: International Trade
Privatization from 1996 has triggered
the inflow of investments into the
country.
The share of foreign trade in GDP
reached 26% in 2006.
The depreciation of the Real has
stimulated Brazilian exports.
Brazil's top three import partners are:
the U.S.A., Argentina, and Germany.
The country mainly imports mineral
fuels & oils, machinery and electrical &
electronic equipment.
The top three export partners are: the
U.S.A., Argentina and China.
The country mainly exports vehicles,
machinery, iron & steel, ores, meat
and other food products.
15
Risk Evaluation
When doing business in foreign
nations, especially emerging markets
there are many risks and challenges.
Political opposition
Trade embargoes
Riots, other civil upheaval & wars
Taxes and interstate trade barriers
Poorly developed infrastructure
Lack of educated employees
Fluctuations in foreign exchange rates
Changes in local laws
Lack of adequate protection by the law
Poorly developed economic markets
Corruption
16
Political Risk
With any investment in a country
outside the United States, there exists
the risk of adverse political
developments, including
nationalization, confiscation without
fair compensation or war.
Social, political or economic instability
in Brazil could adversely affect the
investment.
In today’s current world market,
economies are at lows not seen in
decades. It is almost certain that
countries will enact legislation to
protect their home markets. This
change in legislation could have
adverse affects on international trade.
17
Foreign Currency & Exchange Risk
Fluctuations in currency exchange
rates, costs associated with
conversion of currencies from one to
the other and exchange control
regulation may adversely affect the
value of the investment and its cash
flow.
To help alleviate some of these risks,
the company may inter into financial
arrangements designed to hedge
currency exchange risks.
These hedging activities are also
subject to various risks. There is no
assurance that hedging instruments
will be available of attractively priced.
18
Risk Evaluation
The International Maritime Bureau
reports the territorial and offshore
waters in the Atlantic Ocean as a
significant risk for:
piracy
armed robbery against ships
numerous commercial vessels
have been attacked and hijacked
both at anchor and while underway
crews have been robbed and
stores or cargoes stolen
19
Economic Risk
Economic conditions and markets in
the jurisdiction of Brazil may differ
materially from those in the U.S.
Some of these include real estate
prices, credit markets, the rate of
growth of gross domestic product, the
rate of inflation, changes in policy
regarding taxation, fiscal and monetary
policies, and other economic
regulations are plausible, any of which
could have an adverse affect on the
investment.
20
Johnson & Johnson Band Aid
BAND-AID® Brand Adhesive
Bandages have long been a staple in
a family’s first-aid kit as a source of
healing, comfort and protection.
As the brand has expanded over the
years, so too has the technology and
innovation behind it.
BAND-AID® Brand has moved from
being strictly a bandage to becoming a
brand that offers a wide variety of
products to meet the diverse needs of
today’s active families and their
lifestyles.
21
Johnson & Johnson: Liquid Bandaid
Liquid Band-Aid promotes fast healing
on contact:
Stops minor bleeding & reduces minor
pain instantly
Does NOT sting
Is 100% waterproof
Is fragrance free
How does Liquid Band-Aid work?
The no sting formula dries quickly and
forms a clear, flexible, breathable seal
Keeps out water, dirt and germs to help
prevent infection
Creates an ideal environment for your
body's natural healing process to begin
It stays on better than ordinary
bandages, even on those hard to
cover places.
22
Johnson & Johnson: Liquid Bandaid
Single-Step Liquid Bandage Liquid Bandaid Price
10 Pre-moisten Applicators
Just open and apply! Simple 1-step
application. Great for skin Cracks.
Single-Step™ Liquid Bandage works
great for: Hard-to-over areas, Shaving
nicks, Blisters, Abrasions, Paper Cuts,
Skin Cracks.
How it works: Band-Aid® Brand
Single-Step™ Liquid Bandage
provides one-step wound protection
with no-sting liquid on convenient pre-
moistened swab applicators. IN
minutes it forms an invisible, flexible
seal that is 100% waterproof and
protects from dirt and germs.
A Covered Wound Heals Faster Than
An Uncovered One.
23
Johnson & Johnson: Liquid Bandaid
In 2002 Johnson & Johnson
introduction of a revolutionary new
concept from BAND-AID® Brand – the
Liquid Bandage that promotes fast
healing on contact.
Pros: Easy to use, works for days,
breathable, durable.
Cons: You have to use applicator
wands, more expensive than Band-Aid
strips.
The Bottom Line: This is a great
product that works.
24
Market Share
25
Marketing Strategy
KEY TRENDS AND DEVELOPMENTS
Competitive Environment: increasing
competition among leading direct
selling companies
Brazil keeps its third position in the
global market; however, mass
products dominate changing consumer
habits due to higher income
Pharmacies/drugstores set to become
the most dynamic distribution channel
Appreciation of local currency favor
investment by manufacturers
Appearance remains a priority among
Brazilian consumers
26
Logistical Complexities
Economy Rankings
Ease of Doing Business: Brazil is ranked
125 out of 181 economies doing
business 2009 in Logistics.
Ease of Doing Business 125
Starting a Business 127
Construction Permits 108
Employing Workers 121
Registering Property 111
Getting Credit 84
Protecting Investors 70
Paying Taxes 145
Trading Across Borders 92
Enforcing Contracts 100
Closing a Business 127
27
Logistical Market in Brazil
Amount spent on logistical activities
exceed the gross domestic product
Transportation accounts for nearly
10% of Brazilian GDP
President Lula has made economic
growth and poverty alleviation top
priorities.
Export promotion is a main component
in plans to generate growth and
reduce what is seen as a vulnerability
to international financial market
gyrations.
To increase exports, the government
is seeking access to foreign markets
through trade negotiations and
increased export promotion as well as
government financing for exports.
28
Transportation Roadblocks
Scarcity of well-functioning railways
and waterways
Bottlenecks arise as highways and
railroads reach capacity constraints
Poor highway conditions
Ports: 7
Airports: 4,263
Railways: 29,295 km
Waterways: 50,000 km
Roadways: 1,751,868 km
Land Area: 8,511,965 km
Merchant Marines: 135
29
Change in Brazil
Brazil has one of the most advanced
industrial sectors in Latin America.
During the 1990s, Brazil's financial
services industry underwent a major
overhaul and is relatively sound.
The largest financial firms are
Brazilian (and the two largest
banks are government-owned)
U.S. and other foreign firms have
an important share of the market.
Privatization triggered a flood of
investors
30
Foreign Relations
Brazil has traditionally been a leader in
the inter-American community and
played an important role in collective
security efforts, as well as in economic
cooperation in the Western
Hemisphere.
Brazil supported the Allies in both
World Wars.
Brazil is a charter member of the
United Nations and participates in its
specialized agencies.
Brazil's domestic economy has grown
and diversified, the country has
become increasingly involved in
international economic and trade
policy discussions.
31
Exporting
Port of Suape, Brazil
The Suape Port and Industrial
Complex is the most complete
shipping hub for port related and
industrial companies in the Northeast
Region of Brazil, with a complete
infrastructure to fulfill the needs of the
most diverse enterprises.
The geographical position of the State
of Pernambuco in the center of the
Northeast Region makes Suape the
perfect cargo hub and distribution
center. The location also makes the
Suape Port ideal as an international
hub port for the whole of South
America.
32
Government
Government of Brazil
Like every good government, Brazil
would like nothing more than to
improve the lives of it’s people
(currently on about 15% have access
to the internet). Probably the best way
to do that is to bring in big
corporations.
A big Corporation will bring money,
which will bring in good paying jobs,
which will raise the standard of living
for the whole population.
33
Government Programs
Programs to Promote Investment
Investe Brasil
Brazil Trade Net
Office for the Promotion of Brazil to
Foreign Markets
34
Government Programs
Investe Brasil
A publicly and privately run agency
assigned with the mission of attracting
Investments into the country.
Focused on facilitating the investment
process.
Improve the overall competitiveness of
the country
Develop infrastructure
Promote positive trade balance
Transfer technology and use local
intellectual capital.
35
Government Programs
Brazil Trade Net
A Foreign Affair Ministry agency
whose primary focus to find, attract,
and offer abroad business
opportunities in Brazil.
The essential marketing arm of Brazil.
On BrazilTradeNet you can browse,
free of charge, information on Brazilian
companies, Brazilian export offers and
fairs in Brazil and abroad. You can
also check a variety of publications,
seminars and economic indicators,
among other products and services.
Brazilian export offers and demand for
the import of Brazilian products are
previously validated in order to
guarantee their reliability and quality of
information.
36
Government Programs
Office for the Promotion
A flexible division of government that
has the resources to carry out the
commercial promotion of Brazil to
foreign markets. Activities include:
providing support for Brazilian
businessmen interested in exporting to
the local market
providing support for foreign companies
interested in importing Brazilian
products or in making direct investment
in Brazil
disseminating information on trade and
investment opportunities;
providing support for public and private
entities in the participation in trade fairs,
business missions and other events
related to trade promotion
37
Market Opportunity
Brazil is the largest medical equipment
market in South America
Brazil is both a major medical
equipment producer and importer.
Brazilian medical equipment revenues
in 2004 reached an estimated US$ 1.8
billion, which represents an increase of
72% since 1999.
The U.S. Commercial Service
estimates the market to reach over $2
billion in 2006. The U.S. accounts for
approximately 50% of the import
market. US sales have traditionally
been made through Brazilian agents,
distributors and importers who sell to
hospitals and clinics.
38
Market Opportunity
Brazil is the growing market for home
health care products, which has
increased dramatically in recent years.
Brazil has approximately 150 home
healthcare companies compared to
approximately 1,440 in the US. In
Brazil, these companies are
increasingly viewed as good ways to
cut hospitalization costs while offering
better services to patients.
Health insurance companies are
responsible for paying 99% of the
costs of home care treatment.
The market for home health care
products growing dramatically for
many years to come.
Government investment plans for
public hospitals.
39
Summary
With a land area approximating to that of
the US, over 170 million people including
35 million consumers, and one of the top
10 world economies, Brazil is obviously a
country to be taken seriously.
Brazil has the largest economy in Latin
America, and the largest work force.
Brazil requires imports to meet its citizens
healthcare needs.
Medical Equipment and Pharmaceutical
markets have a combined value of more
than USD 10.4 billion.
In the past five years, the Brazilian
cosmetics and personal hygiene sector
has been growing at an average yearly
rate of 10.4%
40
Recommendation
Based on overall analysis of economic
conditions, marketing, and country
data, Strategic Global Partners
recommends that Johnson and
Johnson take action to proceed
investments of Liquid Bandaid into
Brazil in 2009.
Due to the sluggish economy causing
cheaper cost to enter and marketing,
we recommend that a lay out of only
$80 Million will be needed instead of
the earmarked $120 Million.
We also project returns to only earn
approximately $150 million from the
initial goal projection of $240 Million for
the first year due to the economy.
However, marketing and entry at a
cheaper cost into Brazil will earn
greater dividends and will also surpass
the projected goal in the long term.
41
Resources
1. http://www.brazilcouncil.org/
2. http://www.braziltradenet.gov.br/ABrazilTradeNet/I/Ap
resentacaoNBras.aspx
3. http://en.wikipedia.org/wiki/Brazil
4. http://www.bandaid.com/
5. http://www.jnj.com/connect/
6. http://en.wikipedia.org/wiki/Band-Aid
7. http://www.epinions.com/review/Band_Aid_Liquid_Ba
ndage_10_Per_Package/content_163037220484
8. http://www.drugstore.com/qxp74410_333181_sespide
r/band_aid/single_step_liquid_bandage.htm
9. http://www.economist.com/daily/columns/businessvie
w/displaystory.cfm?story_id=12079717
10. http://www.doingbusiness.org/ExploreEconomies/?ec
onomyid=28
11. http://www.time.com/time/global_business/brazil
12. http://www.forbes.com/feeds/ap/2008/09/17/ap543652
8.html
13. http://www.commerce.gov/NewsRoom/SecretarySpee
ches/PROD01_004268
14. http://store.eiu.com/product/1163410316.html
15. http://www.state.gov/p/wha/rls/28513.htm
16. http://today.worldbiz.com/article_list.php?country=Bra
zil&countryID=15&action=text
17. http://www.financialexpress.com/news/Indo-Brazil-
business-is-booming,-set-to-explode/139849/
18. http://query.nytimes.com/gst/fullpage.html?res=9D07E
5DE163AF933A15757C0A96F958260
42
Contributions
Hans Paul
Team Leader, Strategic Global Partners,
SCM Complexities, and PowerPoint Design
Chris Moseley
Title, Brazil Economic Overview, Risk
Evaluation Overview, Political Overview,
Foreign Currency Exchange
Gino DeJesus
Johnson & Johnson Overview, Liquid Band
Aid, Logistics Complexities, and
Contributions
Thomas Tabacchi
Government Overview, Market Opportunity,
Summary, Recommendation, Resources
43
