MARKET REPORT – CHILE

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					MARKET REPORT – CHILE


       BA 447


     ALI CHEEMA
   BOBBY FERGUSON
 JONATHAN JOHANSON
Chile Marketing/Country Situation
                                       Background
Prior to the coming of the Spanish in the 16th century, northern Chile was under Inca rule while
Araucanian Indians (also known as Mapuches) inhabited central and southern Chile. Although
Chile declared its independence in 1810, decisive victory over the Spanish was not achieved
until 1818. In the War of the Pacific (1879-83), Chile defeated Peru and Bolivia and won its
present northern regions. It was not until the 1880s that the Araucanian Indians were completely
subjugated. A three-year-old Marxist government of Salvador ALLENDE was overthrown in
1973 by a military coup led by Augusto PINOCHET, who ruled until a freely elected president
was installed in 1990. Sound economic policies, maintained consistently since the 1980s, have
contributed to steady growth, reduced poverty rates by over half, and have helped secure the
country's commitment to democratic and representative government. Chile has increasingly
assumed regional and international leadership roles befitting its status as a stable, democratic
nation.

                                        Geography
                             Location: Southern South America, bordering the South
                                         Pacific Ocean, between Argentina and Peru
             Geographic coordinates: 30 00 S, 71 00 W

                      Map references: South America

                                  Area: total: 756,950 sq km
                                         land: 748,800 sq km
                                         water: 8,150 sq km
                                         note: includes Easter Island (Isla de Pascua) and
                                         Isla Sala y Gomez
                   Area - comparative: slightly smaller than twice the size of Montana

                     Land boundaries: total: 6,339 km
                                         border countries: Argentina 5,308 km, Bolivia
                                         860 km, Peru 171 km
                             Coastline: 6,435 km

                      Maritime claims: territorial sea: 12 nm
                                         contiguous zone: 24 nm
                                         exclusive economic zone: 200 nm
                                         continental shelf: 200/350 nm
                               Climate: temperate; desert in north; Mediterranean in
                                         central region; cool and damp in south
                         Terrain: low coastal mountains; fertile central valley;
                                   rugged Andes in east
            Elevation extremes: lowest point: Pacific Ocean 0 m
                                   highest point: Nevado Ojos del Salado 6,880 m
              Natural resources: copper, timber, iron ore, nitrates, precious metals,
                                   molybdenum, hydropower
                       Land use: arable land: 2.62%
                                   permanent crops: 0.43%
                                   other: 96.95% (2005)
                  Irrigated land: 19,000 sq km (2003)

Total renewable water resources: 922 cu km (2000)

          Freshwater withdrawal total: 12.55 cu km/yr (11%/25%/64%)
(domestic/industrial/agricultural): per capita: 770 cu m/yr (2000)

                Natural hazards: severe earthquakes; active volcanism; tsunamis

   Environment - current issues: widespread deforestation and mining threaten
                                   natural resources; air pollution from industrial and
                                   vehicle emissions; water pollution from raw
                                   sewage
     Environment - international party to: Antarctic-Environmental Protocol,
                   agreements: Antarctic-Marine Living Resources, Antarctic
                                   Seals, Antarctic Treaty, Biodiversity, Climate
                                   Change, Climate Change-Kyoto Protocol,
                                   Desertification, Endangered Species,
                                   Environmental Modification, Hazardous Wastes,
                                   Law of the Sea, Marine Dumping, Ozone Layer
                                   Protection, Ship Pollution, Wetlands, Whaling
                                   signed, but not ratified: none of the selected
                                   agreements
              Geography - note: strategic location relative to sea lanes between
                                   Atlantic and Pacific Oceans (Strait of Magellan,
                                   Beagle Channel, Drake Passage); Atacama Desert
                                   is one of world's driest regions


                                     People
   Population: 16,454,143 (July 2008 est.)

Age structure: 0-14 years: 23.6% (male 1,987,962/female 1,899,489)
                15-64 years: 67.6% (male 5,556,867/female 5,563,666)
65 years and over: 8.8% (male 602,789/female 843,370) (2008 est.)
   Median age: total: 31.1 years
                 male: 30.1 years
                 female: 32.1 years (2008 est.)
    Population 0.905% (2008 est.)
   growth rate:

     Birth rate: 14.82 births/1,000 population (2008 est.)

    Death rate: 5.77 deaths/1,000 population (2008 est.)

 Net migration NA (2008 est.)
         rate:

     Sex ratio: at birth: 1.05 male(s)/female
                 under 15 years: 1.05 male(s)/female
                 15-64 years: 1 male(s)/female
                 65 years and over: 0.72 male(s)/female
                 total population: 0.98 male(s)/female (2008 est.)
Infant mortality total: 7.9 deaths/1,000 live births
          rate: male: 8.7 deaths/1,000 live births
                 female: 7.06 deaths/1,000 live births (2008 est.)
           Life total population: 77.15 years
 expectancy at male: 73.88 years
         birth: female: 80.59 years (2008 est.)

  Total fertility 1.95 children born/woman (2008 est.)
           rate:
    HIV/AIDS - 0.3% (2003 est.)
          adult
    prevalence
          rate:

    HIV/AIDS - 26,000 (2003 est.)
 people living
with HIV/AIDS:
     HIV/AIDS - 1,400 (2003 est.)
        deaths:
   Nationality: noun: Chilean(s)
                 adjective: Chilean
Ethnic groups: white and white-Amerindian 95.4%, Mapuche 4%, other indigenous
                 groups 0.6% (2002 census)
     Religions: Roman Catholic 70%, Evangelical 15.1%, Jehovah's Witness 1.1%,
                 other Christian 1%, other 4.6%, none 8.3% (2002 census)
  Languages: Spanish (official), Mapudungun, German, English

     Literacy: definition: age 15 and over can read and write
                total population: 95.7%
                male: 95.8%
                female: 95.6% (2002 census)
    School life total: 14 years
   expectancy male: 14 years
   (primary to female: 14 years (2006)
       tertiary
   education):

   Education 3.2% of GDP (2006)
expenditures:


                                 Government
Country name: conventional long form: Republic of Chile
                conventional short form: Chile
                local long form: Republica de Chile
                local short form: Chile
  Government republic
        type:

       Capital: name: Santiago
                geographic coordinates: 33 27 S, 70 40 W
                time difference: UTC-4 (1 hour ahead of Washington, DC during
                Standard Time)
                daylight saving time: +1hr, begins second Sunday in October; ends
                second Sunday in March
Administrative 15 regions (regiones, singular - region); Aisen del General Carlos
   divisions: Ibanez del Campo, Antofagasta, Araucania, Arica y Parinacota,
                Atacama, Biobio, Coquimbo, Libertador General Bernardo
                O'Higgins, Los Lagos, Los Rios, Magallanes y de la Antartica
                Chilena, Maule, Region Metropolitana (Santiago), Tarapaca,
                Valparaiso
                note: the US does not recognize claims to Antarctica
Independence: 18 September 1810 (from Spain)

      National Independence Day, 18 September (1810)
      holiday:

 Constitution: 11 September 1980, effective 11 March 1981; amended 1989, 1991,
                1997, 1999, 2000, 2003, and 2005
Legal system: based on Code of 1857 derived from Spanish law and subsequent
               codes influenced by French and Austrian law; judicial review of
               legislative acts in the Supreme Court; has not accepted compulsory
               ICJ jurisdiction; note - in June 2005, Chile completed overhaul of its
               criminal justice system to a new, US-style adversarial system
    Suffrage: 18 years of age; universal and compulsory

    Executive chief of state: President Michelle BACHELET Jeria (since 11 March
      branch: 2006); note - the president is both the chief of state and head of
               government
               head of government: President Michelle BACHELET Jeria (since 11
               March 2006)
               cabinet: Cabinet appointed by the president
               elections: president elected by popular vote for a single four-year
               term; election last held 11 December 2005, with runoff election held
               15 January 2006 (next to be held in December 2009)
               election results: Michelle BACHELET Jeria elected president;
               percent of vote - Michelle BACHELET Jeria 53.5%; Sebastian
               PINERA Echenique 46.5%
   Legislative bicameral National Congress or Congreso Nacional consists of the
      branch: Senate or Senado (38 seats; members elected by popular vote to
               serve eight-year terms; one-half elected every four years) and the
               Chamber of Deputies or Camara de Diputados (120 seats; members
               are elected by popular vote to serve four-year terms)
               elections: Senate - last held 11 December 2005 (next to be held in
               December 2009); Chamber of Deputies - last held 11 December 2005
               (next to be held in December 2009)
               election results: Senate - percent of vote by party - NA; seats by
               party - CPD 20 (PDC 6, PS 8, PPD 3, PRSD 3), APC 17 (UDI 9, RN
               8), independent 1; Chamber of Deputies - percent of vote by party -
               NA; seats by party - CPD 65 (PDC 21, PPD 22, PS 15, PRSD 7),
               APC 54 (UDI 34, RN 20), independent 1; note - as of 8 January
               2008: Senate - seats by party - CPD 18, (PDC 5, PS 8, PPD 2, PRSD
               3), APC 16 (UDI 9, RN 7), independent 4; Chamber of Deputies -
               seats by party - CPD 57 (PDC 16, PPD 19, PS 15, PRSD 7), APC 53
               (UDI 33, RN 20), independent 10.
      Judicial Supreme Court or Corte Suprema (judges are appointed by the
      branch: president and ratified by the Senate from lists of candidates provided
               by the court itself; the president of the Supreme Court is elected
               every three years by the 20-member court); Constitutional Tribunal
      Political Alliance for Chile (Alianza) or APC (including National Renewal or
   parties and RN [Carlos LARRAIN Pena] and Independent Democratic Union or
      leaders: UDI [Juan Antonio COLOMA]); Coalition of Parties for Democracy
                (Concertacion) or CPD (including Christian Democratic Party or
                PDC [Jorge BURGOS], Socialist Party or PS [Camilo ESCALONA
                Medina], Party for Democracy or PPD [Pepe AUTH], Radical Social
                Democratic Party or PRSD [Jose Antonio GOMEZ Urrutia]);
                Communist Party or PC [Guillermo TEILLIER]; Humanist Party
                [Marilen CABRERA Olmos]
      Political Roman Catholic Church; United Labor Central or CUT includes
     pressure trade unionists from the country's five largest labor confederations
   groups and other: revitalized university student federations at all major
      leaders:
                universities
  International APEC, BIS, CAN (associate), FAO, G-15, G-77, IADB, IAEA,
  organization IBRD, ICAO, ICC, ICCt (signatory), ICRM, IDA, IFAD, IFC,
 participation: IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO,
                ITSO, ITU, ITUC, LAES, LAIA, Mercosur (associate), MIGA,
                MINUSTAH, NAM, OAS, OPANAL, OPCW, PCA, RG, UN,
                UNASUR, UNCTAD, UNESCO, UNHCR, UNIDO, Union Latina,
                UNMOGIP, UNTSO, UNWTO, UPU, WCL, WCO, WFTU, WHO,
                WIPO, WMO, WTO
    Diplomatic chief of mission: Ambassador Mariano FERNANDEZ
representation chancery: 1732 Massachusetts Avenue NW, Washington, DC 20036
     in the US: telephone: [1] (202) 785-1746
                FAX: [1] (202) 887-5579
                consulate(s) general: Chicago, Houston, Los Angeles, Miami, New
                York, Philadelphia, San Francisco, San Juan (Puerto Rico)
    Diplomatic chief of mission: Ambassador Paul E. SIMONS
representation embassy: Avenida Andres Bello 2800, Las Condes, Santiago
  from the US: mailing address: APO AA 34033
                telephone: [56] (2) 330-3000
                FAX: [56] (2) 330-3710, 330-3160
         Flag two equal horizontal bands of white (top) and red; a blue square the
  description: same height as the white band at the hoist-side end of the white band;
                the square bears a white five-pointed star in the center representing a
                guide to progress and honor; blue symbolizes the sky, white is for the
                snow-covered Andes, and red represents the blood spilled to achieve
                independence
                note: design was influenced by the US flag
                                  Economy
   Economy - Chile has a market-oriented economy characterized by a high level of
    overview: foreign trade and a reputation for strong financial institutions and
               sound policy that have given it the strongest sovereign bond rating in
               South America. Exports account for 40% of GDP, with commodities
               making up some three-quarters of total exports. Copper alone
               provides one-third of government revenue. During the early 1990s,
               Chile's reputation as a role model for economic reform was
               strengthened when the democratic government of Patricio AYLWIN
               - which took over from the military in 1990 - deepened the economic
               reform initiated by the military government. Growth in real GDP
               averaged 8% during 1991-97, but fell to half that level in 1998
               because of tight monetary policies implemented to keep the current
               account deficit in check and because of lower export earnings - the
               latter a product of the global financial crisis. A severe drought
               exacerbated the situation in 1999, reducing crop yields and causing
               hydroelectric shortfalls and electricity rationing, and Chile
               experienced negative economic growth for the first time in more than
               15 years. In the years since then, growth has averaged 4% per year.
               Chile deepened its longstanding commitment to trade liberalization
               with the signing of a free trade agreement with the US, which took
               effect on 1 January 2004. Chile claims to have more bilateral or
               regional trade agreements than any other country. It has 57 such
               agreements (not all of them full free trade agreements), including
               with the European Union, Mercosur, China, India, South Korea, and
               Mexico. Over the past five years, foreign direct investment inflows
               have quadrupled to some $17 billion in 2008. The Chilean
               government conducts a rule-based countercyclical fiscal policy,
               accumulating surpluses in sovereign wealth funds during periods of
               high copper prices and economic growth, and allowing deficit
               spending only during periods of low copper prices and growth. As of
               September 2008, those sovereign wealth funds - kept mostly outside
               the country and separate from Central Bank reserves - amounted to
               more than $20 billion.
        GDP $252.9 billion (2008 est.)
 (purchasing
power parity):
 GDP (official $181.5 billion (2008 est.)
   exchange
       rate):

   GDP - real 4% (2008 est.)
 growth rate:
     GDP - per $15,400 (2008 est.)
  capita (PPP):
        GDP - agriculture: 4.8%
  composition industry: 50.5%
    by sector: services: 44.7% (2008 est.)

   Labor force: 7.32 million (2008 est.)

  Labor force - agriculture: 13.2%
by occupation: industry: 23%
                 services: 63.9% (2005)
Unemployment 7.5% (August-October 2008)
        rate:

    Population 18.2% (2005)
 below poverty
          line:

    Household lowest 10%: 1.4%
     income or highest 10%: 45% (2003)
  consumption
 by percentage
         share:
 Distribution of 54.9 (2003)
family income -
    Gini index:

   Investment 23.7% of GDP (2008 est.)
 (gross fixed):

       Budget: revenues: $46.5 billion
                 expenditures: $37.7 billion (2008 est.)
   Fiscal year: calendar year

   Public debt: 3.8% of GDP (2008 est.)

  Inflation rate 8.8% (2008 est.)
    (consumer
        prices):

  Central bank 6% (31 December 2007)
 discount rate:

   Commercial 8.67% (31 December 2007)
    bank prime
  lending rate:

      Stock of $16.6 billion (31 December 2007)
       money:
Stock of quasi $80.42 billion (31 December 2007)
money:
      Stock of $127.1 billion (31 December 2007)
     domestic
        credit:
Market value of $212.9 billion (31 December 2007)
publicly traded
        shares:
    Industries: copper, other minerals, foodstuffs, fish processing, iron and steel,
                 wood and wood products, transport equipment, cement, textiles
   Electricity - 50.37 billion kWh (2006 est.)
   production:
   Electricity - 45.52 billion kWh (2006 est.)
 consumption:

   Electricity - 0 kWh (2007 est.)
      exports:

   Electricity - 1.628 billion kWh (2007 est.)
      imports:
   Electricity - fossil fuel: 47%
 production by hydro: 51.5%
      source: nuclear: 0%
                 other: 1.4% (2001)
          Oil - 11,610 bbl/day (2007 est.)
   production:
         Oil - 253,000 bbl/day (2006 est.)
 consumption:

  Oil - exports: 32,500 bbl/day (2005)

  Oil - imports: 222,900 bbl/day (2006 est.)

   Oil - proved 150 million bbl (1 January 2008 est.)
     reserves:

  Natural gas - 1.8 billion cu m (2007 est.)
   production:

  Natural gas - 4.2 billion cu m (2007 est.)
 consumption:
  Natural gas - 0 cu m (2007 est.)
      exports:
  Natural gas - 2.4 billion cu m (2007 est.)
      imports:
  Natural gas - 97.97 billion cu m (1 January 2008 est.)
       proved
     reserves:
       Current -$1.574 billion (2008 est.)
      account
      balance:
      Exports: $69.1 billion f.o.b. (2008 est.)

    Exports - copper, fruit, fish products, paper and pulp, chemicals, wine
 commodities:
      Exports - China 14.8%, US 12.5%, Japan 10.5%, Netherlands 5.8%, South
      partners: Korea 5.7%, Italy 5.1%, Brazil 5% (2007)

      Imports: $59.17 billion f.o.b. (2008 est.)

    Imports - petroleum and petroleum products, chemicals, electrical and
 commodities: telecommunications equipment, industrial machinery, vehicles,
                 natural gas
      Imports - US 16.7%, China 11.2%, Brazil 10.3%, Argentina 9.9% (2007)
      partners:

Economic aid - $0 (2006)
    recipient:
   Reserves of $21.99 billion (31 December 2008 est.)
       foreign
 exchange and
         gold:
Debt - external: $64.57 billion (31 December 2008 est.)

Stock of direct $108.9 billion (2008 est.)
       foreign
investment - at
        home:
Stock of direct $29.98 billion (2008 est.)
       foreign
  investment -
      abroad:
      Currency Chilean peso (CLP)
        (code):
Currency code: CLP

     Exchange Chilean pesos (CLP) per US dollar - 509.02 (2008 est.), 526.25
        rates: (2007), 530.29 (2006), 560.09 (2005), 609.37 (2004)
                             Communications
 Telephones - 3.379 million (2007)
 main lines in
         use:

 Telephones - 13.955 million (2007)
       mobile
      cellular:

    Telephone general assessment: privatization begun in 1988; most advanced
      system: telecommunications infrastructure in South America; modern system
                based on extensive microwave radio relay facilities; fixed-line
                connections have dropped in recent years as mobile-cellular usage
                continues to increase, reaching a level of 85 telephones per 100
                persons
                domestic: extensive microwave radio relay links; domestic satellite
                system with 3 earth stations
                international: country code - 56; submarine cables provide links to
                the US and to Central and South America; satellite earth stations - 2
                Intelsat (Atlantic Ocean) (2007)
        Radio AM 180 (8 inactive), FM 64, shortwave 17 (1 inactive) (1998)
    broadcast
     stations:
      Radios: 5.18 million (1997)

    Television 63 (plus 121 repeaters) (1997)
    broadcast
     stations:
  Televisions: 3.15 million (1997)

      Internet .cl
country code:
Internet hosts: 847,215 (2008)

      Internet 7 (2000)
      Service
    Providers
       (ISPs):

Internet users: 5.57 million (2007)
                              Transportation
     Airports: 358 (2007)

Airports - with total: 79
        paved over 3,047 m: 5
     runways: 2,438 to 3,047 m: 8
               1,524 to 2,437 m: 22
               914 to 1,523 m: 25
               under 914 m: 19 (2007)
Airports - with total: 279
      unpaved 2,438 to 3,047 m: 2
     runways: 1,524 to 2,437 m: 12
               914 to 1,523 m: 49
               under 914 m: 216 (2007)
    Pipelines: gas 2,550 km; gas/liquid petroleum gas 42 km; liquid petroleum gas
               539 km; oil 1,002 km; refined products 757 km; unknown (oil/water)
               97 km (2007)
    Railways: total: 6,585 km
               broad gauge: 2,831 km 1.676-m gauge (1,317 km electrified)
               narrow gauge: 3,754 km 1.000-m gauge (2006)
  Roadways: total: 80,505 km
               paved: 16,745 km (includes 2,414 km of expressways)
               unpaved: 63,760 km (2004)
    Merchant total: 44
     marine: by type: bulk carrier 9, cargo 7, chemical tanker 8, container 1,
               liquefied gas 2, passenger 4, passenger/cargo 2, petroleum tanker 7,
               roll on/roll off 1, vehicle carrier 3
               registered in other countries: 40 (Argentina 7, Brazil 1, Cyprus 1,
               Isle of Man 6, Marshall Islands 4, Norway 2, Panama 12, Singapore
               6, Venezuela 1) (2008)
   Ports and Coronel, Huasco, Lirquen, Puerto Ventanas, San Antonio, San
   terminals: Vicente, Valparaiso

                                    Military
     Military Army of the Nation, Chilean Navy (Armada de Chile, includes naval
   branches: air, marine corps, and Maritime Territory and Merchant Marine
               Directorate (Directemar)), Chilean Air Force (Fuerza Aerea de Chile,
               FACh), Carabineros Corps (Cuerpo de Carabineros) (2008)
Military service 18-45 years of age for voluntary male and female military service,
        age and although the right to compulsory recruitment is retained; service
     obligation: obligation - 12 months for Army, 22 months for Navy and Air Force

    Manpower males age 16-49: 4,242,912
  available for females age 16-49: 4,182,509 (2008 est.)
       military
      service:
  Manpower fit males age 16-49: 3,542,448
   for military females age 16-49: 3,500,059 (2008 est.)
      service:

    Manpower male: 147,518
       reaching female: 141,139 (2008 est.)
       militarily
significant age
      annually:

      Military 2.7% of GDP (2006)
 expenditures:

                           Trans-National Issues
    Disputes - Chile and Peru rebuff Bolivia's reinvigorated claim to restore the
 international: Atacama corridor, ceded to Chile in 1884, but Chile has offered
                 instead unrestricted but not sovereign maritime access through Chile
                 to Bolivian gas and other commodities; Chile rejects Peru's unilateral
                 legislation to change its latitudinal maritime boundary with Chile to
                 an equidistance line with a southwestern axis favoring Peru, in
                 October 2007, Peru took its maritime complaint with Chile to the
                 ICJ; territorial claim in Antarctica (Chilean Antarctic Territory)
                 partially overlaps Argentine and British claims; the joint boundary
                 commission, established by Chile and Argentina in 2001, has yet to
                 map and demarcate the delimited boundary in the inhospitable
                 Andean Southern Ice Field (Campo de Hielo Sur)
   Illicit drugs: transshipment country for cocaine destined for Europe and the
                 region; economic prosperity and increasing trade have made Chile
                 more attractive to traffickers seeking to launder drug profits,
                 especially through the Iquique Free Trade Zone, but a recent anti-
                 money-laundering law improves controls; imported precursors
                 passed on to Bolivia; domestic cocaine consumption is rising,
                 making Chile a significant consumer of cocaine
                                 Total Sales

      Toothpaste Sales in Chile, last six years (Millions of USD)
            5     4     3     2                            Sales per
                                  Previous Current
          years years years years                           capita
                                    Year    Year
           ago ago ago ago                                  (USD)
            59   65    69    78      78     83.1             5.16


                   Competitive Market Shares (%) in Chile
           Mfg.
           Sales
          (US$ -
Company     M)        B&B     Caremore   Driscol   Evers      Locals   Regionals
 Market
 Share    83.1         11.5      0         0        0          56.8      31.6
                              Marketing Strategies of Competitors


                                           Brand Formulation


                Economy      White   Healthy   Kids    Small Medium   Large       Tube Pump       Paste   Gel
Britesmile                    3                          3     3        2           3               3      2
Local One          3                   3                 3     3        3           3               3
Regional
One                3           2       3                3      3       3           3               3
Clean &
White                          2                        2      2                   2               2
Local Two                      2                               2                   2                      2
Total              6           9       6        0       11    13       8      0   13    0     0    11     4

1st          White           Medium Tube       Paste
2nd          Economy/Healthy Small             Gel
3rd                          Large




                  Most common is whitening, medium size, tube, paste
                  Next is Economy/Healthy, small size, tube, gel
                  Competition does not market towards kids
                  Pump is not used, only tubes
                              Benchmarking
                                         Local     Regional
                            Britesmile   One         One        Caremore
       Mfr. Sales (mill.
       CLP)                  12,107.6 20,687.3      12,607.4      2,712.7
       Allowance Expense      1,912.2  1,424.5       1,310.2        434.0
       Cost of Goods Sold     5,431.4 10,464.4       5,083.0      1,197.3
       Freight/Tariffs          259.3    105.5          47.6         67.0
       Gross Profit           4,504.7 8,692.9        6,166.6      1,014.4

       Promotion                472.4      617.9        420.2       682.0
       Advertising            1,384.4    1,106.9      1,188.6         0.0
       Sales Force              663.1      496.9        504.0       124.9
       Administrative           861.0      798.4        871.5       273.6
       Total Marketing        3,380.9    3,020.1      2,984.3     1,080.5

       Contr. After
       Mkting                 1,123.8    5,672.8      3,182.3       -66.1

       Fixed Costs              369.2     369.2        369.2       369.2
       Net Profit               754.6    5,303.6      2,813.1      -435.3




       NET PROFIT
       Year One                -612.5    7,488.3      4,366.2         0.0
       Year Two                 809.7    8,268.8      3,328.6    -1,296.4
       Year Three               754.6    5,303.6      2,813.1      -435.3

       Net Loss/Gain            951.8 21,060.7      10,507.9     -1,731.7




 Local One is leader
 Caremore performed poorly every year
                                  Market share



Year Three           Economy     White     Healthy   Kids     Total
Unit Sales (Mill.)        28.2     32.8       27.5      8.6     97.1

Allsmile                 7.7%     15.5%      29.8%   100.0%   24.8% Allsmile
Britesmile               0.0%     46.3%       0.0%     0.0%   15.7%
Clean + White            0.0%     12.0%       0.0%     0.0%    4.0%
Local One               67.3%      0.0%      46.7%     0.0%   32.7% Local One
Local Two                0.0%     16.2%       0.0%     0.0%    5.5%
Regional One            25.0%     10.0%      23.5%     0.0%   17.3%

Year Two             Economy     White     Healthy   Kids     Total
Unit Sales (Mill.)        35.0     29.6       28.1      2.0     94.7

Allsmile                 1.5%      2.7%       4.1%   100.0%    4.7%
Britesmile               0.0%     42.1%       0.0%     0.0%   13.2%
Clean + White            0.0%     18.3%       0.0%     0.0%    5.7%
Local One               75.3%      0.0%      68.2%     0.0%   48.1% Local One
Local Two                0.0%     23.9%       0.0%     0.0%    7.5%
Regional One            23.2%     13.0%      27.7%     0.0%   20.8% Regional One

Year One             Economy     White     Healthy   Kids     Total
Unit Sales (Mill.)        45.2       8.8      29.6      0.0     83.6

Britesmile               0.0%    100.0%       0.0%     0.0%   10.5%
Local One               69.5%      0.0%      69.8%     0.0%   62.3% Local One
Regional One            30.5%      0.0%      30.2%     0.0%   27.1% Regional One




      Local One consistently has largest market share
      Regional One runner up until third year
      Allsmile gained 100 percent of kids market by year two
                                        Retail Sales

Year Three Retail                        Self                  Web/Other
Sales                     Traditional   Serve    HyperMarket     Home      Overall
Total Sales (mill. CLP)     26,266      18,888      28,316       1,916     75,385
Average Retail Discount      2.6%        4.6%       14.0%        13.9%      7.7%

Allsmile                    20.8%       27.0%       19.6%        0.0%      21.4%
Britesmile                  0.0%        15.7%       35.1%        57.0%     18.6%
Clean + White               0.0%        0.0%        10.8%        0.0%      4.1%
Local One                   65.8%       19.9%       6.7%         0.0%      30.4%
Local Two                   13.4%       3.9%        0.7%         0.0%      5.9%
Regional One                0.0%        33.5%       27.1%        43.0%     19.7%

Total                      100.0%       100.0%     100.0%       100.0%     100.1%


           Hypermarket and Traditional sales most popular
           Local One dominates Traditional market
           Local One claimed most sales overall
                                       Product Pricing

                                                                                    Three year
                   Year Three              Year Two               Year One           Average
               Average             Average                 Average                Average
                MSRP    Average     MSRP        Average     MSRP       Average     MSRP    Average
                (CLP)  Allowance    (CLP)      Allowance    (CLP)     Allowance    (CLP)  Allowance
Small
Britesmile      866       12.0%     797         12.0%       714        12.0%       792      12.0%
Clean +
White           782       12.0%     687         12.0%                              735      12.0%
Local One       642       5.0%      604         5.0%        577         5.0%       608      5.0%
Local Two       NA         NA       NA           NA                                NA        NA
Regional One    754       8.0%      714         9.0%        659        10.0%       709      9.0%



Medium
Britesmile      1047      12.0%     962         12.0%       852        12.0%       954      12.0%
Clean +
White           978       12.0%     852         12.0%                              915      12.0%
Local One       782       5.0%      742         5.0%        714         5.0%       746      5.0%
Local Two       866       5.0%      824         5.0%                               845      5.0%
Regional One    959       8.0%      897         8.7%        824        10.0%       893      8.9%



Large
Britesmile      1257      12.0%     1113        12.0%        NA          NA        1,185    12.0%
Clean +
White            NA        NA        NA           NA                                NA       NA
Local One        950      5.0%       907         5.0%       879         5.0%        912     5.0%
Local Two        NA        NA        NA           NA                                NA       NA
Regional One    1146      8.0%      1085         8.5%       989        10.0%       1,073    8.8%


                   Three year market average price for small is (CLP) 711
                   Three year market average price for medium is 870.60
                   Three year market average price for large is 1056.67
                             Advertising
             Year Three
                              Budget                  Benefits
             Brand           (mill. CLP)    Target    Message
             Britesmile       1,322.8      Younger     White
             Local One        1,014.6      Families   Economy
             Regional One     1096.3        Older     Economy



             Year Two
                              Budget                  Benefits
             Brand           (mill. CLP)    Target    Message
             Britesmile        893.7       Younger      White
             Local One        1,037.8      Families   Economy
             Clean & White     926.6       Families    Healthy
             Regional One     1140.5        Older     Economy



             Year One
                              Budget                  Benefits
             Brand           (mill. CLP)    Target    Message
             Britesmile        918.0       Younger     White
             Local One        1,055.6      Families   Economy



             3 Year
             Totals
             Britesmile         3,134.5 Younger           White
             Local One          3,108.0 Families       Economy
             Regional One       2,236.8   Older        Economy
             Clean & White        926.6 Families        Healthy


 Britesmile only competitor to target younger market
 Regional One only competitor to target older market
 Economic benefit dominates
                 Promotion Channel

                Britesmile   Local   Regional
Year Three        (B&B)       One      One    Caremore Total
Traditional         0.0      522.6     0.0       0.0    522.6
Self Serve        187.7       0.0     293.4      0.0    481.1
Hypermarket       268.9       0.0     113.5     682.0  1,064.4
Web/Other
Home              15.8        0.0     13.3       0.0       29.1
Wholesale          0.0       86.4      0.0       0.0       86.4
Total             472.4      609.0    420.2     682.0     2,183.6


                Britesmile   Local   Regional
Year Two          (B&B)       One      One    Caremore    Total
Traditional         0.0      440.4     0.0       0.0      440.4
Self Serve        102.7       0.0     308.5      0.0      411.2
Hypermarket       153.0       0.0     113.1     356.4     622.5
Web/Other
Home               7.2        0.0     11.8       0.0       19.0
Wholesale          0.0       71.1      0.0       0.0       71.1
Total             262.9      511.5    433.4     356.4     1,564.2


                Britesmile   Local   Regional
Year One          (B&B)       One      One      Total
Traditional         0.0      456.8     0.0      456.8
Self Serve          0.0       0.0     461.9     461.9
Hypermarket       353.1       0.0     160.5     513.6
Web/Other
Home               0.0        0.0     18.3       18.3
Wholesale          0.0       71.0      0.0       71.0
Total             353.1      527.8    640.7     1,521.6


                Britesmile Local     Regional
3 Year Totals     (B&B)      One        One   Caremore Total
Traditional         0.0    1,419.8      0.0      0.0   1,419.8
Self Serve        290.4      0.0      1,063.8    0.0   1,354.2
Hypermarket       775.0      0.0       387.1   1,038.4 2,200.5
Web/Other
Home              23.0        0.0      43.4       0.0     66.4
Wholesale         0.0        228.5      0.0       0.0     228.5
 3 Year Total   1,088.4   1,648.3   1,494.3   1,038.4   5,269.4


 Most promotion in hypermarket
 Caremore markets exclusively in hypermarket
 Local One only company to market in wholesale
                     Sales Force Allocation
              All
Year Three    Star      B+B   Caremore   Local   Regional   Totals
Traditional     5         0       0       15        0        20
Self Serve      3         8       0        0       11        22
Hypermarket     3        11       4        0        4        22
Web/Other
Home           0         3       0         0        3         6
Wholesale      1         0       0         2        0         3
Total          12       22       4        17       18        73

              All
Year Two      Star      B+B   Caremore   Local   Regional   Totals
Traditional     7        0        0       14        0        21
Self Serve      0        4        0        0       12        16
Hypermarket     7        6       12        0        4        29
Web/Other
Home           0         3      0          0        3         6
Wholesale      0         0      0          2        0         2
Total          14       13      12        16       19        74


Year One       B+B                       Local   Regional   Totals
Traditional     0                         15        0        15
Self Serve      0                          0        5         5
Hypermarket     13                         0        3        16
Web/Other
Home           0                           0        3         3
Wholesale      0                           2        0         2
Total          13                         17       11        41


         Hypermarket receives most sales force allocation
         Wholesale receives least sales force allocation
                Distribution Coverage


                             Self   Hyper    Web/Other
Year Three      Traditional Serve   Market     Home      Total

Outlets           1,031     307      106        11       1,455

Britesmile          0       78        64         6        148
Clean + White       0        0        54         0        54
Local One          897      95        26         0       1,018
Local Two          897      95        26         0       1,018
Regional One        0       156       64         6        226

                             Self   Hyper    Web/Other
Year Two        Traditional Serve   Market     Home      Total

Outlets           1,089     295       99        10       1,493

Britesmile          0       83        56         6        145
Clean + White       0        0        46         0        46
Local One          948      91        27         0       1,066
Local Two          948      91        27         0       1,066
Regional One        0       147       56         6        209

                             Self   Hyper    Web/Other
Year One        Traditional Serve   Market     Home      Total

Outlets           1,148     283       91         8       1,530

Britesmile          0        0        48         0        48
Local One         1,000     88        28         0       1,116
Regional One        0       137       48         5        190


 Accumulative Totals
Britesmile          0       161      168        12        341
Clean + White       0        0       100         0        100
Local One         2,845     274      81          0       3,200
  Local Two      1,845   95    53     0   1,993
  Regional One     0     440   168   17    625


 Web/Other Home ignored except by Britesmile
 Local one and two focus on Traditional
 Clean + White focuses on Hypermarket only
                Projected Sales

         Prior to Market Entry




                            Period 1
                    % of
                    Total    Size of   Segment
Cross Section      Market    Market     Totals
Younger/Economy    9.50%      7.94
Younger/White      8.50%      7.11
                                        20.48
Younger/Healthy    6.10%      5.10
Younger/Kids        0.40%     0.33
Older/Economy       9.70%     8.11
Older/White         4.70%     3.93
                                        18.64
Older/Healthy       6.70%     5.60
Older/Kids         1.20%     1.00
Families/Economy   18.30%    15.30
Families/White     9.90%     8.28       43.22
Families/Healthy   18.30%    15.30
Families/Kids   5.20%   4.35
  Projected Sales


Upon Market Entry
                            Period 2 (Entry)
                     % of
                    Total   Size of     Est. Share   Projected
Cross Section      Market   Market      of Target      Sales
Younger/Economy     9.50%    9.00          1.5%         0.13
Younger/White       8.50%    8.05          2.7%         0.22
Younger/Healthy     6.10%    5.78          4.1%         0.24
Younger/Kids        0.40%    0.38        100.0%         0.38
Older/Economy       9.70%    9.19          1.5%         0.14
Older/White         4.70%    4.45          2.7%         0.12
Older/Healthy       6.70%    6.34          4.1%         0.26
Older/Kids          1.20%    1.14        100.0%         1.14
Families/Economy   18.30%   17.33          1.5%         0.26
Families/White      9.90%    9.38          2.7%         0.25
Families/Healthy   18.30%   17.33          4.1%         0.71
Families/Kids       5.20%    4.92        100.00%        4.92
                              Total Unit Sales          8.77
                            Total Market Share         9.26%

                               Total CLP Sales       6227.33
                                                        $
                                Total $ Sales         12.23
Projected Sales


 Period Three
                                      Period 3
                   % of Total   Size of      Est. Share of   Projected
Cross Section       Market      Market          Target         Sales
Younger/Economy      9.50%       9.22            8.0%          0.74
Younger/White        8.50%       8.25            16.0%         1.32
Younger/Healthy      6.10%       5.92            30.0%         1.78
Younger/Kids         0.40%       0.39           100.0%         0.39
Older/Economy        9.70%       9.42            8.0%          0.75
Older/White          4.70%       4.56            16.0%         0.73
Older/Healthy        6.70%       6.51            30.0%         1.95
Older/Kids           1.20%       1.17           100.0%         1.17
Families/Economy    18.30%      17.77            8.0%          1.42
Families/White       9.90%       9.61            16.0%         1.54
Families/Healthy    18.30%      17.77            30.0%         5.33
Families/Kids        5.20%       5.05          100.00%         5.05
                                   Total Unit Sales            22.16
                                 Total Market Share           22.83%
                                    Total CLP Sales          16370.10
                                                                 $
                                     Total $ Sales             32.16
                       Projected Sales


                            Pricing


 Pricing by Tube Size, Period 2 (Market Entry)
 Focus on undercutting price of cost leader
 Prices per item (CLP)


     Size                 Cost Leader      All Smile

     Small                604              550

     Medium               742              700

     Large                907              870
                                   Production Implications


           In order to become successful in another company, our group will have to figure out a

few things. The first is finding what type of product customer likes. The second will be whether

or not we will not to build a factory. That may or not save money because of the benefit from

not shipping product as compared to the cost of building a factory.

           When considering whether or not to build a factory, there are a few things that need to be

looked at and evaluated. First will be tariffs and duties you have to pay if you have a factory in

the United States and are shipping the toothpaste to Latin America. The second is shipping rates

for the toothpaste. Last, you have to consider what the volume of production for your company

will be.

           First, let’s look at tariffs and duties. Because we are looking at market entry into Chile,

we have to look at tariffs between the US and Chile. Because of the trade treaty MERCOSUR,

there are no tariffs between the two countries. This isn’t going to have a significant pull on the

decision to produce in the US or Chile.

           Next, let’s take a look at shipping rates between the US and Chile. Based on production

of product in millions of dollars, it is going to save about 11 percent as compared with

production cost to the US. In the event that we were going to branch out into other Latin

American countries, we definitely would want to create a factory in a Latin American country.

The shipping costs are about a third of the cost as if we would ship from the US.

           The third factor we are going to look at is the amount of production we are going to

experience. During the practice rounds, it definitely seemed as though we were going to
experience the cost benefit. It seemed as though after the second year, we had already

experienced the cost benefits.

       Based upon the prior information, I would say that creating a factory would be most

advantageous. It would cut down on the administrative costs, which is going to drop down as

soon as the factory is finished. It takes one year to create the factory.