I Mreport Market Selection (Roll No 6 &7)
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I Mreport Market Selection (Roll No 6 &7)

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This presentation is on the Market Selection Process. I have chosen body care products to be marketed in the Latin American Countries. In this case, comparison between Brazil & Argentina

This presentation is on the Market Selection Process. I have chosen body care products to be marketed in the Latin American Countries. In this case, comparison between Brazil & Argentina

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I Mreport Market Selection (Roll No 6 &7) I Mreport Market Selection (Roll No 6 &7) Document Transcript

  • Kyra Bath & Body Works International Marketing Market Selection Process Project By: Radhika Jhaveri (6) Subhra Das (7) 1
  • Kyra Bath & Body Works Table of Content Objective…………………………………………………………………………..3 Country Specifications: Brazil Population Structure……………………………………………………………..4 Consumption Trends…………………………………………………………….4 Distribution Channels……………………………………………………………5 Government Regulations & policies……………………………………………6 Competitors………………………………………………………………………6 Demand…………………………………………………………………………..7 Country Specifications: Argentina Population Structure……………………………………………………………..8 Consumption Trends…………………………………………………………….8 Distribution Channels…………………………………………………………...9 Government Regulations & policies……………………………………………10 Demand…………………………………………………………………………..10 Competitors………………………………………………………………………11 Evaluation Matrix………………………………………………………………..12 Conclusion………………………………………………………………………..13 Webliography…………………………………………………………………….14 2
  • Kyra Bath & Body Works Company: It has been 5 years since our company was founded. Today our entrepreneurs are found in most of the Asian Countries. Kyra is one of the fastest growing beauty companies. We offer a wide range of high quality bath & body works products. Our Vision is to be the #1 beauty products company in the world. Objective: The objective of this Market Selection Report is to clearly lay down the parameters and criteria for evaluation and to eliminate the markets which are not potential enough as revealed by the evaluation matrix. The Market Research report involves analysis on the following: - • Demographics • Consumption Trends • Competition • Market Size • Economic indicators • Demand • Consumer behaviour • Government Policies and Regulations 3
  • Kyra Bath & Body Works Country: Brazil Brazil has placed itself as one of the fastest growing and emerging markets on cosmetics and personal care industry landscape. Being the largest market in Latin America and one of the top five cosmetics & personal care markets in the world, Brazil offers immense investment opportunities for companies around the world. With rising cosmetic consumption, coupled with increasing income level, demand of cosmetics & personal care products will further shoot in Brazil. Brazil offers low cost manufacturing facilities and has well developed infrastructure with government support that is making the country an idle destination to establishing cosmetic and toiletries production base and target export market. Also, as the country has a large consumer base, manufacturers can easily tap the domestic market. GDP growth rate: 2.2% in 2010 Foreign Exchange Rate (01/10/2009) : 1 BRL = 0.5605 USD, 1 USD = 1.7842 BRL 1 BRL = 0.3833 EUR, 1 EUR = 2.6091 BRL Population Structure Total Population: 191,601,284.07 Urban population: 85.1% Rural population: 14.9% Men (in %) 49.3% Women (in %) 50.7% Annual growth rate of the population: 1.20% Density of population: 23 inhab./km² Ethnic origins of the population: According to the 2000 census, 53.7% of the Brazilian population was white, 38.5% of mixed ethnic origins, 6.2% black, and 0.9% belonged to other ethnic minorities (Indians, Arabs, Japanese), with 0.7% in no particular category. Consumption Trends Consumer Behavior: Consumers are loyal to brands; including the low income population which this allows to assert itself. More well-off consumers pay particular attention to quality, after-sales service, and the company's social commitment (protection of the environment, sanitary standards, etc.) National pride is reflected in consumer habits, but Brazilians remain attached to foreign products as exterior signs of wealth 4
  • Kyra Bath & Body Works Consumer Profile: Consumption among the majority of the population is turned towards food and housing. The Brazilian consumer is more demanding and selective. He is aware of quality, the price of goods and special offers. Brazilians are known to spend approximately 1.8% of their total income on Hygiene and Personal Care products Distribution Channels For several years, supermarkets and in particular hypermarkets, have become more and more important in the distribution milieu. Brazilian hypermarkets make 80% of sales of staple commodities. Market shares: CBD/Casino : 9.19% ; Carrefour : 5.96% ; Wall Mart : 4.1% ; Atacadao: 2.43% ; Lojas Americanas: 2.18% ; SHV Makro: 2.01%. Organizations in the retail sector Brazilian supermarket association (Abrasnet) Types of outlet: Supermarkets, hypermarkets: retail Carrefour, Pao de Açucar, Sendas, Bompreço, Paes Mendoça Markets: Wholesale, retail-wholesale, retail Mostly fresh products for the majority of Brazilian households; exist in town and especially in rural areas. Shops, grocery stores: Retail Small shops make up a network of more or less formal distribution in rural areas and in the poor districts of towns, selling vital commodities. Unauthorized street hawkers: The last link in the distribution chain, characterized by a large number of salesmen, often undeclared, who sell drinks and food in public places, on the roads, outside concerts and sports meetings. Main useful means Brazil's large cities are well served by air. However, goods transport is not much developed, mainly because of the high cost of this type of transport. Practically all the State capitals are linked by tarmacked roads. São Paulo, Rio de Janeiro and other important States have expressways. The road and motorway network covers approximately 1.5 million kilometers, of which some160 000 are 5
  • Kyra Bath & Body Works tarmacked, an increase of more than 300% over the last two decades. This is the means of transport used most, as it handles about 85% of the transport of people and Brazilian products. Recently, the exploitation of several motorways has been transferred to the private sector. The railway network carries 22.5% of goods traffic. Only 7% of the lines are electrified. Most popular forms of direct marketing: Telemarketing, e-mail, mail order, radio sales and teleshopping. Government Policies and Regulations Freedom of establishment Guaranteed. Acquisition of holdings The investment regime in Brazil is a liberal regime which allows foreign investors to have a majority share in the creation of their company. Corporate taxes Tax rate 15%. Companies can benefit from reductions or Corporate tax rate exemptions when they are located in under-developed geographical areas (zonas francas). Supplementary tax on 10% profits over 240 000 BRL Social contribution (CSL) 9% Tax rate for foreign companies Companies resident in Brazil pay taxes on their worldwide profits. Foreign companies are only subject to tax if they engage in certain sales operations involving companies or agents resident in Brazil. Competitors Natura Cosmaticos and Unilever were the top two companies in cosmetics and toiletries in 2008. Overall leader Natura continued to be the number one player in important categories such as fragrances and skin care, while Unilever invested heavily in bath and shower products, deodorants and hair care. Avon Products has increased its activity in direct selling through upgrading its portfolio including new 6
  • Kyra Bath & Body Works launchings of masstige fragrances, colour cosmetics and nourishers/ anti - agers. In addition, Hypermarcas, a Brazilian company, notably grew its share and ranking by acquiring important companies and brands during 2008 becoming an important player in the C&T market. Demand The Brazilian market for cosmetics and toiletries performed well in 2008, underpinned by the encouraging sales in the second quarter. If the new ICMS (a state VAT) under the newly implemented tax substitution system, implemented in February 2008, contributed to the sluggish performance in the first quarter of 2008, the cosmetics and toiletries market remained largely unaffected by the credit crunch after the onset of the global downturn in September 2008. The negative impacts on the Brazilian cosmetics and toiletries domestic market in 2008 were only marginal. Demand for value-added products tends to increase despite the economic downturn in 2009 Manufacturers of cosmetics and toiletries are developing a great number of value- added products as today's Brazilian consumers have become increasingly demanding. Leading companies are trying to find new ways to tempt consumers by improving the packaging and sophistication of product offerings, despite the economic slowdown in 2009 Positive outlook but growth will be slower in 2009 and over the forecast period Factors such as higher unemployment and a new environment of negative expectations will lead to lower growth. In addition, the high penetration levels of categories such as bar soap, shampoo and toothpaste are set to place downward pressure on future market growth. As such, sales of cosmetics and toiletries are expected to grow at a slower rate over the 2008-2013 period than over the 2003-2008 period. Fragrances and sun care are predicted to be the fastest growing categories over the forecast period. 7
  • Kyra Bath & Body Works Country: Argentina Sunk in recession in 1998, Argentina found itself in a bankruptcy situation in 2001. Since 2003, the Argentine economy has started a process of recovery. GDP growth rate was high between 2004 and 2007, nevertheless the country has been trucked by the financial crisis of 2008. The future prospects of growth seem to be lowers. Domestic household consumptions, which have dynamized the economic growth are expected to be lower. Argentina is open to international exchanges: it imports more than what it exports. Argentina principal trade partners are the countries of Mercosur (Brazil, Paraguay and Uruguay), China and USA Foreign Exchange Rate: 1 ARS = 0.2598 USD, 1 USD = 3.8493 ARS 1 ARS = 0.1776 EUR, 1 EUR = 5.6291 ARS GDP growth rate: 0.7% in 2010 Population Structure Total Population: 39,503,466.05 Urban population: 91.8% Rural population: 8.2% Men (in %) 48.9% Women (in %) 51.1% Annual growth rate of the population: 0.94% Density of population: 14 inhab./km² Ethnic origins of the population: 85% Europeans, 13% mixed ethnic origins and 2% Amerindians. Consumption Trends Consumer behavior Argentine consumers pay attention to home delivery and after-sales service. The Argentines favor national products as imported goods are often three times more expensive. Following the crisis in 2001-2002, the Argentines have reoriented their purchases towards sub-brands and special offers in order to save money. However, in certain geographical areas, more well-off consumers tend to accept higher prices. Likewise, big brand names are chosen for their guarantee of safety, the know-how 8
  • Kyra Bath & Body Works with which their products are made, etc. Young people become attached to the brand image of the product, while still paying attention to its price. Consumer profile and purchasing power The Argentine consumer is rational and conservative. Since the economic crisis, he has become more wary, more selective and more reticent with regard to new products. In general, the Argentines are not very loyal to brands. Distribution Channels Types of outlet: Hypermarkets, supermarkets and mini-markets: Located on the outskirts of towns. They sell foodstuffs and non food products. Mini-markets are smaller and located in town. Carrefour, Jumbo, Yaguar. Specialized Hypermarkets: Hypermarkets specialized in one family of products. Department stores: Shopping malls in the town center.Galeria Pacifico, Galeria Alto Palermo Hard discount: Mainly for food. They sell products of the distributor's own brand or no brand at all. People prefer them for their discount prices. Small shops: Specialized local shops: grocer's, butcher's, fishmonger's, greengrocer's, cheese shops, delicatessens, baker's, cake shops, florist's. People prefer them for the quality of their products, human contact and advice. Most popular forms of direct marketing: E-mail, telemarketing, teleshopping, e- commerce. Main useful means: Goods transport (national and regional) in Argentina is dominated by road transport. The road network covers practically all the country. However, 60% of the network is in poor condition. It carried out 74.8% of transport in 1995 compared with 86% in 1990. International goods transport outside Mercosur is dominated by sea transport. The port of Buenos Aires concentrates 60% of port traffic. A total of 313 million tonnes of goods are transported per year. 25 million tonnes transit by rail and 0.15 million tonnes by air. 9
  • Kyra Bath & Body Works Government policies and Regulations Freedom of establishment Yes Acquisition of holdings All sectors of the economy are open to foreign investors, on an equal footing with national investors. The investment regime is a liberal regime. Foreign investment is not subject to any authorization or declaration, whatever the amount or the activity envisaged, and even if this means taking a majority share in the capital of a local company. Corporate taxes Tax rate Corporate tax rate (Sociedades Anonima, SRL, Comandita) 35% For partnership structures, variable according to the amount of between 9% and taxable income of the partners. 35% Tax rate for foreign companies Foreign companies and resident companies are taxed on profits they make in the country. Capital gains taxation The tax rate on long-term capital gains is 35%. Main allowable deductions and tax credit Expenses are deductible for depreciation or amortization, reserves, rents for premises and equipment, wages, etc. Demand A favourable economic scenario continued to lead to higher disposable incomes and increased consumer confidence in the first half of 2008, allowing consumers to continue purchasing value-added products, and enabling companies to continue with new product launches. However, the second half of the year saw a more cautious consumer, with the last quarter being the slowest, as a consequence of internal political problems coupled with fears of the international crisis reaching Argentina, leading to a slowdown in sales. Consumers are paying more attention to personal appearance and image after years of economic recovery driving growth in disposable incomes. Argentine women have 10
  • Kyra Bath & Body Works always been very conscious of their looks and are now able to purchase more products with value-added characteristics to improve their appearance, mainly in colour cosmetics, hair care and body care. In addition, men have become increasingly interested in improving their appearance. Premium and value-added products continued to gain value share in 2008 as consumers with higher disposable turned to recognised high-quality brands during most of the year, becoming more price-sensitive only towards the end of the year. Many products, such as premium fragrances, skin care and colour cosmetics, benefited from successful marketing campaigns focusing on celebrity endorsements and also from the fact its products became more attractive as gifts due to rising prices of alternative products such as clothing and small electronics. The performance of the cosmetics and toiletries market is expected to slow in 2009 as the effects of the global economic crisis are felt in Argentina. In this expected scenario consumers will watch their spending closely, negatively affecting sales of premium cosmetics and toiletries and opening up opportunities for lower priced direct sellers. The forecast period will see lower average growth rates than 2008 as the economy continues to slow down from the peak growth years following the 2001 crisis. Competitors Major players in the market are Avon, Amway, Fuller and Amodil. 11
  • Kyra Bath & Body Works Evaluation Matrix: 12
  • Kyra Bath & Body Works Conclusion The Evaluation Matrix is a comparison between the two markets. It is used for ranking the markets with reference to the attractiveness for the company. Based on the analysis of this report on the economic indicators, growth rate, political conditions, demand and purchasing power of the consumer of the two countries, it can be surmised that entering the Brazilian market shall prove beneficial for the Company. It can also be observed that in free markets, conditions frequently arise, which invite additional competition to enter. Kyra can thus take the advantage of market niches to enter the Brazilian market and then move into other segments once a position of strength has been established in the niches. 13
  • Kyra Bath & Body Works Webliography http://www.bharatbook.com/Market-Research-Reports/Cosmetics-And-Toiletries- in-Argentina.html http://www.laposte-export-solutions.co.uk/uk/markets/country- profiles/argentina/customs-regulations http://www.laposte-export-solutions.co.uk/uk/markets/country- profiles/brazil/customs-regulations http://www.bharatbook.com/Market-Research-Reports/Cosmetics-And-Toiletries- in-Brazil.html http://www.euromonitor.com//Argentina http://www.infodriveindia.com/Exim/Guides/How-To- Export/Ch_4_Market_Selection.aspx#Foreign_Market_Selection_Process 14
  • Kyra Bath & Body Works Thank You! 15