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Casas bahia marketing to the poor

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  • 1. Marketing to thePoor…
  • 2. INTRODUCTION Founded by Sameul Klein in 1958. Largest retail chain in Brazil. Deals in electronics, furniture and appliances. Company own more than 500 stores across the country. Employs around 60000 people and serve more than 31 million customers. Annual revenues of 13 billion real(us$ 7 billion).
  • 3. Retail Industry - Brazil Organized Retail 45% Unorganized Retail55%
  • 4. Sales Structure 5%25% Home Appliances Furniture Miscellaneous 70% •Miscellaneous goods such as clothing and bicycles
  • 5. Revenue Structure10% Credit Cash/Credit Cards 90%
  • 6. Number of StoresYear 1957 1964 1972 1981 1983 1988 1990 1992 1996 2002 2009No. of 1st 2 15 30 43 56 100 90 250 340 565Stores
  • 7. Market Share 10% 21% Casas Bahia18% Ponto Frio Marabras 19% Lojas Cem 15% Magazines Luiza Others 17%
  • 8. 4P’s of Casas BahiaProduct Place Price PromotionDurable items like Own Retail stores Competitive pricing Televisionfurniture, home advertisement.appliances etc… , Word-of- mouth, Cross selling
  • 9. Features Of Casas BusinessModelCredit Rating90% of revenues came from credit sales.Customers were required to submit themselves to an SPS credit check.Transaction would be undertaken based on SPS records.For customers with negative SPC score,no transaction was made.
  • 10. Contd.For customers with negative SPCscore,no transaction was made.For customer with positive SPS score:a) Purchase of less than 600$-no proof of income was requiredb) Purchase of more than 600$-CB has developed a proprietary system to evaluate.
  • 11. Contd.Credit AnalystClient was sent to credit analyst in case of failure in scoreing test.Credit analyst asked a no. of questions to assess client’s credit worthiness.Terms of finance and number of instalments was conveyed to the client in case of positive evaluation.
  • 12. Contd. Customer Information Was centralized Was made availabe to all the stores. CB maintained records on the personality traits for future reference. Carne –the passbook Through this passbook clients paid small amounts for their purchases. Informal Way Of Treating Customers
  • 13. ReasonsFocused on untapped marketSales on installment basis.Cross selling-attractive display of latestChanging finance terms. Timely promotions.Company’s low default rateAds on Television- singers, actors and television personalities.Clients portrayed emotional bonds Strategic location of stores
  • 14.  Strong relationships Area specific Target - lower income group Visual Merchandising Credit financing Aggressive Marketing CB’s Yellow Card (automatic credit, symbol of status among working class) Identified the desire of luxury brands among the poor Pardoned debts of million customers Introduced “unemployment Insurance” (forgo first six installments)
  • 15. Against Casas Bahia???Critics say:• Exploiting the poor by selling the branded products• CB was luring Brazil’s poor towards luxury items• Playing with poor people’s psychology• Prices of goods are being inflated• Interest- free programmers were business tactics• Squeezed money by hiking actual price of goods
  • 16. Casas Bahia and India• According to C.K.Prahlad who is one the most influential management gurus in the contemporary world :In India we cannot follow the same model- High Interest Rate- Low Literacy Rate- Fear of Defaulters
  • 17. BoP Market• Bottom Of the Pyramid (BOP) customers are thepoorest section of the society.• According to the World Bank, about 2.8 billion(which is about 50%) of the World’s totalpopulation has an income lesser than or equal to$2 per day.• With stagnant growth in the developed market,companies are eyeing on the bottom of thepyramid consumers.
  • 18. Importance of MNC s in BoP markets Multinationals are now focusing on designing products to cater to the needs and ability of the BOP customers. They have realized that this segment is a highly profitable one and worth considering due to their high purchasing power. Multinationals followed all such methods to woe the BOP consumers. Companies have continually carried market research to comprehend the gap between spending pattern, needs and requirements of this segment.
  • 19. Contd. These companies are designing new priceschemes, packaging schemes and others on theexisting brands and products. This is to retain the brand equity of the existing product. The strategies are mainly applied in providing a low cost product with high quality. Also bottom of the pyramid marketers aims at raising the standards of living of the consumer.
  • 20. Contd.The growth of micro finance industry is the indicative of the fact that newer schemes and offerings are being designed now-a-days to suit the requisition of the BOP customers.
  • 21. Presently…Operations: 10 States of BrazilInvoicing Foreseen for the year of2007: R$ 12.5 billion of Real.Amount of store in the city of São Paulo: 94 stores. Biggest store area (Super Casas Bahia): 151600 square meters in the Anhembi (São Paulo). - Net profits: R$ 250 million of Real. - Amount of employees: 57518 employees, being 16800 salesmen. - Amount of customers registered in the system of Casas Bahia: 26.3 million.
  • 22. Presented byAtulNehaVivekNareshNavdeep