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).
Retail Industry - Brazil Organized Retail 45% Unorganized Retail55%
Sales Structure 5%25% Home Appliances Furniture Miscellaneous 70% •Miscellaneous goods such as clothing and bicycles
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
Market Share 10% 21% Casas Bahia18% Ponto Frio Marabras 19% Lojas Cem 15% Magazines Luiza Others 17%
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
Features Of Casas BusinessModelCredit Rating90% 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.
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.
Contd.Credit AnalystClient 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.
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
ReasonsFocused on untapped marketSales on installment basis.Cross selling-attractive display of latestChanging finance terms. Timely promotions.Company’s low default rateAds on Television- singers, actors and television personalities.Clients portrayed emotional bonds Strategic location of stores
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)
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
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
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$2 per day.• With stagnant growth in the developed market,companies are eyeing on the bottom of thepyramid consumers.
Importance of MNC s in BoP markets Multinationals are now focusing on designing products to cater to the needs and ability of the BOP customers. They have realized that this segment is a highly profitable one and worth considering due to their high purchasing power. Multinationals followed all such methods to woe the BOP consumers. Companies have continually carried market research to comprehend the gap between spending pattern, needs and requirements of this segment.
Contd. These companies are designing new priceschemes, packaging schemes and others on theexisting brands and products. This is to retain the brand equity of the existing product. The strategies are mainly applied in providing a low cost product with high quality. Also bottom of the pyramid marketers aims at raising the standards of living of the consumer.
Contd.The growth of micro finance industry is the indicative of the fact that newer schemes and offerings are being designed now-a-days to suit the requisition of the BOP customers.
Presently…Operations: 10 States of BrazilInvoicing Foreseen for the year of2007: R$ 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.