Brazil is a large market opportunity for home security due to its growing middle class and increasing spending on security. Scout should focus on entering the Brazilian market through partnering with a third party for security services and distribution, and setting up manufacturing in the Manaus Free Trade Zone to avoid high import taxes. Key target markets are homeowners in major urban areas like Sao Paulo and Rio de Janeiro. Marketing will require an outsourced local team due to cultural differences and multiple languages. Financing options include federal/state programs and venture capital. Potential challenges include product acceptance, currency risk, competition, and developing distribution channels.

1. Brazil
Megan Quigley, Rachel Weinstock, Sean Martinelli, Kyle Donnelly, Ariel Magana, Carlos Ortiz, Alan Reifer

2. Overview
Scout offers an inexpensive and stylish home security system and hopes to expand to
the Brazilian market.
Our Goals are to show Scout the best ways to:
enter
market
target
distribute
compete
finance
manufacture
As well as present the challenges they may face when entering and competing in this
market.

3. Background
6th most pop in the world
Leading economic power in South America
High inequality is a huge economic and purchase factor
The urban population is of 84% (Big security sector)
SP 20 Million/NY 8 Million, RJ 12 Million/Chi 3 Million
Big opportunity for bigger private security sector due to
increase in Security Spending and Economic growth
Society learned to adapt to daily security issues

4. Country Overview
50% market share is accounted by foreign products, The
U.S. has 25% of this share
Increase in inequality-increase in security market sector
Finding local representatives is key for success (sales
representatives,customer service,etc)
5 million homes have security. Only 7% is equipped with
electronic security systems.

5. Industry
84% Brazil's electronic systems are ran by small, and
micro business. 16% are top 8 major security
companies
8000 Security Companies operating: 49% retailers
30% monitoring services, 12% distributors, 9%
manufacturers

6. Market Entry
Divided in 6 categories:
Public Safety & Security: High tech equipments/private
Large Events: Festivals, private events and gov. related
Mass Transportation: Busses, trains, Subways and etc
Airports: Alarms, motion detectors and security systems
Personal and domestic: Bodyguards and home systems
Cyber security: Cryptography and cyber hacking (Brazil
has a huge hacker community)

7. Population Wealth
Forbes: New Millionaires every 2 hours
2011-160 thousand millionaires. and 30 billionaires.
70% SP and RJ
Higher national income, raise of security systems and
private security sectors.
Wealthier households invest in: private security, alarm
systems, surveillance technology and trained security
staff.
The average household will invest over 2K a year in
security

8. Business Culture
Diverse and Internationally oriented by corporations
Patience, is key. Budgets must be adapted by time and
customs.
Face to Face meetings, personal meetings and informal
gatherings are extremely important
Hierarchy is a big decision making factor, most companies
are vertically organized
Find local staff that understands the local market and how
to negotiate culturally.

9. Target Market
“Middle Youth” 30-44 years old
Largest age group in Brazil at 44.75 million
Home owners in urban areas
Home ownership is on the rise
86% of homes are in urban areas
Growing middle class
48% of national income
60% of internet users

10. Target Market
Current population of 204.5 million
210.7 million by 2019
Middle class makes up around 55% of this
GDP growth rate of 1.5% through 2018
Down from 4.5% during 2004-2010
46 million homeowners
Up from 33.3 million in 2000

11. Manufacturing
●Importing will raise your costs by 17-68%
○Extremely high import taxes and duties
●Manaus Free Trade Zone
○Incentives
○Suframa’s industrial requirements
●Option to license your design
○Manufacturer could market on your behalf
○Paid royalties

12. Location of Foreign Operations
●Local service staff
○Customer service
○Marketing
○Sales staff
●Third party security partner
○Local security company in Brazil
○Price adjustments to Always On+ feature

13. Competition

14. Competition
So what areas should Scout focus on?
Urban Areas!
85% (over 172,000,000) live in urban areas
Sao Paulo
Rio De Janeiro
Salvador, Brasilia, Fortaleza, Belo Horizonte

15. Entry Mode
Options:
Service
Franchising
Strengths: Ease of capital expansion, risk transfer, etc.
Weaknesses: Loss of control, innovation challenges, etc.
Third Party for security service and distribution
Competitors that want to increase presence in middle class
market and already have the infrastructure.

16. Entry Mode
Options:
Manufacturing
Manufacture Domestically→ In Manaus FTZ, set
up costs set off import taxes in medium-term, etc.
Licensing→ To an established Brazilian
manufacturer.
Strengths: Make money without risking significant cash, avoids
unsold “garage” inventory, etc.
Weaknesses: Small percentage of sales, loss of control, etc.

17. Entry Mode
Recommendation:
Service: Partner with a Third Party
Manufacturing: Setting up a manufacturing
plant in Manaus, Brazil.

18. Marketing
Social Media
Outsource

19. Marketing Challenges
Culture
Language
Imitation Products

20. Financing
Federal State
Venture Capital

21. Challenges
Increased uncertainty and risk associated with the entry
Acceptance/ Popularity of product
Exchange Rate Fluctuations
Channels for marketing and distribution
Competition

22. Thank You!
Any Questions?