Chile

PUR Water Filter ProductsChris Russo, Kristen Lagasse, Shawn Bolder, and Corey Reeves

Population

• Total Population is: 16,888,760• Growth Rate is 0.836%• Birth Rate is 14.33 births/1,000

population• Infant Mortality Rate is 7.34 deaths

per 1,000• Death rate is 5.97 births/1,000

population• Distribution of Population• 0-14: 22.3% (M-1.92 mil/ F-1.84 mil)• 15-64: 68.1% (M-5.751 mil/ F-1.84

mil)• Average Age:• Males: 31.1 years old• Females: 33.1 years old

• 89% of the Total Population Lives in Urban Areas• This rate is increasing by 1.1% annually• The Migration rate is near nothing•There are 3 Main Ethnic Groups

•White & American Indian makes up 95.4% of the population• Mapuche 4 % of the population• Other Indigenous .6% of the population

Chile’s Economic Information

• GDP• $260 Billion • Real growth rate: 5.3%• Average Salary: $15,500• out of 7.58 million person work

force• 11.5% of population is below the

poverty line• Unemployment rate is at 8.5% • was 9.6% in 2009 and currently

ranks 100th in the world• Sectors: • Agriculture: 13.2%• Industry: 23%• Services: 63.8%

• Distribution of Wealth• 40% of Wealth is controlled by 10% of the population• According to the UNDP Chile ranked 14 out of 15 worst wealth distributions• 47% of Chile’s Stock Exchange Controlled by 4 families

•(in 08’ 12.49% GDP)

Minerals and Resources• Minerals:• Copper (1/3 Government

revenue)• Molybdenum (used in steel

alloys)• Gold• Iron Ore• Lithium• Nitrates

• Resources:• Wood• Fish, Beef, Chicken• Agriculture • Grapes, Apples, Pears, Onions,

Wheat, Corn, Oats, Peaches, Garlic, Asparagus, Beans, wool, etc.

Transportation & Communication• Roads: primary means to get around Chile are by

Bus, Car, or taxi• Within cities people walk or use the subway• Railways ▫ 5,483 km; 3,406 miles

• Mobile Phones are the primary means▫ approx. 16.45 million cell phones

• TV/ Land Line Phone/ Internet• The majority of people in Chile have a means of

communication

Working Conditions• “Pesticide poisoning, lack of employment contracts, child labor and denigrating treatment

are the daily reality of hundreds of thousands of agricultural workers in Chile, according to a local and international campaign for health and labor rights.”

• Mine Collapse in San Jose has shown the world the poor working conditions of mining

• Laws are rarely enforced by the government. No child under the age of 15 is supposed to work, but poverty makes families rely on child labor

• Global awareness has forced the government to take action.

• Monthly- Minimum Wage = 165,000 CLP ($349) Average= 332,600 CLP ($702)

• Approximately 12% - 15% of workers are Unionized with benefits. Some private workers also receive benefits

Family Culture• Family culture is extremely important when targeting

certain markets in Chile• Families tend to be very close knit• It is not uncommon to see extended families living in

the same apartment, house, building, or even neighborhoods• Because of this structure “word of mouth” among

these groups can be vital for a product’s success• Brand use and purchasing patterns are influenced by

prior generations use of products

R&D• Developments In Science and Technology

• Chile has the most advanced telecommunications infrastructure in Latin America

• Boasts the highest personal computer and Internet usage rates in the region

• Technological skills of the labor force• Chile’s strategy of attracting skilled immigrants makes a lot of sense

when you consider that it costs practically nothing compared with the billions that regions invest in creating industry clusters

• Chile enjoys unequalled economic and political stability• Consumer buying habits

• Towns grew offering entertainment to the hard working man and home appliances for the domesticated woman. Banks offering loans to small businesses encouraged a new era of retail and wholesale expansion.

Percentage of GNP in R&D• “doubling Chile’s production of technology until it reaches a percentage of the

GDP equivalent to that of wine and salmon”, 2 of Chile’s greatest exports

Water Contaminants in Chile• Total Trihalomethanes(TTHM)• Total Trihalomethanes are chlorination by-products that can emerge

in chlorinated water. This type of water contaminant can cause anemia in infants, young children and fetuses, nervous system effects and even cancer

• Mercury• Exposure to excessive amounts of mercury maypotentially cause

kidney damage when exposed to levels above the EPA maximum contaminant for level for extended periods of time

• Taste and Odor of Chlorine in Tap Water• If excess amounts are used, or if high concentrations of chlorine are

in your pipes and plumbing, it can cause bad taste and odor in your drinking water.

Water Contaminants Cont.• Industrial Pollution• Depending on the exact pollutant, health concerns include

intestinal polyps, increase risk of cancer, liver problems, kidney problems, damage to the central nervous system, and many other issues with body functions

• Nitrates• Fecal Pollutants• Though the water is regulated by the Superintendencia de

Servicios Sanitarios (SISS), since each region’s water is overseen by different agencies the water doesn’t always meet the standards set for tap water

PUR Filter Technology

Mineralclear FilterStage 1Added layer to trap sediment

Stage 2Activated carbon microfilter for contaminant reduction, also removes 99.9% of the microbial cysts, Cryptosporidium and Giardia

Stage 3Filtered over natural minerals for a crisp, refreshing taste

PUR Products•PUR Mineralclear Horizontal Faucet Water Filter

(9803 CLP/ $21)•PUR 7 Cup Water Pitcher (7002 CLP/ $15)•PUR Purification Packets (500 CLP/ $1.07)•PUR Filter Replacements (4668 CLP/ $10)

Adaptations•Faucet attachments must be adjusted to fit the

differences in Chile•Smaller Pur water pitchers in order to fit the smaller

refrigerators•Sales of water packets for rural, poverty stricken

towns • Language on packaging and instructions needs to be

changed

Competitors• Philips and Vigaflow• Phillips • European based company• Focuses on healthcare, lifestyle, and lighting• Has strong brand awareness in Chile

• Vigaflow• Local Chilean Company• Perception of product is perceived as cheap

• Competitor product & support techniques• In-store returns• Help call centers• Needed little adaptation• Packaging remained the same except

language modification

Competitor’s Pricing•Vigaflow:• 9,900 – 12,600 CLP ($21-$27)• Sold in Vigaflow stores, appliance shops, local

home improvement shops (mainly plumbing stores)• Ex: Orbe, Aguamarket y CIA LTDA, Prochem LTDA.

•Philips:• 11,000 - 20,798.15 CLP ($23 - $45)• Sold in upscale department stores• Falabella, Ripley’s, Paris

• No Store sites have the filters on their web pages

Competitor Product & Packaging

SWOT AnalysisStrengths Weaknesses

• Still an emerging market• Not a pioneer in region

• Chilean belief's that their water is clean enough to drink

Opportunities

• No real dominant product in the market yet

Threats

• Lack of knowledge and poor distribution of wealth

Advertising•Commercial advertisements 2 weeks prior to

entering the market, then continuing after•Online advertisement on Ripley’s and Falabella’s

websites•Online advertisement on the PUR website with

locations where the products can be purchased•Demonstrations on how to use PUR products in

stores they can be purchased at

Commercial Advertisements

• YouTube - PUR Water Filter Commercial• This type of commercial can demonstrate how much

frequently water is used and how the PUR technology can filter your water better

• YouTube - SUMMIT ON THE SUMMIT / PUR Water TV ad :60• Translate into Spanish- Decentering• Since we are introducing these products for sale for the

first time, we would like to make sure there are no errors• Believe this will spark interest in the product due to

PUR’s involvement after the Chilean earthquake in 2010

Sales Promotions

• Free trials with PUR Packets during the first week of introduction

• Buy 5 PUR packets and get a gallon container for free for first time users

• First 50 in the store get a free PUR pitcher on opening day as a gift in selected stores

• Since coupon use is rare, put PUR products on sale for 20% off when introduced• With the benefits of in home trial use and discounts, mixed

with Chilean family culture, we believe the benefits will outweigh the costs of sales promotions in the country

Distribution• Proctor and Gamble (P&G) has

many manufacturing plants across the world that manufacture PUR

• Main manufacturing sites: Maine, Singapore, the UK, and Pakistan

• Origin shipping port: Portland, Maine

• Chilean shipping ports: Coronel, Huasco, Lirquen, Puerto Ventanas, San Antonio, San Vicente, Valparaiso

• Types of distribution: – Railroads

• Almost impossible to reach from Maine to Chile

– Air Carriers• Second best alternative• Santiago is the main airport

– Motor Carriers• Very difficult, gas prices, too

many terrain issues

– Ocean Carriers• Best option• Chile has many harbors/ports

located throughout the country

• P&G ACE provides a high quality service tailored to meet unique international logistics and shipping needs

• P&G ACE air and ocean service capabilities ensure that the cargo reaches its destination on time and intact

• Their attention to detail and innovative approach has earned a reputation of being one of the most dependable and customer-focused forwarder

• U.S.-Chile Free Trade Agreement• Under the FTA it requires equivalence of

technical regulations and standards, alignment with international standards, reliance on a supplier’s declaration of conformity, and use of accreditation to qualify conformity assessment bodies, as well as cooperation through mutual recognition

• Some of the benefits of using them are:• Full Container Loads (FCL)

• Containerization: Exterior Dimension: 20' x 8' x 8'6"

• Customs Clearance • Import/Export Quarantine Service• Express inspection and clearance, Express

release• Restrictive goods clearance (Food, Wine,

Tobacco, Biological Products, etc.) • Customs Consulting (Tariff classification,

Valuation, Customs Duties Solution, etc.)• Cargo Insurance • P&G ACE also makes sure transportation

and shipping needs are met and surpassed once arrived in the harbors

Distribution cont.

Distribution cont.• Warehousing:• P & G ACE also takes care of

warehousing• Bonded & General Warehousing • Long & Short Term Storage• Distribution and Inventory

Management• P & G already has a warehouse in

Santiago, Chile• Address:

Proctor and Gamble Chile LimitadaPresidente Riesco 5335

Piso 17, Las CondesSantiago, Chile

Phone: (562) 816-5000

• Terms of Sale:• CIF (cost, insurance, freight)• CFR (cost and freight)• EXW (ex works)• FAS (free alongside ship)• FOB (free on board)

Channels of Distribution• Potential Retailer Locations:• Lower end: Local Stores, Supermarkets, home improvement shops, online • High end: Upscale Department Stores, Home Improvement Stores, Online

•Ripleys:• Founded in 1956 as the famous 'Royal' store, it changed its name to Ripley in 1964• They are large department stores that have accommodated shoppers young and old• Each store contains four separate floors of children’s wear, women’s wear, men’s wear and home furnishings

• They have 35 stores in Chile that take cash and credit•Ten locations can be found in Santiago

• As they say, “It's one-stop-shopping for the whole family”•In short, Ripley offers its clientele quality merchandise of every conceivable style, size and price range

Channels of Distribution cont.• Falabella:• Has 36 stores located throughout Chile that take cash and credit• Layout is almost identical to Ripleys• The two are major competitors in Chile

• Falabella's core business is the retail of apparel, accessories and home products • Through department stores, malls and specialty shops

• Retailers: Ripleys and Falabella• P & G already has products distributed and sold in Ripleys and Falabella• We will not be using wholesale middlemen• Since Ripleys and Falabella are already established P & G retailers they

will pay for PUR products based on letters of credit• Our price sold to these retailers will include: tariffs, customs fees,

currency fluctuation, transaction costs, and value-added taxes (VATs)

• This is an example of our contract that we will have with our retailers •Our hope is that with the success of our product we will be able to do business with more retailers in similar areas

www.amchamchile.cl/UserFiles/File/Mining%20Industry.pdf

www.britannica.com/EBchecked/topic/111326/Chile/24687/Mineral-resources-noncarboniferous

news.bbc.co.uk/2/hi/americas/country_profiles/1222764.stm

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www.emporikitrade.com/uk/countries-trading-profiles/chile/labour-market

www.mapsofworld.com/south-america/economy/chile.html

en.mercopress.com/2004/09/30/chile-s-wealth-distribution-among-the-world-s-worst

www.nationsencyclopedia.com/economies/Americas/Chile-WORKING-CONDITIONS.html

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Sources