marketing latam - 08 place

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Global MarketingDoing Business in Latin America

8. Place

This presentation (and extra material) belongs to Natalia Ceruti´s Global Marketing Course, within the Leading the Way to Success in Latin America Program. Should not be copied, nor reproduced, in full or in parts, without Natalia Ceruti´s permission.


Place – Marketing Channels

A marketing channel consists of individuals and firms involved in the process of making a product or service

available for use or consumption by consumers or industrial users.


Distribution Terms


Distribution Functions


The Value-Adds vs. Costs of Different Channels

Place in LA


Universe of Stores continues to grow, mainly through Traditional stores, C-stores, Pharmacies (chains) and Hypermarkets

Source: Nielsen 2008

2003 2004 2005 2006 2007 2008

Traditional Stores

C-Stores + Gas Station

Small Supermarkets

Large Supermarkets

Hypermarkets

Includes Argentina, Brazil, Chile, Colombia y México

Num

ber

of

Store

s

Universe of Stores – LatAm 5 Countries

Pharmacies


Latin American consumers mention proximity as the more important attribute for channel selection

Major attribute when choosing the place-of-purchase

Proximity

Low prices

Promotion/

offers

Services

Quality of products

74

65

34

14

13

70

64

31

1

4

4

3

3

3

3

79

64

40

1

6

78

67

47

4

8

Source : Argentina - ACNielsen in MBA – 1,596 Households – 2005 / Brazil- Shopper Trends Sao Paulo 2005 / Colombia – interviews with householders 2005 / Chile – ACNielsen's Consumer Panel Chile – 975 questionnaires


C-Stores as solution centers, focused in “convenience”

“Solution Center” ATM’s, e-money, banking

Cel-Phone re-charges Car-Wash partnerships

Post Photo printing

VSTraditional Stores C-Stores


Consumption: Modern Channels are growing over Traditional Channels (except in Argentina). Still far from developed Regions…

Channels - % ACV

Source: Nielsen 2008

Modern

Traditional Stores

Germany Spain Italy France

Self Service

Traditional

92%

8%

88%

12%

82%

18%

99%

1%Source: Nielsen Europe – Value Sales


Traditional Channels represent larger % of Low-SEL expenditure

Chile

Colombia

México8 1527

43

92 8573

57

High Mid-Low

46

1534 42

54

8566 58

México Mid

3048

6175

7052

3925

High Mid-LowSource: Nielsen Consumer Panel, 2005

Channel Expenditure (%) by Socio

Economic Level

Modern Channels

Traditional Channels


Frequency and size of the salary have impact in channel decision-making

Daily and specific needs

Large ´stocking´ purchase

Small Large

Low salary (daily basis)

High salary (monthly basis)

Sala

ryPurchase size

Needs & purchase occasion

Daily ´basic´ needs

! Fresh products! Special occasions

! Large quantities! Promotional items! Many categories

Not possible for economical

reasons! Daily food! Fresh products! Fractioned sales

Source: Nielsen / Booz Allen & Hamilton

! !"#!$%&'(!)*$*(+'),!-.(/0*)')!1'/%2'!)2*$$'(!*34!

5(*62'378'4!#%!9$+:'!#0'!4*;<

! !"#!0+60'(!)*$*(+'),!#0'!)2*$$!4*+$;!-.(/0*)'!+)!.)'4!*)!

('-%)+7%3

!"#$%&'(#)*+,#((-)*./%0.*1'"*,%2,*1"-3/-(+4*#($*.5#))*6/"+,#.-*.%7-


LA Major Retailers


Where to Buy:Department Stores


Where to Buy:Shopping Centers

Galerías Pacífico

Unicenter

Patio Bullrich


Where to Buy:Special Areas


Palermo Discount


Where to Buy:La Salada

http://ferialasalada.com.ar/


Casas Bahía (Brazil)


Distribution Challenges

• In spite of consolidating retail channels, distribution systems are fragmented and costly.

• More costly when distributing to 2nd and 3rd tier cities, where minor chains are major players:• Libertad (North)• La Anónima (South)

• Temperature controlled distribution infrastructure is limited


Opportunities

• The foreign takeover of the retailing industry in Latin America’s largest cities has opened the door for many global consumer goods suppliers

• The growth of Wal-Mart and other foreign retailer chains into 2nd tier cities will continue to simplify the export process for global companies who might otherwise shy away from these markets


Seven General Rules

1. Select distributors

2. Developing Markets (better than Customer Contacts)

3. Long Term Partners

4. Commit money, managers and ideas

5. Maintain marketing strategy control

6. Ask for detailed data feedback

7. Build links among national distributors

Based on Seven Rules of International Distribution, by David Arnold, Harvard Business Review 2003



Sources

• Cateora, P., Gilly, M. and Graham, J. (2009). International Marketing, 14th ed. New York: MacGraw-Hill.

• Czinkota, M. and Ronkainen, I. (2010). International Marketing, 9th ed. New York: Cengage Learning.

• Keegan, W. and Green, M. (2011). Global Marketing, 6th ed. New Jersey: Pearson Education.

• Kerin, R., Hartley, S. and Rudelius, W. (2007). Marketing The Core, 2nd ed. New York: MacGraw-Hill Irwin.

• Kotler, P. and Armstrong, G. (2006). Principles of Marketing, 11th ed. New Jersey: Pearson Education.

• Kotler, P. and Keller, K. L. (2009). Marketing Management, 13th ed. New Jersey: Pearson Education.

marketing latam - 08 place

Business

traditional cstores

purchase pharmacies

large supermarketsservices

impacttraditional channels

argentina acnielsen

modern channels

large quantities1

specific large stocking