2 Class Consumers2010 100410180355 Phpapp01

MARKETING IN LATIN AMERICA
Consumers & Business
Universidad Argentina de la Empresa

April 2010
Lic. Natalia Ceruti - nceruti@uade.edu.ar

Consumers

Factors that affect an
organization’s marketing program

Consumer Research

Where to look
http://www.iadb.org/research/data.cfm?language=EN&parid=2
www.iadb.org/sociometro

Geographic Sampling Plans: Challenges
• Every country in LA has highly-polarized wealth

patterns with pockets of high purchasing power in
certain cities
• Spending power drops off as focus moves beyond
main cities
• Eg: sample of Sao Paulo city consumers is not valid
for Brazil nor Sao Paulo state
• AB segments are wealthy, but may also buy big
ticket products abroad, except for cars and other
registered goods.

Geographic Sampling Plans: Solutions
• When measuring potential demand, consumer

sampling should focus only on those consumers
with adequate purchasing power to realistically
afford the product
• If sampling data is meant to be extrapolated to
make inferences about national population, survey
must include different urban markets indicative of
national demand levels
• Sampling done within one city should be balanced
to reflect the socio-economic strata of the
population base

Contact Lists: Challenges
• Perhaps the single-most misunderstood aspect of LA market
surveys conducted by US & European multinationals
• There are no equivalents to business-focused research (e.gg.:

D&B, Equifax)
• Most business lists are heavily biased and not systematically

updated
• Most survey teams are paid per successful interview →rushed

interview completions→ poor quality results
• Consumer-focused contact lists typically limited to credit-card-

holding households, representing about 30% of HHs
• In addition, phone penetration is limited in D/E levels.

Contact Lists: Solutions
• Consumer lists should cover the SE group that are

the focus of the research
• Filter question should be included in questionnaire
to support SE estimate (as they are often
innaccurate on consumer contact lists), else a “filter
section” asking respondent´s way of life (# cars, #
rooms in house, computers, phones, light bulbs,
etc) is more delicate and can help assess SEL
• Lower SEL lists are difficult to obtain and may
require intercept methods
• Business contact lists are best sourced from local
agencies.

Asking Money Questions:
Challenges
• Survey respondents (business & consumer)
are unlikely to answer questions about
income/profit
• Reasons: tax evasion, security fears

Asking Money Questions:
Solutions
• Surveying wealthy individuals: “snowball”
method asking for referrals and acquaintances
(although it abandons random sampling
principles)
• Surveying middle-class: less direct questions to
approximate household wealth
• Interviewing companies: face-to-face interviews
are best for bridging trust gap (& easier to do as
they are concentrated in a few large cities).

Soliciting Critical Opinions
• In US or Europe consumers and business rarely
hesitate to share criticism of a product, company or
even an individual
• Some Latin cultures (e.g.: Mexico) strongly discourage
frank assessments of this type
• Thus customer satisfaction surveys in the region will
almost always score higher than in US or Europe
• Global researchers should turn to local partners to help
design, modify & conduct LA surveys and analyze
results
• Customer satisfaction questions should be expressed in
relative terms vs competitor product (& not
benchmarked word-for-word against other parts of the
world).
Consumer Behaviour

Understanding the Consumer
CULTURAL
Culture SOCIAL
PERSONAL
Reference
Groups Age and PSYCHOLOGICAL
Lifecycle stage
Motivation
Occupation
Perception
Economical
Subculture Learning
Family situation
Beliefs
Lifestyle
Attitudes
Personality
Selfconcept
Status and
Roles
Social Class

Culture

Culture

Cultural Highlights
1. National Character
• They reflect Culture
2. Non Verbal Language into Society
3. Food Preferences • They allow

marketeers to
understand
4. Symbols Consumers and also
to plan strategies
5. Taboos
6. Ritual Activities
7. Transition Rites

National Character

Non Verbal Language

Food

Symbols

Taboos

Ritual Activities

Transition Rites

Social Class

Social Structure
AB - $ 24.000/m - € 4.000/m
C1 - $ 12.000/m - € 2.000/m
C2 - $ 6.000/m - € 1.000/m
D - $ 3.000/m - € 500/m
E - $ 1.000/m - € 150/m
Source: Adaptaded from Cuore – Grupo CCR 2009

Social Class

Class Pride

Class Pride

Healthyness

Social Groups

Family

Modern Family Lifecycle

Modern Family Lifecycle

Change of Roles

Metro sexual males
Axe Shower Gel

Kids Power
Claro
Primer Cobayo

Value in Uncertainty

Consumer Value
Perceived Sacrifice Perceived Benefit

•Price (Money) •Product or Service
•Time •Additional Services
•Effort •Personal Value
•Psichologycal Cost •Image
Consumer Value in Uncertainty
• Consumers are always learning
• Realistict
• Selective
• Stretching Budget
• Fashion!
• Personal Gratification
• Less resistance to changes (Innovation!)

Latin Consumer Value
• Dimensions to Integrate in Brands and Image

1. Economic Value (Smart Pricing)
2. Self Gratification (Sofistication)
3. Belongingness (Aspirational)
4. Honesty and Transparency
5. Imported vs National

Myths and Truths
• Poor people don´t care about fashion and clothing.
• Brands are not important in lower levels.
• Only price matters.
• Higher levels always buy expensive brands.
Based on strategy+business - Issue 34 - 6 Truths about Emerging-Market Consumers

Myths about Consumers
Based on strategy+business - Issue 34
6 Truths about Emerging-Market Consumers

Myth #1:
Low-income Consumers
spend little on material
goods

Truth: They are poor, then spend more of their
income on consumer goods than wealthier
segments
• Emerging consumers spend 50-75% of their disposable income
on consumer products
• At subsistence level, it is 100%
• Middle to upper-income consumers allocate up to 35% of their
income to these goods
• A significant portion of low & lower-middle income HHs have
running water, electricity and basic appliances (refrigerators,
TV, radio)
• In countries like Mexico & Costa Rica many have washing
machines, VCRs and access to cars
• This influences demand for consumer goods and purchasing
behavior
Myth #2:
Low-income & subsistence-

level Consumers’ needs are
simple

Truth: These consumers buy premium-priced
branded products and are sophisticated
shoppers
• Their shopping needs and tastes are basic but not simplistic
• They aspire to buy leading brands because they embody quality
& status
• They would rather pay more for quality than risk a product
failure (“cheaper becomes expensive”)
• But acceptance of lower-priced value brands is growing in some
countries
• Strongest brand loyalty is among staples (rice, oil)

Myth #3:
Emerging Consumers are

overwhelmingly attracted to
the lowest shelf prices

Truth: Emerging consumers take into account
many factors other than price when shopping
• Meticulously track price benchmarks, show considerable

restraint as shoppers & reluctant to use credit
• Price sensitivity includes “total cost of purchasing” (shelf price,
transportation, child care, burden of heavy packages & time)
• Shop more frequently & smaller purchases
• Retailer more than 5 mins walk or 3-4 bus stops away would
have to discount 25-55%
• Tend to buy smaller sizes even if per-unit cost is higher
(smaller income & living space)

Myth #4:
If they did not face

budgetary constraints,
emerging consumers would
prefer modern supermarkets

Truth: Emerging consumers are satisfied with
traditional retailers, and don’t necessarily aspire
to shop in modern supermarkets
• In Brazil, ferias (licensed street markets) sell 70% of fresh

food
• Too much variety can tempt them to buy more than they
need, is more time-consuming and can cause feelings of
inferiority
• Preferred fruits and vegetables are those sold by street
retailers
• Supermarkets can be too impersonal,
embarrassment/mistreatment if short of cash
• Smaller stores are more caring and personal.

Myth #5:
Emerging Consumers are

highly dependant on credit

Truth: Emerging consumers use credit to
extend their purchasing power
• People in low-income segments try not to spend beyond their

means, and cash is one way to control expenditures
• Credit is viewed as more appropriate for major purchases
(appliances, school uniforms)
• If just short of amount needed, neighborhood retailers carry a
customer account
• Technically this is informal short-term credit, but is also an
extension of personal relationship between consumer and
shopkeeper
• In some countries, emerging consumers have checking
accounts (Brazil)

Myth #6:
Emerging Consumers all

belong to one segment: “the
popular class”

Truth: There are many ways to segment. Emerging
consumers differences, based on lifestyle and
attitudes, impact on shopping behavior
• In developed markets, middle and upper-income levels are

subsegmented (yuppies, buppies, DINKs, BoBos)
• Even though emerging consumers may have homogenous
profiles re demographic & socioeconomic variables, behaviors
can be differentiated by psychographic variables:
• Practicality-control-traditionalism
• Emotion-impulse-innovation

Marketing in Latin America
nceruti@uade.edu.ar

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MARKETING IN LATIN AMERICA

Consumers & Business

Universidad Argentina de la Empresa

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

• Every country in LA has highly-polarized wealth

Lic. Natalia Ceruti - nceruti@uade.edu.ar

• When measuring potential demand, consumer

Lic. Natalia Ceruti - nceruti@uade.edu.ar

• There are no equivalents to business-focused research (e.gg.:

• Most business lists are heavily biased and not systematically

• Most survey teams are paid per successful interview →rushed

• Consumer-focused contact lists typically limited to credit-card-

• In addition, phone penetration is limited in D/E levels.

Lic. Natalia Ceruti - nceruti@uade.edu.ar

• Consumer lists should cover the SE group that are

Lic. Natalia Ceruti - nceruti@uade.edu.ar

• Reasons: tax evasion, security fears

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

3. Food Preferences • They allow

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Source: Adaptaded from Cuore – Grupo CCR 2009

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Axe Shower Gel

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Lic. Natalia Ceruti - nceruti@uade.edu.ar

Perceived Sacrifice Perceived Benefit

• Consumers are always learning

• Less resistance to changes (Innovation!)

Lic. Natalia Ceruti - nceruti@uade.edu.ar

• Dimensions to Integrate in Brands and Image

2. Self Gratification (Sofistication)

4. Honesty and Transparency

Lic. Natalia Ceruti - nceruti@uade.edu.ar

• Poor people don´t care about fashion and clothing.

• Brands are not important in lower levels.

• Only price matters.

• Higher levels always buy expensive brands.