Building in the BRICs: Market understanding and strategic development for international brands

1
Building in the BRICsMarket understanding and
strategic development for international brands

• ESOMAR Global Diversity Conference
• Miami, 9-10 May 2006
• Roberto Lobl and Geoff Wicken

2
Introduction The BRICs
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Introduction to BRICs
4
BRICs Fundamentals
5
Big Opportunities and Challenges
6
Our Data Source TGI
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TGI Countries
Norway
Canada

Sweden
Russia
N. Ireland Rep of Ireland
Poland
GB
Ukraine
Germany
Czech Rep
Slovakia
France
Slovenia
China
Japan
USA
Italy
Hungary
Kazakhstan
Bulgaria
Spain
Croatia
Serbia
Romania
Greece
Turkey
Egypt
Taiwan
Kuwait
Israel
Iran
Saudi Arabia
Hong Kong
Lebanon
Mexico
Puerto Rico
UAE
Thailand
Nigeria
Philippines
India
Malaysia
Venezuela
Colombia
Uganda
Kenya
Singapore
Ecuador
Tanzania
Indonesia
Peru
Brazil
South Africa
Australia
Chile
Argentina
New Zealand
50 countries across 6 continents
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TGI Survey Details
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Mainstream Consumer Target Population
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Indicator Measures
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Social Indicators
Source Global TGI
Base 20-54 year olds, living in main cities
(BRICS) all (Europa)
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Durable Goods Ownership
Source Global TGI
Base 20-54 year olds, living in main cities
(BRICS) all (Europa)
13
Recent Purchasing
Source Global TGI
Base 20-54 year olds, living in main cities
(BRICS) all (Europa)
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Indicator Measures

• China and Russia seem to be the more developed of
  the four, with figures frequently close to
  Europe.
• China has higher ownership levels but with modest
  growth.
• India has the lowest figures of all but also
  shows the highest growth
• Brazil stands in the middle with figures
  sometimes closer to China and Russia and
  sometimes to India. Its unquestionable that it
  has a serious education problem and this is a
  barrier to further development.

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Use of Media
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Print and TV
Source Global TGI
Base 20-54 year olds, living in main cities
(BRICS) all (Europa)
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Other Media
Source Global TGI
Base 20-54 year olds, living in main cities
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5 Top Newspaper Content Topics
Source Global TGI
Base 20-54 year olds, living in main cities
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Top TV Genres
Source Global TGI
Base 20-54 year olds, living in main cities
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Top TV Genres
Source Global TGI
Base 20-54 year olds, living in main cities
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Top TV Genres
Source Global TGI
Base 20-54 year olds, living in main cities
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Top TV Genres
Source Global TGI
Base 20-54 year olds, living in main cities
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Media in the BRICs
Source Global TGI
Base 20-54 year olds, living in main cities
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Underlying Values and Attitudes
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Three Relevant Groups

• Answers are very similar in all the BRICs
  countries, indicating that they share the same
  pattern of attitudes or values.
• Shared also by the European countries. This group
  is called Universal values.
• Contrast between BRICs and western (European)
  attitudes and values. We have called these
  Specific values.
• Attitudes and values which vary within BRICs
  countries, indicating that these may be too
  localized to be compared, or even divergent.
  These are the Divergent values.

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Universal Values
Source Global TGI
Base 20-54 year olds, living in main cities
(BRICS) all (Europa)
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Universal Values
How I spend my time is more important than the
money I make
I have a practical outlook on life
It is important to keep young looking
I enjoy spending time with my family
I think its important to have a lasting
relationship with one partner
I don't like the idea of being in debt
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Specific Values
Source Global TGI
Base 20-54 year olds, living in main cities
(BRICS) all (Europa)
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Specific Values
I like to pursue a life of challenge, novelty
and change
It's important my family thinks I'm doing well
Because of my busy lifestyle, I don't take care
of myself as well as I should
I really enjoy any kind of shopping
Money is the best measure of success
I would be prepared to pay more for
environmentally friendly products
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Divergent Values
Source Global TGI
Base 20-54 year olds, living in main cities
(BRICS) all (Europa)
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Divergent Values
I am a vegetarian
My faith is really important to me
I am very good at managing money
Real men don't cry
I like taking risks
It is important to be attractive to the opposite
sex
I like to stand out in a crowd
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Values and Attitudes

• Universal values are basically related to the
  importance of the family and to a conservative
  behaviour.
• Brand images related to conservative and
  unadventurous values can be considered to be
  risk- free and can be positively associated with
  universal values
• Specific values are related towards ones image
  to the family or society. Success seems to be the
  driving force behind most of these specific
  statements.
• Success and social ascension can be positively
  associated in most BRICs countries, as the
  struggle for social ascension is considered to be
  a sign of a healthy society.
• Divergent values are statements much more related
  to very local attitudes or values, and often are
  controversial issues rooted in local culture.
• Global companies have to be extremely careful
  regarding controversial issues, which may work
  very well in some countries but can become
  destructive in others.

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Factors of Special Significance
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Orientation International and Local Focus
Source Global TGI
Base 20-54 year olds, living in main cities
(BRICS) all (Europa)
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Brands - Experimentation and Loyalty
Source Global TGI
Base 20-54 year olds, living in main cities
(BRICS) all (Europa)
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Communications Openness and Word of Mouth
Source Global TGI
Base 20-54 year olds, living in main cities
(BRICS) all (Europa)
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Trends
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Trends

• Already BRICs consumers are spurring demand for
  cars and mobile phones, and better food,
  furnishings, and clothes
• Looking at trends in consumer behaviour over
  recent years can help identify where further
  growth opportunities might lie as the BRICs
  economies develop
• Some examples from key product categories

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Mobile Phone Trends Rapid Growth

• 2001 2005
• Brazil 42 69
• Russia 7 58
• India 9 40
• China 40 79

Mobile phone ownership is growing at a rapid
pace in all of the BRICS markets
Source Global TGI
Base 20-54 year olds, living in main cities
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Internet Trends Steady Growth
internet users (broadest definition)
Internet usage is rising steadily in Russia,
India and China, contributing to worldwide user
growth
Source Global TGI
Base 20-54 year olds, living in main cities
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Automotive Trends Room for Growth
Car owned in household
Levels of car ownership inthe BRICs markets are
lowrelative to developed nations,but there is
clear potentialfor growth
Source Global TGI
Base 20-54 year olds, living in main cities
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Super Consumers A Key Group to Target
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Identifying the Super Consumers

• Each population is divided into four
  Socio-Economic Levels (SEL)
• Group 1 Top 10
• Group 2 Next 20
• Group 3 Next 30
• Group 4 Next 40

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Deriving the SELs

• Points-scoring system, based on educational
  achievement and durables ownership
• The 13 items and their points values

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Why target the Super Consumers?

• In each of the BRICs markets they
• Have higher than average income
• Are the first to try out new products and
  brands
• Establish a base among the Super Consumers
• Uptake should spread to the mass market
• Success a good indicator of long-term brand
  viability

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Visiting McDonalds
Base Total measured adult population
Source Global TGI
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Nescafe Instant Coffee
Index
Source Global TGI
Base Total measured adult population
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Strategies for Success
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Top Brands - Brazil
Users (m) 41.3 35.2 35.2 32.1 32.0 30.4 30.0 29
.8 29.4 29.3
Users () 68.0 57.9 57.9 52.9 52.7 50.0 49.3 4
9.1 48.5 48.2
Brand 1. Coca Cola 2. Moça 3.
Colgate 4. Veja 5. Bombril 6.
Hellmanns 7. Sorriso 8. Omo 9.
Knorr 10. Sadia
Category Soft Drinks Condensed
Milk Toothpaste Household Cleaners Scouring
Pads/Sponges Mayonnaise Toothpaste Laundry
Soap/Detergent Seasoning/Bouillon Cold Cuts
Red text brands owned by international companies
Source TGI Brazil 2005
Base Total measured adult population
50
Top Brands - Russia
Users (m) 35.4 29.4 27.8 27.1 25.0 22.6 21.4 21
.2 20.6 20.1
Users () 58.7 48.7 46.1 44.9 41.5 37.5 35.4 3
5.1 34.1 33.3
Brand 1. Hozyaystvennoe 2. Fairy
3. Bonduelle 4. Makfa 5. Baltimor 6.
Belizna 7. Rossiyskiy 8. Duru 9.
Krestyyanskoe 10. Zolotaya semechka
Category Laundry Soap Washing up Liquids Canned
Vegetables Packeted Pasta Tomato
Ketchup Bleach Cheese Toilet Soap Butter Vegetable
Oil
Red text brands owned by international companies
Source TGI Russia 2005
Base Total measured adult population
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Top Brands - India
Users (m) 62.6 52.2 49.8 46.8 45.7 44.0 40.1 39
.4 37.1 34.7
Users () 86.9 72.4 69.1 64.9 63.4 61.0 55.6 5
4.7 51.4 48.2
Brand 1. Britannia 2. Parle 3.
Tata 4. Vim 5. Pepsi 6. Dettol 7.
Brooke Bond/Lipton 8. Maggi Masala 9.
Amul 10. Coca Cola
Category Biscuits Biscuits Salt Scouring
Products Cola Antiseptic Liquid Packet
Tea Instant Noodles Butter Cola
Red text brands owned by international companies
Source TGI India 2005
Base Total measured adult population
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Top Brands - China
Users (m) 50.8 48.8 39.6 39.2 38.1 37.3 34.3 34
.3 30.8 30.7
Users () 72.4 69.5 56.3 55.9 54.3 53.2 48.9 4
8.9 43.9 43.8
Brand 1. Safeguard 2. Colgate 3.
Rejoice Hot Oil 4. Coca Cola 5. Crest 6.
Pepsi 7. Kang Shi Fu 8. Wrigleys
Doublemint 9. San Xiao 10. KFC
Category Soap Toothpaste Shampoo Cola Toothpaste
Cola Instant Noodles Chewing Gum Toothbrushes Fast
Food Restaurants
Red text brands owned by international companies
Source TGI China 2005
Base Total measured adult population
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Category Flooding
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Tea Brands by Age Group - Russia
Source TGI Russia 2005
Target All category consumers
Base Total measured adult population
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Tea Brands by SEL - Russia
Target All category consumers
Source TGI Russia 2005
Base Total measured adult population
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Detergent Brands by SEL - Russia
Target All category consumers
Source TGI Russia 2005
Base Total measured adult population
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The New Russians
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Toilet Soap Brands by SEL - India
Target All category consumers
Source TGI India 2005
Base Total measured adult population
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Deodorant Brands by SEL - Brazil
Target All category consumers
Source TGI Brazil 2005
Base Total measured adult population
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China - The Traditional Marketing Approach
Average GDP per capita
Tier 1 (4 Cities) USD
4,130 Tier 2 (27 Cities) USD
1,946 Tier 3 (41 Cities) USD 1,187
Tier 4 (594 Cities) USD 554
Beijing Shanghai Guangzhou
Shenzhen
Tianjin, Wuhan, Shenyang, Chongqing 23 others
Lanzhou, Zibo, Hefei, Nantong 37 others
Rest of China
Source China Statistical Yearbook 2002
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Localising the Offer
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PG Great Success in China

• The Actions
• Invested in understanding local consumers
• Utilized communication messages centred around
  Chinese values
• Developed new product variations to cater to
  Chinese tastes

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Adapting products to local tastes
Salty Toothpaste good for whitening
Tea-flavoured Toothpaste stops bad breath
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Frito Lay - Localising the Strategy

• Chinese concept of Yin Yang
• You dont match hot weather with hot flavoured
  products
• So for summer, developed cool-lemon Lays
• Yellow, strongly lemon-scented
• Dotted with lime specks and mint
• Packaging features images of breezy blue skies
  and rolling green grass

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Frito-Lay Brands in India

• Adapted potato chip flavours to local tastes
• Masala
• Mint chutney
• Created Kurkure
• Based on concept of typical Indian snacks
• Kurkure means crunchy in Hindi

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Top Brands Sweet and Salty Snacks India
Brand 1. Kurkure Masala Munch 2.
Kurkure Chatpata Chaska 3. Kurkure Red
Chilli Chatka 4. Cheetos Masala Balls 5.
Piknik 6. Peppy 7. Act II Corn Chips Tangy
Masala 8. Cheetos Triyums Masala Cheese 9.
Cheetos Tangy Loops 10. Cheetos Xs and Os
Saucy Cheese
Users (m) 22.2 9.8 8.8 5.9 4.1 2.7
2.1 1.9 1.8 1.6
Target All category users
Source TGI India 2005
Base Total measured adult population
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Standardised Western Products in Russia

• Key target is ready to buy international brands
• Dont require indigenous products
• Prioritise thinking on international products

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Standardised Western Products in Brazil

• Affluent classes are westernised
• International brands are well-regarded
• Selling the same version as in Paris or London
  adds value
• Product alternatives for less affluent groups
• Lower cost variants
• Budget prices

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Conclusions
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Conclusions

• Unifying factors of the BRICs are size and
  potential
• Economic growth rates mean rapid increases in the
  numbers of people entering the branded goods
  market
• One size fits all marketing strategies will not
  work
• Greatest differences in China and India
• Brazil the most westernised of the BRICs
• Russia in between, with its own secrets

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Conclusions

• The BRICs four very different culture and value
  sets
• Require different product and marketing
  strategies
• Common themes
• Category flooding
• Localising the offer
• Cultural sensitivity in marketing
• While not forgetting the considerations of
  marketing to western audiences

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Building in the BRICsMarket understanding and
strategic development for international brands

• ESOMAR Global Diversity Conference
• Miami, 9-10 May 2006
• Roberto Lobl and Geoff Wicken