This presentation is on the Market Selection Process. I have chosen body care products to be marketed in the Latin American Countries. In this case, comparison between Brazil & Argentina

1. Kyra Bath & Body Works
International Marketing
Market Selection Process
Project By:
Radhika Jhaveri (6)
Subhra Das (7)
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2. Kyra Bath & Body Works
Table of Content
Objective…………………………………………………………………………..3
Country Specifications: Brazil
Population Structure……………………………………………………………..4
Consumption Trends…………………………………………………………….4
Distribution Channels……………………………………………………………5
Government Regulations & policies……………………………………………6
Competitors………………………………………………………………………6
Demand…………………………………………………………………………..7
Country Specifications: Argentina
Population Structure……………………………………………………………..8
Consumption Trends…………………………………………………………….8
Distribution Channels…………………………………………………………...9
Government Regulations & policies……………………………………………10
Demand…………………………………………………………………………..10
Competitors………………………………………………………………………11
Evaluation Matrix………………………………………………………………..12
Conclusion………………………………………………………………………..13
Webliography…………………………………………………………………….14
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3. Kyra Bath & Body Works
Company: It has been 5 years since our company was founded. Today our
entrepreneurs are found in most of the Asian Countries. Kyra is one of the fastest
growing beauty companies. We offer a wide range of high quality bath & body works
products. Our Vision is to be the #1 beauty products company in the world.
Objective:
The objective of this Market Selection Report is to clearly lay down the parameters and
criteria for evaluation and to eliminate the markets which are not potential enough as
revealed by the evaluation matrix.
The Market Research report involves analysis on the following: -
• Demographics
• Consumption Trends
• Competition
• Market Size
• Economic indicators
• Demand
• Consumer behaviour
• Government Policies and Regulations
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4. Kyra Bath & Body Works
Country: Brazil
Brazil has placed itself as one of the fastest growing and emerging markets on cosmetics
and personal care industry landscape. Being the largest market in Latin America and one
of the top five cosmetics & personal care markets in the world, Brazil offers immense
investment opportunities for companies around the world. With rising cosmetic
consumption, coupled with increasing income level, demand of cosmetics & personal
care products will further shoot in Brazil.
Brazil offers low cost manufacturing facilities and has well developed infrastructure with
government support that is making the country an idle destination to establishing
cosmetic and toiletries production base and target export market. Also, as the country has
a large consumer base, manufacturers can easily tap the domestic market.
GDP growth rate: 2.2% in 2010
Foreign Exchange Rate (01/10/2009) :
1 BRL = 0.5605 USD, 1 USD = 1.7842 BRL
1 BRL = 0.3833 EUR, 1 EUR = 2.6091 BRL
Population Structure
Total Population: 191,601,284.07
Urban population: 85.1%
Rural population: 14.9%
Men (in %) 49.3%
Women (in %) 50.7%
Annual growth rate of the population: 1.20%
Density of population: 23 inhab./km²
Ethnic origins of the population: According to the 2000 census, 53.7% of the
Brazilian population was white, 38.5% of mixed ethnic origins, 6.2% black, and 0.9%
belonged to other ethnic minorities (Indians, Arabs, Japanese), with 0.7% in no
particular category.
Consumption Trends
Consumer Behavior:
Consumers are loyal to brands; including the low income population which this
allows to assert itself. More well-off consumers pay particular attention to quality,
after-sales service, and the company's social commitment (protection of the
environment, sanitary standards, etc.)
National pride is reflected in consumer habits, but Brazilians remain attached to
foreign products as exterior signs of wealth
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Consumer Profile: Consumption among the majority of the population is turned
towards food and housing. The Brazilian consumer is more demanding and
selective. He is aware of quality, the price of goods and special offers.
Brazilians are known to spend approximately 1.8% of their total income on Hygiene
and Personal Care products
Distribution Channels
For several years, supermarkets and in particular hypermarkets, have become more
and more important in the distribution milieu. Brazilian hypermarkets make 80% of
sales of staple commodities.
Market shares: CBD/Casino : 9.19% ; Carrefour : 5.96% ; Wall Mart : 4.1% ;
Atacadao: 2.43% ; Lojas Americanas: 2.18% ; SHV Makro: 2.01%. Organizations in
the retail sector Brazilian supermarket association (Abrasnet)
Types of outlet:
Supermarkets, hypermarkets: retail
Carrefour, Pao de Açucar, Sendas, Bompreço, Paes Mendoça
Markets: Wholesale, retail-wholesale, retail
Mostly fresh products for the majority of Brazilian households; exist in town and
especially in rural areas.
Shops, grocery stores: Retail
Small shops make up a network of more or less formal distribution in rural areas and
in the poor districts of towns, selling vital commodities.
Unauthorized street hawkers: The last link in the distribution chain, characterized by
a large number of salesmen, often undeclared, who sell drinks and food in public
places, on the roads, outside concerts and sports meetings.
Main useful means
Brazil's large cities are well served by air. However, goods transport is not much
developed, mainly because of the high cost of this type of transport.
Practically all the State capitals are linked by tarmacked roads. São Paulo, Rio de
Janeiro and other important States have expressways. The road and motorway
network covers approximately 1.5 million kilometers, of which some160 000 are
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tarmacked, an increase of more than 300% over the last two decades. This is the
means of transport used most, as it handles about 85% of the transport of people and
Brazilian products. Recently, the exploitation of several motorways has been
transferred to the private sector.
The railway network carries 22.5% of goods traffic. Only 7% of the lines are
electrified.
Most popular forms of direct marketing: Telemarketing, e-mail, mail order, radio
sales and teleshopping.
Government Policies and Regulations
Freedom of establishment
Guaranteed.
Acquisition of holdings
The investment regime in Brazil is a liberal regime which allows foreign
investors to have a majority share in the creation of their company.
Corporate taxes
Tax rate
15%. Companies can benefit from reductions or
Corporate tax rate exemptions when they are located in under-developed
geographical areas (zonas francas).
Supplementary tax on
10%
profits over 240 000 BRL
Social contribution (CSL) 9%
Tax rate for foreign companies
Companies resident in Brazil pay taxes on their worldwide profits. Foreign
companies are only subject to tax if they engage in certain sales operations
involving companies or agents resident in Brazil.
Competitors
Natura Cosmaticos and Unilever were the top two companies in cosmetics and
toiletries in 2008. Overall leader Natura continued to be the number one player in
important categories such as fragrances and skin care, while Unilever invested
heavily in bath and shower products, deodorants and hair care. Avon Products has
increased its activity in direct selling through upgrading its portfolio including new
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launchings of masstige fragrances, colour cosmetics and nourishers/ anti - agers. In
addition, Hypermarcas, a Brazilian company, notably grew its share and ranking by
acquiring important companies and brands during 2008 becoming an important
player in the C&T market.
Demand
The Brazilian market for cosmetics and toiletries performed well in 2008,
underpinned by the encouraging sales in the second quarter. If the new ICMS (a state
VAT) under the newly implemented tax substitution system, implemented in
February 2008, contributed to the sluggish performance in the first quarter of 2008,
the cosmetics and toiletries market remained largely unaffected by the credit crunch
after the onset of the global downturn in September 2008. The negative impacts on
the Brazilian cosmetics and toiletries domestic market in 2008 were only marginal.
Demand for value-added products tends to increase despite the economic downturn
in 2009
Manufacturers of cosmetics and toiletries are developing a great number of value-
added products as today's Brazilian consumers have become increasingly
demanding. Leading companies are trying to find new ways to tempt consumers by
improving the packaging and sophistication of product offerings, despite the
economic slowdown in 2009
Positive outlook but growth will be slower in 2009 and over the forecast period
Factors such as higher unemployment and a new environment of negative
expectations will lead to lower growth. In addition, the high penetration levels of
categories such as bar soap, shampoo and toothpaste are set to place downward
pressure on future market growth. As such, sales of cosmetics and toiletries are
expected to grow at a slower rate over the 2008-2013 period than over the 2003-2008
period. Fragrances and sun care are predicted to be the fastest growing categories
over the forecast period.
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8. Kyra Bath & Body Works
Country: Argentina
Sunk in recession in 1998, Argentina found itself in a bankruptcy situation in 2001.
Since 2003, the Argentine economy has started a process of recovery. GDP growth
rate was high between 2004 and 2007, nevertheless the country has been trucked by
the financial crisis of 2008. The future prospects of growth seem to be lowers.
Domestic household consumptions, which have dynamized the economic growth
are expected to be lower.
Argentina is open to international exchanges: it imports more than what it exports.
Argentina principal trade partners are the countries of Mercosur (Brazil, Paraguay
and Uruguay), China and USA
Foreign Exchange Rate:
1 ARS = 0.2598 USD, 1 USD = 3.8493 ARS
1 ARS = 0.1776 EUR, 1 EUR = 5.6291 ARS
GDP growth rate: 0.7% in 2010
Population Structure
Total Population: 39,503,466.05
Urban population: 91.8%
Rural population: 8.2%
Men (in %) 48.9%
Women (in %) 51.1%
Annual growth rate of the population: 0.94%
Density of population: 14 inhab./km²
Ethnic origins of the population: 85% Europeans, 13% mixed ethnic origins and 2%
Amerindians.
Consumption Trends
Consumer behavior
Argentine consumers pay attention to home delivery and after-sales service. The
Argentines favor national products as imported goods are often three times more
expensive. Following the crisis in 2001-2002, the Argentines have reoriented their
purchases towards sub-brands and special offers in order to save money. However, in
certain geographical areas, more well-off consumers tend to accept higher prices.
Likewise, big brand names are chosen for their guarantee of safety, the know-how
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with which their products are made, etc. Young people become attached to the brand
image of the product, while still paying attention to its price.
Consumer profile and purchasing power
The Argentine consumer is rational and conservative. Since the economic crisis, he
has become more wary, more selective and more reticent with regard to new
products. In general, the Argentines are not very loyal to brands.
Distribution Channels
Types of outlet:
Hypermarkets, supermarkets and mini-markets: Located on the outskirts of towns.
They sell foodstuffs and non food products. Mini-markets are smaller and located in
town. Carrefour, Jumbo, Yaguar.
Specialized Hypermarkets: Hypermarkets specialized in one family of products.
Department stores: Shopping malls in the town center.Galeria Pacifico, Galeria Alto
Palermo
Hard discount: Mainly for food. They sell products of the distributor's own brand or
no brand at all. People prefer them for their discount prices.
Small shops: Specialized local shops: grocer's, butcher's, fishmonger's, greengrocer's,
cheese shops, delicatessens, baker's, cake shops, florist's. People prefer them for the
quality of their products, human contact and advice.
Most popular forms of direct marketing: E-mail, telemarketing, teleshopping, e-
commerce.
Main useful means:
Goods transport (national and regional) in Argentina is dominated by road transport.
The road network covers practically all the country. However, 60% of the network is
in poor condition. It carried out 74.8% of transport in 1995 compared with 86% in
1990.
International goods transport outside Mercosur is dominated by sea transport. The
port of Buenos Aires concentrates 60% of port traffic.
A total of 313 million tonnes of goods are transported per year. 25 million tonnes
transit by rail and 0.15 million tonnes by air.
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10. Kyra Bath & Body Works
Government policies and Regulations
Freedom of establishment
Yes
Acquisition of holdings
All sectors of the economy are open to foreign investors, on an equal footing
with national investors.
The investment regime is a liberal regime. Foreign investment is not subject to
any authorization or declaration, whatever the amount or the activity
envisaged, and even if this means taking a majority share in the capital of a
local company.
Corporate taxes
Tax rate
Corporate tax rate (Sociedades Anonima, SRL, Comandita) 35%
For partnership structures, variable according to the amount of between 9% and
taxable income of the partners. 35%
Tax rate for foreign companies
Foreign companies and resident companies are taxed on profits they make in
the country.
Capital gains taxation
The tax rate on long-term capital gains is 35%.
Main allowable deductions and tax credit
Expenses are deductible for depreciation or amortization, reserves, rents for
premises and equipment, wages, etc.
Demand
A favourable economic scenario continued to lead to higher disposable incomes and
increased consumer confidence in the first half of 2008, allowing consumers to
continue purchasing value-added products, and enabling companies to continue with
new product launches. However, the second half of the year saw a more cautious
consumer, with the last quarter being the slowest, as a consequence of internal
political problems coupled with fears of the international crisis reaching Argentina,
leading to a slowdown in sales.
Consumers are paying more attention to personal appearance and image after years
of economic recovery driving growth in disposable incomes. Argentine women have
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always been very conscious of their looks and are now able to purchase more
products with value-added characteristics to improve their appearance, mainly in
colour cosmetics, hair care and body care. In addition, men have become
increasingly interested in improving their appearance.
Premium and value-added products continued to gain value share in 2008 as
consumers with higher disposable turned to recognised high-quality brands during
most of the year, becoming more price-sensitive only towards the end of the year.
Many products, such as premium fragrances, skin care and colour cosmetics,
benefited from successful marketing campaigns focusing on celebrity endorsements
and also from the fact its products became more attractive as gifts due to rising prices
of alternative products such as clothing and small electronics.
The performance of the cosmetics and toiletries market is expected to slow in 2009 as
the effects of the global economic crisis are felt in Argentina. In this expected
scenario consumers will watch their spending closely, negatively affecting sales of
premium cosmetics and toiletries and opening up opportunities for lower priced
direct sellers. The forecast period will see lower average growth rates than 2008 as
the economy continues to slow down from the peak growth years following the 2001
crisis.
Competitors
Major players in the market are Avon, Amway, Fuller and Amodil.
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Evaluation Matrix:
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Conclusion
The Evaluation Matrix is a comparison between the two markets. It is used for
ranking the markets with reference to the attractiveness for the company.
Based on the analysis of this report on the economic indicators, growth rate, political
conditions, demand and purchasing power of the consumer of the two countries, it
can be surmised that entering the Brazilian market shall prove beneficial for the
Company.
It can also be observed that in free markets, conditions frequently arise, which invite
additional competition to enter. Kyra can thus take the advantage of market niches
to enter the Brazilian market and then move into other segments once a position of
strength has been established in the niches.
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14. Kyra Bath & Body Works
Webliography
http://www.bharatbook.com/Market-Research-Reports/Cosmetics-And-Toiletries-
in-Argentina.html
http://www.laposte-export-solutions.co.uk/uk/markets/country-
profiles/argentina/customs-regulations
http://www.laposte-export-solutions.co.uk/uk/markets/country-
profiles/brazil/customs-regulations
http://www.bharatbook.com/Market-Research-Reports/Cosmetics-And-Toiletries-
in-Brazil.html
http://www.euromonitor.com//Argentina
http://www.infodriveindia.com/Exim/Guides/How-To-
Export/Ch_4_Market_Selection.aspx#Foreign_Market_Selection_Process
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Thank You!
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