Selling in Latin America

Marketing Insights

&

Reality

Market Basics

• 250 million low-income consumers

• $120 billion in annual purchasing power

“Low-income markets present a prodigious opportunity for the world’s wealthiest companies — to seek their fortunes and bring prosperity to the aspiring poor” -- C.K.Prahalad

Global Retail Giants

• Have made only modest progress in penetrating low income segments in Latin America

• Current retailing format is targeted at high income customers

• Carrefour, Metro & Wal-Mart carry merchandise aimed at upper class

• Ignored low income market segments

Fortune at the bottom of the Pyramid• C.K.Prahalad recently published his

findings on how firms can be profitable by serving those who are neglected today

• Latin American Governments are trying to solve Economic & Social problems

• Firms can seek growth and profit by refocusing on lower class and middle-lower class segment

• Wal-Mart became successful in US by concentrating on lower end of market

The Challenge

• Selling to lower end consumers is a big challenge

• Firms are unfamiliar with distinctive retail terrain of Latin America

• Understand the market needs • Firms must offer different value propositions • Modify their distribution & marketing strategies• While maintaining current offerings to existing

customers• Will require a new business models

Retailing Sector

Retailing sector in Latin America

0%

20%

40%

60%

80%

100%

Brazil

Argen

tina

Colum

bia

Chile

Costa

Rica

Mex

ico

Traditionals

Small Supermarkets

Giant Retailers

Recent History

• Economic Boom of 1990’s and