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«Roberto Lobl, IBOPE Media Geoff Wicken KMR Group, London, UK Polly Carter, BMRB, London, UK Preface The BRICs markets – Brazil, Russia, India and ...»

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Remembering still that we are looking at 20-54s in the major cities, and further that for India the target excludes the lowest grades, Russia and India have a much higher proportion of higher education entrants compared to China or Europe. For many, education is perceived as the ‘ticket’ for a better future, and so the key obligation for parents is to ensure that their children get good – and preferably higher – education.

Brazil has a completely different structure. Almost half of its population has only primary or less education, yet on the other hand 24% have experienced higher education – not far from European standards. This reveals Brazil’s most serious challenge in the near future, and its biggest hurdle in achieving significant levels of social and economic development.

Ownership of household durables When individuals’ resources grow, as a consequence of economic development, they often invest in items for the home. These range from labour-saving devices such as washing machines and vacuum cleaners to luxuries such as DVD players and video cameras.

Examining the levels of ownership of such items can tell us a great deal about relative economic development at the overall level, as well as enabling brand owners to identify which individuals might be targeted – either on the basis of not owning certain items, or that their ownership of them may indicate a certain level of affluence and readiness to purchase other goods.

Some categories deserve special attention. Personal computers reach European levels in China and half of European levels in Brazil and Russia.

India has a low figure, of only 10% of the target group population.

Ownership of automobiles shows a completely different pattern. Brazil is highest among the BRICs with 44% penetration, closely followed by Russia with 33%.

Recent purchasing of highvalue items The chart opposite compares the ownership levels of twelve durable goods items in the BRICs with those of Europe. We can see the Chinese levels are in general the highest of the four BRICs countries, averaging 87% of those in Europe. At the opposite end is India with roughly half the ownership levels of the other BRICs. For this urban 20-54 group, Brazil and Russia reach an average of around 70% of European levels.

It’s also important to assess how fast these markets are growing. This can be estimated by examining the proportion of current ownership bought in the last year. The lower chart shows us that, for these items, growth in India is quicker than in Europe.

So with the lowest GDP per head, India has the lowest ownership levels, leaving significant growth potential, which seems to be taking place. It also has the advantage of good education levels. China shows high ownership levels, and partly as a consequence seems to be the least dynamic of the four when looking at growth rates. Russian ownership of kitchen appliances is high, and Brazil also shows encouraging growth rates.

Marketing factors

There are specific questions concerning BRICs consumers that will concern marketers. How international are they in their orientation? How do they regard international brands? What is their reaction to advertising? We can also use Target Group Index information to help answer these.

National vs. international outlook

Although BRICs consumers in general claim to be interested in international events and other cultures, there is some disparity with regard to more specific consumption. In all BRICs markets the stated preference for buying goods produced in your own country is marked. (See chart). As we see opposite however, purchasing behaviour in practice offers a more encouraging story to international brand owners.

There is some ambivalence in attitudes to the west, although ultimately the fact that 63% of Indian consumers agree that they “really like it that more and more international brands are available in India nowadays” may well be significant. Equally 53% of Chinese consumers agree that they are “drawn towards the lifestyles of developed nations”. This too points towards opportunities for international companies able to invest their brands with ‘status points’.

Brands and advertising There is good news for brand owners in the views that BRICs consumers have about brands in general.

They are ready to experiment, as evidenced by their response to the statement “I like to try out new food products”. (See chart). If you can make your brand proposition appealing, they are likely to give it a chance.

Then when persuaded about a brand’s merits, they will stay loyal (“once I find a brand I like, I tend to stick to it” – see chart) which indicates the long-term potential for successful products.

Furthermore they do appreciate the value of brands. Many agree that “it’s worth paying extra for quality goods”.

All these attitudes suggest that many BRICs consumers are potential good customers.

Top-of-the-head views about advertising vary considerably. Chinese, Indian and especially Brazilian consumers are quite positive, yet Russians are more immediately sceptical. That said, 59% of Russians agree that they “enjoy funny advertisements”, so the initial reaction can be overcome.

Word of Mouth is also a factor. Consumers are likely to share opinions about brands – both by asking others and as a result of being asked. This is a phenomenon of which brand owners should be aware.





A key audience to target – the Super Consumers Defining the Super Consumers Defining the Super Consumers As the BRICs markets become increasingly wealthy, wages and spending power are set to rise. But how can we predict what is around the corner in terms of consumer potential? A good place to start is by looking at the behaviour of those with the highest socio-economic status – the ‘Super Consumers’ – as a predictor of future spending habits, trends and preferences.

Our definition of the ‘Super Consumers’ is drawn from work done to create a system of comparable socio-economic groups across countries. These are known as the Target Group Index Global Socio Economic Levels. We have defined the highest 10% of each country’s population in terms of socioeconomic status as the Super Consumers.

The Super Consumers are of particular importance to brand owners seeking to penetrate developing markets, as their wealth and status generally makes them the first to try new products and brands. Once a brand has established a base among this group, uptake is likely to spread into the mass market as the wealth divide narrows. Therefore success among the Super Consumers is an excellent indicator of longterm brand viability and success.

Marketing to the Super Consumers In each of the BRICs markets, the Super Consumers have aboveaverage income and resources. In contrast to the broader population they are far more likely to own cars, and possess a large proportion of all high-ticket items owned.

Over 80% have mobile phones in each of the BRICs markets, and they are a key target for many other items. The disparity between their level of ownership of digital cameras and that of the total population (shown opposite) is typical.

Increasing levels of disposable income also bring growth opportunities for the leisure and travel industries. The leisure habits of the Super Consumers in each of the four BRICs markets are remarkably similar. In all the markets, they can be found frequenting coffee shops and fast food restaurants, and enjoy spending their free time going to the cinema and theatre.

Marketing to the Super Consumers Super Consumers are consistently more likely than average to use global brands. This behaviour is repeated across the BRICs markets, and across many categories.

Looking at western fast food restaurants, and McDonalds in particular, they are between one and a half times and four times as likely as the broader population to represent the clientele. (See chart). This gives a good indication of why they represent such a powerful initial target for international companies. It also suggests how much longerterm potential might lie in the other groups as their level of resources and ability to afford branded goods grows.

In China, 40% of Super Consumers say that they “prefer to buy foreign brands, even though they are more expensive”. Since they feel financially secure they are more likely to pay a premium for what they perceive to be quality products.

Nescafé has achieved high levels of usage, and the SEL indices opposite show that, in all the BRICs, users are present not only among the Super Consumers but the next two groups too. The highest indexing group is still the top 10%, although the bias will have reduced since Nescafé was first launched, as its usage percolated through the groups.

Strategies for success

Many international companies have been active in pursuing the huge opportunities offered by the BRICs markets. We will see in this section how well penetrated some of them have become – achieving positions among the very top brands in the BRICs markets. Coca Cola and Pepsi, Colgate and Crest toothpaste, Lipton tea and Knorr, KFC and Wrigley’s chewing gum, Hellmann’s mayonnaise and Omo have all ‘top 10’ positions in one or more of the BRICs.

At the corporate level, Procter & Gamble, Unilever, Nestlé, Hyundai, McDonalds, LG and Frito-Lay are often mentioned among the organisations that have seen success.

A range of different approaches can drive success. We shall examine two of these in detail: category flooding and localising the offer.

Category flooding Category flooding – or price segmentation – is the strategy of putting multiple brands into the same category at different price points.

Premium brands are targeted at the more affluent consumer groups, who can afford a higher level of quality, are often more statusconscious, and may be more attracted to international brands.

But appealing just to this sector will not achieve domination of a category.

For this, you must attract the mass market. The mid-market and budget brands are targeted at groups with lower disposable income levels, who cannot afford the premium brands but are still attracted by the quality assurance promised by a well-known corporate name.

P&G and Unilever in particular have taken this approach across many categories in the BRICs markets.

Brazil This strategy has been pursued in Brazil by Unilever, P&G, Nestlé and even some local players. The lower-budget options offer the same perception of reliability as the premium brands.

Here we see Unilever’s three leading deodorant brands, each targeted at a different SEL group. Dove appeals to the higher sectors, Rexona to the middle market and Axe to the lower groups.

One of the more common strategies in Brazil is the acquisition of local competitors and addition of their brands to the portfolio. Some of the largest brand owners in the country began their activities in this way.

Russia In Russia, a typical strategy is to promote two different kinds of brands. The first might be called ‘traditional’. This type of brand has a Russian name, and packaging of a ‘soviet’ design. It is targeted at older people who still miss the old communist regime and have low social status. Examples are Beseda, a tea brand from Unilever, and Mif detergent from P&G.

The second type is a brand considered as ‘international’ or ‘innovative’. These are typically multinational brands which in Russia are often aimed at the upper mass market. Examples are Lipton, another tea brand from Unilever along with Beseda, and Tide from P&G in the same detergent category as Mif.

Target Group Index data again show this incategory segmentation to be working very well. Within the tea category, the user profile for Lipton peaks among the higher SEL groups, in contrast to Beseda. The picture in the detergent category is similar: Tide’s user base is more upscale than Mif’s.

The young and ‘elite’ groups are the most attractive in Russia at the moment. Their level of consumer activity is high, and money is a great motivator for them, given that it provides a measure of social status. They prefer well-known, good quality brands. This group is growing, while the older, less branddriven group is in decline.

India



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