Introducing Baby Bed with Remote Monitoring Capability to Brazil - Coursework Example

Marketing Contents Introduction 4 Population 4 Growth rate 4 Number of live births and birth rates 4 Distribution of population 5 Economic Statisticsand Activity 6 Gross Domestic Product 6 GDP per capita 6 Distribution of wealth 6 Minerals and Resources 7 Transportation and physical infrastructure 7 International Trade Statistics 8 Import and Export Statistics 8 Exchange rate regime 8 Trade Restrictions 8 Development of technology 9 Channels of Distribution 9 Media 10 Product Information 11 The market 11 Geographical Segmentation 11 Consumer purchase decision 12 Distribution of the product 12 Advertising and Promotion 12 Pricing 13 Competitor Analysis 13 Market Size 14 Government Regulations 14 References 16 Introduction Brazil is considered to be one of the fastest developing countries in Latin America that has become an attractive destination of consumerism (U.S. Department of State, 2015). The purpose of this paper is to introduce a new bed for babies in the market of Brazil. This section explores the current economic situation in Brazil and understands the extent to which the product launch will be successful. Population Growth rate In the year 2014, the estimated population of Brazil was around 202,656,788. Correspondingly, its growth rate was approximately 0.8% (CIA, 2015). Brazil comes in the sixth place following China, India, European Union, United States, and Indonesia. Comparing this percentage of growth rate to some other countries such as The United Arab Emirates, Egypt, and Jordan, it shows that they are quite similar. It is also important to note that if we look at the growth rate over a single year, we might find that it’s relatively small. While if we consider looking at it for a longer term, the difference will seem larger. Number of live births and birth rates The birth rate of a country plays a role in determining mainly the population’s growth, thus the countries growth. Having higher birth rates show that the economy of a specific country would be dynamic and growing in the future. The birth rate of the country, Brazil, is 14.72 births per 1000 (CIA, 2015). On the other hand, the infant mortality rate of the country is around 19.21 deaths per 1000 live births in the year 2014. Those percentages show that the mortality rate is higher more than the birth rate in Brazil. Moreover, 84.6% of total population resides in the urban areas showing that minority of the people reside in the rural areas. This could be the result of the improved health services and the sufficient amount of essentials such as food and water in these urban areas compared to rural areas in the country. Apparently, introducing a product that is for infants might be a bit risky knowing that there is a higher mortality rate in Brazil than birth rate. However, having them concentrated in the urban areas makes the probability of the product being purchased higher. This is due to the reason that people living in those areas are more able to purchase such products. Distribution of population It has been reported that Brazil has the highest age distribution in the age group of 25-54 years accounting for 43.7% of the population. This is closely followed by the age group lying in between 0-14 years accounting for 23.8% of the population (CIA, 2015). Having this age distribution in Brazil had an effect on the economic growth. It is known that people from those ages are the working force in a country. Moreover, the gender ratio of Brazil has a higher concentration towards men. The male to female ratio at birth is 1.05. While the male to female ratio for the age group of 0-14 years is 1.04 and that for the age group of 15-24 years is 1.03. The proportion of male population is also higher compared to female population for infants and it is estimated to be around 1.05 (CIA, 2015). In addition, the rate of migration rate is -0.15% (CIA, 2015). This implies that the rate of immigration is smaller than the rate of emigration showing that more people are leaving the country than entering it. Having a diversified population in Brazil would help significantly in the introduction of the baby bed-monitoring product. Ethnic group comprise 47% of white population, 43.1% brown population, 7.6% black population and 1.1% Asian (CIA, 2015). The rate of population growth in Brazil that is made up of different ethnic backgrounds shows that there are ample chances for the product to be successful. Economic Statistics and Activity Gross Domestic Product Brazil has been able to achieve impressive growth rates in the past. The Gross Domestic Product (GDP) growth of Brazil peaked in the year 2010 reaching a value of 8%. The GDP of the country was estimated to be $ 2,245,673,032,354 in 2013 and it had shown a 2% increase from the previous year (The World Bank, 2015). The Brazilian economy, like most of the other developing economies, has undergone a transition over time from being a primarily agriculture driven economy to being a service driven economy. Brazil has a wide variety of industries like automobile industry, petrochemicals, steel, aircraft and consumer durables. In 2013 the share of agriculture was 5.5% of GDP. While the contribution of the industrial sector was approximately 28% and that of the service sector was 68.1% (CIA, 2015). Over the time the service sector of the economy had also experienced rapid growth and maximum growth, has been witnessed in case of banking and financial services. The insurance sector of the economy has also been growing strongly. GDP per capita The GDP per capita of the country was $12,100 in 2013. This value was 2% higher compared to that in the previous year, that was $11,900 (CIA,2015). These values indicate that the income of the middle class in Brazil is rising significantly, which has particularly made it a profitable destination for business expansion. Likewise, the spending power of the middle class has risen significantly over the past decade, thus enhancing their ability. Distribution of wealth Despite the strong level of economic growth in Brazil, the level of income difference in the economy is very high and the income share of the highest 10% of the population is 42% and the lowest 10% of the population is 1% (The World Bank, 2015). Large Brazilian cities have very high extent of income inequality as has been observed from the statistics of the country. For instance, it has been observed that Rio De Janerio has the highest income inequality in Brazil (Croix, 2012). Despite economic growth of the country the level of inequality has grown significantly over the past decades. The middle class population in Brazil was 36 million among a total population of 190.7 million showing that the values are quite steep. (Croix, 2012) Minerals and Resources The country has a wide range of natural supplies, which accounts for a considerable amount of revenue. The main resources are iron, nickel, manganese and gold, mining of these resources provide a considerable source of wealth to the country population (CIA, 2015). The huge supply of natural reserves in the country indicates that these reserves contribute to a significant proportion of GDP. The mineral reserves of the country especially diamond, iron and phosphates have given a great drive to the earning potential of the economy. Additionally timber and forest industry in Brazil is also on a rise. Transportation and physical infrastructure Developing a smooth transportation is one of the main concerns of the Brazilian government. The country has well-connected networks of airports, railway systems and roads. There are approximately 700 airports in the country and a total railroad of 28,538 km (CIA, 2015). Moreover, there are seven major seaports in the country. The government of Brazil has been strongly developing the physical infrastructure of the country in order to attract foreign investments. The airports at Sao Paolo, for example, are particularly facing increased pressure, as this city has become the gateway for entry for visitors. Brazilian government had planned to invest $6 billion in expanding the capacity of the Brazilian airports (ASA, 2010). Brazil also faces considerable problems in regard to the availability of paved roads indicating that the movement of traffic is considerably slower. (CIA, 2015) The well connectivity of the roads will actually make it smoother to transport the goods from the warehouse to the stores. However, the absence of paved roads in the country indicates that the transportation will be significantly slower. Therefore, the delivery of the babe bed monitoring product would be easier and faster to deliver to retailers and customers. International Trade Statistics Import and Export Statistics It has been estimated that the value of Brazilian exports was $244.8 billion in 2013 and value of imports was $241.4 billion (CIA, 2015). The commodities which are mainly exported are coffee, automobiles, heavy equipments, iron ore and footwear. On the other hand, the commodities mainly imported are chemical products, oil, parts of automobiles and electrical equipments. (CIA, 2015) Exchange rate regime According to estimates published by the World Bank the balance of payment situation of the country is precarious because the country is running a huge trade deficit. It has been observed that the rising level of current account deficit in the country is the main reason behind the rising trade deficit. Brazil like most of the other developing countries has opted for a floating exchange rate. During recession Brazil had mainly focused on devaluating of its currency to promote exports. Economists are of the view that the Brazilian government had often overvalued its exchange rate to generate accumulation of capital driven by profits (U.S. Department of State, 2015). Trade Restrictions There is no denying the fact that Brazil has received most of the foreign direct investment compared to the other Latin American countries. FDI in Brazil reached the maximum value in 2010 and was estimated to be at 15374.35 USD Million (Trading Economics, 2015). In January 2014 the value was 6500 USD million. Brazilian government promotes FDI in all the sectors except a few namely aviation, insurance, media and infrastructure concession (U.S. Department of State, 2015). Development of technology Brazil has also been undergoing a huge technological innovation over the past twenty five years. It has been found that the growth of scientific development in Brazil has been higher than the industry average. However, the performance of the country is relatively lower in terms of technological innovation. The characteristic faced by Brazil is rather common in most of the developing countries. One of the most plausible explanations is the absence of coordination between universities and research centres. Industries need to work in collaboration with the universities to improve the extent of innovation (Zanotto, 2002). Channels of Distribution Brazil’s retail industry is one of the most developed industries of the country having a total value of $230 billion mostly driven by the growth of the domestic brands. The major players in the market are Carrefour, Wal-Mart, Pao de Acucar and Lojas Renner to name a few. It has been observed that the format of stores is very important in Brazil as consumers prefer big stores with number of salesmen. The most common form of store formats in the country is hypermarkets, convenience stores and supermarkets. The most important forms of financing activities of retailers are providing direct credit to consumers, payroll loans and credit cards (Thomas White International, 2012). However, the heavy competition in the market may make it difficult for the producers to sell the product at a high price. Media It has been observed that different channels of multimedia are very popular in Brazil. There are around 465 daily newspapers in the country. Also, there are 138 television stations in the country with 209 televisions per 1000 houses. Additionally, the number of cable subscribers is 14 per 1000 (Press Preference, 2015). The number of radio stations in Brazil is 1822 and every 409 people out of 1000 have the ability to access radio frequency. It has been estimated that the overall Internet penetration in Brazil is 49.3% in 2013 which is considerably higher than the 40% mark in 2011 (Statistica, 2014). It can therefore be commented that all the three mediums namely radio; television and newspaper can be used as mediums of advertising. The most important criteria will be to target the correct set of audience through the correct form advertising. For instance, the popularity of internet is high with the individuals but same cannot be said for the older segment of the population. Product Information The new product to be launched is an innovative small bed for little infants. The bed has certain exclusive features that set it apart from its closest competitors. It has a camera and a voice recorder. The video recording facility of the bed will allow mothers to closely monitor their kids when they are out for work. The bed also comes with a voice detection technology allowing mothers to connect with their children even if they are away from them. The technological advancement of the product over its rivals is going to provide it with additional advantages. The main challenge can come from the income disparity in the market as this would imply that the product cannot be afforded by everyone as it belongs to the category of upmarket goods. The market Geographical Segmentation It has been observed that majority of the population in Brazil lives in the urban areas. This implies it will be rationale to launch the product in the metropolitan areas which are not only the hub of economic activities but also houses the largest section of the population. It is recommendable that the product can be launched in four main cities Brasilia and Rio de Janeiro. These are two of the most popular cities in Brazil representing a lucrative market. These cities are highly modern with broadly paved roads and well developed railway networks and airports. Consumer purchase decision The standard of living of people in Brasilia is of highest order in entire Brazil. The demography of Brasilia is quite diverse including all the four ethnic forms that are predominant in Brazil mainly whites, blacks, browns and Asians (Encyclopedia, 2015). According to market research reports it has been established that people in Rio de Janeiro and Brasilia are cities which has consumers spending largest sum of money on clothing and footwear. The estimated values are US$10.2 billion and US$6.2 billion respectively (Euromonitor International, 2012)). These figures are interesting because it shows that the lifestyle of the consumers is very high and they will be willing to spend higher sum of money on the infant bed. Distribution of the product The retail industry is extremely competitive in Brazil and current statistics reveal that the supermarkets, departmental stores and hypermarkets are extremely popular. This means that the product has to be distributed to these stores in particular. Most importantly retailers like Wal-Mart and Carrefour can be used for selling the products. Advertising and Promotion There is a growing consensus among researchers in the marketing literature that an effective promotional strategy must be designed for making the product launch a successful event (Cravens and Piercy, 2008). The idea is to communicate the marketing message to the core consumer group. In this case the core consumer group can be divided into two broad groups namely 15-24 and 25-45. The rationale for including the first age group is the high instance of teenage pregnancy in Brazil. The other age group is the normal child bearing age of the woman. The product can be easily purchased by both the age groups as it is perfectly suitable for single mothers and divorcees as well. Based on the popularity of the multimedia devices in Brazil, it is recommendable to utilize both mass media like radio, television and print media like newspapers. It can be well assumed that the ownership of television sets is ample in the chosen metropolitan areas making the idea of advertisement through television a successful idea. The circulation of newspapers in Brazil is also high which can be used to promote the product to the consumer segment who does not view television. Finally, internet can also be used as an effective mode for advertising the product. Pricing The product is quite superior to others making premium pricing strategy a viable option for the product. Researchers have observed that premium pricing is the ideal strategy for positioning a product in the niche market when it is relatively superior compared to its competitors (Cravens and Piercy, 2008). The product can be considered as a premium offering which is expected to induce a unique image in the mind of the consumers. This product is actually suitable for women or families who fall in the category of high income group having a high disposable income. This in turn also justifies the premium pricing strategy. Competitor Analysis The survey of the current market structure reveals that the new baby crib can face competition both from domestic and international suppliers. The strongest internal competition is going to come from Multimoveis Industria De Moveis Ltda, Sapindesign and Naikits Baby Confeccao. The strongest competition from international sellers is expected to come from Wenzhou Times Co. Ltd and Shanghai Xuerui Import & Export Co. Ltd. These manufacturers provide baby cribs but none of them comes with features like video camera monitoring and voice detection capability. The price range of the existing products lies in the price range of $70-$250 depending on the product feature. The new crib is going to be priced comparatively higher than this and a price of $290 has been considered. All of the competitors use the major retailers like Wal-Mart, Carrefour and Pao de Acucar and Lojas Renner to sell their products. The products are sold both on online channels and brick and mortar stores. These retailers employ both print and mass media for advertisement. The proliferation of internet has also increased the instance of internet advertising. Market Size The Brazilian furniture industry has experienced phenomenal growth in the past five years . It was estimated that Brazil had produced nearly 461 million pieces of furniture in 2012 and this was about 7% higher than the previous year (Furniture and Furnishing, 2014). The value of the goods produced was estimated to be around R$ 32.5 billion which was a 10% increase compared to the previous year. From 2008-2012 the Brazilian furniture industry had grown by 29% (Furniture and Furnishing, 2014). The main reason behind the growth of the Brazilian furniture industry is the growth of the disposable income of the consumers which have allowed them to spend more on luxury furniture. This implies that the new innovative baby crib will find acceptance among the masses. Based on these trends it can be expected that the industry sales will grow by 5% in the current financial year and the sales for the company can be 1.5 million dollars by the end of the first financial year. This figure is justified given the robust growth of the overall industry and the changing lifestyle of the consumers towards heavy consumerism. Government Regulations The Brazilian government is currently driven by the drive of globalization in particular. It has been consistently reducing the corporate taxes in order to provide boost to the business enterprises (Reuters, 2015). The Federal government of the country has prudently reduced the tax requirements of the market players in the furniture business industry. This very step has hugely boosted the confidence of the furniture producers in the Brazilian market allowing them to increase the scale of their production (Furniture and Furnishing, 2014). The government had decided to move forward with the decision of extending the period of tax break for the furniture industry in order to increase the sales of this industry. This is expected to boost the demand for the products. The government regulations coupled with the affluent lifestyle of the consumers present ample chances of growth. These statistics indicate that Brazil can be a potential market for launching of the new product. References ASA. (2010). Infrastructure Opportunities In Brazil opportunities. Retrieved from http://www.haynesboone.com/files/Uploads/Documents/Presentation%202010%207.13.pdf. CIA. (2015). The World Fact Book. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/br.html. Croix, S.D.S. (2012). Brazil Strives for Economic Equality. Retrieved from http://riotimesonline.com/brazil-news/rio-business/brazil-strives-for-economic-equality/#. Cravens, D. and Piercy, N.F. (2008). Strategic marketing. New York: McGraw-Hill. Encyclopedia. 2015. Brazil. Retrieved from http://www.encyclopedia.com/topic/Brazil.aspx. Euromonitor International. (2012). Passport: Cities Case Study. Retrieved from http://go.euromonitor.com/rs/euromonitorinternational/images/Passport%20Cities%20Case%20Study%20Business%20Expansion.pdf. Furniture and Furnishing. (2014). Brazil Furniture Industry. Retrieved from http://www.furnitureandfurnishing.com/html/jul13/market-outlook-brazil-furniture-industry.php. Press Preference. (2015). Brazil: Basic Data. Retrieved from http://www.pressreference.com/Be-Co/Brazil.html. Reuters. (2015). Brazil extends tax break for auto, furniture sales. Retrieved from http://www.reuters.com/article/2014/06/30/us-brazil-economy-tax-idUSKBN0F52HU20140630. Statistica. (2014). Internet user penetration in Brazil from 2011 to 2017. Retrieved from http://www.statista.com/statistics/292757/brazil-internet-user-penetration/. The World Bank. (2015). Databank: Brazil. Retrieved from http://data.worldbank.org/country/brazil. Thomas White International. (2012). Retail Sector in Brazil. Retrieved from http://www.thomaswhite.com/global-perspectives/retail-sector-in-brazil-riding-the-wave-of-middle-class-growth-and-consumer-credit-boom/. Trading Economics. (2015). Retrieved from Brazil Foreign Direct Investment 1995-2015. Retrieved from http://www.tradingeconomics.com/brazil/foreign-direct-investment. U.S. Department of State. (2015). 2013 Investment Climate Statement – Brazil. Retrieved from http://www.state.gov/e/eb/rls/othr/ics/2013/204608.htm. Zanotto, E.D., 2002. Scientific and technological development in Brazil. The widening gap. Scientometrics, 55(3), pp.411-419. Read More