Marketing 376 Spring 2014

Olson

Gillette Razors in

Brazil

Prepared By:

Daniel Alcaraz Leander Arellano

Jen James Thania Morales

Angelina Munoz

1

Market Analysis Plan

Introduction

In comparing the five countries for which to market Gillette Razors, we have decided upon

Brazil. This decision was based upon many factors; Brazil is a BRIC and a Newly Industrialized

Country; Brazilian population is approximately 200 million and growing at a rate of 1.8% annually; the

status of the middle and upper­middle class is rising substantially; and Brazil is the host of the 2014

FIFA World Cup as well as the 2016 Summer Olympics. Our target markets are the middle class and

the upper­middle class, and our product mix includes the Gillette Fusion ProGlide and the Gillette

Fusion ProGlide Styler.

A. Goals/ Objectives, Strengths and Weaknesses of the Firm & Brand for Country

1. How SWOT factors correlate to the advantages of the country market chosen.

­ Strengths: 95% of imports are received by boat through their various shipping facilities and

ports. Since the United States ranks 2nd in product imports shipped to Brazil (1st is China, 3rd is

Argentina), we believe that the United States & Gillette would be best suited for exporting razors to the

Brazilian marketplace. The distance between the United States and Brazil is also a strength that is

advantageous for the U.S. razor company. In comparison, the companies Muhle and Merkur ­ which

encompass the major competitors in the razor market ­ are stationed in Germany. Thus, these foreign

competitors would have to travel much farther to reach Brazil to market their products, as opposed to

Gillette. This is a cost that will outweigh the benefits for German razor companies, resulting in reluctance

by the German manufacturers, and also a more advantageous position for the United States.

Furthermore, Muhle and Merkur razors have hefty price tags on them, a price that would likely be

unaffordable to many in the developing marketplace of Brazil. Gillette however, supplies razors that are

just as efficient, affordable and desirable to consumers in comparison to their more costly competition

from Germany.

­ Weaknesses: Due to it’s status as a rapidly developing country, the Brazilian marketplace is

extremely volatile and unpredictable. Consumers are particularly easy to sway in a particular direction.

Therefore, if a German competitor becomes the primary source for razors in the Brazilian marketplace,

it will be much more difficult for Gillette to develop a strong competitive position against the German

razor manufacturers.

2

­ Opportunities: Gillette is a company founded and based in the United States, which is much

closer geographically than the primary threats ­ German companies Muhle and Merkur ­ to the Brazilian

marketplace.

­ Threats: As mentioned above, the German razor companies, particularly Muhle and Merkur

are the primary threats to Gillette’s market dominance in the razor marketplace. Since Brazil is growing

at a quick pace, we cannot rule out the possibility that Brazilian citizens may construct a domestically

manufactured razor that is more cost efficient and desirable than Gillette razors.

2. Why the other four countries were not as good a fit for Gillette Razors.

Denmark is a country located in Europe bordering northern Germany. Obviously, it is a more

easily accessible country for Germany to market its’ razor companies as opposed to the U.S. razor

company Gillette, which is roughly 10,000 miles away from Denmark. We also took into consideration

the stage of market development in Denmark, which currently stands as a developed country, hence it is

safe to assume that market saturation for razors will be achieved by a closer manufacturer, particularly

by Germany.

Roughly 1,000 miles from Denmark, Finland is also much closer to German razor manufacturers

than U.S. razor company Gillette. Finland is also a developed country that is likely to have experienced

razor market saturation via German influence.

Germany supplies a huge amount of domestically manufactured razors, and has been doing so

for approximately 100 years. The razor market in Germany is extremely saturated by German razor

companies, particular those of Muhle and Merkul. Proposing to export Gillette razors to Germany is an

extremely risky venture, the likelihood of failing to sell to an already saturated market is high, and could

cost not only Gillette, but also Proctor & Gamble millions of dollars for attempting such an endeavor.

In 2013, Pakistan was ranked as one of the poorest countries in the world. To this day,

Pakistan is still a third world country that has not heavily invested in shaving products, whether it be

U.S. or German manufactured razors. Due to modern warfare like many Middle Eastern countries,

Pakistan has become a risky, volatile market. Furthermore, many Pakistani men prefer to trim their

beards rather than shave them. Although there are some Pakistani citizens that do shave, it is not as

viable a market as the potential prospects of marketing to Brazilian citizens. The success rate of

marketing razors to Pakistan is expected to be lower than all other countries under consideration.

3

B. Analysis­ 1. Market Assessment of the Country

Demographics ­ After conducting a brief demographic study of the Brazilian market, it is quite

obvious that the largest country in South America is a wonderful opportunity to market Gillette razor

products. With a population that hovers around the 200 million mark and approximately home to 65

million households, Brazil is indexed the 6th largest country in terms of world population ranking.

Although not ideal, population replacement rate in Brazil is fairly stable at 1.79 children per woman, so

we expect relative stability for the razor market in the long run. The age range of Brazilian citizens allows

for a fairly stable market in the short run, which only increases in the long run; current median ages for

men and women are 30 and 32 respectively. Furthermore, with about 30% of the population over the

age of 45 and an average life expectancy of 73 years, short term market success is projected to last for

almost thirty years of stability. Proportionately, about 41% of citizens are under the age of 25, thus long

term success for marketing endeavors is expected to grow as time progresses. In comparison to the

Organisation for Economic and Co­Operation Development (OECD) average country quality of life

index, Brazil is slightly above average; OECD average is 80, while Brazil is at 82. With more than 90%

of the adult population being able to read, there is a high level of adult literacy, thus consumer

understanding of products & instructions for use do not pose any foreseeable issues.

Micro­Economic Factors ­ Brazil’s economic prosperity has allowed it to slowly redesign its

wealth distribution and empower a new consumer market. WIth an expanding middle class purchasing

power, there is a lower fertility rate, a growing life expectancy, and better socioeconomic conditions.

Macro­Economic Factors ­ As the seventh largest economy in the world by purchasing

power parity, Brazil has the highest GDP in all of Latin America and strives to become more active in

the international manufacturing market. Coupled with an international market that guarantees

productivity growth and dilution of the elevated costs of living, the Brazilian middle class is clearly on the

rise. Therefore, market growth potential in the future is high enough to determine that choosing Brazil as

our target market is the ideal candidate for Gillette razors. The stability of the Brazilian marketplace has

substantially improved, thereby and several factors have allowed for the creation of a stable

macroeconomic environment, including a consolidated democracy with over 20 years of regular

elections, 20 years of trade liberalization, 15 years of price stability, 10 years of fiscal targets

4

(established after a deep fiscal restructuring at all levels of government), strong central banks, and

innovative social policies.

Amidst the global economic crisis, Brazil has emerged with its head on its shoulders, due to the

heavily regulated and controlled banking system and the Brazilian monetary stability, proving that it is a

country capable of participating in global economic governance and further prosperous market fruition.

Given Brazil’s market size and vast resources, it is a marketplace that has potential to create the

capacity to respond quickly to global demand, particularly in the commodity (toiletries, consumption,

etc.) and energy sectors, thereby evidencing the growing demand for razors, making it a key component

of the growing global economy.

Geographic Factors and how They Shape the Culture ­ Brazil is unique in comparison with

other emerging markets given its combination of natural and structural assets. Thriving commodity

exports of iron ore, petroleum and soybeans, and the availability of natural resources like oil and gas,

have allowed Brazil to glide through a period of rapid and sustained economic growth.

The sheer mass and perforated shape of the country permit Brazil to share common borders

with most of the other South American countries, allowing Brazil to assume a primary trading role with

relative ease. Brazil’s complex landscape is a great way to describe its inhabitants. From the Northwest

to the Southeast, natives express stark contrasts, and neither can function independently without the

other; Brazilians thrive on community involvement.

The rivers and waterways of Brazil are vital to the country’s transportation of goods and fertility.

The dry regions require water from the rivers to survive, just as the natives rely primarily on port

infrastructure for imports and exports. Such trade allows Brazilians the opportunity to interact with

people from all over the world, increasing their global presence. Since Brazil shares borders with ten of

the twelve South American countries, the inflow & outflow of worldly news flows through the country

every day. This has proven to strengthen Brazil’s regional and international country alliances. However,

just like the hinterlands behind the mountain that don’t get rain, Brazilians are likewise slow to show

development in some areas, particularly in the field of education.

Significant Historical Factors Shaping the Culture and Discussion ­

Brazil’s stability has been an earmarked topic of discussion. The past instabilities of the country

have left some industries skeptical of the potential growth in Brazil. This is because of the instability of

5

ideologies of governance, which have shifted Brazil’s future as an economic powerhouse several times.

Upon further investigation of the stability of the Brazilian market, skepticism from other industries can be

used to our advantage when marketing Gillette products in Brazil. In combination, it’s large population,

growing middle class purchasing power, and high quality of life all provide for the foundations of a stable

and continually progressive economy.

Another area of historical concern in Brazil is the country’s rate of inflation. The oil shock of

1973 was an external factor that has tremendously affected Brazil’s internal politics. The crisis that

resulted had left Brazil with an overvalued currency, as well as a high current account deficit. When the

oil market began to gain power, and the Eastern European market opened up, Brazil’s internal politics

could not operate without taking into account the impact from outside political and economic forces.

Brazil has taken the necessary steps to curb the impacts from external factors. It has also taken steps

necessary to stabilize impact from non­beneficial internal factors.

Perhaps one of the most influential recent historical factors that have shaped the culture is the

concept of “la Bolsa Familia.” This is a project that has proven to benefit lower class families, who

now have access to the marketplace. In the past, the international marketplace was exclusively for the

elite, but now, with an increased global need for commodities, this has allowed Brazil to have a more

influential position, thereby providing foundation for a potentially more prosperous market, particularly

for the various subcategories of the commodity sector, obviously inclusive of the razor market. Despite

the huge hit that other countries are still recovering from, Brazil has benefited from relatively stable

economic growth, low inflation rates and social welfare improvements.

Political and Legal Factors that Shape the Marketplace

There are political and governmental areas that negatively impact the Brazilian market. As stated

by Gannon, Brazil is a country “plagued with a distrust of government and widespread bribery and

corruption.” The excessive government bureaucracy and political oligarchy existent in some of the

poorer states have been effective in blurring the lines between public and private consumption. A high

rate of taxation & high crime rate also add to the issue.

However, since Brazil experienced little effect from the global crisis, there’s been a huge

expansion in Brazil’s middle class, who have enjoyed increasing wealth. Also beneficial for the country’s

international market position was the new wave of investment by companies that were attracted by

6

Brazil’s growing economy and membership of Mercosur, which occurred in the 1990s. Brazil offers a

low­cost location for foreign investors from the developed countries.

Infrastructure

As of 2010, Brazil has not invested enough into its infrastructure. Studies show that heavy

infrastructure investments translate into long­term macroeconomic growth. Although Brazil has more

available resources, these resources are still insufficient. Combined with a growing purchasing power,

and a new role in global politics, the country must invest more into infrastructure to remain competitive.

A key concern is the insufficient nature of Brazil’s existing infrastructure, because in it’s current state, the

country will be unable to sustain domestic growth and dynamism in local & foreign trade. The

bottleneck effect this creates is a major problem for country’s infrastructure, which is why infrastructure

reform is vital to prevent Brazil’s growth from stalling.

As this chart clearly indicates, Brazilian investment in infrastructure as a percentage of GDP has

decreased over each 10 year period from the 1970s into the 2000s. An issue of consideration pertains

to the National Brazilian Development Bank, which invested about R$274 billion from 2010­2013 in

the market (up 38% from 2005­2008). Roads remain the primary means of transport in and around

Brazil – both for passengers and for freight purposes. The Central Intelligence Agency estimates more

than 1.5 million kilometers of paved roadways, and according to Forbes Magazine, there are about 410

vehicles per square kilometers. The Brazilian highway system is one of the largest in the world, but is

also known for being inadequate. As a result, some of the roads are undergoing a major revamp and

expansion. Partly due to the 2014 FIFA World Cup and 2016 Summer Olympics, the motivation

behind this expansion and development has also been to link the industrial sector with the less

7

developed parts of the country by road. The recent decisions advocating infrastructure reform are

attractive, not only to Brazilian citizens, but also to foreign investors.

2. Relevant Consumer Behavior of the Country and Culture

Cultural Values: Cardinal, Primary, and Secondary

Brazilian culture is considerably one of the most unique in the world. Brazil’s cardinal values are

very similar to ours in the United States. “Individual Brazilians value equality and the freedom to pursue

their dreams” (Gannon). In addition to a high emphasis on individuality, the highest­ranking Brazilian

values are true friendship, mature love, happiness, and inner harmony (Scribd).

Brazil’s primary values revolve around the high importance placed on family. Family is the

foundation of the social structure and forms the basis of stability for most people (Kwintessential). There

are many important aspects that make up the Brazilian family unit. This includes parents, the extended

family, and even ancestors. The prominence of a strong family network provides Brazilians a sense of

stability in their lives. Not only does it impact their personal individual lives, but influences the Brazilian

perspective on the world (ACAD).

Secondary cultural values for Brazil are centered around personal relationships. Personal

relationships play an important role in the lives of Brazilians and influence all aspects of one’s life,

including one’s personal and professional life (ACAD). In an individual’s professional life, Nepotism is

very important. Because Brazilians are extremely family­oriented in every aspect of life, Nepotism

implies that employing people one knows and trusts is more beneficial than a stranger. Brazilians respect

hierarchical relationships, and their society is structured along the lines of economic class and social

status. Such hierarchical values like these are typical in countries with a Catholic heritage, since people

have been conditioned to respect the authority of priests and bishops (ACAD).

Analysis of Hall’s 10 PMS’s (Primary Message Systems)

1. Interaction­ Meaning of Life, Philosophy, Cosmos, Religion (Olson Mar. 18)

As we might already know Brazilians are heavily united by dancing the samba and this translates

into their personal lives. Brazilians are extremely patient people who continue smiling “because they can

dance the samba and be the center of attention in a world full of freedom.” (Gannon) The samba

represents a nation that is full of contrasts and a diverse culture; their complex cultural will continue

8

being expressed by them escaping through the dance of samba. The samba is a national symbol within

Brazil and it “represents this notion of a spontaneous escape from the everyday reality of unemployment,

low standard of living, and poverty that affects many Brazilians.” (Gannon)

Escape is something Brazilians have been craving and it is a way for them to hide from hardship

and difficult times. Although they might be faced with challenges they still posses a great passion for life.

“Individual Brazilians value equality and the freedom to pursue their dreams and [they] are allowed

religious freedom and the right to procreate with whomever they chose.” (Gannon) As mentioned

earlier, their religion matches the vast diversity of Brazil. Religion is found as a contrast between Roman

Catholicism and African cult worship. Their lives are surrounded by contrasts in many ways including

their national flag that literally translates to “order and progress.” (Gannon)

2. Association­Human Relationships (Olson Mar. 18)

“Tudo bom” is a phrase which means everything about life turns out to be good in some way or

another. (Gannon) This helps to understand Brazilians human relationships with others. It is quite easy to

make acquaintances or “colegas” in Brazil but it does however take a long time to cultivate a deep and

lasting friendship. Their relationships between men and women are complex; adding to a country of vast

contradictions. As mentioned in the Gannon text, “the need for human contact best exemplifies through

the Brazilian family; family ties are paramount of importance in Brazil.”

Adding to a nation of complexity is the fact that Brazil has five different currencies dating back

since the year 1940. This may be a reason why it has “one of the widest disparities of wealth

worldwide.” (Gannon) Brazilians respect hierarchical relationships and “their society is structured along

the lines of economic class and social status.” (ACAD) Their hierarchical structure means that respect

must be shown to those of higher status, for example priests within the catholic church.

3. Subsistence­ Food and Work (Olson Mar. 18)

As we continue exploring Brazil we start to realize that Brazilian culture continually follows this

idea of land of contrasts as stated by Gannon. He mentions that the south is much wealthier than the

north which only adds to the division of the rich and poor. The poor as we might guess might use

samba to escape the reality of economic hardship. Many Brazilians still continue to smile and dance the

samba even within poor neighborhoods known as “favelas.” (Gannon) Although we may see a lot of

poor Brazilians we also see a growing middle class throughout the country itself.

9

Major firms in Brazil will tend to help their employees out if under financial stress. They are not

only incredibly helpful financially, but they will also be there during times of need personally and within

the family. It is “not uncommon to see a high correlation between people’s personal and work lives;

Brazilians will mix their business and social life. It is also not unusual for Brazilian factory workers to

spend a month’s salary on the costumes they will wear at the Carnival Parade.” (Gannon)

4. Procreation (Olson Mar. 18)

Brazilians are all about family, they are incredibly close to their loved ones and treat their closest

friends as family. Romantic relationships are seen everywhere since Brazilians are very affectionate.

Brazilians are “allowed religious freedom and the right to procreate with whomever they chose.”

(Gannon) This religious freedom is seen through their relationships; sexuality is well embraced. There is

a large gay population even though it is considered a “macho culture.” Although roles are well defined,

men are men and women are women, there is still some contrasts within this. Brazilian men really care

about their appearance, even masculine men, as they are well known for caring about their appearance

and grooming rituals.

5. Learning (Olson Mar. 18)

The educational system in Brazil is quite interesting, “as it is both lax and controlled” according

to Gannon. The vestibular is an entrance exam given to students in order to enter a university and most

students push really hard in order to pass this exam and be admitted into a university. Education is an

area in which contradictions in Brazilian culture continue and it is common to get things done by taking

shortcuts and by avoiding a direct plan or schedule. Their sense of time makes them a polychronic

culture.

6. Time­ A Future Polychronic Culture (Olson Mar. 18)

Brazilians are ambiguous or hesitant about the future but Gannon suggests that “Brazil is a

country about the future and always will be” (Gannon) probably due to its growing economy and the

fact that they hide from uncertainty by continually escaping through their love of dance. The land of

Brazil was a part of the Portuguese Empire mostly because Brazilians did not want to go to war and

therefore Roman Catholicism evolved in the country. This created several different forms of government

over time making this country “extremely diverse with several distinct regions and twenty six states.”

(CIA)

10

Brazilians tend to be more polychronic in the sense that they are highly committed to people and

long lasting relationships are built over a long period of time. They do not follow a schedule and tend to

borrow and lend things between their friends and loved ones. They are highly inclined towards visuals

and images rather than words. By them sharing so many borders it allows Brazilians to interact with

other cultures and opens them up territorially.

7. Space­ Personal Space, Distance, Territoriality (Olson Mar. 18)

Their long lasting relationships and closeness to each other makes them a physical culture that

will glaze and physically touch one another. They are very attached to others and this allows them to

share personal space and makes them a very easy culture to approach. “Personal bonding or ‘jeitinho’

is translated as enlisting a fellow human being to help one circumvent the rules due to one’s personal

circumstance and engaging in this ritual allows Brazilians to bypass both impersonal rules and to exert a

certain amount of control over their daily lives.” (Gannon) Brazilians are able to detach themselves and

open up to others. A high reliance on trade allows Brazilians the opportunity to interact with people

from all over the world and therefore increasing their status in the global marketplace.

8. Defense­ Internal VS External (Olson Mar. 18)

Brazilians are more internally focused since they do operate under rules of law and of course

they follows their own set rules of man. They are a high power distance society that follow rules and

tends to use medicine reactively. In the sense of an external culture, Brazil does have a military in

charge but troop importance isn’t as important as other countries. Brazil was essentially founded by

three different groups. The conquering Portuguese, the endemic Brazilian people, and finally slaves in

Brazil (Country Reports.) “Businesspersons might hire a ‘despachante’ or agent to aid in the navigation

of Brazil’s numerous and complicated bureaucratic rules; the structure is somewhat complex” adhering

to the complex nation of Brazil as mentioned many times. (Gannon)

9. Play­ Cultural Aspects and Recreation (Olson Mar. 18)

Brazilians tend to get lost while dancing the samba and use dance in order to escape which

means they tend to lose track of time. “Too much uncertainty avoidance motivated them to escape

tension through the music and dance of the samba.” (Gannon) Their focus tends to drain into their dance

11

following their complex culture and lack of commitment to certain tasks but rather to other people. Their

relationship with others is highly important to them. Gannon put it best in the sense that “Brazilian people

come from various social and economic background and races and few nations can match this nation’s

diversity.”

10. Material Effects (Olson Mar. 18)

Brazilian people tend to share with each other, especially within their own group. Their sense of

high uncertainty avoidance tells us that they are more quality oriented than quantity. Although some

Brazilians are faced with many challenges, in many cases economically, they still posses a great passion

for life who will continue to value equality and the freedom to pursue their dreams.

Hofstede’s Score Analysis

Graph from: Geert, Hofstede. “What about Brazil.” The Hofstede Centre.

http://geert­hofstede.com/index.php

High on UA (Uncertainty Avoidance): 76 (The Hofstede Centre)

This creates a rule­oriented society that institutes laws, rules, regulations, and controls in order to reduce

the amount of uncertainty (The Hofstede Centre). As a result of this high Uncertainty Avoidance

12

characteristic, the society does not readily accept change and is very risk adverse. Countries high on

UA like cleanliness and order. However, high on UA makes change quite difficult. Long­term

relationships are necessary in the business world for Brazil. Brazilians believe that trust and friendship

are essential for business.

High on PDI (Power Distance): 69 (The Hofstede Centre)

These societies are more likely to follow a caste system that does not allow significant upward mobility

of its citizens. It is easier to manage a society. Societies with a high PDI have more discipline. Also,

ability to effect changes quickly and easily. However, they are unwilling to accept responsibility.

Countries with high PDI tend to dress with formal brand images. They are also obedient consumers.

Countries with high PDI expect differential prices (special people get special prices). Brazil is a

patriarchal society. The father is the final decision maker. In the brazilian workforce managers are seen

as the final decision maker (Hierarchical structure).This implies how power distance is involved in the

brazilian society.

Individualism: 38 (The Hofstede Centre)

Brazil has a low score of individualism; loyalty in a collectivist culture is paramount, and overrides most

other societal rules (The Hofstede Centre). Collective countries tend to only trust the group.

Collectivism: Brazil has a higher score of collectivism than the United States. Collective countries tend

to only trust the group. In the brazilian society family unity is extremely important. According to Gannon,

children don’t leave home until they get married.

Masculinity: 49 (The Hofstede Centre)

With a score of 49, we can conclude that Brazil is quite competitive. A masculine country is less

emotional. If they have something they just want more and more of it. Brazil has a passion for sports,

especially soccer.

Long Term Orientation (Confucian Dynamism): 65 (The Hofstede Centre)

13

On the LTO Brazil scored a 65. We can say that Brazil is in need for immediate gratification. A high

score in LTO can also lead to the conclusion that Brazilians look for long term relationships, therefore it

takes time before a foreign can have a successful business deal with a Brazilian.

Consumer Behavior as part of Cultural Values, Norms, and Attitudes

Brazil has one of the most diverse and wide­ranging cultures in the world. Their cultural values,

norms, and attitudes are what make consumers to behave the way that they do. In Brazil, trends

connected with the principles of “quality of life”, convenience, price­consciousness, and brand loyalty

and others are very present in the market (PWC).

Because of these trends, many companies in Brazil have already provided products and services

to accommodate the needs of consumers. Brazil being a varied country, there are many different classes

of consumers within the Brazilian consumer market. However, regardless of the consumer’s profile,

most developed cities will accommodate to high or low consumption, quality­service or price­oriented,

and branded or private labels. One important attitude of Brazilian consumers is they distinguish products

by the brand, associating them with concepts of high quality, trust, loyalty, and status (PWC).

Shopping is definitely integrated into the lifestyle of the Brazilian urban population both as a

usual and necessary activity and an entertainment programme. Purchasing decisions, opinion makers to

attract new consumers, and low prices, vastly influences their attitudes towards distinct brands. Major

impulse purchases are considered a norm in Brazil’s culture (Euromonitor).

Consumer Behavior as Related to the Specific Product Category

Brazil is considered the fourth largest cosmetics and personal care market in the world (PWC).

There are many factors that have contributed to this rise in consumption over the past years. This

dramatic increase is due to the rising disposable incomes among mid­ and low­income consumers.

Currently, the Brazilian cosmetics and personal care market is consisted of 1,367 manufacturers of

which 15 are large companies with revenues of over BRL 100 million, accounting for 71.7% of total

revenues (PWC). Many of the leading companies in Brazil are similar to those of great popularity in the

United States. Some of these multinational companies accounting for the most­share are Avon,

Colgate­Palmolive, Johnson & Johnson, Nivea, and Procter & Gamble.

14

Another factor that contributes to being the fourth largest cosmetics and personal care market is

because Brazil is arguably one of the cosmetic surgery capitals of the world. This is due to the fact that

individuals place an increasingly higher emphasis on an all­round grooming regime (Euromonitor

International). Convenience and low prices are the main factors in the strong performance of disposable

razors. These factors are typically inclined to target younger consumers and the millions of lower­income

male consumer (Euromonitor International).

3. Competitive Analysis of Country Market for Gillette Razors

Brazil’s razors market is the second fastest growing in the world. Also, the BRIC nation leads

the male razors and blades market in its group. Moreover, it has been forecasted that Brazil will soon

overtake the U.S. and become the leading male grooming market in 2015 (Spire Research). As a

result, the personal care growing market in Brazil, has attracted more than 327 companies in the last

years. However, only the few top companies hold the 61% of the market share (Euromonitor), and the

razors segment was responsible for the 59.3% of the male razors and blades market in Brazil in 2009

(Datamonitor Report).

Due to the low entry barriers established by the Brazilian market, the industry’s structure has

been shaped significantly. Moreover, alternatives to the use of razors when removing corporal hair have

raised and created a significant competition to top companies in Brazil. One of these companies is

Natura, which holds the biggest percentage of market share in the personal care industry. A reason for

this is that Brazil ranks #1 in the world with pharmacies and drugstores, which promotes the creation of

their own formulas and alternatives to hair removal processes. Brazil is followed by India, and USA

(Euromonitor).

A key factor when analyzing the competitive market for razors is that Brazilians have the highest

percentage in hair removal (Euromonitor). This opens doors for a wide and competitive market for all

kinds of hair removal products. In addition, Brazil has the second largest male toiletries market by value

(Market Research Reports). In the male market, the early young adults (30 years­old or less), often

first­time users of shaving products, demonstrate a heavy consumption of male toiletries products.

Essential factors when choosing which brands to use are quality and individualism. Due to Brazil’s

increasingly skin­care awareness, the consumption of products that satisfy the needs of the different skin

types, hair, and lifestyles through individualistic features are important factors when promoting such

15

products. Moreover, the vast majority of users of disposable razors and blades, 44.3%, are users that

also seek ease of use and convenience. These drivers motivate consumers in Brazil to purchase a

particular brand or style (Market Research Reports).

Additionally, when studying the razors and blades market, we cannot take for granted the

competition faced by hair removal alternatives such as waxing, hair removal creams, and also electric

razors, and battery operated razors. Electric razors brands such as Phillips, Black & Decker and

Remington are some of their foreign competitors. Yet, they only account for 3% of the market (Kline

Group Latin America). However, disposable razors still dominate the market because of the consumer’s

familiarity to this product.

1. Domestic Competitors:

One of the strongest domestic competitors could be the successful and innovative company

Natura, which has been able to place themselves as a top company for skin care and environmental

sustainability in Brazil. As of 2012, Natura held 13% of the market share in Brazil, the biggest

percentage among its competitors (Euromonitor). This threatens the razors and blades segment, because

more often people are moving towards skin care alternatives such as natural hair removal products

offered by Natura.

Furthermore, as mentioned before, due to the familiarity of the consumers with razors, the ease

of its use, and the variety of styles and brands, razors are still the most widely method of hair removal.

Gillette has been able to take advantage of this opportunity in the US market, and seeks to follow

similar strategies in Brazil as well. Moreover, due to the fact that shaving is an intimate practice,

consumers often seek a smooth and pleasant experience. This is one of the reasons why Gillette has

been able to stay in the market as the leader provider in the razors market.

Its mobility and smooth performance are key differentiators of their products. Such is the

example of the ProGlide and Mach3 for men, which are two of the most sold razors in the world along

with the Venus razor for women. Another differentiator from other competitors is their solid history as a

leader brand. Gillette, a brand of Procter & Gamble, has accounted for almost half of the male

grooming market, factor that will benefit the razors company when expanding into the Brazilian market.

Also, the use of constant TV advertisements, and celebrities and national leaders advertising campaigns

16

helps the brand create trust and credibility in the Brazilian market. Gillette’s indisputable success in the

US market will support the future expansion of its products to Brazil.

2. Foreign Competitors:

Gillette competes against established and global companies such as Unilever, BIC, and Schick

made by the battery company, Energizer. However, Procter & Gamble Company is the leading player

in the razors and blade market in Brazil (Datamonitor Report). It is followed by Unilever and BIC,

respectively. If Gillette enters into the Brazilian razrs market, we intend to occupy more than 50% of

the market share. Gillette’s competitor Unilever holds 10% of the toiletries market share (Euromonitor).

In addition, BIC has previously stated that they will be a strong competitor for Gillette, and will intend to

take market share from the Procter & Gamble razors division (Globo Brazilian Newspaper).

Lastly, there is low private label penetration due to the high market concentration by top razor

brands. The vast majority of Brazilians prefer to use a branded product, rather than a less­known

brand. As a result, top brands such as Gillette are been able to take advantage of being a top razor

brand by constants advertising and celebrity endorsement in order to create brand exposure in the

Brazilian market. Such is the case of the recent advertising campaign for Gillette during the Brazil World

Tour, where they have acquired the naming rights. Gillette has been able to gain large amounts of

exposure not only throughout the world, but most importantly in Brazil, where Procter & Gamble is

been able to take advantage of key determinants in Brazilian product consumption, such as their passion

for soccer, and marketing strategies such as constant brand exposure.

C. Marketing Plan for Selected Products

1. Product Decisions

Branding:

Because Brazil is mainly a collective culture, word of mouth is one of the main strategies Gillette

will need to approach in order to gain vast amounts of exposure. Brazilians are highly influenced by the

opinion of those close to them, as well as leaders or well­known characters and celebrities, which will

be one of the most effective marketing strategies fro Gillette. Celebrity endorsement will be a key

strategy in the advertising of our remarkable razors.

17

This also reflects the similarity mentioned by Gannon in regards to the Brazilian samba and their culture

overall. The samba includes small circular steps that have been present throughout their history and

behavior (Gannon). Gillette’s vision is to take advantage of the small and close relationships between

Brazilians, such as the strong unity bonds in families, and take constants and persistent steps in order to

effectively market our products. Moreover, because Brazil is driven by power distances and hierarchies,

it is important to implement repetition , to create a sense of “top of mind” brand in our target market.

Image Development:

Gillette will build a high end image of quality, high functionality, and status overall.

Product Features:

Due to the fact that it is a society that values high quality, trust, loyalty and hierarchical status,

we have chosen to develop a product with high end features in order to create a competitive razor to

attract the Brazilian male market.

Throughout the development of the Gillette’s razor Fusion, we will highlight the high tech

features of the product, as well as the release of different World Cup special edition razors in order to

appeal to this neutral culture. As a result of their profound passion for soccer, their national sport, and

also their high appreciation for quality of life, Gillette seeks to implement a distinctive model that will

highly attract this passionate market.

As seen on the Hofstede’s value analysis, Brazilian culture scored relatively high on uncertainty

avoidance. This characteristic will guide us to accentuate the high functionality of our Fusion razor.

Samba is an escape for the Brazilian society, from social inequality, job unemployment and the

different economic challenges Brazilians face everyday. As mentioned by Gannon, samba is an escape

to paradise (Gannon). For this reason, every time the consumer uses our razors, they should be able to

escape into a unique shaving experience.

Product Mix:

We will launch two products into the Brazilian market, the Fusion proglide in order to appeal to

the middle class market, and also the Proglide styler upper­middle class. Because of the accentuated

different in social status, we want to offer a product that will be appealing not only to one sector, but for

18

other markets as well.Brazilians prefer to be differentiated between the different social status, this is a

result of their high scores on power distance.

Packaging:

The packaging for our Gillette Fusion razor will provide visibility of the product, as well as an

elegant and quality packaging. Their neutral results on masculinity and femininity leads them to be highly

influenced on the details as well as the overall impression of high functionality of the product. Moreover,

because of their importance on status, the packaging will provide a well­designed and neat impression.

Branding issues:

Because of their high reliance and loyalty to products that are well­established and provide a

reliable and long history of good quality and performance, we might face market entry issues and

challenges as a new brand. The need to develop trust and portray high quality of our product in order to

build a sense of high functionality is crucial. That being said, we have implemented a specialized plan to

market during the 2014 FIFA World Cup with the cultural appeal and love of football, as well as

celebrity endorsements from iconic people like Roger Federer.

2. Pricing Decisions:

Mid­Price Products

Gillette seeks to place themselves as a high status brand. After completing an overview of

various prices for toiletries in Brazil from 2010, we have decided to price this product a little higher than

the 2010 price of R$8.55 for a 2­Pack of 3 blade razors. Our plan is to increase the price to R$24.95

(walmart.br). When taking this decision, we have taken into consideration the Brazilian GNI per capita,

which was $11,630 in 2012 and is expected to be even higher in 2014, especially after the 2014 FIFA

World Cup and 2016 Summer Olympics .

19

*Graph found at http://data.worldbank.org/country/brazil.

3. Placement Decisions:

Gillette will be first distributed into major economically developed cities such as Rio de Janeiro,

Sao Paulo, Belo Horizonte, Fortaleza, Salvador, Brasilia, and Manaus, which is the eighth largest city

located on the west side of the country. (Costasur) The high concentration of Brazilian population in

these cities will allow Gillette to acquire huge amounts of exposure, as well as a wide approach of the

Brazilian population.

4. Promotional Decisions:

As indicative of the Hofstede Values, Brazil ranks high on collectivism, and as a result, we will

not offer coupons or discounts for the higher priced razors. However, taking into consideration the

increasing GDP per capita, we may begin by offering discounts for disposable and low priced razors to

see if such promotions would prove effective in further expanding our market potential.

D. Budget

Ball Park Costs Involved:

Taking into consideration that one U.S. dollar is worth approximately $2.20 Brazilian Real, we have

decided to price our products accordingly. By researching the price comparisons of the Fusion Proglide

and Proglide Styler in U.S. markets, we plan to market the Fusion ProGlide at approximately R$24.49,

while the Fusion ProGlide Styler at approximately R$39.95. These prices are comparable to Walmart

Prices in the United States, adjusted to international currency conversions.

20

Financial Opportunity:

We have the opportunity to eliminate substantial competition in the razor market with our prices. In

comparison to Muhle, which charges an average of $60 U.S. for one of their razors, the same razor

would cost about R$132 in Brazil. Furthermore, the Merkur Model 178 Classic is about $45 in the

U.S. thereby making it about $99 in Brazil. Contrasting these prices with those of the Gillette razors we

plan to market, consumers will appreciate the comfort and feel of our razors as well as the less costly

financial burden this puts on their wallets.

Executive Summary:

Our marketing group has chosen to expand Gillette Razors into the Brazilian marketplace. There

are many reasons as to why we chose Brazil over the 5 countries we have individually been assigned.

Brazil is one of the BRIC countries and is a rapidly developing country with huge market potential and a

massive population. We have found Brazil to be the dominating choice over Denmark, Finland,

Germany and Pakistan. The decision to export Gillette razors to Brazil was voted upon unanimously.

Conclusion:

Throughout this proposal we have provided an overview of Brazilian male razors market,

implemented and applied the results of studies such as the Hall’s and Hofstede values, and lastly

evaluate the market as well as provided a marketing plan for the launching of this product into the

Brazilian market. We believe that the release of Gillette’s razors Fusion and Proglide Styler will entitle

the company with a great success and start of a long­lasting and loyal relationship with our male target

market. Bibliography

Brazil – Climate. 2011. http://www.brazil.org.za/climate.html#.UytGhdztG0s

Brazil: Key player in global beauty and personal care growth.(2010). Euromonitor International. Retrieved from: http://nme2010­2.wikispaces.com/file/view/BrazilKey Player

Brazil: Language & Values. (2003) http:acad.depauw.edu/~mkfinney/teaching/com227/culturalportfolios/brazil/values_proverbs.htm

21

Brazil: Retail and consumer. (2006). PWC. Retrieved from: https://www.pwc.com/en_GX/gx/retail­consumer/pdf/brazil.pdf

Brazil. The World Bank. World Development Indicators. N.p. 2013 24 November 2013. http://www.worldbank.org/country/brazil

Brazilian Legal Profession. “Punitive damages in civil cases” Harvard Law. http://www.law.harvard.edu/programs/plp/pdf/Brazilian_Legal_Profession.pdf

Consumer Lifestyles in Brazil. (2014). Euromonitor International. Retrieved from: http://www.euromonitor.com/consumer­lifestyles­in­brazil/report

COP 15. Sustainable Development. Environment in Brazil. http://www.cop15.gov.br/en­US/indexb867.html?page=biblioteca

Costasur; Brazil. http://brazil.costasur.com/en/ciudades­grande.html

Culture & Consumer Behavior. (2010). Scribd. Retrieved from: http://www.scribd.com/doc/27525800/Culture­Consumer­Behavior

Gannon, Martin J., and Rajnandini Pillai. “The Brazilian Samba.” Understanding Global Cultures: Metaphorical Journeys through 31 Nations, Clusters of Nations, Continents, and Diversity. Thousand Oaks, CA: Sage Publications, 2013. Print.

Geert, Hofstede. “What about Brazil.” The Hofstede Centre. http://geert­hofstede.com/index.php

Household Size and Demographic Dividend in Brazilian Housing Market. http://www.dpi.inpe.br/sil/CST310/cst310_2010/Aula8_RobertoCARMO/givisiez_oliveira_IUSSP2009_household size and housing market.pdf

IDEA. Institute for Democracy and Electoral Assistance. Brazilian Enfranchisement Rates. 2010. http://www.idea.int/vt/countryview.cfm?id=30

22

Kwintessential. Culture Guides. Brazil. http://www.kwintessential.co.uk/search?q=brazil&Itemid=424

OECD. Better Life Index. Brazil. http://www.oecdbetterlifeindex.org/countries/brazil/

Olson, Dr. Lois “Market Assessment.” Class Lecture. San Diego State University. 18 Feb.2014.

Olson, Dr. Lois “Hall’s Primary Message Systems.” Class Lecture. San Diego State University. 18 March.2014

Soccer Politics / The Politics of Soccer. http://sites.duke.edu/wcwp/research­projects/politics­and­sport­in­latin­america/brazil/

The World Factbook. Brazil. Central Intelligence Agency. https://www.cia.gov/library/publications/the­world­factbook/geos/br.html

23