Big brand ideas inspire huge emerging market

Opportunities for growth in Brazil come from targeting a mass middle-class with big brand ideas, according to Silvina Moronta

We all know that Brazilian culture is about dance and rhythm. And this goes for the economy, not just the night-life. In 2010, Brazil’s GDP grew six times faster than the UK’s (7% versus 1.2%). This growth is being driven by a dramatic change in the income of Brazil’s 190 million inhabitants. In the past seven years poverty dropped from 35% to 22%, real salaries grew by 40% and unemployment dropped from 12% to 8%. This has led to the dramatic growth in middle-class consumers from 37% to 50% of the population.

But what does it take for brands to be successful and join the growth in Brazil? Two of the key principles of brand leadership we use at the brandgym are particularly relevant.

Follow the money

Concentrating effort and money on the business where there is a competitive edge is the most fundamental characteristic of a leader brand. So, the first question to answer is which are the most attractive targets/markets to focus on?

A few years ago, to win in Brazil meant to target two extremes. On one side there were the luxury seekers – the luxury goods market in Brazil represents US$2.3bn a year – and on the other side there was a huge mass of low-income consumers. Global companies such as Unilever responded to this with price tiers, with affordable mixes and premium offerings of key brands.

For example, on the same personal-wash shelf were two tiers of Lux brand: Lux Luxo and Lux Suave, a low-price/margin version. Despite the communication and innovation effort behind Lux Luxo, the lower-priced version is what grew.

Today the picture has changed dramatically. An attractive new target is the emerging lower-middle class or ‘class-C’ consumer. They earn between US$600 and US$2,600 a month and the group has increased to 95.4 million people, which is 1½-times the UK population. These previously low-income consumers now have access to a new world of brand alternatives and are becoming more sophisticated.

To see class C in action, head to the Nova America Rio de Janeiro shopping mall. This mall gets about 50% of its sales from the class-C consumer, buying everything from new homes to cars (about 400 cars are sold each weekend); and 40% of the Brazilian population (more than the UK population) are planning to change their mobiles in 2011. Many other categories with explosive growth projections for the next few years include banks, beverages, garments, airlines, technologies, telecommunications and cosmetic surgery.

A good example of a company embracing the class-C consumer with open arms is Ambev, the Brazilian beer giant. The owner of the three leading brands (Skol, Brahama and Antartica) is planning to launch Budweiser this year. It will be positioned between the current mainstream segment and premium segment, called ‘core plus’ and integrated by consumers whose tastes are evolving and becoming more sophisticated.

Some companies are still focusing on products for low-income or high-end consumers. What are your marketing projects for the new class-C consumer? Are you dancing in some of the categories with explosive growth projections, or still deciding whether or not to join the party?

Build Big Brand ideas

Winning brands in Brazil, like successful brands anywhere, have a big brand idea that goes beyond the purely functional. The key in Brazil is to appeal to people’s optimistic and colourful hearts. This explains the local success of Persil/Omo’s global ‘dirt is good’ campaign, which was in fact born in Brazil and then exported around the world. Two more iconic Brazilian brands using this positive outlook on life are Natura and Havaianas.

Natura is the leading brand in Brazil in cosmetics, fragrances and personal care, and a Brazilian company that is growing globally with a turnover of more than US$2bn. The company pioneered using ordinary women rather than supermodels in communication and having a new approach to the massive anti-ageing trend. It was the inspiration for the Dove Global team to develop the famous ‘Campaign for Real Beauty’.

Havaianas has turned the commoditised category of flip-flops into a huge business with its relaunch in 1994. From being cheap sandals for fishermen, they became fashion articles for Hollywood stars and top models – proving again that there are no commodity markets, just commodity thinking.

Some brands are still offering a traditional problem-solving proposition in Brazil. Is your brand story inspiring enough for the emerging Brazilian class C? For your brand to join the party you need to follow the money by targeting the emerging class C and make sure you develop an inspiring and positive brand idea so these consumers will want to dance with you.

Silvina Moronta, partner at brandgym LatAm.

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