D271 Doing Business in Latin America Final

50

___% of Latin American consumers are in the range of 15 to 44

39

__% of the US consumer population is in the age range of 15-44

20

__% of European consumers are 65+

Women

One important trend of the last 40 years has been the slow incorporation of _______ into the formal economy with better paying jobs.

Income

The incorporation of women into the formal economy has led to a rise in the average household ________, allowing for consumers to purchase more products.

6

The level of unemployment in the US is very low and almost never higher than __%

20

In Latin America, unemployment is on average __% and the level of underemployment is even higher.

Low

The level of high-level education is still very ___. And opportunities in STEM

10

Health expenditure is __ times less per capital than that of the US

Peru

Due to the COVID pandemic and limitations of the government provided healthcare system, _____ leads the world in deaths per capita.

Street violence

Certain places of Latin America, and especially Central America have become more dangerous in the last few years. An increased proliferation of _______ _________ has driven some consumers to shop more in the modern retail world.

Declining births

The population of Latin America is currently very young, but there are now ________ ______.

10

Health expenditure is __% of what is spent per capita in the US.

9

Only __% of young adults in Latin America have advanced University Degrees.

5

1 in __ young adults are unemployed.

43

__% of young adult deaths are from violent causes.

Mid-lifers

When it comes to finding consumers, declining births increases the importance of ___-______.

more

Dual income households are ______ frequent.

Smartphones

The use of ___________ continues to expand.

Young adults

The ______ _______ of the 90s that benefited from Latin America's years of Expansion are becoming mid lifers with money to spend.

Single

_______-person households proliferate.

Stronger

Latin American consumers enjoy a __________ pallet of senses.

More

Latin Americans meet _____ home than away.

Smaller

Latin Americans are accustomed to ________ spaces.

More

Latin Americans celebrate ____.

unexpensive

One of the reasons that Latin Americans meet more at home than away is because cleaning services are _________, so many consumers can do more at home.

False

T/F: There are more differences between Americans than there are among Latin Americans.

Fashion

_________ preferences between Argentineans, Colombians, and Central Americans is significant.

Acidic, sweeter

South Americans tend to prefer ______ perfumes and foods, while Caribbean's prefer ________ flavors.

Lively, moderate

Central and Caribbean consumers tend to prefer more ______ colors while South Americans prefer more ________ ones.

Product

Latin Americans have different ________ preferences. Some Latin Americans prefer the use of liquid detergent while others prefer the powder. In certain countries of south European influence, Mate is preferred to tea and coffee, while in others drinking coffee in the morning is the rule.

Price, quality

Wealthier consumers are influenced by _______ but ruled by _______.

Quality, price

Poorer households are influenced by _______ but ruled by _____.

500

On the poor side of the wall, the USD average income is $________.

10000

On the wealthy side of the wall, the USD average income is $__________.

Promotions

In order to trust and make a purchase, consumers of low income levels prefer to see __________.

everyday low prices

Wealthier, more experienced consumers have high expectations of quality, demand service, and although they like promotions, they prefer an _________ ___ _______ strategy because they are already familiar with many of the brands and their products.

660

Altogether, the low income market and the wealthier market combine to make a total of ____ million consumers.

True

T/F: The young new market with many first-time consumers are eager to try new products

False

T/F: The young new market with many first-time consumers have high brand loyalty

Price

The young new market with many first-time consumers is still ruled by _____.

5

There are __ times as many young first time consumers than there were in the 1990s

outskirts

In recent years, most of the illegal occupation that happened in the 90s and early 2000s has transformed into densely populated areas in the _________ of Latin American cities.

False

T/F: Because spaces between houses are very reduced and rooms tend to be used by many family members, big presentations of items, such as products sold in gallon or bulk are considered MORE practical

True

T/F: Older slums have all public services but the ones that were recently formed usually lack sewage, potable water, or electricity

Lower

The _____ segment of Latin America has improved its economic condition in the last 20 years and now has more disposable income and is able to access a wide variety of products.

True

T/F: The market of young, first-time consumers live in reduced spaces with many family members and friends, have high levels of insecurity, and limited access to all public services. Despite this, they have increased purchasing power.

Informal

Most of low-income Latin Americans work in the ________ economy.

False

T/F: Although those who work in the informal economy have a very unstable income, they can still make long term plans or purchasing decisions.

Daily, cash

Informal workers get paid _____ and in ____.

daily

A person that is paid ______ will also purchase for their daily or maximum weekly consumption. They cannot buy in bulk.

Public transportation

As opposed to Americans that move mostly in cars or organized public transportation, Latin Americans move in overcrowded ______ ___________ that is usually unsafe and underregulated.

Corner store

If you don't have a car and bad access to public transportation it is much harder to buy from big supermarkets on the outskirts of town. Because of this, many opt to buy smaller presentations that you can carry from the ______ _____ that is a few blocks away from home.

Bodega

Where they value convenience

Producer Markets

Where they value price, trust, and credit

Cash and Carry

Where they value price and service.

Bundled

Latin American consumers like to buy _______ products. Usually wrapping one high value item with a second or third given free.

True

T/F: Because companies need to tailor to consumers with such diverse economic conditions, many companies see themselves needing to use several brands.

False (opposite)

T/F: high-level brands use messages that appeals to the consumer's emotions while low-level brands need to use more rational communication.

Youtube

Has become the 4th or 5th most seen media channel in most countries of Latin America.

Social media

As online connectivity expands through the region, we expect ______ _____ to become the main way in which consumers access information and the predominant way to make new products known to the public.

New Middle Class

Actions taken that resulted in a ___ ______ _____:

-Rising price of raw materials

-Political stability

-Reduction of the state

-Increased foreign investment

-Higher levels of employment

-Better paying jobs

40

Traditional retail makes up __% of the population

1.9

The total size of the Latin American retail market is ___ trillion dollars

5.3

The total size of the retail market in the US is ___ trillion dollars.

10

Accounting for the fact that Latin America has more than half of the population of the US, the size of the retail industry on a per capita basis ends up being approximately __ times less.

Second

Latin America rands ______ in the number of retail outlets per 1000 inhabitants, nearly 5 times the rate of North America.

False

T/F: Because of how fractioned and highly informal the retail market is in Latin America we can trust the data gathered on them.

D

Which of the following is NOT one of the four major players in the Latin American retail sector?

A) Walmart

B) Carrefour

C) CASINO

D) Pacific Alliance

E) Chilean Cencosud

Mexico, Brazil, Argentina

______, ______ and _________, being the biggest markets, have received the most FDI from transnationals.

National

Chile's retail industry is fueled by its _________ companies, many of which have become important investors in the region.

Argentina, Brazil

Walmart remains strong in Mexico and Central America but has recently exited from both _________ and _______ . Their store formats pricing strategy and product assortment was not appealing to these countries forcing them to adjust their business. They tried to do this for many years until they finally decided to sell their operations.

35-40, 25-30

The modern retail store has an average margin of __-__%, which is much higher than the __-__% share that small corner stores earn. For this reason, consumers end up finding the product cheaper in the traditional market than on the modern retail market.

Collateral

You should NOT give credit in the traditional market if you do not have some type of ___________.

Professional

When dealing with modern retail buyers, _________ skills are needed. Metrics like service levels, inventory rotation, profitability per sku, in-store investment, are usually used.

Empathy

In the traditional market emotional _______ and good ongoing sales is what is important. Discussions will be less professional.

Sales

Your discussions with your traditional retail client will mostly be about ______ to the market.

Volume

Traditional retail clients like to negotiate based on ______. They sometimes try to buy more than you offered to sell.

Modern

Pros of the _______ retail market

-Better consumer experience

-A more secure environment

-Available use of credit cards

-Better assortment of luxury products

-More established and expensive brands

Modern

Cons of the ______ retail market

-Inconvenient driving locations

-Higher prices on average

-An impersonal relation

-Financial credit is available

Traditional

Pros of the __________ retail market

-Better location - usually a small walk

-Local made brands, Asian and counterfeit products

-Lower prices on most items

-More bundles and promotions

-Feeling valued - "He knows my name"

-Sometimes direct credit, no interest

Traditional

Cons of the ___________ retail market

-Unsafe payment conditions

-Payment mostly in cash

-Reduced assortment of products

-A more constrained experience

exhibitions

In the modern retail market you are both a seller of products and buyer of __________.

Terms

In the modern retail market, _____ of payment become more important than the actual payment.

Low

In the modern retail market, having ___ inventories is critical.

Buyers

In the traditional retail market you deal with self-made ______.

Products

In the traditional retail market you are a seller of ________, store exhibitions are less of a concern.

Payment

In the traditional retail market actual __________ becomes critical.

Inventory

In the traditional retail market price is the main issue, _________ is not seen as a cost.

Real estate

Most retail companies also have a ____ ______ arm because when they open a new store, the whole area immediately raises in value.

True

T/F: Sometimes retail chains buy a much larger area than that of the actual store, to profit on the added value of the land

Vertical integration

Many in the traditional sector find value in ________ ____________ (usually into shipping)

True

T/F: When transnationals decided to access the Latin American market they used the same methods they had in Europe and the United States. These formats achieved rapid growth due to their focus on customer service and a better buying experience.

2010 recession

During the ____ _________ the economic slowdown brought customers from the stores set up by transnationals back to the traditional market.

Pandemic

The _________ caught the modern retailers with private labels, diminished service and bad assortment products (either high end or value-based private brands)

Habits

It's much easier to give consumers what they want, then to change their ______.

True

T/F: Modern retailers have changed their strategy in the last 5 years. Moving from typical US formats to formats that are more similar to those used in the traditional retail world.

False (it's growing faster)

T/F: As analysts predicted, the Traditional Market is slowly diminishing.

Walmart

Reasons for Walmart's failure in Brazil:

-Everyday low prices opposed to promotions

-Do it yourself instead of service

-far away

-Items are too large - don't have space at home

Online shopping

The pandemic is accelerating the development of ______ ________.