brazil half-full half-empty

Brazil: is the glass half full

or half empty?

• Glasses

• The emergent middle class

• Conclusions

Do you see a young lady or an old woman in this picture?

It depends on how you look at it!

Do you see a duck or a rabbit in this picture?

You can see both!

Depending on the glasses you use, you can better see reality

• Within the water

• In the darkness

• Very far

• Very close

Brazil 2004: is the glass

half full or half empty?

My book Copo Pela Metade aims at: 1.) seeing reality by combining different kinds of glasses, and 2.) to work out an archaeology of the future in order to antecipate trends and create scenarios

Policy Making

guidance on social and economic development

promotion

guidance on marketing strategy

and tactics

Business

They share some point of view but use differente kinds of glasses, and many times they see different kinds of realities

Glasses for policy making used by governments,

multilateral development organizations focus on

Demography:

vital and social statistics, such as births, deaths,

diseases, marriages, etc., of populations.

Demography

CENSUS

Glasses for business organizations

Marketing Intelligence and Research:

vital and social knowledge on the different lyfe styles and consumption patterns of society and

individual

Marketing Intelligence and Research

More sophisticatedmethodologies and tools

• Focal group

• Creative segmentation

• Geomarketing (Geographical InformationSystems)

• Adhoc high techtools for scrutinizingpeople’s diverse life and consumption styles

More sophisticated methodologies and tools

• Focal group

• Creative segmentation

• Geomarketing (Geographical Information Systems)

• Adhoc high techtools for scrutinizing people’s diverse life and consumption styles

Análisenacional/regional

Análise deárea de influência

Análise de ponto

Rio de Janeiro, 10 julho 2001 (Jornal do Brasil)

baseada em informações nos Censos de 70, 80 e 91

Fundação Getúlio Vargas divulga pesquisa Mapa do Fim da Fome

Temos 50 milhões de miseráveis (29.3% da população brasileira tem renda mensal inferior a 80 reais per

capita).

Governments

Multilateral organizations

NGOs

REALITY

POLICY

ACTION

DEVELOPMENT MINDSET

Are outperforming businesses which

• Target the bottom of pyramid (bop) segments of the marketplace

• Developed successful business design oriented for clients at the bop

28 lojas no Rio de Janeiro

2 milhões de clientes ativos no Leader Card

Health insurance for CD strata in the states of RJ and SP: increased the number of clients from 250 thousand to 400 thousand over the last 3 years

How neighborhood supermarket are much more productive in

terms of m2 profitability

Aparelho de TV a cores:

• 97% domicílios têm

• 4 anos de uso em média

IncomeMarket penetration of goods and

service

Sectorial Production

Sectorial Marketing Analysis

IncomeMarket penetration of goods and

service

Sectorial Production

Sectorial Marketing Analysis

Income

Consumption

What is the picture when one brings the things together?

Income48% does have formal

labour relationship

52% does not have formal or consistent income

The issue of the INFORMAL ECONOMY and how it mess up the Census conclusions

Poor knowledge

48% does have formal labour relationship

52% does not have formal or consistent incomeConsumption

and Life Styles

Better knowledge about the different segments of the society as a whole

Brasil in the 70s

• Affluents

• Middle class

• Poor

• Deprived

• 300 thousand households

• 2,5 million households

• 12,5 million households

70 million inhabitants 15 households

Consumer

socie

ty

Out of

Consumer

Society

------------------------- Poverty line ------------------------------

• Ricos

• Classe média

• 300 mil domicílios

• 2,5 milhões de domicílios

The major beneficiaries of the “Economic Miracle” of the 70s

• National Housing Funding System• Public free Universities• Jobs in state-owned corporations • Mechanisms for protecting of savings

against inflation (indexation)

The subsid

ies

which ju

st a fe

w

people

are

aware of...

Major Forces of Transformation post 70’s

• Acceleration of the urbanization process • Acceleration of the industrialization process• The Civic Revolution • Economic estabilization• Globalization

Major Forces of Transformation post 70’s

ACCELERATION OF URBANIZATION PROCESS

Gráfico 4.1 pg 66

Major Forces of Transformation post 70’s

ACCELERATION OF INDUSTRIALIZATION PROCESS

1950: rural economy 1950 ==> early 90s: 8o. GDP

Major Forces of Transformation post 70’s

THE CIVIC REVOLUTION• amazing increase of the social mobility• from military dictatorship ==> democratic system• 222.000 NGOs• Free elections• Free press• Ongoing improving of the democratic-civic institutions and system• A new civic mindset: for the very first time in History the ordinary

man has a feeling that playing by rules seems to be worthwhile

Major Forces of Transformation post 70’s

GLOBALIZATION

Brazil 2000The emergent middle class is

reaching a critical massa

178 million inhabitants46,5 million household

Citizen

Tax payer

Consumer

Client is king!

Social economic stratification of the households in Brazil (%)

1

4

7

12

34

34

8

A1

A2

B1

B2

C

D

E

Segment Households (M)

A1 0,465A2 1,86B1 3,255B2 5,58C 15,81D 15,81E 3,72

The New Brazilian Middle Class

1993 1996 2000 Variation

A 2 5 5 3

B 12 19 19 7

C 26 31 34 8

D 42 33 34 -6

E 18 12 8 -10

Former Middle Class

The NewMiddle Class

Emergent Middle Class

The economic estabilization repositioned almost overnight the life style and the consumption patterns of the popular strata in terms of

• Purchasing power

• Purchasing habits

• Capacity to plan

The CDE share of national consumption(76% households)

• 64% of food• 58% of personal care and household

products• 58% of appliances• 51% of vestuary and shoes• 50% of household construction reform• 43% of personal services• 64% of pharmaceuticals

The message for the business players is easy:

No one is leader without being leader with CDE strata

Changes in household patterns

• Family average number of members has decresased dramatically

• Improvement of the women social and economic condition

• Two breadwinners instead of one...

The society as a whole has been striving to improve its life not

only after the Real Plan implementation.

Eletro-domésticos por domicílio em 1969 e em 2001

95%

98%

79%

64%

58%

25%

0% 20% 40% 60% 80% 100%

TV

Geladeira

Som

Favelas século XXI = bairros popularesDesfazendo o mito da pobreza

Pesquisas de Pearlman sobre a evolução do consumo em favelas do Rio

Penetração de serviços coletivos urbanos e tipo de construção (percentual de domicílios) em 1969 e em 2001

29%

60%

48%

37%

97%

96%

95%

96%

Água

Esgoto

Luz

Casa de Alvenaria

1969 2001

Favelas século XXI = bairros popularesDesfazendo o mito da pobreza

Pesquisas de Pearlman sobre a evolução do consumo em favelas do Rio

Penetração de bens de consumo (percentual de domicílios) em 2001

96%

98%

89%

79%

57%

48%

48%

22%

14%

0% 20% 40% 60% 80% 100%

Geladeira

Liquidif icador

Telefone (f ixo ou celular)

Videocassete

Carro

Favelas século XXI = bairros popularesDesfazendo o mito da pobreza

Pesquisas de Pearlman sobre a evolução do consumo em favelas do Rio

Faixas de renda Salários Mínimos (%)

1969 2001

1SM ou menos 11 15

1SM a 2 SM 38 29

2SM a 3SM 29 11

3SM a 4SM 12 14

4SM a 5SM 3 11

5SM ou mais 6 20

Total 100% 100%

Pesquisa de Perlman sobre a evolução da renda familiar das populações de estudo entre 1969 e2001 em favelas do Rio

Favelas século XXI = bairros popularesDesfazendo o mito da pobreza

Penetração eletroeletrônico 2000A1 A2 B1 B2 C D E TOTAL

% % % % % % % %

Máq. de lavar roupa 96 95 91 85 66 32 4 58

Máq. de secar roupa 58 40 28 16 7 2 9

Maq. lavar louça 68 44 26 8 1 5

Geladeira 100 100 100 100 99 94 31 89

Freezer 87 75 53 40 18 5 19

Forno micro-ondas 89 78 54 34 11 2 15

Aspirador de pó 83 76 66 43 15 2 19

Mais de 4 rádios 51 45 42 50 33 5

Televisor 100 100 100 100 99 95 62 93

2 ou mais televisores 100 98 40 21 6 1 11

CD Player 96 92 81 63 32 9 1 30

Video Cassete 100 98 94 87 47 4 37

Telefone 98 96 86 67 36 11 1 33

Câmera de vídeo 63 35 16 8 1 - - 4

Micro computador 69 51 32 11 3 - - 7

Fax 44 22 12 4 1 - - 3

Fonte: ANEP/ABIPEME/IBOPE

Fonte: ANEPE/ABIPEME/IBOPE 1998

Corporations are learning to develop a business design more

oriented to the needs of CDE strata

Government won’t be able to deliver good quality services to

everyone

The truth that people are starting to realize is...

A and B are already paying for education and health services

(although they still have non-paid university what means that.

55 public governmental university draw 70% of the budget of the Education

Ministry)

.

CDE are in a hurry to improve their life

Exemplo: Educação

44%53%

9,60%

33%

39%

41,90%

23%8%

48,50%

Fundamental Médio Superior

A/B

C

D/E

Distribuição da População Economicamente Ativa (milhões) por Grupos de Anos de Estudo e

Classe Econômica

Fonte: PNAD 2001/IBGE

Fornecedores Produção LogísticaCanaldistribuição

Esgota-se o ciclo da “Economia de Produtos”

ValorAgregado ProduçãoLogística

O cliente quer soluções

• Preço• Conforto• Conveniência• Atendimento• Economia de tempo• Qualidade• Relacionamento

CanalDistribuição

Economia de Serviços: o famoso “Foco no Cliente”

Transporte urbano

Conclusions

• Lack of vision the need to integrate business and goverment knowledge to forge a new development consensus

• Opportunities (infrastruture, education, health, public services, etc)

• Challenges

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