AIDS, condoms and carnival

Durex in Brazil

MBA Institute 2010.11.04

Blomqvist Karin, Keizer Julie, Matytsine Alexander, Le gall Jordana
OUTLINE

• Aids' and condoms history

• Brazil’s global environment PESTEL
• SSL activities
• (How Durex entered in Brazil)
• Export and supply process
• Marketing mix
• SWOT analysis
• Marketing plan
• Conclusion
• Recommendations
• References
 INTRODUCTION

Problem formulation

Was it a good idea for Durex to enter

the Brazilian condom market?
AIDS HISTORY

• First victim in 1981 in USA

• “gay syndrome”
• In 1982 in France

• Controversy between US and France

• 20 billions of victims
• Rhythm of 3 billions per years
CONDOM HISTORY
 PESTEL
Political factors
• Stable government
• Member of trade
organizations
• Protectionist policies
• Number one buyer of
condoms
• Developed social welfare
program
• High level of corruption
and violence
 PESTEL

Economic factors
• GDP growth -0.2
• Unemployment 8.1%
• Inflation rate 5.1%
• CB discount rate 8.75%
• Lending rate 47.25%
• Exchange rate R$1 = $0.6
or €0.43
• Improved credit rating
2010, BBB- by Fitch
PESTEL
 PESTEL

Socio-cultural factors
• 66.8% between 15-64
• Years in school: 14
• Religion: Roman Catholic
• Internet users: 96.6 M
• Mobile owners: 46.3%
• 44hrs working week
• Up to 30 days of holiday
• HIV deaths/year: 15000
• Condom use: 20-46.5%
 PESTEL

Technological factors
• 60% of R&D in Latin America
• Government spent more
than R$ 1.7 bn since 2006
• State-owned condom
factory
• “Terrible infrastructure”
• R$ 500 bn earmarked for
infrastructure up to 2015
 PESTEL

Environmental factors
• 45.5% of energy consumption
from renewable energy sources
• Environmental policy
• Cancellation of some taxes
if contributing to develop.
• PIS – social integration
program
• Program H – changing
attitudes
 PESTEL

Legal factors
• Board of Director’s must be
at least 2 residents
• IPI tax 10%
• INSS – healthcare tax
• II – import tax
• Labour laws (44
hour/week, min. wage
R$510, annual vacations)
 CONCLUSION PESTEL
PRO
• Stable government
• No international conflicts
• Member of trade org
• Stable economy
• Promising economy
• Gov spends on R&D
CON
• Corruption and violence
• High income disparity
• Under developed
infrastructure
• Difficult to open up
business
• Cumbersome procedures
and regulations
 CONDOM MARKET IN BRAZIL
SIZE
Commercial market: 660 000 000 (6.6 million)
Government hand-outs: 1 000 000 000 (1 billion)

BRANDS
MARKET SEGMENTATION
PORTER’S FIVE FORCES
PORTER’S FIVE FORCES

• Requires high start-up

capital
• Expensive and time
consuming to get quality
standards

LOW • Difficult to offer better price

or service due to
incumbents
• Difficult to gain trust and
brand loyalty
PORTER’S FIVE FORCES

• Companies dictate
conditions

• Many suppliers
LOW • Large amounts purchased by
companies
 PORTER’S FIVE FORCES

• Low switching costs

• Difficult to differentiate

MEDIUM/LOW • Growing industry

 PORTER’S FIVE FORCES

• Many substitutes to prevent

pregnancy

• No substitute to prevent
MEDIUM/LOW STD’s and AIDS
PORTER’S FIVE FORCES

• A few large brands dominate

– Jøntex
– Olla
– Lovetex
– Natax

HIGH – Prudence
• Many small brands
• Fierce competition:
– Few differentiation options
– High fixed costs
– High growth possibility
 CONCLUSION PORTER’S FIVE FORCES

NEW BUSINESS: BUSINESS ALREADY IN THE

MARKET:

UNATTRACTIVE ATTRACTIVE

ATTRACTIVE
 SSL

• Mix of consumer and medical brand

• Brands:

• 30 countries across Europe, Asia Pacific and America

 SSL Strategy SSL values
• Consumer insight • Successful
• Innovation in new product • Socially Responsible
• Effective advertising • Lively
• Efficient business practices
• Training and development of
their people
DUREX SALES
 CUSTOMERS
 Online-stores
 Hospitals

• Retailers  Medical stores

• Distributors  Sex shop

 Hotels & Resorts

 Super-market
 Reckitt Benckiser
• Acquried SSL
international 1/11 2010
SWOT Analysis
 Strenghts
Excellent brand image / Widely
recognized market leader
Good quality / Superior technological
skills
Wide geographic coverage
Strong financial condition
 Weaknesses

High price for local majority

Higher overall costs relative to key
competitors
 Opportunities
Governmental helps
Strong advertising and promotion
Expanding the company’s product line
Ability to grow rapidly
 Threats
Low consumption
Need a change in people’s mind
Increasing competition
 Conclusion
« Image is everything »
Pay for Quality
Government helps
You don’t mess with Durex 
 MARKETING MIX

Product: condom promotion

Durex,Scholl

Price: 3-5€ / package of 4

Place: High School,streets,

Promotion: media, television, newspapers, public spaces

such as billboards and bus shelters, celebrities
ADVERTISING
VIDEO http://www.youtube.com/watch?v=8NdEVrcvMU4
 CONCLUSION

• Was it a good idea?

– PESTEL
– PORTER
– SWOT
FUTURE RECOMMENDATIONS
 BIBLIOGRAPHY
Reports
• Datamonitor. Country analysis report Brazil. June 2009.
• The Economist Intelligence Unit Limited. Country report Brazil. June 2009: Issue 6
• Financial Times. Investing in Brazil. Special report. November 5, 2009.
• The Guardian. Inside Brazil, a new future. Special report. March 14, 2008.

Webpages
• Angloinfo. http://brazil.angloinfo.com/countries/brazil/socsecurity.asp (accessed 2 October, 2010)
• Avert. http://www.avert.org/aids-brazil.htm (accessed 4 October, 2010)
• BBC news. http://www.bbc.co.uk/news/world-latin-america-11389613 (accessed 5 October, 2010)
• BBC news. http://news.bbc.co.uk/2/hi/americas/7335925.stm (accessed 5 October, 2010)
• Bloomberg. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFJJVxM6CVD8 (accessed 24 October, 2010)
• Business week.
http://www.businessweek.com/news/2010-02-01/brazil-infrastructure-projects-require-85-billion-in-financing.html
(accessed 4 October, 2010)
• Business week. http://www.businessweek.com/news/2010-02-04/brazil-s-infrastructure-in-terrible-shape-fraga-says.html
(accessed 4 October, 2010)
• British Chambers of commerce. http://www.exportguides.co.uk/brazil/ (accessed 10 October, 2010)
• Central Intelligence Unit. https://www.cia.gov/library/publications/the-world-factbook/geos/br.html (accessed 2 October
2010)
• Currency calculator. http://www.x-rates.com/calculator.html (accessed 14 October, 2010)
 BIBLIOGRAPHY
Webpages continued.
• Embassy of Brazil in London. http://www.brazil.org.uk/economy/foreigntrade.html (accessed 15 October, 2010)
• Euromonitor international. http://www.euromonitor.com/factfile.aspx?country=BR (accessed 5 October, 2010)
• Federal Research Division of the Library of Congress. http://www.country-data.com/cgi-bin/query/r-1810.html (accessed 19
October, 2010)
• France 5. http://www.france5.fr/sante/histoires/W00476/1/
• Historical exchange rates. http://www.oanda.com/currency/historical-rates (accessed 14 October, 2010)
• SSL International. http://www.ssl-international.com/Pages/default.aspx (accessed 9 October, 2010)
• Ministry of External relations.
http://tgspaaa1.miniserver.com/~tgspawnb/system/brazilianchamber/images/PDF/5.1legalguide.pdf (accessed 9 October,
2010)
• OECD. http://www.oecd.org/dataoecd/62/35/35415135.pdf (accessed 4 October, 2010)
• Portal Brazil. http://www.brasil.gov.br (accessed 29 September, 2010)
• Preservativos Natex. http://www.preservativosnatex.com.br/en/index.html (accessed 2 October, 2010)
• Promundo. http://www.promundo.org.br/en/ (accessed 5 October, 2010)
• Prospects. http://www.prospects.ac.uk/brazil_job_market.htm (accessed 10 October, 2010)
• Time Magazine. http://www.time.com/time/world/article/0,8599,2022661,00.html (accessed 29 October, 2010)
• The Wall Street Journal. http://online.wsj.com/article/BT-CO-20100924-711075.html (accessed 4 October, 2010)
• WTO. http://www.wto.org/ (accessed 29 September, 2010)

• http://www.citesciences.fr/francais/ala_cite/science_actualites/sitesactu/question_actu.php?id_article=10703&langue=fr.