MARKETING PLAN DEVELOPMENT

Members:
Mario Alvear
Adam Lorca
Constance Morales
M. Fernanda Ruz
Teacher:
Mariela Collio
Subject:
Marketing II

Executive Summary

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The company was created by its president and main shareholder, Horst Paulmann Kemna,
who started in the supermarket business in the late 1950s. In 1960 he inaugurated the first
self-service "Las Brisas" in a 160 m2 premises, in the city of Temuco, in the south of Chile.
This became a supermarket chain that covered the main cities of the region.

After vast experience in retail trade, the businessman decided to venture into a new
supermarket format. The objective was to offer in one place the greatest variety of products,
with the highest quality and the best service, a revolutionary idea for the industry at that time.
With this concept, the company took the initial step towards expansion by creating the first
hypermarket in Chile in 1976: Jumbo, with 7,000 m2 located on Avenida Kennedy in Santiago.

Jumbo is one of the main participants in the supermarket business in Chile. It has a solid and
clear commercial positioning in the medium and high income segment, which has allowed it to
maintain positive sales margins above the industry average; offers a varied assortment of
products, including food, groceries and a wide range of items, such as: clothing, household
items and appliances. In addition to traditional brands, Jumbo offers its own brand products,
which have achieved a solid commercial positioning, mainly associated with variety and
excellent quality.

Analysis of the situation

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Analysis of the external situation of the company

Macroenvironment

Demographic Environment

Population size, birth rates, mortality, age structures, family formation and
population movements

According to the last CENSUS carried out in Chile in 2012, the Chilean population is
17,444,799 million inhabitants, the number of inhabitants born alive amounts to 243,635, on
the other hand, the mortality of inhabitants is 94,895 according to the DEIS in 2011; and the
number of families counted in the last CENSUS is 5,035,637 throughout Chilean territory

In Latin America, Chile, with a rate of 0.99%, ranks fifth among the countries with the lowest
annual growth during the last decade, between the censuses carried out in 2002 and 2012. In
previous measurements, the indicator already showed a slowdown, starting from the rate of
1.64%, which was calculated between 1982 and 1992, and 1.24%, which was reached
between 1992 and 2002.

The current figure, meanwhile, places Chile below countries such as Bolivia and Peru and
makes it comparable with the demographic condition of nations such as Canada, the United
States, South Korea, the United Kingdom and Switzerland, among others.

Jumbo is both in Santiago in the metropolitan region and in other large cities throughout Chile
which have a large concentration of people on a stable basis or at certain times of the year as
can be seen in the following graph:

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 Cantidad de habitantes por ciudad donde hay uno
o mas Jumbo
400000
300000
Cantidad de
200000 habitantes por
100000 ciudad donde
hay uno o mas
0 Jumbo
e a ta o a o r n e e s a z o a n n s o o s tt o
iqu lam gas iap ren rais l ma nco elip ilpu nde agu Cru uric Talc hilla pcio gele muc orn Vara on tiag
u p e c
Iq Ca tofa Co La s alpa a de Co an F Qu os A an nta C C ce An Te Os to o M San
n s
n V iñ S L R Sa Co Lo er ert
A V Pu Pu

Where it can be noted that in the three cities or commune in the case of Concón, although they
have few inhabitants; comparing them with the others; In the summer they stand out for having
a large influx of visitors, which compensates for this imbalance.

Graph showing the Chilean population in five-year groups

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Economic environment

Chile, in recent years, has seen constant growth in its economy, increasing its GDP year after
year, which has generated greater income for people and therefore greater consumer
spending. Let us remember that GDP is the value of all final goods and services produced
within a country in a given year and there is a consensus on the part of the majority of
economists who prefer to use this indicator when studying the per capita well-being of a nation.

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 National income and wealth

As the table shows, the participation of the richest 1%, using the direct figures provided by the
Internal Revenue Service, it is obtained that the per capita income of the richest 1% is 40 times
greater than the per capita income of 81% of the population. .

Growth and Recession

Chile has proven to be one of the fastest growing economies in Latin America in the last
decade, but the international crisis has hit its doors and since 2013 a gradual slowdown in
its economic activity has been observed.

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 Inflation

The Consumer Price Index (CPI) recorded zero monthly variation, accumulated 5.1% so far
this year and 5.5% reference to twelve months.

In November, five of the twelve divisions that make up the CPI basket recorded positive
incidents. Among the divisions that registered increases, Miscellaneous Goods and
Services (1.7%) stood out with an incidence of 0.118 percentage points (pp.) and Housing
and Basic Services (0.6%) with an incidence of 0.086 percentage points. For its part, of the
divisions that negatively influenced the indicator, Transportation (-0.8%) stood out, with an
impact of -0.117 pp. and Food and Non-Alcoholic Beverages (-0.5%), with an incidence of -
0.103 pp.

Unemployment

In the last three years, Chile has shown not only low unemployment rates and higher
employment, but also great progress in improving quality.

According to the NENE survey (New National Employment Survey), carried out by the INE
(National Survey Institute), between the quarters January-March 2010 and December 2012 -
February 2013, the unemployment rate fell from 9.0% to 6. 2%, which is the lowest in the last
15 years.

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 Interest rates

The monetary authority has not modified it since May 2011. So far this year, Colombia, Chile
and Mexico remain between 4.25% and 5%. Brazil is at a level of 9%.

Fiscal policy

Chile's macroeconomic policy framework consists of a counter-cyclical fiscal policy, guided by

a structural budget rule, an inflation targeting regime applied by an independent central bank, a
floating exchange rate and a well-supervised financial system.

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 Monetary politics

The Monetary Policy Rate (MPR) entered a neutral cycle in November after completing a cut of
200 basis points in the last year, but some surveys are beginning to anticipate new drops due
to doubts about the strength of the economy's recovery in the 2015.

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Exchange rates

10
Balance of payments

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Social and cultural environment

Changes in values

Chilean culture is crossed by changes and continuities. Among the transformations, the
redefinition of the state and market preference have a special impact. From very early
on, Chilean identity was linked to the formation of the national state and, later, to the
emergence of a social state. The cultural dimension of the state is most notable in
education, the democratic order or public policies.

Changes in expectations

An expectation is the hope or illusion of realizing or seeing a certain purpose fulfilled. In

the commercial context, it would be the anticipation that a customer makes of the
experience they will have when purchasing a certain product or service.

This anticipation, on the one hand, will be unique to the client, as it is based on their
own experience and knowledge and, on the other hand, it will have certain points in
common with the rest of the consumers, to the extent that the purchase to be made is
more or less less widespread and the experience more common, the change in
consumer expectations usually means an increase in these.

Changes in lifestyles

In recent years there has been a new trend and it stands out for leading a healthier and
healthier life, whether through sports and/or eating healthy. Although this trend is
becoming more widespread, it should be noted that its gaps depend on several factors,
including the socioeconomic level of the population, its area of residence and age.

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Trends in education
Family transformations, which are increasingly frequent, constitute a new danger, an
imminent risk that is added to other harmful factors that can affect education in our
country, since they negatively influence school performance, permanence in the
educational system, in the behavioral manifestations and emotional expressions of
children, especially in those from low sociocultural and economic levels, since they are
subject to different and multiple risk factors.

The increasing trend in transformed single-parent families makes it imperative to

implement actions in schools aimed fundamentally at creating support networks for
children from dysfunctional families. The role of the school in the personal and value
development of children is increasingly important.

Social issues

For one reason or another, many Chileans form their individual identity outside or in
opposition to society. This “asocial individualization” reflects a paradox. While, on the
one hand, society increasingly encourages individuals to build their own life projects, on
the other, the daily environment limits their capacity for the individual fulfillment that
society itself proclaims.

Social groups

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Monthly autonomous income by decile of per capita autonomous income of the household
($PCh November 2006)
Per capita household
Decile Home
Minimum Maximum Average
Yo — 32.822 16.841 75.687
II 32.825 49.400 41.358 179.457
III 49.407 65.650 57.262 239.074
IV 65.653 83.658 74.496 298.447
V 83.660 102.967 93.201 345.526
SAW 102.973 130.656 115.710 429.983
VII 130.669 169.754 148.431 533.240
VIII 169.760 236.509 199.075 681.531
IX 236.527 393.947 301.240 983.646
x 394.073 32.085.000 884.961 2.365.797

Region ABC1 C2 C3 d AND

Yo 6,6 17,5 26,1 35,4 14,4

II 9,0 20,2 27,0 33,1 10,7

III 5,0 13,5 23,4 36,8 21,3

IV 4,2 12,6 20,1 35,3 27,7

V 6,7 17,2 24,8 37,2 14,1

SAW 3,9 11,4 19,9 38,3 26,5

VII 2,9 9,1 17,5 35,5 35,1

VIII 4,6 11,2 19,7 33,4 31,0

IX 3,7 9,8 16,6 30,1 39,8

x 3,8 9,9 16,2 31,7 38,4

XI 4,7 12,5 17,9 33,3 31,6

XII 6,3 18,0 26,0 35,7 14,1

RM 10,6 19,2 25,1 35,3 9,8

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 Total 7,2 15,4 22,4 34,8 20,3

Attitudes and behaviors regarding product use

The source of change is usually a person, a group or a means of communication. The source's
credibility, attractiveness, and power (its ability to administer positive or negative sanctions or
reinforcement) influence attitude change. Furthermore, the combined influences of several
source characteristics can produce the desired effect. In this sense, the structure of the
message and the extent to which it is logical and convincing are relevant variables.

Crime, drug addiction, etc.

According to a survey carried out in Chile, 47.15% of those surveyed said that crime is a
problem that affects them directly and that generates a feeling of unease, which detracts from
their quality of life.

It should be noted that 42.62% declared having been a victim of crime in the last year, "which is
alarming because it is about half of the population surveyed," said the parliamentarian.

Perception of those surveyed, 57.52% consider that drug addiction increased in the last year
and only 6.53% believe that it has decreased. "As with crime, those interviewed believe that
drug addiction could also be combated with greater strictness of the law, more education and a
greater number of police officers. Likewise, 89.66% of those surveyed agreed with carrying out
the drug test for the authorities.

Environmental environment

In this area, the ecological issue has gained great strength in recent times, all linked to caring for the
planet, giving great importance, for example, to recycling or including materials that take care of the
environment. This ecological awareness today is instilled and will be instilled even more in the short

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term, in children from a young age, therefore, both parents must work together to create future citizens
responsible for caring for the environment.

Restrictions in supplies and environmental degradation.

Environmental alert: it is prohibited to turn on all types of wood heaters and other wood-based
heaters, whether or not they are equipped with a double combustion chamber system,
throughout the Metropolitan Region.

The mineral extraction and concentration processes are highly demanding in water and energy,
so the explosive development of mining projects in region II and III, caused by the high prices of
metals such as copper, has established a significant increase in the demand not only for
electrical energy, but also for water resources.

Technological environment

Technology today becomes a key success factor for many companies, where they seek to be at the
forefront of new technologies that allow them to be more efficient and less dependent on labor. As
indicated by the Ministries of Economy, Agriculture and Labor, the scarce qualified labor available is
one of the factors that have increased production costs. Although, they point out, changes are being
sought to increase the hiring of workers, one of the alternatives to the problem is being provided by
technology.

Inventions and innovations, diffusion and patents.

There are 30 Chilean inventions that have been published in more than 10 countries. In this
select group are the well-known Crystal Lagoons pools by Fernando Fischmann, which have
been patented in nearly 60 countries; an artificial photosynthesis system; androgra herb extract
to treat autoimmune diseases such as AIDS or diabetes mellitus, and a procedure to leach
copper oxide without using sulfuric acid. The time the process takes – a minimum of 18 months

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 passes – and the high economic cost since registering an innovation costs US$ 10 thousand per
country.

Investigation and development

Chile has made some progress on the issue of innovation and the issue has been put on the
public agenda. One of the main differences with the United States lies in a cultural issue. “In the
United States, ordinary people have internalized that if they have an invention, patent it and
develop it commercially, it can be transformed into a good business. In Chile, on the other hand,
this is not part of the national culture and is rather reduced to very small sectors.

Political and legal environment

In this case, the country has remained politically stable in recent years, thus providing greater security
and confidence to citizens. At the same time, international relations have increased over time, such as
the Free Trade Agreement (FTA), which generates greater possibilities of generating business beyond
our borders, that is, expanding the possibility of exporting and importing products such as in this case.
This situation is favored for Jumbo since it generates greater opportunities to grow and generate
greater income.

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Microenvironment

The elements of the micro environment are the market where the company carries out its
activity, the suppliers, intermediaries and companies that are part of the competition and their
consumers.

Market: We will take into account both the current market and the potential market.

Today's market, Jumbo is characterized by offering the best, delivering the widest variety of
products, to the quality of these is added the quality of its services, as a company that seeks
differentiation, its customer niche is well defined, mostly It is located in the middle class
upwards and is a type of loyal customer who tends to always buy in the same place, aimed at
Chilean families, both parents (adults) and children and young people.

Potential market, with respect to Jumbo, the supermarket industry has room to grow and
integrate new players, sales in supermarkets are above 70% in the country. Being a high-
demand business, there are many buyers, which means that the effect of a few does not have
great relevance in this market. In addition, there is the C3, D and E segment where it only
penetrates 20%, therefore it has growth potential.

Our focus : ALL clients.

1. With or without purchases

2. With or without debt

3. With or without default.

Competition: Made up of the group of companies that try to satisfy the same need as
our company.

What are the competitors of this company

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Jumbo Supermarkets at a national level manages to stand out for its excellent quality in terms
of its products and services delivered to its customers, so the level of competitiveness is high
and demanding, so we can point out Tottus among the new competencies as threatening
agents of this company. Although this company is known in the media at a national level, it
intends to acquire part abroad, referring to South American countries such as Peru and
Argentina where, on the one hand, Jumbo has already had a presence for quite some time.
We could also include Hiper-Lider since it was purchased by Wal-Mart, expanding the Líder
supermarket chain by integrating new foreign products into our country.

In the industry, according to figures from Chilean Supermarkets, Jumbo is the second largest
operator in the country with a market share of 27.2% based on reported income from
supermarket operations in Chile. In this segment Cencosud competes with operators such as
Wal-Mart Chile, with the first position in the market, SMU, third, and Tottus.

Amount of intensity of competition in the market

Competitiveness is generated because the supermarkets mentioned above have their own
brands that differentiate them from other companies, so every day the markets, both Jumbo
and its present competencies, must play with prices, customer loyalty, brand positioning and
presence. , at the level of competitiveness, improve the relationship between them and
suppliers, etc.

How competition affects market evolution and structure

It is understood that supermarket chains share a homogeneous group, so anti-competition is

eliminated since it is unlikely that they will cover the supplier market in their hindering strategy.
Even so, there are recognized brands, essential for a supermarket to compete in an equivalent
manner with the rest, then if it is feasible that such exclusion could occur.
Jumbo, by covering part of the national and international territory, affects smaller marketing
companies because this is the dominant market and competitive relevance exists in this
environment.

How do competitors' actions affect this company's MKT decisions?

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Jumbo is one of the main participants in the supermarket business in Chile. It has a solid and
clear commercial positioning in the medium and high-income segment, which has allowed it to
maintain positive sales margins above the industry average.

How do competitors achieve their competitive advantages? And how do they maintain
them over time?

Among the new participants that join the market, there is growth in the food industry, this leads
to greater competition between companies that want to stay in the market and not lose their
customers. On the other hand, new companies will want to position themselves very well, enter
in search of new clients and not leaving the market, that is why they must go in search of new
products that differentiate their company from being profitable, reduce their fixed costs to be
able to obtain long-term profits among others, this causes more even a rivalry between
companies which leads to prices varying depending on the competition.

Suppliers: Good purchasing and supply management of the necessary materials is

recommended, as well as a good relationship.

Jumbo presents a wide range of suppliers, both national and foreign. National suppliers are
basically representing food, perfumery and hygiene producers. Purchases abroad, mainly
clothing and household items, come in a high percentage from Asia. It is important to mention
that the holding company is in a process of structural reorganization that seeks to achieve
synergies through the collective negotiation of its businesses with suppliers, in order to
centralize the acquisition of merchandise for all business units, in addition to its own
consumption. .

The main sources of financing, in addition to its assets, come from the local and international
banking system (mainly associated with the countries where the company operates), and from
obligations with the public (bonds). The company managed to reduce the short-term portion of
its debt, reaching 9.2% as of December 2009. Such reduction was possible thanks to debt
restructuring through capital contributions and bond placements in order to pay more
immediate term commitments.

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5 PORTER Forces

1st Force: Entry Barriers

Entry barriers High Half Low
Initial investment x
Brand loyalty x
Cost advantage x
Scale economics x
Specific technical knowledge x

Product differentiation x
Legal Barriers x
Switching costs for customers x

Access to distribution channels x

2°F: Rivalry between competitors

Determinant variables High Half Low

Dominated by few companies x

They compete with other companies x

with substitute products (reverse
evaluation)

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My industry is an important customer x
for its suppliers (reverse evaluation)
They provide important and vital input x
for the industry
Threat of forward integration. x

3ºF: Bargaining power of suppliers

Determinant variables High Half Low

Dominated by few companies x

They compete with other companies x

with substitute products (reverse
evaluation)
My industry is an important customer x
for its suppliers (reverse evaluation)

They provide important and vital input x

for the industry
Threat of forward integration. x

Bargaining power of suppliers Threat Chance

4th F: Bargaining power of buyers

Determinant variables High Half Low

Concentrated or grouped clients x

They buy in large volumes x

They acquire standard or x
undifferentiated products
Threat of backward integration x

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Product not decisive or vital for x
customer quality
Well informed clients x
Difference in treatment with -
wholesale and retail clients
Bargaining power of buyers threat chance

5ªF: Threat of entry of substitute products

Determinant Variables High Half Low
Availability of substitute products. x

Switching costs for the customer x

(reverse evaluation)

Prices in my industry relative to x

substitutes

Quality/price ratio in my product x

(reverse evaluation)

Risks due to proximity of substitute

products threat Chance

Intermediaries: Necessary when an organization addresses a large number of

consumers who are spread over a wide geographic area (wholesalers and retailers).

Zero level channel

(Also called direct marketing channel) is formed by a manufacturer who sells directly to the end
customer. The most relevant forms of direct marketing channels are home sales,
telemarketing, television sales and manufacturer-owned establishments.

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Jumbo really does not have a channel since it is the intermediary between the supplier and the
final consumer, which delivers the products to the current customer and has the opportunity to
give advantage to the potential customer, although it is forced and will be responsible for
storing, handling and preserve the merchandise delivered by the supplier subject to all legal or
regulatory health and safety standards in force and with the due degree of diligence and care.

Consumers : person who satisfies their needs through an economic activity, being the
final subject of the production cycle.

Customer needs do not refer to a type of product brand but to its diversification, people's
desire to look for new brands or similar products that satisfy a need. This is why Jumbo seeks
to satisfy its customers with the greatest variety of products in the market, therefore retail
stores with low differentiation of brands, varieties and formats are not in a position to compete
directly or indirectly, since it does offer a significant variety in its products for its consumers.

In addition to proposals to guarantee good service to your clients and why not say reward them
so that they remain. Likewise, it seeks the best selection of clients and the best client portfolio.
Activating, deepening, retaining, reducing and containing customers.
Likewise, the fact of having our own and differentiated brands of the same product makes it
have added value and generates better prices (price/quantity – price/quality relationship).

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Analysis of the internal situation of the company

General to the organization

Organizational structure

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Management capacity

Pablo Castillo has a Master's degree in Economics from the University of California and
a Bachelor's degree in Economics and Business Sciences from the Pontificia Universidad
Católica de Chile. Pablo was financial director of the Compañía Sudamericana y Residente
steamships, and Vice President of Corporate Finance of CITICORP Chile. Pablo Castillo joined
Cencosud in 2001. Pablo was Managing Director and Administrative and Financial Director of
Cencosud.
Local
1.- Implementation of lean methodology as a work system.
 Standardization of processes.
 Application of 5S.
 Permanent training for collaborators.
 KPIs that support the implementation.

2.- Execution of a plan for stores with low profitability in both chains.
Multidisciplinary team dedicated to seeking sustainable and replicable
opportunities.

3.- Incorporation of technologies

 Renewal of the cashier system.
 Workforce management for shift management.
 Automation of back office processes.
 Cash scanner changes.

Human Resources

There are 14,000 workers in total that Jumbo provides employment. According to
the salaries paid in Cencosud supermarkets, the extension of the working day will imply

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an extra (taxable) income that will fluctuate between $1,200 an hour (for an employee
who earns little more than the minimum wage) and $2,400 (the highest paid ).

CENCOSUD has a "Code of Ethics" which reflects the corporate principles and values,
being a guide on internal coexistence and relationships with clients, consumers, suppliers,
shareholders and society in general. The Code for CENCOSUD constitutes the cornerstone of
the way of acting without leaving aside the identity of each of the divisions (Paris, Easy, Jumbo,
Santa Isabel)

Training

Jumbo delivers and gives its workers the opportunity to deliver courses or training
through technical institutes and universities, such as certification in the use of technology and
computer tools, in addition to updating knowledge in the use of ICTs through university Santo
Tomas.
It also provides training in leadership development that has helped us provide the talent
that our organization requires to face the future. An example of this is our Operation Trainees
programs where hundreds of young professionals prepare to take on the management of our
stores.

Corporate culture

Jumbo's culture is strongly rooted in the values with those of the founder, Mr. Horst
Paulmann, who believes that there is simply no key to success but that everything is in the
hands of the attitude that the people of the company have and these attitudes are: desire,
courage, being consistent, coherence and perseverance, and tries to transmit the thought to all
its employees. According to Paulmann, “knowing how to run a business is learned the hard way
in the university of life.”

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 We recognize that organizational culture is a result of the history, traditions, practices,
and rituals of the country at the national level. We aspire to cultivate culture by aligning it with its
brand positioning and image for its consumers, achieving its own identity appropriate to its
strategy. We build culture through leader development, communication, training and
development programs, evaluation and incentive mechanisms.

We aspire for our business to carry a distinctive “seal”. Being part of this group
generates certain obligations, because we share certain beliefs; certain principles associated
with serving our clients with passion, relating to everyone with respect, transparency, closeness
and trust, always thinking like owners, actively seeking opportunities to learn, and being creative
and innovative.

Corporate identity

We seek to make our operations profitable and expand through organic growth in
the markets where we have a presence. Favorable demographic characteristics,
sustainable growth in household consumption, low formal retail penetration and solid
macroeconomic environments. As a complement to our core business, we are actively
involved in the development of the commercial real estate business in the region;
particularly in Chile, Argentina, Peru and Colombia with 29 shopping centers, which
represent 756,264 m2 of surface for lease as of December 31, 2013. We also offer our
own brand credit cards,

It has a solid and clear commercial positioning in the medium and high-income
segment, which has allowed it to maintain positive sales margins above the industry
average. Jumbo offers a varied assortment of products, including food, groceries and a
wide range of items, such as: clothing, household items and appliances. In addition to
traditional brands, Jumbo offers its own brand products, which have achieved a solid
commercial positioning, mainly associated with variety and excellent quality.

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Production

Technologies

One of the main technological advances in which we should invest is the braille code
system in all jumbo stores since this will achieve greater integration of blind people. Another
improvement to consider is the inventory measurement system in sales locations since it
increases the speed of new merchandise orders. This reduces the time that elapses between
inventory measurement and dispatch of the new order in order to achieve rapid replenishment
and not run out of stock of products. This encourages the distributor to reduce their inventory
levels, since ultimately these act as a substitute for information.

In this way, they tend to increase the frequencies of merchandise shipments. If it is also
assumed that there are economies of scale in the offices, then it follows that the optimal size of
the premises must be larger and this increases the tendency of supermarket chains to
hypermarket clustering since a larger infrastructure is required, which that would represent a
threat to the industry.

Scale economics

By being part of the cencosud holding company, Jumbo acquires certain advantages
when purchasing its merchandise.

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 Along with the hypermarket, the holding company has smaller supermarkets such as Santa
Isabel. In this sense, the volume of merchandise they buy is much greater, which translates into a
lower acquisition cost (economy of scale). Along with this, for this type of economy to work, it is
necessary to have an effective management and control plan, since that if we bought more than we
can store we would face a lack of economies of scale. This is why jumbo has its own warehouses
which allows it to store a large amount of products which are distributed to its different branches. It
is also necessary to maintain a good relationship with suppliers since they are the essential part of
the entire product buying and selling process.

Within the range of hypermarkets or rather the holding companies to which they belong, they
all have economies of scale. On the Cencosud side we find Jumbo and Santa Isabel, on the Wal-
Mart side we have what is Leader, Leader Express, Ekono and Cuenta Supermarkets. In this
sense, it acquires a much greater advantage over Tottus since they only have one line of
supermarkets and also over smaller supermarkets.

Experience curve

Pioneers in the hypermarket format in Chile, with the opening of the first Jumbo in
1976. Since then, we have expanded and increased our supermarket division, and as of
December 31, 2013, we owned a total of 37 hypermarkets and Jumbo supermarkets.

Production capacity

Quality products, like homemade.

The quality and freshness of food is a constant concern at Jumbo. For this
reason, our food technology professionals carry out a rigorous selection and monitoring
of the raw materials used in our own products from their production source and the
manufacturing process to their location on the shelf with the final product.

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 Raw Materials

Jumbo really does not have a channel since it is the intermediary between the
supplier and the final consumer, which delivers the products to the current customer
and has the opportunity to give an advantage to the potential customer.

Patents

Developing own brands such as Krea Hogar y Textil, Tunnel, Alpes Outdoor,
Savia Nativa, Neü Mobel, Roots Outdoor Furniture, Global Home & Alaniz Home.

Marketing

Market penetration

Jumbo uses the differentiation strategy, with the quality and variety of its product
assortment and the level of its service which had to be of high quality. It has demanding clients,
a large and mature market.

Marketing manager:

 Varied, extravagant and imported products (greater brand value)

 Physical layout planning (always available)
 Satisfy customer needs

COO:

 Have products at low prices (national and international)

 Coordinate with mkt manager.

R&D Manager:

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  Own brand products with standards to achieve differentiation.

Manager Control management:

 Align to achieve common goal.

 Worry that quality standards are met (customers)
 Communicate relevant information to senior management in order to maintain the
goal, evaluating and influencing different managers to align their behavior.

Customers

ABC1 level sectors but also being able to penetrate the c1 and c2 market with a strategy
of integrating premises in popular communities such as Puente Alto or Maipú. As well as in
regional stores.

Jumbo customers recognize the supermarket for its quality of service and its products,
they are characterized by their loyalty, which is why their visits to the establishments are
periodic.

Product portfolio

Jumbo Hypermarket

Locker room:

• Tunnel

• Club Maxx

Home and Decoration:

• Krea and Krea Kids

Electronics:

• Global Home

Baby section:

32
 • Baby Place

Edibles and Drinks:

• Jumbo Products

• Kontiki Products

Variety of products, they have their own production, imported (1,700 SKUs from more
than 20 countries), functional (celiac, diabetic, hypertensive), organic (vegetables and wines),
own brand (More than 1,000 SKUs, it is the best-selling brand in our premises; leader in oils).

Competitive advantages

Jumbo is one of the largest hypermarkets in the country, but that doesn't mean
we don't have a competitor. But we cope by making a difference. Between the variety
and the own brand products, we can say that we have the largest variety on the market
since our motivation is customer service. Seeing you happy and that you always find
what you are looking for and if you look for it and don't find it in our location. We bring it
for you.

 TECHNICAL SHEET BY PRODUCT : each product has its technical sheet of

origin and processing, from fruits and vegetables to electrical products.
 INTERNAL USEFUL LIFE MANUAL : All products have a useful life, whether
perishable or non-perishable items. In this case, through studies we predict an
estimate of their useful life.
 SUPPLIER CERTIFICATION PROGRAM : Because our customers are the most
important thing, we have certified suppliers to provide confidence in all our
products.

VARIETY

 OWN PREPARATION: We have the widest variety of products made and

harvested by us, from vegetables, wines, rice and appliances.

33
  IMPORTED: We have the widest variety of products with more than 1,700 Skus
from more than 20 different countries. We have the widest variety of beers and
meats on the market
 FUNCTIONAL: Celiacs, diabetics, hypertensives. Because we know how difficult
it can be to find a product that suits you. We include them in all our stands to
make your life much easier
 ORGANIC : Because you deserve the best and freshest, our vegetables will
always be the best quality
 OWN BRAND: More than 1,000 Skus at your disposal only in own brands.

BAKERY

We are the hypermarket with the largest bakery in quantity and variety, more than 2MM
kilos per month, 52 types of bread produced in each location and with a permanent
development of products that set trends. (CHIA, SALT REDUCTION, RAW MATERIALS
WITHOUT CHOLESTEROL AND WITHOUT TRANS FATS)

CECINA FACTORIES

Our cured meat factory is recognized within hypermarkets as the most varied. We sell
about 60 thousand kilos of artisanal cured meats per month, 24 types of products made in our
factory and so that you know what you are buying, we have an outstanding tasting panel where
you can try our products before taking them.

Quality of service.

We work to be one of the most profitable and prestigious retailers in Latin

America. Every day we concentrate our efforts to ensure that our customers have a
superior shopping experience. We work with respect for the communities with which we
live.

 The supermarket's commitment supports the Jumbo experience.

34
 1-They will refund you double if the product does not satisfy

2- If it is not there, the customer writes the product in the box and they get it for
you

3- More availability of boxes in the sales room

7 consecutive years winning service excellence

Image of products and brands.

Jumbo, as one of the largest hypermarkets in the country, seeks to add a value
proposition, quality and service in each of the products it sells. That is why every product that
jumbo sells represents quality. Within the range of products that jumbo sells we can find, for
example.

“Zeitun” extra virgin olive oil

35
 It is a national product recognized throughout the world. This product could initially be
purchased only in the place where it was produced. In the foothills near Rengo. But thanks to
jumbo's efforts, you can find this product on their shelves.

That is what Jumbo wants to convey, unlike other hypermarkets who seek to sell
volume. Although some of their prices are higher than the average of their competition, quality is
paramount.

Innovation

Jumbo creates innovation in its customer service, through the implementation of online
purchases, creation of QR codes in sales shelves that are used to know prices and the total cost
of purchases, creation of reusable and biodegradable bags

With this, jumbo hopes that customers will be loyal since the supermarket will make their
daily tasks easier, that the service will provide several tools to personalize the shopping
experience and say that jumbo is transparent and is not afraid to bring prices closer to buyers.
At the same time, it generates loyalty in clientele that is friendly to the environment.

36
 Costs and prices
Financial situation as of December 31, 2010 and 2011 expressed in thousands of
pesos.

37
38
Income Statement of December 31, 2010 and 2011 expressed in thousands of pesos.

HORIZONTAL ANALYSIS
ASSETS 2010 2011

39
CURRENT ASSETS
Cash and cash equivalents 100 126.91
Other current financial assets 100 89.42
Other current non-financial assets 100 54.41
Trade debtors and other current accounts receivable 100 114.01
Accounts receivable from related entities, current 100 -
Inventories 100 135.68
Current tax assets 100 111.01
Total current assets 100 121.09

NON-CURRENT ASSETS
Other non-current financial assets 100 1354
Other non-current non-financial assets 100 89.42
Non-current rights receivable 100 156.85
Investments accounted for using the equity method 100 113.05
Intangible assets other than goodwill 100 112.4
Capital gain 100 98.87
Property, plant and equipment 100 131.01
Investment properties 100 110.36
Deferred tax assets 100 125.65
Total non-current assets 100 117.85
Bank assets
Credits and accounts receivable from clients 100 99.7
Other assets 100 111.49
Total banking services assets 100 101.31
Total assets 100 118.13

PASSIVES 2010 2011

CURRENT LIABILITIES

40
Other current financial liabilities 100 85,6
Trade accounts payable and other accounts payable 100 121,12
Accounts payable to related entities, current 100 149,22
Other short-term provisions 100 58,26
Current tax liabilities 100 152,92
Current provisions for employee benefits 100 127
Other current non-financial liabilities 100 89,34
Total current liabilities 100 113,55

NON-CURRENT LIABILITIES
Other non-current financial liabilities 100 135,77
Non-current liabilities 100 108,7
Other long-term provisions 100 210,37
Deferred tax liability 100 120,11
Other non-current non-financial liabilities 100 273,63
Total non-current liabilities 100 136,92
Bank liabilities
Deposits and other term deposits 100 98,64
Other passives 100 97,78
Total liabilities banking services 100 98,53
Total liabilities 100 123,8

NET WORTH
Issued capital 100 100
Accumulated earnings 100 114,58
Share premiums 100 100
Other reserves 100 81,18
Equity attributable to the owners of the controlling company 100 109,93
Non-controlling interests 100 127,12
Total assets 100 110,41

Total assets and liabilities 100 118,13

STATEMENT OF INCOME 2010 2011

122,1
ordinary activities income 100 8

41
 122,0
Sales cost 100 5
122,5
Gross profit 100 4
194,0
Other income, by function 100 4
132,1
Distribution costs 100 7
122,7
Administration expenses 100 3
115,2
Other expenses, by function 100 7
Other gains (losses) 100 8,126
Financial income 100 63,56
171,7
Financial costs 100 5
Share of profits (losses) of associates and joint ventures accounted for using the
equity method 100 76,97
482,7
Exchange differences 100 1
199,8
Result per readjustment unit 100 4
110,0
Profit (loss) before tax 100 7
Income tax expense 100 156,5
Profit (loss) from continuing operations 100 98,46

INCOME STATEMENT BANKING SERVICES

Net interest income and adjustments 100 80,92
Provision for credit risk 100 61,07
Total net operating income 100 87,03
Administration expenses 100 99,51
Total operating expenses 100 99,51
Operational result 100 62,37
Profit (loss) banking services 100 62,37

Lost profit) 100 97,37

42
 VERTICAL ANALYSIS
ASSETS 2010 2011

CURRENT ASSETS
Cash and cash equivalents 1,62 1,74
Other current financial assets 0,8 0,6
Other current non-financial assets 0,36 0,16
Trade debtors and other current accounts receivable 12,25 12,57
Accounts receivable from related entities, current - 0,001
Inventories 8,93 10,25
Current tax assets 0,36 0,34
Total current assets 24,32 24,93

NON-CURRENT ASSETS
Other non-current financial assets 0,05 0,62
Other non-current non-financial assets 0,41 0,47
Non-current rights receivable 0,97 1,29
Investments accounted for using the equity method 0,54 0,52
Intangible assets other than goodwill 6,7 6,65
Capital gain 16 13,35
Property, plant and equipment 27,13 30,08
Investment properties 18,68 17,46
Deferred tax assets 1,91 2,03
Total non-current assets 72,65 72,47
Bank assets
Credits and accounts receivable from clients 2,61 2,21
Other assets 0,41 0,39
Total banking services assets 3,03 2,6
Total assets 100 100

43
PASSIVES 2010 2011

CURRENT LIABILITIES
Other current financial liabilities 4,8 3,48
Trade accounts payable and other accounts payable 20,1 20,6
Accounts payable to related entities, current 0,01 0,02
Other short-term provisions 0,42 0,21
Current tax liabilities 0,73 0,8
Current provisions for employee benefits 0,83 0,9
Other current non-financial liabilities 1,25 0,94
Total current liabilities 28,04 26,95

NON-CURRENT LIABILITIES
Other non-current financial liabilities 21,82 25,07
Non-current liabilities 0,16 0,15
Other long-term provisions 0,45 0,8
Deferred tax liability 4,08 4,15
Other non-current non-financial liabilities 0,47 1,1
Total non-current liabilities 26,99 31,28
Bank liabilities
Deposits and other term deposits 2,29 1,91
Other passives 0,34 0,28
Total liabilities banking services 2,63 2,19
Total liabilities 57,66 60,43

NET WORTH
Issued capital 14,6 12,36
Accumulated earnings 22,97 22,28
Share premiums 7,51 6,36
Other reserves 3,93 2,7
Equity attributable to the owners of the controlling company 41,16 38,3
Non-controlling interests 1,18 1,27
Total assets 42,34 39,57

Total equity and liabilities 100 100

44
STATEMENT OF INCOME
ordinary activities income 100 100
Sales cost 71,82 71,74
Gross profit 28,18 28,26
Other income, by function 0,71 1,12
Distribution costs 0,18 0,19
Administration expenses 19,6 19,68
Other expenses, by function 1,96 1,85
Other gains (losses) 0,17 0,01
Financial income 0,27 0,14
Financial costs 1,28 1,8
Participation in the profits (losses) of associates and joint ventures 0,12 0,07
Exchange differences 0,03 0,13
Result per readjustment unit 0,25 0,41
Profit (loss) before tax 6,14 5,53
Income tax expense 1,23 1,57
Profit (loss) from continuing operations 4,91 3,96

BANKING SERVICES RESULTS STATEMENT

Net interest income and adjustments 0,57 0,37
Provision for credit risk 0,13 0,07
Total net operating income 0,43 0,31
Administration expenses 0,41 0,32
Total operating expenses 0,41 0,32
Operational result 0,03 0,01
Profit (loss) banking services 0,03 0,01

Lost profit) 4,95 3,94

45
 FINANCIAL ANALYSIS
REASONS 2010 2011

Liquidity ratios
Current ratio 0,8671 0,9246
Quick reason 0,5487 0,5443

Reasons for activity

Inventory rotation 7,8448 7,0566
Total asset turnover 0,9752 1,0086

Debt ratios
Debt ratio 0,5766 0,6043

Profitability ratios
Gross profit margin 0,2818 0,2826
Operating profit margin 0,073 0,067

Distribution channels

Jumbo really does not have a channel since it is the intermediary between
the supplier and the final consumer, which delivers the products to the current
customer and has the opportunity to give advantage to the potential customer,
although it is forced and will be responsible for storing, handling and preserve the
merchandise delivered by the supplier subject to all legal or regulatory health and
safety standards in force and with the due degree of diligence and care.

46
 Logistics

Jumbo has a distribution center in the Pudahuel commune, which is where they store
electronic products, clothing, and things other than food (perishable and non-perishable). They
have agreements with logistics companies to ship products from the distribution center to the
different sales rooms.

In the case of mega suppliers (Nestlé, Unilever, agrosuper, etc.), when they are perishable,
they ship directly to the sales rooms. And when they are non-perishable, they are sent to the
distribution center.

Diagnosis of the Situation

47

STRENGTHS
1.- The Jumbo supermarket belongs to
the Cencosud company, which gives it
a great image in front of consumers,
transmits confidence to them because
they belong to a recognized company
and this causes consumers to be sure
that the products they offer within of
the supermarket must be of good
quality since otherwise it would
seriously damage the image of the
company.
2.- It has a distribution center for
centralized purchases, introducing own
brands with high demand and good
margin of its sales spaces.
3.- Standard price chain and with a
wide variety of additional and specific
services.
4.- Pioneer in the implementation of the
mega market format, taking advantage
of economies of scale, incorporating
other higher-margin product categories
and achieving high negotiating power
with suppliers.
5.- It has professional management
and good locations in middle and
mostly high-income sectors of
Santiago, and has the land necessary
for its growth plan and a solid technical
and financial capacity.
6.- The supermarket accepts all types
of payments, whether with cash, cards,
checks, which reflects great flexibility
when looking for a payment method, so
the consumer is not obliged to pay in
any specific way. . On the other hand,
if you use the supermarket card you
can accumulate points that can be
redeemed in the future.
7.- Have your own brands, which
avoids intermediation costs and allows
you to sell at lower costs than
SWOT
WEAKNESSES
1.- Bad relationship with suppliers due
to aggressive purchasing and sales
price policies.
2.- Few sales rooms in regions. They
are not yet able to focus on all
socioeconomic levels, which is why
there are still many customers who
prefer to go to other places to purchase
the products they need.
3.- By having many suppliers it is
difficult to have absolute control over
them both in terms of customers and
financially.
4.- Poor resolution of customer
problems.
5.- Difficulty in changing the internal
mentality in a culture that has been
installed for years.
6.- Problems with your Jumbo card due
to its high interest rate and ambiguities
in billing accounts.
7.- Problems with unions. If the
workers go on strike again demanding
poor working conditions and unfair
payments, Jumbo's reputation could
fall, making it visible to customers as
an unfair supermarket that only cares
about the profitability of senior
management.
48
traditional brands and also allows you
to differentiate yourself from the
competition.
8.- There is a very noticeable order
within the distribution of products in the
supermarket, allowing consumers to go
specifically to the area of the good they
wish to buy, saving them time
searching for said products .
OPPORTUNITIES
1.- Concern for the environment,
sustainability, in short corporate
responsibility, is becoming more and more
fashionable, which is why Jumbo should
take this opportunity to give more
emphasis that it is a company that really
cares about quality of life.
2.-There could be possibilities to expand
further abroad due to the current success
of being one of the most recognized
supermarkets in Chile, and thus form
alliances with other companies.
3.- The customer seeks to buy fast,
gourmet foods inside supermarkets.
4.- Greater acceptance of people towards
supermarkets' own brands.
5.- Incorporation of new formats such as
telemarkets, and created the development
of credit to clients and incorporation of
organizations as clients
THREATS
1.- Within the food retail distribution
industry, competitors could appropriate
the concept of sustainability, making
the differentiation that Jumbo has
against other companies disappear.
3.- Market volatility. If the prices of
some products change too much in the
future, this will affect suppliers,
customers and the company itself.
4.- New competitors are a direct threat
since they are governed by them with
respect to their prices and the
improvement of their service, achieving
successful entry and development of
international chains (Tottus, Wal-Mart,
etc.), thus increasing the negotiation
capacity of suppliers.
5.- Economic crises; since if there were
economic crises in the jumbo country it
would be affected by the decrease in
its sales.
7.- Exhaustion of land suitable to
absorb market growth
8.- Government regulation of business
expansion possibilities (credit, new
categories, low-cost pricing policies,
etc.).
9.- Reaction of suppliers to their loss of
negotiating power (eliminate leading
chain products: Coca Cola, Nestle,
Lucchetti, Confort, etc.), thus creating a
possible association between
themselves.
10.- The prices of their competitors
49
 since they would be their substitutes
and these prices can lead them to lose
a large number of customers if the
difference between their prices and
those of other supermarkets is very
high .

Marketing objectives

After the SWOT analysis was carried out and the strengths and weaknesses of the company
and the competition were determined. You can set a new goal in the company:

50
 a) Give greater publicity to self-made products
b) Improve the profitability of jumbo through an increase in income from the sale of greater
volumes of self-made products.

Detail steps to follow:

a) Strengthen advertising and positioning of self-made products :

Jumbo has a wide range of products, but its main defect is selling them as an alternative good,
the idea is to transform that and create them into first-class goods, that is, they are on par with
the rest of the products.

b) Improve profitability by increasing the sale of larger volumes of self-made products:

Give greater importance to own brand products, position them in better locations and be able to
sell them in large quantities. With this we will achieve lower production costs and a higher
margin when they are sold.

Marketing strategies

To achieve the previously proposed objectives, Jumbo must create the following
strategies in order to reach the end of the period with satisfactory results.

51
 In development strategies:
Jumbo must have a differentiation strategy, promote its own products and position them within a
Premium segment, so that people stop thinking that they are an alternative product by exposing
the superior characteristics compared to competitors.
At the same time, a cost leadership strategy is also prudent since by promoting and promoting
self-made products, low manufacturing costs and sales prices relatively similar to those of the
competition are generated, which helps us carry out the advertising and promotion of products
for a greater profit margin that is occupied in these two policies.

Competitive strategies

Jumbo, by not dominating the product market, must create advertising and promotion
aggressively and increase the quality of its own products in order to increase sales volumes
and create consumer loyalty to its own brand. Challenger strategy.

Growth strategies

The strategy to be used will be to penetrate current markets with existing products, jumbo
through the previous strategies, seeking to capture new consumers of its own-made products
and increase their purchases.

Segmentation and positioning strategies

Segmentation strategies:

52
The strategy used by Jumbo is undifferentiated since the company addresses all segments
with a single offer and positioning.

Positioning strategies:
Your positioning strategy would be its quality, its variety of products, its differentiation; and this
applies to their own products of good quality and variety.

Marketing mix

Product: Jumbo's own brands. They will be manufactured with selected products that detail their origin
and manufacturing process. These will be differentiated from the rest through their packaging, which
will be modified. The green packaging characteristic of the supermarket will be changed to a black one,
which will seek to create a status for the product.

53
Price: The price setting will be to achieve maximum market penetration, where the product will be
“relaunched” with an attractive hook-up promotion price which will be for a limited time.

Distribution : The distribution of the product will be carried out mainly in the hypermarket chain stores,
its main advantage is that it will be accessible to all types of public without the need for any special
requirements. It will also give you the option to make your purchase and subsequent delivery through
the internet where the main benefit will be to avoid all kinds of lines.

Communication

Advertising : It will be carried out through internet advertisements (pop up) which will be displayed on
pages related to food, recipes, etc.

Public relations: Tastings, fairs and exhibitions will be created with the re-launched products

Sales promotion: Discounts will be generated depending on the day of the week or lightning offers
where the product will be at a considerably lower price compared to its similar products.

Direct marketing: Personalized emails where the product will be promoted.

Action program

Gannt Chart

PROJECT PLANNER
PERIOD

54
 Department in Budget to Janua Februar Marc
Actions
charge use ry y h April May June

xx
Creation of External marketing
advertising company/jumbo
campaign for own marketing department
products

Hire a food

x
engineering
company that Jumbo Marketing
improves the Department
quality of self-
made products

x xxx x
Increase stock
volume of own Jumbo sales
products department

xxx
Tastings Sales
PR and marketing
room and free
department
samples

x
Evaluation of
Sales, marketing,
marketing
finance department
objectives

Control

The growth in sales volume of self-made products will be measured and how much
money was saved in relation to previous years due to the reduction of production costs
or the reduction of products that replace them.
These will be measured in money, units sold through a balance sheet when seeing the
profitability that these 6 months gave when comparing them with previous semesters.

55
 Action summary sheets

STRATEGY

1.1. ACTION: Creation of advertising campaign for own products

Try to attract new consumers and try to attract the attention of
Specific goal current consumers
Capture and attract through an aggressive advertising
Action campaign in the media
description

Calendar January February

56
Budget -

Priority 1

Marketing department and outsource the service with external

Responsible advertising companies

That sales of our own products increase and that of other

Cost of brands decrease
Chance

Analyze how advertising moves in the media

Indicator
Follow-up

STRATEGY

1.2. ACTION: Hire a food engineering company to improve the quality of self-
made products

Increase the quality of our own products

Specific goal

Reformulate self-made products with better raw materials but

Action maintaining the previous essence
description

January
Calendar

-
Budget

57
 1
Priority

Production departament
Responsible

Rising costs but better consumer acceptance

Cost of
Chance

In management meetings, self-made products are served to

Indicator notice the difference in flavor and the improvement in the quality
Follow-up of the products.

STRATEGY

1.3. ACTION: Increase stock volume of own products

Growth in production volumes of own products

Specific goal

Optimize the production process and purchase of new

Action machinery that helps meet the objective
description

Calendar February to June

-
Budget

58
Priority 2

Finance and production department

Responsible

The space that will be used for new self-made products

Cost of
Chance

Verification of monthly production volumes

Indicator
Follow-up

STRATEGY

1.4. ACTION: Tastings Sales room and free samples

Make known the reformulation of the products in terms of
Specific goal flavors
Culinary product demonstrations and sample giveaways
Action
description

Calendar January to March

Budget -

59
Priority 3

Marketing and Public Relations Department

Responsible

Jumbo expense for the use of free products but greater visibility
Cost of of own products is achieved
Chance

Surprise visits to Jumbo stores by a supervisor to demonstrate

Indicator if they are delivering these samples.
Follow-up

STRATEGY

1.5. ACTION: Evaluation of marketing objectives

Verification of goals met
Specific goal

Analyze quantifiable sales results

Action
description

At the end of june

Calendar

-
Budget

60
Priority 4

Department of Finance
Responsible

Does not have

Cost of
Chance

Analyze sales and verification of goals.

Indicator
Follow-up

Bibliography and web graphics

www.jumbo.cl
www.cencosud.cl
www.ine.cl

Fundación Sol supermarket report

http://www.fundacionsol.cl/wp-content/uploads/2010/09/Informe-Ditrab-
2007-Supermercados2.pdf

www.tecnomercado.cl
Case study “Supermarkets in Chile” Pontifical Catholic University of
Valparaiso Author; Rodrigo Vergara Barbagelata 2012

61
62