Nuova Accademia di Belli Arti Milano

BERSHKA IN BRAZIL

José Contreras
Julia Avancini
Maria José Gonzales
Marina Gallati

Fashion Marketing Communication

Milano/2012

THE BRAND

Bershka is one of the brands from the Inditex Group (which the sales represents 10% of the company), focus in the young public which like street style, music and art. The brand was created in April 1998 with a new conception of fast fashion and store, selling clothes just for women. In 2002 the company started to produce men collection too.
The brand can be a reference point for fashion targeting because in just 2 years has consolidated its brand image with 100 shops. Nowadays the brand has 785 stores in 54 countries, and shopping at Bershka offeres the newest and hippest 21st century trends to their clients.

MISSION

The reason why Bershka exist is to offer to their consumers the best trends of the fast fashion world with an urban style, bringing new products to the stores in a short time. Therefore, the brand wakes the desire of buy in their clients, because is updating frequently and offering new products with different design all week.

ENVIRONMENT

Brazil is a country that is growing in a lot of aspects, especially economic facts. With a World Cup in 2014 and the Oplympics in 2016, all world are paying attention and thinking in ways to invest there. Not only have that, but the media (movie and television) focused attention in the country in the last years too. For these reasons, the country is one of the world’s leading destinations for foreign direct investment, being an open country that encourages investment, having a significant role in the global economy. The country is the largest economic power of Latin America and the world’s 10th largest economy. Therefore, has a diversified and growing economy that plays a significant role in the global economy.

Political

Brazil has the Federative Republic type (with 26 states and a federal district), being an independent country since September, 7, 1822. Their branches contain: Executive–president (chief of state and head of government popularly elected to no more than two 4-year terms), Legislative–Senate (81 members popularly elected to staggered 8-year terms), Chamber of Deputies (513 members popularly elected to 4-year terms) and Judicial–Supreme Federal Tribunal (11 life time positions appointed by the president). In the country exists a lot of political parties like: Workers’ Party (PT-center-left), Democrats (DEM-center-right), Brazilian Democratic Movement Party (PMDB-center) , Brazilian Social Democratic Party (PSDB-center-left) , Green Party (PV-left) , Socialism and Freedom Party (Psol-left) , Brazilian Labor Party (PTB-center-right) , Brazilian Socialist Party (PSB-left), Democratic Labor Party (PDT-left) ,Communist Party of Brazil (PCdoB-left). The ex-President, Lula, has made the economic growth and poverty alleviation top priorities, and the current President Dilma Rousseff (of the same political party), continues with the same idea. Other important point is the exportation, and to increase the government is seeking access to foreign markets through trade negotiations and increased export promotion as well as government financing for exports.
Economy

Brazil is recognized to has a lot of natural resources (Iron ore, manganese, bauxite, nickel, uranium, gemstones, oil, wood, and aluminum), agricultural production (coffee, soybeans, sugarcane, cocoa, rice, livestock, corn, oranges, cotton, wheat, and tobacco) and industry (types–steel, commercial aircraft, chemicals, petrochemicals, footwear, machinery, motors, vehicles, auto parts, consumer durables, cement, and lumber). Generally, Brazil is open to encourage foreign investment, being the largest recipient of foreign direct investment. Nowadays, the economy of the country is on the rise, and because of the natural resources Brazil became the most powerful country of South America.

Social

The country has the largest population from Latin America, and ranks fifth in the world. In the nation of the Americas, Brazil is the only place which the people speak Portuguese language, having different ethnics groups like: Italian, German, Spanish, Japanese, Indigenous people and African. About religion, 74% of the population is Catholic, and 88% of adult population is literate. In recent years, Brazil underwent rapid urban growth. This aids the economy to grow more, but also creates serious social, political problems, security, environmental for major cities, in a place where not all systems work properly.
Brazilians spend a lot of time on reading fashion magazines, watching television programmes and, consequently, soap operas have a big influence on the way they dress. Due to the fact that the A and B population segments are increasing in Brazil, the market for luxury goods is also expanding rapidly and is becoming a strong source of profits. As Brazilians are experiencing more stability, prosperity and general changes in social classes, they are now capable of buying products that were previously too expensive, which is partly why the demand for trendy and sophisticated high-end fashion is increasing.

Environment

Brazil is suffering for lack of transport infrastructure such as railways and the poor quality of roads, but these points have been seen as a major obstacle to economic growth, but investment in infrastructure more recently become a priority the Government launched a program to develop infrastructure called the growth Acceleration Program (CAP) to address the country's highways, railways, energy supply and infrastructure needs. The recent development includes the construction of two new railways linking central Brazil to ports in the states of Rio de Janeiro and Bahia, and the construction of Açu Superport, a port and industrial complex and a half times the size of Manhattan Island, which should be completed by 2012 addition, the country also lacks reliable and affordable energy. Most of the country's energy is produced from renewable sources, particularly power plants that provide four fifths of Brazil's electricity. Entretando, the country is the world's fifth largest with a total area of 8.5 million square kilometers and has a good river system, with 7,500 km of coastline, the country also has abundant reserves of natural resources such as iron, copper, nickel, manganese, or tin. Brazil represents 2.5% of the world and many regions still unexplored, with an estimated gold reserves of 2000 tonnes.

Technological

Brazil is a global leader in areas such as biofuels and deepwater oil and a leader in South America in science and technology. The Brazilian government is trying to develop and support innovation in companies, providing incentives to increase innovative activities, facilitating scientific and technological research by private companies and encouraging collaboration between the public and private sector. Therefore the mining industry has benefited from government support. Sixteen universities now offer courses in geology, geochemistry and geostatic and seven offer degrees in mining engineering.

Legal

Brazil ranks as one of the world’s leading jurisdictions for mining investment but because of its complex federal legal structure, the regulation in this area is bureaucratic, inconsistent and lacks certainty.
Brazil has also implemented strict environmental regulations. The regulations of environmental aspects of mining at both federal and local level and the inconsistencies between regulations in different states can create confusion and duplication in the application procedures.
The Brazilian tax system is also a matter of complexity. Brazil comprises numerous federal, state and municipal taxes. The law does not distinguish between domestic and foreign owned companies. Companies are generally subject to tax at a rate of 25% (15%, plus an additional tax of 10% on profits exceeding 240,000 BRL), plus social contribution tax equal to 9% of accounting income.

MARKET ANALYSIS

Introduction

Brazil is claiming its place on the global stage, and interestingly, fashion is playing a major role in the country’s ascension. Significantly, the tremendous energy in Brazil’s fashion market is flowing from both inside and outside the country. There are numerous Brazilian ready-to-wear and accessory brands which have been highly successful with domestic consumers and are now setting their sights outside Brazil. For global fashion brands, Brazil is a land of opportunity. Just in 2010, Diane von Furstenberg, Missoni, Chanel, Gucci, Louis Vuitton and Burberry made, or were making, large investments in the country, opening stores in major urban centers — mostly in São Paulo, but also in the capital city Brasilia, a fast-emerging market for luxury goods, and in Rio de Janeiro; number one in the rank of employers within this sector. These three locations should have the attention when talking about fashion in Brazil, but other centers should not be put aside.
This moment of optimism can easily be seen in Brazil when you walk around Brazilian high-end boutiques and malls packed with customers who are spending intensively, and when you feel the creative energy and optimism at Fashion Events in the country. Three of those events should have more attention in Brazil, namely São Paulo Fashion Week, the biggest in the country; Rio-à-Porter and Fashion Business (also in Rio de Janeiro), this last more business oriented. But it is also clear that the current boom has not happened overnight. Instead, Brazil’s rise as an important fashion market results from a complex set of interconnected conditions, many of which have been a long time in the making.

Macroeconomic Facts

Before making an assessment of the Brazilian fashion industry, it is necessary to discuss some macroeconomic and demographic facts having an impact on the fashion market. Brazil has recently slowed down from the very strong economic growth displayed in the two first quarters of 2011. This widely reflects the withdrawal of fiscal stimulus and changes in monetary policies. However, with growing salaries and the continuous drive towards credit expansion, principal consumption economists expect a rebound. The newly elected government is, furthermore, committed to massive infrastructure investments that should help lift growth rates in the coming years.
The economy of Brazil is the seventh largest in the world. Having abundant natural resources, Brazil has become the most powerful country in South America in economic terms. The growth for Brazil in 2010 showed a massive increase of 7.7 % and although this level shall not be seen as a sustainable long time trend, growth is expected for the coming many years on an average of 4.5-5.5%. The domestic demand is also accelerating at an enormous pace, which is an important reason why imports are increasing. Major industries are textiles, shoes, chemicals, aircraft, steel, motor vehicles, etc. Agricultural products include coffee, sugarcane, soy beans, orange juice, wheat, rice etc.
Brazil with its population of almost 200 million dynamic economy dominates South America both in size and economic strength and with its new found wealth and prosperity the middle and upper class of society has increased immensely. Most of the wealthiest people in Brazil live in São Paulo and the city states that there are more billionaires in São Paulo than the rest of South America combined.

Demographic Overview

During Lula’s time as president, the living standard of the Brazilian population has improved substantially. The poorest segments of the population are referred to as E and D classes, the middle class as C, whereas the richest are A and B classes. In the last decade a lot of the Brazilian people moved from the segments E and D into group C, which is the middle class of Brazil, and although not compatible with European standards, still gives a boost in the purchasing power. Segment C of the Brazilian population now accounts for approximately 93 million people, and the income of a family from the C class ranges between 1.115 and 4.808 Reais (USD 660 and 2.840) a month. In 2014 the middle class is expected to increase to 113 million people, which will be 56 % of the total population.
More than 20 million people have been lifted out of poverty during Lula’s presidency, and his successor Dilma Rousseff has promised to lift out further 20 million. The different social classes ranging from A to E and the development hereof can be seen in the figure below. The richest classes A and B are increasing each year and are estimated to increase by 16 % until 2014, ending at 31 million people.XBrazil has historically had a very favourable demographic structure, with a large share of the population in working ages.
Demographic development is expected to continue although with a tendency of more people in the group above 60 years of age. The demographic development in the long term is beneficial and positive for growth in the market for upper-price and luxury goods as it is often people in the ages 30-60, who buy luxury goods and are loyal to brands.

Cities Strong on Fashion Consumption in Brazil

In 2011, approximately 20 million people of the Brazilian population were classified as segments A and B, which estimates an income of above USD 2.800 a month. It should be noted, however, that the part of the Brazilian population belonging to segment A has a significant higher income than USD 2.800 a month. Most of these people live in the major cities, mainly São Paulo, Rio de Janeiro, Brasília and Curitiba. These areas should therefore be the target market of luxury companies wishing to enter the Brazilian market, with core focus on São Paulo and Rio de Janeiro. In addition, upper-price and luxury goods are primarily sold in upscale shopping centers in Brazil. The best known upscale shopping centers in São Paulo are Cidade Jardim, Daslu Mall, Shopping Iguatemi and MorumbiShopping. Furthermore, a survey has shown that when it comes to the buying patterns of the Brazilian high-end consumer, customers spend on average USD 1.700 on every visit to shopping mall Cidade Jardim; an amount equivalent to more than three times the minimum wage in Brazil.

Social - Consumer Behaviour

Brazilians, especially women, like to pay attention to fashion trends by reading fashion magazines and watching trendy television programmes. Brazilian women dress elegantly in skirts, dresses and tops preferring colour over monochromatic styles, whereas men dress more casually, tending to wear jeans and a shirt but also liking colours. Workplace clothing is formal and very conservative. People dress differently at different occasions and are very conscious of wearing the right clothing. As an example people dress casually for everyday tasks but very formally when going to work or special events. Brazilians spend a lot of time on reading fashion magazines, watching television programmes and, consequently, soap operas have a big influence on the way they dress. Due to the fact that the A and B population segments are increasing in Brazil, the market for luxury goods is also expanding rapidly and is becoming a strong source of profits.
As Brazilians are experiencing more stability, prosperity and general changes in social classes, they are now capable of buying products that were previously too expensive, which is partly why the demand for trendy and sophisticated high-end fashion is increasing.

Conclusion

Throughout this analysis, it is apparent that there are tremendous opportunities within the Brazilian fashion industry. The Brazilian fashion market is expanding rapidly and Brazilians are becoming even more conscious about fashion trends as well as quality. With the high growth rate of consumer spending, an increasing number of international clothing brands are now targeting Brazil, introducing slightly modified selection of their brands in the country.
Concerning the three segments of the fashion industry touched upon in this paper, it seems as the segment of upper-cost and high quality clothing has the most potential for Danish clothing companies. There are numerous of Brazilian companies present on the market within this market segment. However, since imported goods, especially from Europe and the United States of America, are very lucrative and of high demand within Brazil, Danish companies should certainly take into consideration the Brazilian market.
In our perception many consumers will purchase our brand because the 74% of the population know the brand and the 54% have bought at least one thing in Bershka and the 93% would like to have a store in Brazil So according with this research in São Paulo because most of the wealthiest people in Brazil live in São Paulo and the city states that there are more billionaires in São Paulo than the rest of South America combined, so that’s why we focus in Brazil but we are going to open the store in São Paulo, in this place we are going to open in MorumbiShopping Center because according to our research the 81% of the respondents to our questions are students between 18 to 25 years old and the students population in Brazil represent the 25% of the entire population; So this shopping center is located in front of the Biggest private university in São Paulo.

SWOT ANALYSIS

Strengths

* Ability to adapt to the customer: It continuously adapts to changing consumer demands. * Short Shelf Life: according to the new philosophy youth. No need apparel for several years, but for now and no matter that does not last too. * Policy of low prices, reasonable prices. * Reputation * Peace of mind when buying: The consumer is not trampled by employees while in the facility. You can go at your leisure. * After sales Advantages: ease of change of products. * Rotation of products: Design two new collections every week and is thus a widely varying demand. This is possible thanks to the flexibility of their production process. * Local downtown and International Expansion. * Diversification: Expanding the range of products and compete in other areas.
Weakness

* Saturation of the market * There are not enough large sixes * Inventories that do not cover the entire demand produces below estimated demand and sometimes consumers do not find what they are looking for. * Incurs large expenditures for rental of premises; it must be noted that being in the inner cities in the world involves a huge expenditure in terms of rents. * Do not have a database of the clients and with this, the company loses the opportunity to know the better. * Sometimes the elaborate garments with a reduced lifespan cause quality problems. * Huge lines when you are going to pay.

Opportunities

* Increasing interest of the personal image. * Technological development. * Economic recovery. * Diversification into related markets (Zara, Pull & Bear) * International expansion: increase sales. * National growth: increased shared of sales.

Threats

* Possible market saturation. * Emergence of economic problems in the store. * Other Inditex stores (Zara and Pull & Bear). * Imitation. * Demanding costumers.

Bershka stores are characterized by modern music in their establishments.

MARKETING OBJECTIVE

Maintain positive, steady, growth each month, Generate at least $40,000 in sales per month, this is a good starting prices in the beginning so we can determine how successful the store will be in terms of profit, besides that we want to experience an increase in new customers who are turned into long-term customers, realize a growth strategy in the store per year

Budget

| 1 month | 2 month | 3 month | 4 month | 5 month | 6month | total | Advertising | | | | | | | | Billboard | 8500 | 8500 | 8500 | 8500 | 8500 | 8500 | 51,000 | In Buses | 5000 | 5000 | 5000 | 5000 | 5000 | 5000 | 30,000 | In metro stations | 3500 | 3500 | 3500 | 3500 | 3500 | 3500 | 21,000 | In Radio | 4500 | 4500 | 4500 | 4500 | 4500 | 4500 | 27,000 | In Magazines | 6000 | 6000 | 6000 | 6000 | 6000 | 6000 | 36,000 | Direct MKT | | | | | | | | Internet | 1500 | 1500 | 1500 | 1500 | 1500 | 1500 | 9,000 | Facebook | 1600 | 1600 | 1600 | 1600 | 1600 | 1600 | 9,600 | P.R. | | | | | | | | Opening Party | | | | | | 150,000 | 150,000 | | | | | | | Total | 333 600 |

MARKETING STRATEGIES

Positioning a company entails choosing the best strategy that is viable in the long-term and able to face competitors and maximize long-term revenues. We chose 2 strategies in order to position its company:

1- Differentiation: Building a brand name via massive advertising in order to get the loyalty of the customer: this strategy concentrates on advertising and it rarely uses promotions to sell its products since promotions only attracts one-off customers who are searching for cheap bargains, customers who are looking for cheap bargains.
2- Cost leadership: this strategy involves selling products at discount prices in order to encourage customers buy more and attract new customers who are looking for cheap bargains.

Push Strategy

Depends on the company's sales force in creating demand for the company's products. Selling is one of the most important tools in marketing; having a trained and experienced sales force could put in place a successful marketing communications strategy.
Ask employees to contribute tunes and even model the clothes themselves, putting together outfit ideas. Create a theme, such as winter apparel when fall season hits, or offer ideas for an upcoming event in your city. Advertise the fashion show with fliers slipped into shopping bags and posted around the store's location, or take an advertisement in the newspaper. Offer attendees a list of all the clothes the models are wearing and stock up so supply will be grab-and-go after the show. Hire a professional stylist to be available during specific hours in your store.

COMMUNICATION OBJECTIVE

Since there is no Bershka store in Brazil, and we are going to be the first one there the company must focus on promoting and increasing brand awareness.
However the company has a strong presence in the market. That is why many people know through the Internet or in their travels to other countries, they go buy clothes.
Beshka is focused on young middle-class and upper low (B and C), for this reason the store will be located in one of the largest malls called “Morumbi” located in Sao Paulo, fifth fashion capital and second in America.
This mall is near universities, offices and residences so people will have the opportunity to go to the mall and try the clothes on, see the different trends and styles Bershka have so that’s how the company expects to increase awareness by 20%, and in return they anticipate a 30% increase in profit.

COMMUNICATION STRATEGY

Opening date: december 8th 2012

Our campaign will be focused in 6 months: 3 before the opening and 3 after the opening.

First 3 months (October, November, December): they will be signs in the street saying ''Bershka coming soon" and 'Bershka...wait for it". Also it will be Billboard, metro showing the clothes and the message. Using the radio for noticing that Bershka will e opening soon.

Advertising

Advertising is necessary in the beginning because it is the best tool to reach the mass target. This communication tool will only be used in the beginning to gain the mass awareness about the brand and the opening event.
The media that we are going to implement are: radio and print
Radio:
* Spots in the radio stations most tuned for the young population.
Print:
* Implementation of Billboards located in busiest streets in São Paulo. * Advertisements in the magazines most widely read by the young population, like Elle, Creativa and Gloss. * Advertisements printed outside and inside as well of the buses passing through the main streets, and at the bus – metro stations.

Direct Marketing

Direct marketing will be very beneficial because is personal and it will help to reach the targeted market in the best manner. Contact the costumers by email, mailbox and by social networks like Facebook and Tweeter.
Public Relations

Public Relations will be significant for the company in order to build good relationships with potential customers.
Once they develop this loyal relationship, consumers can associate a sense of trust with Bershka. The brand will use events and parties for their tactics. Bershka will make it their most important aspect to put on “out of the ordinary” events to make the brand stand out in a vibrant way.

Personal Selling

Will be a vital tool for Bershka. The workers will be young personal, conversational, nice, and caring about the customers. They will always make the customers feel welcomed and special that’s why we hire young personal to create an environment related with the students and the costumers feel identified with this environment.

BIBLIOGRAPHY

* www.bershka.com * www.inditex.com * http://www.sebraesp.com.br/Paginas/default.aspx * www.morumbishopping.com.br/ * http://grailresearch.com/pdf/ContenPodsPdf/Global_Fashion_Industry_Growth_in_Emerging_Markets.pdf * http://www.dmogt.dk/~/media/Files/dmt/dokumenter/Eksport/2011/Market%20analysis%20Brazilian%20Fashion%20Industry.ashx * http://www.marketingteacher.com/lesson-store/lesson-marketing-communications.html#