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GLOBAL 2016: Culture, improved quality, lower prices drive rise of local brands in Latam

Key actions will help multinationals dance to Latino beat

by Leticia Arslanian, General Manager
and Beatriz Portas, Strategic Planner
Geometry Global
Leticia.Arslanian@geometry.com / Beatriz.Portas@geometry.com
 
 
Global brands aim to remain relevant and competitive in Latin America while small local brands increasingly rise and engage consumers.
 
For Latinos, the importance of belonging to a community is extremely high. Peer acceptance and influences count more than an individual point of view on a decision-making process. The community values its local culture and local habits as a way to reinforce its identity in a globalized world. This sense of belonging is a cultural characteristic Latinos have inherited from post-colonial times, when together they had to build solid nations.
 
With that in mind, it’s not difficult to understand why local brands are able to create such a strong emotional connection with Latino customers. These brands usually sustain an equation that global competitors find hard to beat: cultural identity + improved quality + lower prices. Not surprisingly, over the few last years as the creative economy grew stronger, Latin America saw a huge rise of micro and small local businesses.
 
This created an even larger network of local services and products conceived by and for Latino consumers. According to the International Labour Organization (ILO), an agency of the United Nations, workers who were once employees of big companies started their own businesses, and many of them entered the informal economy. As a result, the ILO suggests that micro and small businesses are now the engine of job creation in Latin America.
 
On the other side, we have global brands thirsty to penetrate the Latin America region and gain share of market among Latinos. But these brands are still perceived by many consumers as expensive, faceless and rootless mega-corporations. So what can global brands do to remain strong and be more competitive in this scenario? Here are five tips to get a Latino beat:
 
  1. Enhance the sense of community and peer connection by climbing down from the pedestal and letting consumers participate on the business by reviewing, rating and co-creating products and services through smart digital strategies.
  2. Be the one to identify and embrace a local cause. Far from being chauvinistic nationalist movements, they are about supporting one’s neighborhood, one’s city, one’s region. For example, knowing that urbanization is accelerating and that public transportation is quite poor in Brazil, the bank Itaú created an integrated system of bicycles that are available all over the big cities, facilitating Brazilians’ everyday life.  
  3. Recognize and celebrate the local culture through marketing and design. As an example, Coca-Cola and Bradesco changed their iconic red colored brand to blue in order to celebrate a Brazilian tradition from the North called Parintins Festival.
  4. Work in partnership with local brands and help consumers find the small and micro businesses that can serve their needs. Claro Telecom, for example, is working in partnership with Brazil-based cosmetics company Natura to give Natura sales consultants free data to interact with potential customers via its app.
 
One last fact that, now more than ever, represents an opportunity for global brands to be popular with Latinos is the new arrivals of refugees and immigrants to the region. Latin America has become even more diverse and tolerant over the last few years. According to the UN, the total number of people who applied for asylum in Brazil has increased by over 930 percent between 2010 and 2013. In 2016, brands that promote new encounters, and serve the needs of newcomers as well as those who seek to welcome them, will probably win the love of many Latinos.