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Peru 2017 | Brand value proposition

THE GREAT DIFFERENTIAL IN TIMES OF ECONOMIC SLOWDOWN

 

The reverberations of the economic slowdown in Latin America are being felt by Peruvian consumers. This is despite the fact that Peru has the highest expansion rates in the region.

 

According to Kantar Worldpanel, the food and dairy sectors are experiencing the most signi cant decrease, especially among medium-low and low socio-economic segments, and in the provinces. In these areas, consumers are increasingly looking for a “good value” proposition.

 
 

OLIVIA HERNÁNDEZ

Client Management Director,

Kantar Millward Brown Perú Olivia.hernandez@millwardbrown.com

Olivia holds a BSc in Actuarial Sciences from Instituto Tecnológico Autónomo de México (ITAM) and an Applied Statistics Diploma and Management Skills Diploma, also from ITAM.

 

Olivia joined Kantar Millward Brown Mexico in 2005 and moved to the Peru office in 2012. She has over 20 years of experience in market research helping clients to build valuable brands and communication efficiency.

 

This creates a great challenge for brands, particularly those in FMCG. Through analysis of various categories using BrandDynamics™, we have found that in 2016, demand for a good price (28%) and quality/ performance (12%) have significantly increased.

 

This clearly suggests a constant search for a value equation. It is important to point out that Peruvian consumers are not only looking for lower prices. Inexpensive brands that don’t deliver good performance won’t be the ones winning the battle; instead, winning brands will be those offering consumers quality at a good price.

 

BALANCING THE EQUATION

Consumption of brands with prices higher than the category average might be impacted if they do not develop marketing strategies that create empathy with consumers, by being supportive and close. There are plenty of ways to do this. For instance, during the economic crisis in Argentina in 2002, the Skip brand of detergents increased the availability of smaller packs and also introduced cheaper large sizes, offering consumers a better value equation.

We are not suggesting price decreases, just as long as the brands deliver added value. This can be done by offering intangible benefits that are hard to replicate (“Premium”). Brands need to carry out tactical activities that in the medium term retain their consumers and in the long term become more significant, consolidating their brand power in preparation for when the economy recovers.