Brand Building in Latin America
As Markets Open and Competition Stiffens, Brand Image
Grows in Value
New York, October 13, 1999
Free from trade barriers and restrictive government regulations in Latin America, major local, regional and multinational companies are now aggressively promoting their brands and competing for the nearly 500 million consumers who live in the region.
"Mexico, Central and South America are rapidly evolving economically, and companies are increasingly focusing their efforts on branding and positioning," according to Barry Green, executive vice president of Lippincott & Margulies, a leading global brand image and identity consulting firm. "Previously, both domestic and international competition were hampered by government regulations and barriers to trade, resulting in narrowly defined markets and few consumer choices," he says.
As deregulation has taken hold and trade barriers have crumbled, Green observes that Latin America has become more enticing to world-class companies looking to bring their powerful global brands into this lucrative market.
"The multinationals that are coming into the market dedicate a great deal of resources to their brands because they know that a carefully managed brand identity can shift customer behavior and increase loyalty to a company's product and services," Green says. "The Latin American market is wide-open terrain, with customers who have income to spend. Sophisticated Latin American executives have carefully studied what companies in other countries, particularly the United States, have done in the past and are now applying those lessons to building their brands."
Fighting Foreign Competition on Home Turf
One Latin American client, the state-owned Pemex Gas and Basic Petrochemicals, Mexico's largest corporation, is operating in a newly deregulated market. "Natural gas consumption is expected to grow rapidly in the Mexican market over the next several years," explains Green. "Non-Mexican companies are responding with bids for transportation and distribution contracts. Pemex has a significant advantage in that the company already possesses broad awareness among Mexican and international consumers, business and financial audiences."
Years as a government-owned monopoly, however, had created some negative perceptions of Pemex in the marketplace, weakening the brand's equity, Green adds. To strengthen its brand and compete in the marketplace, Pemex embarked on an identity and image program to position itself as a customer-oriented provider of natural gas and value-added services for the Mexican and selected other North American markets. Looking to defend the company's strong market position and increase awareness, Lippincott & Margulies developed a new name, Pemex Gas Natural, created a new visual system, and implemented an integrated communications plan all designed to capitalize on the strength of the Pemex name and broaden the company's recognized characteristics of reliability and quality.
Like other privately-owned institutions in Chile, Banco Sud Americano faced serious challenges as relaxed taxation and deregulation brought an influx of foreign competitors into the formerly protected market, according to José Martinez, a partner of Lippincott & Margulies, who operates between the firm's New York and Latin American offices.
Market research conducted by the firm pinpointed a new consumer-oriented positioning platform to build on which emphasized the bank's professionalism, personal attention and international competency. Management credits its new brand identity system as a major factor contributing to the company's significant improvement in its performance and in the way it is viewed in the investment community.
Capitalizing on an Acquired Name
Martinez says that multinationals face a similar challenge when entering the Latin American market through acquisition, especially when they try to capitalize on an acquired name while rebuilding brands that have been damaged or become lax due to years without competition.
When ABN AMRO acquired Banco Real, the fourth largest private sector Brazilian bank was 1,400 branches strong and had one of the most nationalistic reputations in Brazil—making it difficult for ABN AMRO to apply its master brand naming strategy to the acquisition. A study conducted by Lippincott & Margulies determined the extent to which the Banco Real and ABN AMRO identities should be utilized in the venture. The resulting brand identity strategy, which includes a visual identity system that utilizes the Banco Real name and an ABN AMRO endorsement line and typeface, helps to extend ABN AMRO's image as a prestigious international financial services leader, while working in tandem with the regional equity of the Banco Real name, according to Martinez.
Similarly, when Continental Airlines acquired 49 percent of Copa, the national airline of Panama, both companies had clearly defined brand attributes that would serve them well in the Latin American market, according to Martinez. "The challenge was to align the characteristics of the Latin American market with each airline's principal identifying elements. The new identity reflects Copa's regional personality and Continental's international focus," he says.
Moving Beyond Latin American Borders
Building the brand and attracting customers at home is certainly a priority for Latin American-based companies, but the larger and more aggressive companies have a strong desire to compete on a global level, says Green. Aracruz, an established Latin American pulp manufacturer, is making a move away from the commodity business and differentiating itself through branded products. The company wanted to market its new product, Lyptus, a solid wood product made from enhanced eucalyptus, beyond the Latin American borders in Europe.
"Aracruz saw an opportunity to apply its expertise in the forestry industry to fill a need in the marketplace for inexpensive, durable, ecologically-sound lumber," says Green. "The company also understood the importance of creating a strong brand image if it was to take the product to Europe to compete." In order to introduce itself and its new product outside of Latin America, Aracruz management and Lippincott & Margulies developed a branding strategy that included the development of the brand name—Lyptus—a visual identity system and packaging based on the quality, consistency and environmentally-sound nature of the product.
The trend in brand building should continue to build momentum as long as the Latin American market continues its marked growth, according to Green. "From what we've seen, the companies that recognize the need and are able to devote the resources to communicating positive attributes about their company to consumers, potential employers and the investment community, are enjoying the fruits of their labor vis-a-vis strong market share and name recognition."
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