Casas Bahia - Marketing to the Poor

            
 
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Case Details:

Case Code : MKTG102
Case Length : 14 Pages
Period : 1997-2005
Pub Date : 2005
Teaching Note :Not Available
Organization : Casas Bahia
Retail ing
Countries : Brazil

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts

Serving the Urban Poor

Brazil's population could be broadly categorized into five economic groups - A, B, C, D and E. While A, B represented the affluent class; C, D, E represented the lower income groups. In 2004, the population of Brazil was 180.7 million out of which nearly 84 per cent was considered to constitute the lower income groups.

The lower income groups represented significant purchasing power in Brazil's economic system (Refer Exhibit II for income distribution in Brazil). The high end product companies often did not target the lower income groups since they did not make enough money to consume their products.

Though the huge low-income population did not have enough money, it wanted all kinds of basic consumer goods like refrigerator, television and washing machines and the only way of acquiring these goods was through credit. There were usually two sources for the working class to obtain credit - financial institutions like banks and private money lending agencies...

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

The Business Model

Credit financing formed the core of Casas Bahia's business model. Over 90 per cent of the company's revenues came from credit sales. Generally, the credit history of the customer was obtained from the information provided by 'Service of Credit Protection' (SPC) , the credit bureau of Brazil. All customers who wished to finance their purchases from Casas Bahia were required to submit themselves to an SPC credit check...

The Criticism

Despite its reputation as the poor man's shopping paradise, Casas Bahia came under lot of criticism that it exploited the poor in the name of selling them branded products in easy instalments. Some analysts felt that Casas Bahia targeted the poor working class people by taking advantage of their vulnerabilities and yearning for expensive consumer goods. They observed that meeting basic needs was always the top priority of poor anywhere in the world. But, Casas Bahia was making Brazil's poor to go for luxury items like branded consumer electronics by compromising on basic needs...

Exhibits

Exhibit I: Snapshot of Brazil
Exhibit II: Brazil - Distribution of Income
Exhibit III: Training of Credit Analyst
Exhibit IV: Product Display at Casas Bahia Stores
Exhibit IV (Contd): Product Display at Casas Bahia Stores


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