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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Introduction Contd...

Casas Bahia's innovative instalment sales⁵ schemes unlocked the purchasing power of Brazil's enormous working class and catered to the needs of low-income groups while earning good returns for the company.

Background Note

Casas Bahia was founded by Samuel Klein (Samuel) in 1958. The third of nine children of a carpenter, Samuel was born in a Jewish family in Lublin, Poland. In 1942, the Nazis imprisoned the 19-year-old Samuel and his father and sent them to the concentration camp of Maidanek.

In 1944, when the Red Army of Russia advanced against the Nazis to free Poland, the German soldiers removed the prisoners from Maidanek camp. Samuel was able to escape during his journey from Maidanek camp to Germany. Samuel came back to his old house but it was destroyed.

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Towards the end of the war, he was reunited with his brother Salomon and sister Sezia, who escaped to Russia. After the war, the brothers left for Germany where they had a surprise reunion with their father. They stayed in Munich, Germany, between 1946 and 1951. In the early 1950s, the family felt that it was time for them to leave Europe.

The father and sister left for Israel to join the Jewish community. Salomon left for the US while Samuel decided to go to South America where he had some friends. He left for Bolivia in 1952 along with his wife and young son Michael. On being invited by an aunt who lived in Rio De Janeiro, Brazil, he left for Brazil. In less than two months, he obtained authorization to live in Brazil.

Settling in the industrial Sao Paulo suburb of Sao Caetano do Sul in 1952, Samuel bought a horse and a cart. To support his family, Samuel started to hawk blankets, bed linen and bath towels in neighbourhoods inhabited by migrant labourers arriving in large droves to work at the nearby factories.

When customers hesitated to buy a blanket, Samuel urged them to keep it till next month in case the customer changed his/her mind. By then, the chill of Sao Paulo would have affected the migrants and when Samuel returned after a month, they would often thank him for saving them from the cold. More often than not, these customers, in addition to paying for the blanket, bought something else too from Samuel as a token of gratitude...

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5] Sales through instalment are particularly designed for people who cannot afford to pay the full price of a product. However, the facility of paying back the full price through part-payments over a period of time involves paying a little over the actual price of the article. Casas Bahia made 90 per cent its sales on instalment basis called credit sales. The purchase price of the article is considered as the loan given by the stores to the buyer who'll discharge the debt through monthly payments.