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American Resource Center™
College Is Hard. American Research Center Makes It Easier.
BRAZILGroup Assignment #2
BRYANT UNIVERSITYPROFESSOR ZDRAVKOVIC- MKT 368
December 8, 2011
Jeffrey BragaSamuel LeMayColin Mayberry
Francis McKiernanVeronica Wohlschlaeger
1
Description of the American Resource Center
American Resource Center (ARC) is a state-of-the-art technology and information center
where lower and middle class people in Brazil can expand their knowledge and take advantage
of the world of opportunities technology presents. This center will be located in São Paulo,
Brazil. The goal of ARC is to provide its clients with a technology resource center that they can
use to improve the quality of their life. The facility is exclusively for people attending college
online or participating in online certifications and degree programs. Unlike crowded, noisy
internet cafes, ARC provides a state-of-the-art learning environment that fosters the education
process. It is not a college, but rather a means of adequate access to online educational and
occupational resources.
ARC is a fantastic resource for anyone who utilizes it. The building is roughly 10,000 ft²,
containing a main area for the users and a back office area for the staff. The building also
contains bathrooms and two water fountains. There are thirty individual work stations, each with
their own Apple computers. ARC also has a printing station for people to print documents,
photos, and articles out at. In addition to technology, there is an expansive selection of books.
ARC has several tables for patrons to relax, read, and more importantly learn. This being the
most important aspect of ARC and adding the most value, is the availability of an extremely
knowledgeable staff. The employees hail from various countries all over the world and speak
multiple languages to accommodate all of their customers. ARC’s staff have retained degrees
from prestigious institutions and have diverse educational backgrounds to fully serve the needs
of its customers. This is their competitive advantage and the attraction that is, ARC.
AMERICAN RESOURCE CENTER ™
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The Marketing Mix
Influences to the Introduction of the American Resource Center (Product or Service)
The idea for ARC was formed after an interview with a Brazilian national who said there
is “definitely a lack of education especially in some of the poorer and more populated areas”
(DaCruz, 2011). This makes Brazil’s current culture a positive influence to introduction. The
average years of schooling of the labor force in Brazil is only 8.25 years. São Paulo has the most
universities in Brazil but a dropout rate of 20%. This is due to an inability to pay tuition. Also,
many people have jobs that hinder their ability to attend classes or study. Brazil's booming
economy has steered people away from conventional schooling and into employment. Brazilian
culture has saved college as a luxury for the elite but there is a need to educate the emerging
middle class. Since August 1995, amendments to the 1988 constitution eliminated legal
distinctions between majority-foreign-owned and majority-domestic-owned companies in Brazil.
However, its legal system will still have the most influence over ARC’s introduction. The
purchase of real estate by foreign individuals and companies is restricted under Law 5709
(Brazil, 2009).
American Resource Center’s Mode of Entry Strategy
ARC will enter Brazil as a wholly owned subsidiary by greenfielding. Greenfielding is a
type of wholly owned subsidiary that is developed in another country instead of being purchased,
like a merger or acquisition. This mode of entry was chosen due the status of Brazil’s emerging
economy and the various advantages of developing a company overseas. When a market is
emerging they are on the forefront of all aspects of the economy. The population is generally
very youthful, is experiencing a major shift in technology, and are more reluctant to have
international businesses erect in their country to boost the overall economic foundation.
However, choosing this mode of entry also allows for full ownership, entitling ARC to all
profits. It also allows ARC to manage and control its own processes and tasks in terms of
marketing, production, logistics, and sourcing decisions. Having the authority to make your own
decisions in these areas of business is a critical advantage operating in another country. ARC
benefits by not paying exponential costs of economies of scale, ARC’s customers benefit by
AMERICAN RESOURCE CENTER ™
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paying a low cost for a quality service and the Brazilian economy benefits by adding value to its
local market. In addition to benefiting the Brazilian economy, the strong commitment to the local
market will portray their company as insightful and genuinely devoted to their customers by
providing the opportunity to increase their quality of life.
Target Market
ARC is established in São Paulo, the largest city in Brazil and home to roughly 20
million people (KPMG, 2010). This large urban area is driven mainly by the development of the
agriculture, mining, manufacturing and service sectors, all of which do not require much of an
education to succeed in. ARC plans to target these individuals in the lower and middle classes.
Positioning at the bottom of the pyramid (BOP) is an attractive market because it represents
untapped wealth. Cost innovation tailored to fit lower income levels will provide access to this
target market. Surprisingly, despite Brazil’s colossal territory, 80% of its population lives in
urban areas (U.S. Department of State, 2010). What that means is 80% of Brazil’s purchasing
power is located within miles of ARC’s physical location. The number of students engaging in
online education programs in Brazil rapidly growing. Between 2007 and 2008 alone, the number
of students enrolled in college online nearly doubled. In addition to that, the per capita GDP
(purchasing power parity) is $10,900 (U.S. Department of State, 2010), which is extremely low
but their service is inexpensive, highly valuable, and also very flexible. The per capita GDP of
this segment is important for ARS to consider because they cannot target the upper-middle class
or the rich because they have the resources and the accessibility to the services that ARC is
providing. Lower class citizens are under privileged because they do not have the resources to
conduct research, read, browse the web, and acquire the necessary skills that will improve their
quality of life and ARC is designed to minimize that gap.
AMERICAN RESOURCE CENTER ™
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The Branding Strategy of the American Resource Center
ARC will pursue a global branding strategy to position itself in the global economy. They
chose to implement a global strategy because ideally, this will give ARC a uniform, worldwide
image that can be marketed through globalization. Also, the internet and other technologies
available today will accelerate the pace of globalization making it more efficient for ARC to
convey its brand image worldwide. Developing a local strategy was not an option for ARC.
ARC is not a national company providing service to its citizens so they would not be able to
utilize nationalistic pride as strength to their brand. ARC would also not be able to acquire a
brand name from an existing company in Brazil that fits the business ARC’s because there are no
resource centers that provide similar services to ARC.
The Risk of Counterfeiting to the American Resource Center
ARC will not be affected by counterfeiting. The closest substitute to their product that is
present in Brazil is an internet cafe. Although internet cafes are heavily saturated, they do not
offer the same services as ARC. ARC has capitalized on innovation to overcome the first-mover
advantage of internet cafes. Having an intellectual staff on hand at ARC during all operating
hours, state-of-the-art equipment and the maintenance of a quite atmosphere to foster learning
will differentiate their service from that of other internet cafes. However, the National Institute of
Industrial Property (Instituto Nacional da Propriedade Industrial.INPI) has laws regarding
trademark infringement and is responsible for enforcement of those laws. Infringement on the
ARC name is possible due to the first-to-file principle practiced in Brazil. ARC will protect itself
from identical or similar services or products by registering the brand name in a timely manner.
Advantages of ARC’s United States Origin
The United States of America is ARC’s country of origin. In Brazil, legally registered
companies, foreign or domestic, enjoy the same rights and privileges and they compete on equal
footing for financing and contract opportunities. However, ARC’s American origin does add
AMERICAN RESOURCE CENTER ™
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substantial credibility to its branding. In 2007, $972 billion dollars was spent by the US
Government as their national education budget (Bureau, 2009). American students’ rank 17th in
the world based off of statistics (Bureau, 2009). This is due to the No-Child-Left-Behind Act
where the focus is on the students at the lower end of the learning spectrum (Reed, 2010). Out of
17.5 million college students in the United States, over 670,000 students are international
students. These numbers have been rising and will continue to do so over the coming years
(Fischer, 2009). The prestige that American universities and colleges hold may prove to be an
advantage for ARC. More Brazilians may be inclined to use their resource center due to the fact
that an education from the United States is highly valued. Another advantage will be ARC’s
collection of Apple computers purchased in America. There is no presence of corporate Apple in
South America. Since no legitimate Apple stores exist, all Apple products are purchased through
resellers at astronomical prices. The lower and middle classes of Brazil do not have the means to
access such technology, thus the availability will be intriguing.
The Pricing Strategy and Drivers of the American Resource Center
BOP positioning requires ARC to pursue cost innovation that will structure expenses to
offer high value for low cost. ARC does not want to utilize backwards innovation because
offering state-of-the-art equipment is part of the differentiation from internet cafes. Instead, ARC
aims to saturate all major price points. ARC plans to implement two different options when it
comes to pricing their service. They offer an hourly rate at a cost of 10 Real (5.60 USD) per hour
or 50 Real (27.93 USD) per day (CoinMill, 2011). ARC has a five hour time limit on their
service to eliminate bottlenecks and maximize the efficiency of their service. Consumers can also
purchase a monthly membership which would cost 100 Real (55.87 USD) (CoinMill, 2011).
Basically, for 100 dollars a month they are provided with over 1,000 hours of state-of-the art
technology to use at their leisure. ARC created these price points by calculating the average cost
of the internet café services of their competitors. This number came out to be 8 Real per hour for
Wi-Fi usage in a noisy, cluttered, dirty café. ARC priced their service at the margins they did
because they are offering a service in an atmosphere that is conducive to the expansion of that
individual’s intellectual horizons while their competitors are just trying to make an extra dollar
AMERICAN RESOURCE CENTER ™
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by providing internet connection. ARC also allocated the expense of their technology being
double the price of what it is America in Brazil due to economies of scale. Having these products
outsourced incurs high imposed duties and the coordination of logistical processes such as arrival
and departure from ports, vessels, containers, and warehouses can be rather expensive with an
unstable economy.
Advertising Strategy and Other Means of Communication
New businesses need to accomplish several tasks with their marketing activities. These
tasks include educating the consumer about the service use and benefits, raising brand awareness
and creating brand image. ARC’s biggest marketing priority is to inform people about their
service and why it is helpful. As a facility and service, ARC needs to balance utilizing trade-
directed push promotions (except at online schools) and consumer-orientated pull promotions.
Forming a good relationship with the Center for Digital Inclusion (CDI) could prove to be
extremely valuable. CDI is a non-profit organization that uses technology to reduce poverty.
Joining forces with them would help spread awareness of ARC to their target market. Loaning
the facility out to CDI for a few hours would be good public relations and they, in turn, would
promote their facility to the people that they work with.
Advertising in Brazil cost 50 times less than it does in the United States and represents
only 1% of the GDP. Brazilians do not like comparative or violent ads and prefer ads to be
entertaining so they will execute accordingly. Advertisements are usually in increments of 30, 45
and 60 seconds. ARC will air their 60 second promotional message on local television and
popular sporting events like the 2014 World Cup. They also have patrocinios which are five-
second insertions on the top left-hand corner with a voiceover. Newspapers and magazines come
after television in advertising allocation. ARC plans to explore all of these avenues in their
promotional strategy. Leo Burnett, a famous advertiser in Chicago once defined advertising as
“selling corn flakes to people who eat cheerios” but ARC’s marketing is about selling corn flakes
to people who skip breakfast. Since ARC’s target market is someone without access to the
internet at home, they will focus less on an internet presence. Instead of investing in search
engine optimization, ARC will place ads on the websites of online degree programs.
AMERICAN RESOURCE CENTER ™
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Local Regulations Preventing the Execution of ARC’s Promotion Plan
In September 2007, the major of São Paulo issued a mandate that called for the
elimination of visual clutter. He named this law Clean City Law (Reed, 2010). He wanted São
Paulo’s focal point to be the city itself, not desperate, colorful marketing campaigns. Millions of
dollars in fines have been issued to those who fail to adhere to the Clean City Law. Citizens
clearly approve as petitions to reinstate outdoor advertising have been largely unsuccessful.
Surveys have found that at least 70% of Sao Paulo residents are happy with the change (Reed,
2010). This means that ARC will be forced to depend heavily on push promotions by online
colleges and on pull promotions in television, radio, newspaper, and magazine ads. This will be
an opportunity for us to connect with the local market on a more personal level by physically
going out and interacting with their staff and informing them about their service face-to-face.
Promotional Message
ARC’s promotional message is “convenient opportunity”. The consumer needs to know
using ARC facilities provides them with the opportunity for advancement at little cost. To
convey this message, ARC will run the ad below in several Brazilian newspapers and magazines.
AMERICAN RESOURCE CENTER ™
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The promotional tagline- “Ir para a universidade é difícil. Centro de Pesquisa Americana
torna mais fácil (Google Translate, 2011).” is Portuguese for “Going to college is hard.
American Research Center makes it easier.” Taking out the tagline still allows the print
advertisement to effectively convey their message. This makes it universally understandable.
ARC’s commercial aims to educate people on their service and its benefits. The commercial is
composed of royalty-free clips which entitle ARC to use the copyrighted material without the
need to pay royalties for each use or per volume sold (Video Blocks, 2011).
ARC’s Global Supply Chain
Managing Physical Distribution
The physical geography and location of Brazil on the world map suggests that using
Brazil’s ports in São Paulo would be the most efficient and cost effective method of managing
distribution of the their building materials, furniture, and computers. All electronic equipment
will be imported to Brazil from the United States. This will all be shipped on vessel carriers in
containers tracked by ARC logistics in Brazil. Currently, Brazil imports 181.7 billion dollars
annually, up from 127.7 billion in 2009 ranking them 22nd in world imports (Bureau, 2009). The
United States is Brazil’s largest importer accounting for just over 15% of their total imports
(Bureau, 2009). Additionally, Brazil’s largest imported commodities include electronics,
machinery and automotive parts (Central Intelligence Agency, 2010). Due to the fact that ARC
will be headquartered in the United States and importing electronics they can expect fewer issues
with customs and local government in moving goods from one country to another.
Managing Sourcing Strategy
ARC will be igniting as a wholly owned greenfield subsidiary. By outsourcing
management, ARC can hope to encounter less resistance from local government as well as the
most effective platform to distribute computer and internet access. Currently, Brazil is a country
of about 201 million people with only 76 million having access to the internet, roughly 38%
(Theme Demo, 2011). Complimenting the large need for internet access in Brazil is the purpose
AMERICAN RESOURCE CENTER ™
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of that access. At this point in time 26% of internet users in Brazil, the largest segment, are
classified as “knowledge seekers” (Theme Demo, 2011). By catering to the largest segment of a
growing market ARC anticipates a large user base. ARC’s sourcing strategy also includes the
hiring of bilingual American college graduates from various countries and educational
backgrounds to further assist their customers. These graduates will possess the necessary
characteristics to fully assist their market segment by having backgrounds in Finance, Computer
Science, Math, English, Economics, and legal studies. Sourcing such a diverse array of
accredited educational backgrounds will provide easier management of these employees and less
room for error because they are skilled and responsible.
Retailing
ARC will be open from the hours of 10am to 10pm on weekdays. Saturday’s hours will
be 9am-1pm and ARC will not be open on Sundays due to cultural conflict. In most Brazilian
cities, working hours are 8:30am to 5.00pm with a 1-2 hour break in the middle for lunch.
Businesses are usually open from 9:00am to 7:00pm Monday-Friday and 9:00am-1:00pm on
Saturday. Larger businesses and most in São Paulo may be open longer hours so the extension
into night will benefit even those who work for larger companies. Another consideration in
operating hours is the high percentage of Catholics in Brazil. The devoutness of Brazilians to
Catholicism means being open on Sunday, Catholics day of rest, could be detrimental to both
image and usage. At best no one would be using the facilities, at worst it could be viewed as
disrespectful. ARC offers a service not a product, making the approach to a retailing strategy
quite different than that of a product. The fees will provide revenue to cover operating costs and
help turn out a profit for reinvestment and possible expansion for more establishments similar to
ARC.
AMERICAN RESOURCE CENTER ™
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Works Cited
Brazil. (2009). Retrieved from Internet World Stats: http://www.internetworldstats.com/sa/br.htm
Brazil. (2011, 9). Retrieved from The Economist Intelligence Unit: http://www.eiu.com/report_dl.asp?issue_id=1998481784&mode=pdf&rf=0
Bureau, U.C. (2009). The 2009 Statistical Abstract. Retrieved from National Data Book http://www.census.gov/compendia/statab/2011/tables/11s0216.pdf
Burgoyne, P. (2007, 6 18). Sao Paulo: The City That Said No to Advertising. Retrieved from Bloomberg Business Week: http://www.businessweek.com/innovate/content/jun2007/id20070618_505580.htm
Buiness Opportunities in Brazil. (2009, 10 26). Retrieved from Insper: http://www.iae.edu.ar/SiteCollectionDocuments/Investigacion/ENOVA/Business_Opportunities_in_Brazil.pdf
Campanelli, M. (2006, 6 19). Marketing to Latin America? Think Brazil. Direct Marketing News. Retrieved from http://www.dmnews.com/marketing-to-latin-america-think-brazil/article/91632/
Central Intelligence Agency. (2010). the world fact book. Retrieved 12 4, 2011, from the world fact book brazil: https://www.cia.gov/library/publications/the-world-factbook/geos/br.html
DaCruz, C. M. (2011, 12 1). Director at A Catwalk in Their Shoes. (V. Wohlschlaeger, Interviewer)
Department of State, U. S. (2011, March 8). Brazil. Retrieved from http://www.state.gov/r/pa/ei/bgn/35640.htm
Distance higher education in Brazil. (2010, 7 1). Retrieved from Nuffic Neso Brazil: http://www.nesobrazil.org/dutch-organizations/column/distance-higher-education-in-brazil
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Fischer, Karin. "Number of Foreign Students in U.S. Hit a New High Last Year - Global - The Chronicle of Higher Education." Home - The Chronicle of Higher Education. The Chronicle of High
Google Translate. (2011, 12 3). Retrieved from http://translate.google.com/#
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Reed, Matt (12 December 2010). “Tackling ‘achievement gap’ hurts US schools”. Melbourne, Florida: Florida Today pp. 1B
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Video Blocks. (2011). Retrieved 12 4, 2011, from Videoblocks.com: https://www.videoblocks.com/login/
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