Chile: The Secrets of Local Brand Value

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The Value of Being Chilean in Chile

By Marcela Perez De Arce
Client Service Director
Millward Brown Chile
marcela.perezdeArce@millwardbrown.com

 

During the economic crisis of 2009, Chile experienced a marked change among consumers. Buyers became empowered, more discerning, and with the mass adoption of social networking, over time began to demand a more horizontal relationship with brands.

What does this mean for us today? Who is managing to respond to these consumers?

Many multi-national brands rely on their globally flexed muscles, which make it easy to work their way into consumers’ minds, but a large number of local brands also compete successfully and lead their categories. What’s their secret?

Part of the answer lies in their familiarity with consumers in a context where buying power among the middle and low segments has increased over the years. As a result, certain product categories have become more competitive, with success awarded to those companies who develop a deeper understanding of local consumers. In Chile, some local brands have such strong leadership that no foreign competitor has been able to beat them. Some have become the generic name for their category, or have become icons, which reinforces their positioning even more.

A classic example is that of department stores, where non-Chilean brands have never been able to achieve even second or third place. The whole category is made up of local brands, and development is such that for the last ten years they have been exploring entrance into other countries in Latin America. A key element for understanding this phenomenon is the enormous internal competition between existing brands, which has obliged them to continue improving on their formulas (including consumer profiling, mix of products and services, price, location, etc.) in order to connect better with their target audience.

Visiting the mall is now a national pastime

The success of Chilean department stores extends to retail in general, including malls, supermarkets and pharmacies and has a great impact on Chileans’ lives and behavior as consumers. Different studies show that visiting malls has become the main weekend activity for many middle class families. This, and the fact that many of these companies issue credit cards for their consumers, has meant a major increase in consumption among middle and lower segments. Going to the mall and shopping have become a lifestyle. Consumers may have credit in several stores of which there are two or three in each mall, as well as smaller specialty shops, food courts, cinemas and other services that add variety to the mall experience.

However, it’s not only in retail that local brands stand out. The world of beers is another place where Chilean brands show strong leadership. Chile isn’t a highconsumption country, but the market has grown by 54% in the last 5 years with an increased variety of imported and artisanal beers. Of 15 brands evaluated in Chile, only six show outstanding power (over 100 points on an indexed scale) and of these, four are Chilean, including the first place brand.

What does this tell us? In terms of the MDS model, in a market that is only recently expanding, one wouldn’t expect to see such balanced construction as we see among department stores. In fact, it never happens. However, there is something similar in the retail world and other categories. They rest on their history, tradition, local elements (partying, young people’s humor, the landscape) and the national identity (“our thing,” football sponsorship, origins).

In these and other similar cases, many Chilean brands (and others that behave as local brands) respond to these new consumers with an intimate, informal dialogue to connect with their story. Some become “the brand of Chileans” or “of Chile.” Others become icons in their categories, or they ensure their presence at every critical moment of the national experience. In other words, the speak “from one Chilean to another.”

BrandZ LatAm Top 50 2014

BrandZ LATAM 2014 Report Top 50 Report

Top 50 Chart


Methodology and valuation by Kantar Millward Brown


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