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.”