Brazil Market Entry Paper Essay Example

million people in Brazil, over half of whom are under 29 years old, M-Box aims to provide affordable games. Legitimate vendors in the US sell six-month-old games for R$250, which equates to approximately $140 US dollars.

Previously, game console sales were at approximately 600,000 annually and have been steadily increasing. The Brazilian market provides limitless potential for growth and advancement. Our goal is to reach a minimum of 350,000 households, with the amount varying depending on household size. The M-Box will be competing primarily against other consoles like Nintendo Wii, Microsoft X-Box 360, and Sony Playstation 3.

Our competitive advantage comes from lower costs resulting from our manufacturing and distribution plans for the M-Box. The middle class, which has a higher likelihood of affording luxury items, is a significant target market. However, whether or not the M-Box qualifies as such depends on family income. In Brazil, around 91 million people (approximately 49.1% of the population), belong to this demographic, which has experienced steady growth over the past decade.

To project M-Box sales, we considered previous annual sales data for all game consoles (though individual data was unavailable), our target market percentage, and the size of the middle class. Our low-cost alternative could give us an edge based on recent years' average annual sales figures exceeding 600,000 units for consoles like Wii, X-Box 360, and Playstation 3.

To appeal to a wider range of users in Brazil, it was decided that the M-Box would use Blu-Ray technology, with the built-in feature similar to that of a Playstation 3, as high television ownership rates mean many Brazilians already own separate DVD players. In terms of distribution, the lack of a

dominant national retail chain devoted solely to games means the M-Box console and games may need to be distributed across multiple smaller individual stores. A potential solution to this issue is undertaking local manufacturing operations within Brazil to significantly decrease production costs.

Our company believes that manufacturing within Brazil is crucial for success in the gaming market. By doing so, we can eliminate import and shipping costs, giving us a competitive edge. Our M-Box product will be more cost-effective than competitors such as X-Box 360 and PS3 in Brazil. While our management will primarily operate from the United States, this decision was made due to the more advanced state of the gaming industry there compared to Brazil's early stages of development.

Our aim is to enter the gaming industry in Brazil with the assistance of skilled management from the United States. To achieve this, our team of two will need to spend three nights in Brasilia, which will include airfare and accommodation at Sonesta Hotel Brasilia, costing $1,452. Furthermore, we have two shipping alternatives through FedEx for a 100-pound crate measuring four feet on each side.

FedEx offers two shipping options, namely FedEx International Priority and FedEx International Economy. The former is faster but more expensive, costing $1,452.20; while the latter takes longer to arrive and costs $1,026.30.

Assessing expenses incurred by other countries currently distributing goods in the Brazilian market is important when considering how to introduce the M-Box to Brazil. Significant price disparities between Brazil and the United States exist for established gaming systems such as Playstation 3, Wii, and Xbox 360 due to a steep import tax of 60%. This tax drives up prices for

both systems and games beyond the reach of many Brazilian consumers. As a result, exporting may be a more cost-effective approach for establishing a foothold in this market.

Although counter trade, which involves trading goods for services, is not common in the US, it may be an option to offset the costs associated with distribution and marketing when exporting to Brazil because of tariffs and duties. However, there would be no monetary gain from this method, even if it reduces the incurred red balance. Another option is turnkey projects which allow existing individuals to set up a business for us. However, due to the underdeveloped system in Brazil, we do not believe this would be beneficial in the long term.

Considering the lack of managerial experience among the population of Brazil, management contracts seem unwise. On the other hand, licensing carries less responsibility, but we are not averse to taking on responsibility. Franchising the M-Box may need more resources than we have currently, so it may be wise to consider it in the future as our product outreach expands. However, our preferred method of entering the Brazilian market is via joint venture. We view this as an opportunity to aid in the development of their internal market and expand our horizons to include Brazil in our target countries, given their lag in the gaming industry.

Our decision to opt for a joint venture in Brazil for marketing and distributing the M-Box is influenced by the risks involved in various entry modes. We aim to collaborate with Tectoy, the manufacturer and distributor of the Zeebo game system and former Brazilian manufacturer of Sega game systems. The marketing strategy

for the M-Box consists of a low-budget but high-impact plan. We plan on allocating about 2% of total sales revenue towards marketing and advertising.

Partnering with Tectoy provides a cost-effective advertising strategy for the M-Box. Tectoy, a well-respected gaming company in Brazil, offers networks for M-Box promotion. This inclusion in Tectoy's product line targets the existing Brazilian gamer demographic. Combining efforts with Tectoy allows for an easy entry into the Brazilian gaming market. Advertising recommendations for the M-Box marketing campaign include TV commercials, billboards, radio, and in-store promotion.

The M-Box's target market ranges from seven to twenty-nine years old, which makes up slightly over 40% of Brazil's population. To effectively reach this large demographic, we will heavily rely on television and radio commercials as well as billboards. It typically takes a consumer seeing or hearing a marketing message at least seven times for it to impact their decision-making. Therefore, we have chosen billboards, television, and radio as our primary marketing channels.

Humans tend to follow routine, driving the same routes and consuming the same media each day. This predictability makes these channels effective for marketing purposes. Based on our research, we conclude that the Brazilian gaming market is a good opportunity for our company, and we plan to enter through a joint venture with Tectoy. This approach will enable us to produce and distribute in Brazil without significant financial strain.

The M-Box will be offered at an affordable price due to our partnership with Tectoy. Tectoy's distribution system within Brazil is beneficial in promoting the sale of the M-Box. The gaming industry in Brazil is new and not yet highly competitive, making it an ideal location for

the growth and success of the M-Box for many years to come. References: http://www.bankintroductions.com/brazil.html, http://www.state.gov/r/pa/ei/bgn/35640.htm#econ