Brazil Analysis: Comparison of category activity in 2007 versus 2006

The Selection of Categories was done to highlight significant change in the marketplace for a cross section of the entire category universe. The analysis is based on number of spots.

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Highlight on Growth

Two categories that showed significant growth in 2007 were Fragrances with 48% and Toys with a 25% growth.

Fragrance growth in spots was driven by Procter & Gamble with a 24% increase, as well as PUIG who significantly grew their marketing expenditures and resulted in 202% more spots within their Carolina Herrera, Nina Ricci and Paco Rabanne product lines. These increases were driven by Carolina Herrera aggressively repositioning its new fragrances 212 Sexy and CH, while P&G countered by promoting the Hugo Boss and Lacoste brands. LVMH jumped by183% for its brands Christian Dior, Givenchy, Kenzo and Loewe.

The increase in the Toy category was driven by Hasbro who heavily promoted new product launches inspired by the release of the movies Spider-Man 3 and Transformers.

Understanding Market Declines

The categories that showed significant decreases in 2007 were Internet Company/Service Providers which showed a drop of 35% and Personal Care/Hygiene: Dental at a 16% decrease.

The Internet Company/Service Provider category’s decline can be attributed mainly to two companies. The first is Telefonica which invested tremendously in 2007 to improve and increase its range of services. They may have diverted marketing dollars or more than likely decided to wait until they could promote the improved services until 2008.

Mercado Libre S.A. was the other company that impacted the total spot loss. In fact, it cut back its expenditures which resulted in a decline of spots of 34%. This reallocation happened even though Mercado Libre acquired “deremate.com” in 2007. Again, they may have decreased their activity until the integration of deremate.com was completed when they could more efficiently promote the new combined services.

Personal Care/Hygiene: Dental was impacted by Colgate Palmolive decreasing their promotional activity which resulted in 20% drop in spots in 2007. This happened even though they announced at the beginning of 2007 a revenue growth of 11.5% driven mainly by their advertising and promotional efforts. Since advertising is driving their growth the decline in spots on Pay Television seems to suggest that they had moved some of the Pay Television budget to other media they felt would drive sales more.

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