Selling to the middle class in Latin America requires creativity in tough times

“The middle class,” said Jaime Ramirez, Black & Decker’s vice president and general manager of Latin America, “is the engine of growth in Latin America. The largest demand for construction comes from the middle class.

“If construction is growing, that will us and the economy growth,” he said.

Ramirez was joined at WorldCity’s Global Connections event on Wednesday by John Price, managing director for Business Intelligence at Kroll, and Jose Miguel Pinto, a consultant who previously ran Latin America operations for Proctor & Gamble, Clorox and Avon.

The theme of the monthly Connections event was “Selling to the Middle Class in Latin America.” Global Connections has been sponsored since its 2001 inception by by Florida International University’s Chapman Graduate School of Business.

Unfortunately, business is tough right now, and devaluating currencies has made it all the tougher, he said. “First quarter was flat, which we considered really good. It is very tough to predict what will happen in the balance of the year.”

Kroll’s John Price: Toss out last year’s survey data

Price, representing Kroll, concurred. “Last year’s survey data, throw it in the garbage. It’s not worth anything.” Companies with a “dollarized component,” he said, will find it particularly rough sledding, given the currency situation.

Over the last several years, however, due to increased credit and solidly run economies, the poor and middle class in Latin America has seen their purchasing power rise rapidly. Where from here is less clear.

Ramirez, though, sounded a note of hope when he predicted that “the fastest region that’s going to recover is going to be Latin America,” given that the region, without a mortgage market of consequence did not have a housing bubble like in the United States. “The majority of banks in Latin America are very solid.”

The third panelist, Jose Miguel Pinto, president of consulting firm Innovation and former leader of three global brands, knows there are often opportunities in the most challenging of times.

“Everywhere you look, there are opportunities,” he said. “If you listen to your customers and you are creative, you will do well.”

He provided examples of redesigned lipstick applicators at Avon, reconstituted laundry paste at Proctor & Gamble, and a bit of entrepreneurial empowerment at Clorox.

In the Dominican Republic, Clorox found it was effectively locked out of the 250,000 corner stores around the capital of Santo Domingo, where bleach was largely sold. Unilever and Colgate were stronger brands with sway with the distributors. Merchants then sold small amounts from gallon jugs, but not before diluting the product.

Clorox created new packaging, in smaller, more affordable units where the product was superior since it was not diluted. They then bought miniature vans and employed a small cadre of drivers to sell the product. If, in three years, the men were still working with Clorox, they could keep the vehicles, a lease to purchase program of a sort. The empowering strategy worked. Before long, a few dozen drivers had grown to more than 500, including some who then subcontracted with others.

The improved sales numbers told the story but the sure sign of success? Clorox’s competitors began to use a similar system.