American Research Center

American Resource Center™

College Is Hard. American Research Center Makes It Easier.

BRAZILGroup Assignment #2

BRYANT UNIVERSITYPROFESSOR ZDRAVKOVIC- MKT 368

December 8, 2011

Jeffrey BragaSamuel LeMayColin Mayberry

Francis McKiernanVeronica Wohlschlaeger

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Description of the American Resource Center

American Resource Center (ARC) is a state-of-the-art technology and information center

where lower and middle class people in Brazil can expand their knowledge and take advantage

of the world of opportunities technology presents. This center will be located in São Paulo,

Brazil. The goal of ARC is to provide its clients with a technology resource center that they can

use to improve the quality of their life. The facility is exclusively for people attending college

online or participating in online certifications and degree programs. Unlike crowded, noisy

internet cafes, ARC provides a state-of-the-art learning environment that fosters the education

process. It is not a college, but rather a means of adequate access to online educational and

occupational resources.

ARC is a fantastic resource for anyone who utilizes it. The building is roughly 10,000 ft²,

containing a main area for the users and a back office area for the staff. The building also

contains bathrooms and two water fountains. There are thirty individual work stations, each with

their own Apple computers. ARC also has a printing station for people to print documents,

photos, and articles out at. In addition to technology, there is an expansive selection of books.

ARC has several tables for patrons to relax, read, and more importantly learn. This being the

most important aspect of ARC and adding the most value, is the availability of an extremely

knowledgeable staff. The employees hail from various countries all over the world and speak

multiple languages to accommodate all of their customers. ARC’s staff have retained degrees

from prestigious institutions and have diverse educational backgrounds to fully serve the needs

of its customers. This is their competitive advantage and the attraction that is, ARC.

AMERICAN RESOURCE CENTER ™

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The Marketing Mix

Influences to the Introduction of the American Resource Center (Product or Service)

The idea for ARC was formed after an interview with a Brazilian national who said there

is “definitely a lack of education especially in some of the poorer and more populated areas”

(DaCruz, 2011). This makes Brazil’s current culture a positive influence to introduction. The

average years of schooling of the labor force in Brazil is only 8.25 years. São Paulo has the most

universities in Brazil but a dropout rate of 20%. This is due to an inability to pay tuition. Also,

many people have jobs that hinder their ability to attend classes or study. Brazil's booming

economy has steered people away from conventional schooling and into employment. Brazilian

culture has saved college as a luxury for the elite but there is a need to educate the emerging

middle class. Since August 1995, amendments to the 1988 constitution eliminated legal

distinctions between majority-foreign-owned and majority-domestic-owned companies in Brazil.

However, its legal system will still have the most influence over ARC’s introduction. The

purchase of real estate by foreign individuals and companies is restricted under Law 5709

(Brazil, 2009).

American Resource Center’s Mode of Entry Strategy

ARC will enter Brazil as a wholly owned subsidiary by greenfielding. Greenfielding is a

type of wholly owned subsidiary that is developed in another country instead of being purchased,

like a merger or acquisition. This mode of entry was chosen due the status of Brazil’s emerging

economy and the various advantages of developing a company overseas. When a market is

emerging they are on the forefront of all aspects of the economy. The population is generally

very youthful, is experiencing a major shift in technology, and are more reluctant to have

international businesses erect in their country to boost the overall economic foundation.

However, choosing this mode of entry also allows for full ownership, entitling ARC to all

profits. It also allows ARC to manage and control its own processes and tasks in terms of

marketing, production, logistics, and sourcing decisions. Having the authority to make your own

decisions in these areas of business is a critical advantage operating in another country. ARC

benefits by not paying exponential costs of economies of scale, ARC’s customers benefit by


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paying a low cost for a quality service and the Brazilian economy benefits by adding value to its

local market. In addition to benefiting the Brazilian economy, the strong commitment to the local

market will portray their company as insightful and genuinely devoted to their customers by

providing the opportunity to increase their quality of life.

Target Market

ARC is established in São Paulo, the largest city in Brazil and home to roughly 20

million people (KPMG, 2010). This large urban area is driven mainly by the development of the

agriculture, mining, manufacturing and service sectors, all of which do not require much of an

education to succeed in. ARC plans to target these individuals in the lower and middle classes.

Positioning at the bottom of the pyramid (BOP) is an attractive market because it represents

untapped wealth. Cost innovation tailored to fit lower income levels will provide access to this

target market. Surprisingly, despite Brazil’s colossal territory, 80% of its population lives in

urban areas (U.S. Department of State, 2010). What that means is 80% of Brazil’s purchasing

power is located within miles of ARC’s physical location. The number of students engaging in

online education programs in Brazil rapidly growing. Between 2007 and 2008 alone, the number

of students enrolled in college online nearly doubled. In addition to that, the per capita GDP

(purchasing power parity) is $10,900 (U.S. Department of State, 2010), which is extremely low

but their service is inexpensive, highly valuable, and also very flexible. The per capita GDP of

this segment is important for ARS to consider because they cannot target the upper-middle class

or the rich because they have the resources and the accessibility to the services that ARC is

providing. Lower class citizens are under privileged because they do not have the resources to

conduct research, read, browse the web, and acquire the necessary skills that will improve their

quality of life and ARC is designed to minimize that gap.


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The Branding Strategy of the American Resource Center

ARC will pursue a global branding strategy to position itself in the global economy. They

chose to implement a global strategy because ideally, this will give ARC a uniform, worldwide

image that can be marketed through globalization. Also, the internet and other technologies

available today will accelerate the pace of globalization making it more efficient for ARC to

convey its brand image worldwide. Developing a local strategy was not an option for ARC.

ARC is not a national company providing service to its citizens so they would not be able to

utilize nationalistic pride as strength to their brand. ARC would also not be able to acquire a

brand name from an existing company in Brazil that fits the business ARC’s because there are no

resource centers that provide similar services to ARC.

The Risk of Counterfeiting to the American Resource Center

ARC will not be affected by counterfeiting. The closest substitute to their product that is

present in Brazil is an internet cafe. Although internet cafes are heavily saturated, they do not

offer the same services as ARC. ARC has capitalized on innovation to overcome the first-mover

advantage of internet cafes. Having an intellectual staff on hand at ARC during all operating

hours, state-of-the-art equipment and the maintenance of a quite atmosphere to foster learning

will differentiate their service from that of other internet cafes. However, the National Institute of

Industrial Property (Instituto Nacional da Propriedade Industrial.INPI) has laws regarding

trademark infringement and is responsible for enforcement of those laws. Infringement on the

ARC name is possible due to the first-to-file principle practiced in Brazil. ARC will protect itself

from identical or similar services or products by registering the brand name in a timely manner.

Advantages of ARC’s United States Origin

The United States of America is ARC’s country of origin. In Brazil, legally registered

companies, foreign or domestic, enjoy the same rights and privileges and they compete on equal

footing for financing and contract opportunities. However, ARC’s American origin does add


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substantial credibility to its branding. In 2007, $972 billion dollars was spent by the US

Government as their national education budget (Bureau, 2009). American students’ rank 17th in

the world based off of statistics (Bureau, 2009). This is due to the No-Child-Left-Behind Act

where the focus is on the students at the lower end of the learning spectrum (Reed, 2010). Out of

17.5 million college students in the United States, over 670,000 students are international

students. These numbers have been rising and will continue to do so over the coming years

(Fischer, 2009). The prestige that American universities and colleges hold may prove to be an

advantage for ARC. More Brazilians may be inclined to use their resource center due to the fact

that an education from the United States is highly valued. Another advantage will be ARC’s

collection of Apple computers purchased in America. There is no presence of corporate Apple in

South America. Since no legitimate Apple stores exist, all Apple products are purchased through

resellers at astronomical prices. The lower and middle classes of Brazil do not have the means to

access such technology, thus the availability will be intriguing.

The Pricing Strategy and Drivers of the American Resource Center

BOP positioning requires ARC to pursue cost innovation that will structure expenses to

offer high value for low cost. ARC does not want to utilize backwards innovation because

offering state-of-the-art equipment is part of the differentiation from internet cafes. Instead, ARC

aims to saturate all major price points. ARC plans to implement two different options when it

comes to pricing their service. They offer an hourly rate at a cost of 10 Real (5.60 USD) per hour

or 50 Real (27.93 USD) per day (CoinMill, 2011). ARC has a five hour time limit on their

service to eliminate bottlenecks and maximize the efficiency of their service. Consumers can also

purchase a monthly membership which would cost 100 Real (55.87 USD) (CoinMill, 2011).

Basically, for 100 dollars a month they are provided with over 1,000 hours of state-of-the art

technology to use at their leisure. ARC created these price points by calculating the average cost

of the internet café services of their competitors. This number came out to be 8 Real per hour for

Wi-Fi usage in a noisy, cluttered, dirty café. ARC priced their service at the margins they did

because they are offering a service in an atmosphere that is conducive to the expansion of that

individual’s intellectual horizons while their competitors are just trying to make an extra dollar


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by providing internet connection. ARC also allocated the expense of their technology being

double the price of what it is America in Brazil due to economies of scale. Having these products

outsourced incurs high imposed duties and the coordination of logistical processes such as arrival

and departure from ports, vessels, containers, and warehouses can be rather expensive with an

unstable economy.

Advertising Strategy and Other Means of Communication

New businesses need to accomplish several tasks with their marketing activities. These

tasks include educating the consumer about the service use and benefits, raising brand awareness

and creating brand image. ARC’s biggest marketing priority is to inform people about their

service and why it is helpful. As a facility and service, ARC needs to balance utilizing trade-

directed push promotions (except at online schools) and consumer-orientated pull promotions.

Forming a good relationship with the Center for Digital Inclusion (CDI) could prove to be

extremely valuable. CDI is a non-profit organization that uses technology to reduce poverty.

Joining forces with them would help spread awareness of ARC to their target market. Loaning

the facility out to CDI for a few hours would be good public relations and they, in turn, would

promote their facility to the people that they work with.

Advertising in Brazil cost 50 times less than it does in the United States and represents

only 1% of the GDP. Brazilians do not like comparative or violent ads and prefer ads to be

entertaining so they will execute accordingly. Advertisements are usually in increments of 30, 45

and 60 seconds. ARC will air their 60 second promotional message on local television and

popular sporting events like the 2014 World Cup. They also have patrocinios which are five-

second insertions on the top left-hand corner with a voiceover. Newspapers and magazines come

after television in advertising allocation. ARC plans to explore all of these avenues in their

promotional strategy. Leo Burnett, a famous advertiser in Chicago once defined advertising as

“selling corn flakes to people who eat cheerios” but ARC’s marketing is about selling corn flakes

to people who skip breakfast. Since ARC’s target market is someone without access to the

internet at home, they will focus less on an internet presence. Instead of investing in search

engine optimization, ARC will place ads on the websites of online degree programs.


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Local Regulations Preventing the Execution of ARC’s Promotion Plan

In September 2007, the major of São Paulo issued a mandate that called for the

elimination of visual clutter. He named this law Clean City Law (Reed, 2010). He wanted São

Paulo’s focal point to be the city itself, not desperate, colorful marketing campaigns. Millions of

dollars in fines have been issued to those who fail to adhere to the Clean City Law. Citizens

clearly approve as petitions to reinstate outdoor advertising have been largely unsuccessful.

Surveys have found that at least 70% of Sao Paulo residents are happy with the change (Reed,

2010). This means that ARC will be forced to depend heavily on push promotions by online

colleges and on pull promotions in television, radio, newspaper, and magazine ads. This will be

an opportunity for us to connect with the local market on a more personal level by physically

going out and interacting with their staff and informing them about their service face-to-face.

Promotional Message

ARC’s promotional message is “convenient opportunity”. The consumer needs to know

using ARC facilities provides them with the opportunity for advancement at little cost. To

convey this message, ARC will run the ad below in several Brazilian newspapers and magazines.


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The promotional tagline- “Ir para a universidade é difícil. Centro de Pesquisa Americana

torna mais fácil (Google Translate, 2011).” is Portuguese for “Going to college is hard.

American Research Center makes it easier.” Taking out the tagline still allows the print

advertisement to effectively convey their message. This makes it universally understandable.

ARC’s commercial aims to educate people on their service and its benefits. The commercial is

composed of royalty-free clips which entitle ARC to use the copyrighted material without the

need to pay royalties for each use or per volume sold (Video Blocks, 2011).

ARC’s Global Supply Chain

Managing Physical Distribution

The physical geography and location of Brazil on the world map suggests that using

Brazil’s ports in São Paulo would be the most efficient and cost effective method of managing

distribution of the their building materials, furniture, and computers. All electronic equipment

will be imported to Brazil from the United States. This will all be shipped on vessel carriers in

containers tracked by ARC logistics in Brazil. Currently, Brazil imports 181.7 billion dollars

annually, up from 127.7 billion in 2009 ranking them 22nd in world imports (Bureau, 2009). The

United States is Brazil’s largest importer accounting for just over 15% of their total imports

(Bureau, 2009). Additionally, Brazil’s largest imported commodities include electronics,

machinery and automotive parts (Central Intelligence Agency, 2010). Due to the fact that ARC

will be headquartered in the United States and importing electronics they can expect fewer issues

with customs and local government in moving goods from one country to another.

Managing Sourcing Strategy

ARC will be igniting as a wholly owned greenfield subsidiary. By outsourcing

management, ARC can hope to encounter less resistance from local government as well as the

most effective platform to distribute computer and internet access. Currently, Brazil is a country

of about 201 million people with only 76 million having access to the internet, roughly 38%

(Theme Demo, 2011). Complimenting the large need for internet access in Brazil is the purpose


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of that access. At this point in time 26% of internet users in Brazil, the largest segment, are

classified as “knowledge seekers” (Theme Demo, 2011). By catering to the largest segment of a

growing market ARC anticipates a large user base. ARC’s sourcing strategy also includes the

hiring of bilingual American college graduates from various countries and educational

backgrounds to further assist their customers. These graduates will possess the necessary

characteristics to fully assist their market segment by having backgrounds in Finance, Computer

Science, Math, English, Economics, and legal studies. Sourcing such a diverse array of

accredited educational backgrounds will provide easier management of these employees and less

room for error because they are skilled and responsible.

Retailing

ARC will be open from the hours of 10am to 10pm on weekdays. Saturday’s hours will

be 9am-1pm and ARC will not be open on Sundays due to cultural conflict. In most Brazilian

cities, working hours are 8:30am to 5.00pm with a 1-2 hour break in the middle for lunch.

Businesses are usually open from 9:00am to 7:00pm Monday-Friday and 9:00am-1:00pm on

Saturday. Larger businesses and most in São Paulo may be open longer hours so the extension

into night will benefit even those who work for larger companies. Another consideration in

operating hours is the high percentage of Catholics in Brazil. The devoutness of Brazilians to

Catholicism means being open on Sunday, Catholics day of rest, could be detrimental to both

image and usage. At best no one would be using the facilities, at worst it could be viewed as

disrespectful. ARC offers a service not a product, making the approach to a retailing strategy

quite different than that of a product. The fees will provide revenue to cover operating costs and

help turn out a profit for reinvestment and possible expansion for more establishments similar to

ARC.


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