Emerging Lower Middle Class Fires Up Marketers in Brazil

New Group Becomes Country's Largest Consumer Set, Driving Sales of Cars, Houses, Cellphones, Electronics

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RIO DE JANEIRO (AdAge.com) -- Much of Brazil's explosive growth is being fueled by an emerging lower middle class that has grown to 95.4 million people. As they snap up cars, cellphones and new homes, this group is quickly becoming a prime target for marketers.

A spot for Vivo, a Brazilian cellphone company that is taking its digital 3G signals to remote parts of the country.
A spot for Vivo, a Brazilian cellphone company that is taking its digital 3G signals to remote parts of the country.
The group, called the Clase C, earns between $600 and $2,600 a month and, through upward mobility in a growing economy, has become Brazil's largest consumer group in a population of 192 million people. (Clase A and B are Brazil's elite and upper middle class, while the D and E classes are on the lowest rungs of the economy.)

Nova America, a thriving but not upscale shopping mall in Rio de Janeiro, gets about 50% of its sales from the Clase C. Carlos Martins, the mall's superintendent, said sales have been growing by about 15% a year, and the mall is adding new stores and corporate offices this year. About 50,000 people a day pass through the mall, spending an average of $80 per person and buying cellphones, consumer electronics and even cars and houses.

"We are huge sellers of real estate and cars," Mr. Martins said.

Every weekend, car dealers set up shop in the mall's parking lot and sell an average of 400 cars a weekend. In 2009, car sales to Brazil's Clase C consumers grew by 50% nationwide.

Housing boom
Rossi, a condo developer, has opened sales offices at Nova America and other malls for the first time. Thanks to a new government mortgage financing program called "My house, my life," it's easier for lower-income households to get 30-year mortgages. Condo developers are responding by building smaller, cheaper apartments. Now 60% of Rossi's sales come from Brazil's C and D classes. After selling 13,000 small units in 2009, the company plans to offer double that number this year.

"This was a badly served audience," said Marco Adnet, Rossi's national sales director and a VP of Rio's Real Estate Association. "With the support of the federal government, everything changed. We launched apartments with monthly payments of $100 a month."

Understanding this group of new consumers can be challenging for marketers trying to target them with the right products, services and messages. An ad agency called Consumidor Popular recently ran a workshop for 12 executives that included kits full of photos the agency had snapped in the homes of Clase C families showing what was in their cupboards and refrigerators to offer insights into their brand choices and consumption habits.

In 2009, car sales to Brazil's Clase C consumers grew by 50% nationwide.
In 2009, car sales to Brazil's Clase C consumers grew by 50% nationwide.
High-status cellphones are a given, and the Samsung Star model, priced at $325, is a favorite among the Clase C, who account for about 50% of Samsung's cellphone sales. According to Carlos Werner, Samsung's director in Brazil, the total cellphone market grows by about 100% a year, and some Clase C consumers are already on their third cellphone, replacing older models and upgrading to more expensive ones.

Samsung profits
Samsung's LCD and plasma TVs are also big hits among this consumer group. To drive sales, retailers offer low-interest installment plans and customers go to the store every month to make their payment.

Despite a penchant for pricey cellphones, most Brazilians stick to pre-paid plans. According to the National Telecom Agency's tally of cellphone plans, 145 million of them -- almost 82% of the total -- are pre-paid, and only 30 million, or 17%, are post-paid. Prepaid plans are the choice of Clase C.

Vivo, owned by Spain's Telefonica and Portugal Telecom, is Brazil's mobile-phone leader, with 54 million clients. Planning Director Daniel Cardoso estimates that about 35% of his clients are from the Clase C and that those numbers are growing fast. To accommodate them, Vivo is adding new sales outlets and lower price points so consumers can add minutes in increments as low as $3 or $5.

Vivo's ad campaign, by Sao Paulo agency Africa, tells true stories of reaching remote parts of Brazil and changing peoples' lives. Ads show a young woman updating her blog from the Amazon region and a young designer working on sustainability projects using Vivo's mobile internet connection.

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