Media Evaluation of Brazillian Cachaça Pitu

           

The Brazillian cachaça Pitu, symbolized by the red Pitú on the label (like lobster), Pitú is one of the most recognized brands of cachaça in the world, the No. 2 cachaça maker. Made from fresh cut sugar cane, cachaça Pitu it is known for superb quality, and how well it blends with fresh fruit and juice. Manufactured in the State of Pernambuco, northeast Brazil, Pitu is a 75-year old family business, with a tradition in the production of cachaça, which can produce up to 15 million bottles annually (Ballve, 2002).

            Exports of the clear liquor are fueled by the popularity of the caipirinha, a drink mixing crushed ice, lime, sugar and silver cachaça, a sweet-and-sour concoction downed by the hip in bars from Berlin to New York. Cachaça makers, who already enjoy a half-billion-dollar annual domestic business in Brazil, now see an opportunity to increase consumption of the drink in U.S. because of the upcoming events in Brazil (World Cup in 2014 and the Olympics in 2016, O’Conor and Barnes, 2012). Additionally, a recent development has resulted in the U.S. officially recognizing the sugar-cane spirit cachaça -- used to make caipirinha cocktails -- as a genuine Brazilian product, which means it can be sold in American liquor stores as "cachaça" and not just "Brazilian rum." (Phillips, 2012). This is a victory for cachaça because even though cachaça is a close relative to rum, rum is derived from molasses, a byproduct of sugar refineries, while cachaça is made from pure sugarcane juice. This differentiation can prove to be important in the marketing of the product. 

            Pitu also faces some competition in U.S. where there are now some 20 cachaça brands (Perlroth, 2010). Leblon cachaça, for instance, with Bacardi’s involvement as a strategic partner and investor now lead the Caipirinha trend in the United States. Another strong competitor is the 51 cachaça which is actually the cheapest alternative, or even Cabana Cachaça, which manufactures and imports high-end cachaça.

            Given this scenario Pitu has the advantage successful distribution agreements established in U.S., allowing them to be available in most of the liquor stores and bars. However, their challenge now is not only increase exports to U.S, which today represent about 1% of the production (Ballve, 2002). Also, change their image as “the go-to brand for broke students looking to make cheap caipirinhas” to elevate the Brazilian liquor to a place on the global bar shelf next to Scotch whisky and Mexican tequila.

 Media Combination that would be effective for the target market and product.

            Cachaça Pitu advertisements have been available in print media in the U.S., for example, in the Portuguese newspapers for NYC's Brazilian community They also have exposure on the internet with their own web site and also some videos.  In order to create awareness of Cachaça Pitu, it is recommended to use three different medias to provide a coverage of at least 80% of our target market over a period of six months. The goal is to extend media coverage to as many of the members of the target market audience as possible while minimizing the amount of waste coverage.

            Among the wide variety of media available it is recommended are going to use print media magazine, interactive media Internet and support media in-store. For print media it is recommended choose to use magazines because they provide better segmentation potential thus it is recommended can focus our campaign to reach our specific target market while giving a high level of information about the product (Belch, & Belch, 2012). Also magazines allow for high quality reproduction which combined with some creativity it is recommended would give the ability to explore the colors of Brazil as well as the images. Another positive feature of magazines is the prestige the cachaça can gain from advertising in publications with a favorable image. For example Esquire covers men’s fashion in a very favorable environment, cachaça Pitu advertising in this magazine could enhance the prestige of the product line. Also, in the Men's Health magazine it is recommended can reach men in their early thirties a demographic which is a very high consumer of alcohol. In the Sports Illustrated, it is recommended can take advantage of the fact that most people drink when they watch a game to advertise our product to our target market. Even though the cost to advertising in a magazine can be high and they only have a limited reach, the magazine will give Pitu the ability to engage readers, hold their attention and expose them to cachaça.

            Nowadays with smartphones, tablets and other devices, it is indispensable to develop and maintain a good web site. Pitu should use some banners and contextual ads to direct people to the web site. The web site will provide interactive activities that go beyond just information. It is necessary to create a long term relationship with the consumers to establish a brand image for the product and support sales (Belch, & Belch, 2012). The web site will give ideas how to use cachaça and give incentives for party with cachaça. By clicking in one of the ads the consumer can access the address of the shops which sell Pitu. The site also will give tips on how to create a party, games to play with cachaça, and information from experts about the quality of the product. The site will be designed to offer very useful information, as well as samples for people older than 21 years old.

            Finally the media in-store is going to support our campaign at the place which our customers are going to buy. Since the customer is already in a liquor store, that is where the decision is made, therefore it is recommended to reach the target market at the point of the purchase, providing additional product information while reducing their own efforts (Belch, & Belch, 2012). For instance the in-store ads would be aisle displays, store leaflets, shopping bag etc.

Media plan schedule to leverage the media.

The media plan schedule to leverage the print media magazine, interactive media Internet and support media in-store recommended is based on the pulsing method. In the pulsing strategy, continuous exposure is maintained, but certain at times promotional efforts are stepped up (Belch, & Belch, 2012). Since our product is not seasonal, our advertising would continue throughout the year but maybe increase at holiday periods such as Mardi Gras Memorial Day, Labor Day, or Fourth of July and increase in a sports game periods such as Super Bowl and NBA Finals.

                The table 3.1 is a six month mockup of a media schedule covering 3 magazines publications--the prices are fictitious, also include estimated page size (small, medium, big).

TABLE 3.1: MAGAZINE SCHEDULE PLAN

Publication Jan Feb Mar Apr May June Total Esquire Magazine, Circ: 700,000, Target: Afluente men, Pub: 12x/yr (1) Size: small Cost: 100,00 Size: small Cost: 100,00 200,00 Men's Health Magazine, Circ: 210,000, Target: Men 25-44 years, Pub: 12x/yr (2) Size: Medium  Cost: 130,000 Size: Big   Cost: 200,00 Size: Big   Cost: 200,00 $530,000 Sports illustrated, Circ: 1,9 million, Target: Sports followers, Pub: weekly (3) Size: Big Cost: 300,000 Size: Big Cost: 300,000 600,00 Total $ Cost $100 $300 $130 $300 $300 $200 $1,330  Total # Impressions 700,00 1,9 million 210,000 1,9 million 910,000 200,000 1320000 (1) http://www.esquiremediakit.com/r5/cob_page.asp?category_code=circ (2) http://mediaweek.co.uk/channel/Magazines/article/1117627/MAGAZINE-ABCs-Mens-titles-lead-digital-editions-charge/ (3) http://sportsillustrated.cnn.com/adinfo/si/ratecardframe.html

The media schedule during six months for the in-store ads and for the internet interactive activities are going to follow the same schedule of promotional efforts: FIGURE 3.2: IN-STORE and INTERNET ACTIVITIES SCHEDULE

promotional increase Efforts due increase Super Bowl due increase holidays increase due due maintain maintain NBA holidays Jan Feb Mar Apr May June

            Since achieving awareness requires reach, which is exposing potential buyers to the message (Belch, & Belch, 2012). Pitu cachaça needs a very high level of reach, since the objective is to make all potential buyers aware and prepare to adopt the product. The objective of the schedule plan is to reach a larger number of the target market, in attempt to make them learn about cachaça, try it, and develop favorable attitude towards the Pitu brand.

            The problem arises because there is no known way to determining how much reach is required to achieve the levels of awareness, attitude change, buying intentions nor can it is recommended be sure an ad placed in a vehicle will actually reach the intended audience (Belch, & Belch, 2012). This leads to a question, what frequency of exposure is necessary? Based on that information the schedule plan maintain continuously the frequency of promotional efforts in every media choose, while stepped up in certain times. The objective is to have the total market audience reached by using three different magazines even if some people see the ad twice.

            Because the cachaça Pitu needs to develop a new attitude towards the brand only awareness in as many people as possible is not enough. Pitu cachaça, needs to create a demand for cachaça, especially by taking advantage of the popularity of caipirinha drink they can teach people how to properly make the drink. Thus at the same time that awareness is created a certain level of frequency to achieve effective reach is necessary to give time for the consumer to understand how to use, where it came from, and why it is cool to drink caipirinha with Pitu cachaça.

            The schedule of the media in-store will support the sales and will make sure that the target market gets exposure to the message as close as possible to when they are going to  make the purchase, therefore the media in-store will continue as long as possible.          

            Finally, in this plan the budget was not consider, thus in real situations the budget would be one of limitations which should be consider in first place before establishing any plan.

           

REFERENCES

Ballve, Marcelo (2002). One Part Cachaça, Two Parts Marketing.  Latin Trade (English),             10870857, Aug2002, Vol. 10, Issue 8

 Belch, G., & Belch, M. (2012). Advertising and promotion: An integrated marketing         communications perspective (9th ed.). Boston: McGraw-Hill/Irwin.

O’Conor, Erika and Barnes, Taylor (2012) Slum Dwellers Are Defying Brazil’s Grand Design      for Olympics. A version of this article appeared in print on March 5, 2012, on page   A1. Retrieved at may 2012 from:             http://www.nytimes.com/2012/03/05/world/americas/brazil-faces-obstacles-in-        preparations-for-rio-olympics.html?pagewanted=all

Phillips, Dom (2012). Obama and Dilma Agree on Bourbon and Cachaça, but Not Much Else. Apr 12, 2012 11:06 AM GMT-0300. Retrieved at may 2012 from:          http://www.bloomberg.com/news/2012-04-12/obama-and-dilma-agree-on-bourbon-        and-cachaça-but-not-much-else.html

Perlroth, Nicole (2010). Sobriety Check.  03.04.10, 06:00 PM EST. Retrieved at may 2012            from: http://www.forbes.com/2010/03/04/brazil-cachaça-bacardi-cabana-leadership-        second-acts-anttila.html

Analyze of Helms- Burton legislation

Basically Helms- Burton legislation strengthened the existed embargo by, prohibiting loans, credits, or financing by US citizens or residents for transactions to confiscated property and forces the United States to vote against admission of Cuba to international financial institutions until democracy is restored in Cuba. Also it allows US citizens to sue in the US court system anyone who "traffics" in property confiscated by Cuba, and extends this

right to people who were not US citizens at the time of the confiscation and blocks admission to the United States by foreign citizens (corporate officers, families, shareholders, and so on) involved in "trafficking" in confiscated property (Roy, 1997; pg 82).

            The key issue that prompted EU to take the Helms-Burton dispute to the WTO was because EU interpreted the law as a grave violation of international conventions, centering on the issue of extraterritoriality. They argued that the Helms-Burton law disrespects other governing party’s attitude toward sovereignty. Therefore, in a environment where EU and US had reach advanced stages of economic development, any practice or policy that restrains free trade (in theory) should be consider illegal. However US argued that Helms-Burton legislation objective is to promote “democracy” discouraging foreign investment in Cuba through the threat of lawsuits and the imposition of travel restrictions. According to Roy, (1999) the US law seeks to generate a deeper economic deterioration in order to accelerate the fall of the current Cuban regime.

            In this law the potential claimants against "traffickers" of confiscated property seem to be the major issue (Marquis, 1997), because it has produced uncertainty in business circles. Therefore, EU wants to protect the marketplace by forcing US to act under the laws and regulations established to promote fair competition.

            Helms-Burton definitely had a negative impact on the prospects for Cuban society by slowing new foreign investment and increasing the cost of external financing. Foreign companies probably will find another market in which to invest but the Cubans have no alternatives and they are the ones who suffer the most, they must stay there and struggle to live and survive day by day. Foreign investments in Cuba would help people to have job opportunities, it would help stimulate the economy and finally it would make possible for people to have access to goods and technology and maybe this could be the starting point for Cuba to open up to capitalism. However the American Helms-Burton law inhibited foreign investments and isolated a nation, making Cuban people are less encouraged to "empower" themselves and change the government because now they depend even more on the government.

            On other hand, Fidel Castro has not been affected by this law, actually it serves as a pretext for the Cuban government to justify itself in carrying on a repressive government. In fact, according to Robinson et al (1996), some dissidents have reported an increase in repression since the passage of the Helms-Burton Act. In 1998, Castro remains in power and the U.S. legislation was not successful in achieving its desired effects on the Cuban economy or on Fidel Castro's leadership position (Arendt, 1998). 

            Finally we would think that at least the U.S. government had benefited from the Helms-Burton law, yes? Actually not, the Helms-Burton Act has raised a conflict in the international community. The United States has faced retaliatory measures from several nations including the European Union (E.U.), Mexico and Canada.  Beyond these efforts to hinder enforcement of the Helms-Burton Act, nations also have taken actions to attack U.S. trade. For instance the E.U. has been working on compiling a "blacklist" or "watchlist" of U.S. companies who file suits against European businesses and has been threatening to deny visas to representatives of those U.S. companies (Arendt, 1998). ' The US government argues that “the conflict unchained by the EU's demand in the World Trade Organization does not benefit anybody" (Roy, 1997).  The fact is that Helms-Burton law doesn’t seem to benefit anybody.

Economic barriers would have to be overcome by a U.S. firm to conduct business successfully in Cuba.

            Since the economy system in Cuba is centrally planned socialism, the state has broad powers to serve the public interest. In Cuba the state makes most of the decisions about what goods and services are produced and in what quantities; consumers can spend their money on what is available. Therefore, the economic barrier created by this economic system would have to be overcome by a U.S. firm to conduct business successfully in Cuba. Companies mostly understand that the characteristic of centrally planned economy, where the government has ownership of most industries as well as individual enterprises. However because demand typically exceeds supply, in this kind of economy, the opportunities for foreign investment are high. If companies could explore areas where the government has less control, then they could be successful in their business deals in Cuba.

            The American companies have an advantage to be experienced superiority of market capitalism in delivering the goods and services that people need and want, which can led to its adoption in Cuba, as it happened in other socialist former countries (Keegan & Green, 2011). However, Cuba must engaged in economic reforms, in varying proportions, by increased reliance on market allocation and private ownership to promote a friendly environment for American Companies. This friendly environment, however, will be the very difficult to achieve because even if the economic reforms are made, Cuban politics are very different from American politics and this will create continuous friction. Additionally, years of embargos, plus the Helms-Burton law had made the whole Cuban society to suffer therefore the image of American companies has been seriously damaged by years of punishments from U.S. to Cuba. The fact is that even if the economic barriers been overcome, even if the politics change, people are still going to be there to remember and make their own assumptions.

REFERENCES

Keegan, W. J., & Green, M. C. (2011). Global marketing: 2011 custom edition (6th ed.).   Upper Saddle River, NJ: Prentice Hall / Pearson.

MARQUIS, CHRISTOPHER.  (1997). " New test looms in wrangle over property Cuba seized," Miami He r a ld,  26 April.

Roy, Joaquin, (1997). The Helms-Burton Law: Development, Consequences, and Legacy for        Inter-American and European-US Relations. Journal of Interamerican Studies &     World Affairs, Fall97, Vol. 39 Issue 3, p77-108, 32p

Robinson, Linda et al. (1996), Cuba Takes a Stiff Belt, ("The debate over how best to change       Cuba -- more investment that would bring more foreign influence or more isolation in      hopes of toppling Castro -- has gone on for more than three decades"). U.S. NEWS &           WORLD REP., July 29, 1996, at 36, 37. 

Arendt, Michelle, (1998). The Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of      1996: Isolationist obstacle to Policy of Engagement. Case Western Reserve Journal of            International Law, 00087254, Winter98, Vol. 30, Issue 1

United Nations. Distr.: General : 2 February 2011. Resolution adopted by the General       Assembly on the report of the Second Committee, International trade and development           (A/65/434/Add.1) 65/142. Retrieved at april 2012 from:      http://www.un.org/ga/search/view_doc.asp?symbol=A/RES/65/142&Lang=E