1

Running head: Havaianas

Havaianas

Strayer University

Juliana Hendershot

Marketing 500

Professor Kung

March 20, 2010

Havaianas

Until 1999 the product was exported to over 40 countries, mainly from Latin America,
 2
Running head: Havaianas

Africa and some countries in Asia. The company was using the same basic strategy without

changing the product, communication or promotion. In Brazil, Havaianas were marketed with

relatively low prices. However, the Company had an opportunity to position the sandals for a

market with a high purchasing power, such as the U.S., Australia and Europe.

Segmentation and Positioning of Havaianas for International Market

The company had two paths to follow for exporting the product, focusing primarily on

classes A and B. The two options were almost antagonistic and required very different strategies.

Focus on the base of the pyramid would rapidly increase market penetration and storage

volumes, but would risk facilitating copies of the product for low-cost competitors, particularly

Chinese manufacturers, responsible for more than 50% of the footwear industry in the world (10

times the Brazilian production). On the other hand, the adoption of a strategy to differentiate the

brand from any other sandal in the market; this strategy would require heavy investments in

brand creation and cause understanding of the target market much more demanding.

Although there are other challenges to be overcome, the success of repositioning the

product in Brazil and its transformation into a fashion item for classes of higher purchasing

power boosted the company's management and enabled them to choose the second strategy to

entry into the European and American markets. From the beginning, the company sought to

select a team of professionals to work directly with the appointed exclusive distributors for each

region or country, aiming to promote sales and proper display of products at the outlets. This

team mission was to make the distributor of each country realized that the market had higher

added value.

A bold strategy was established for the major international markets. Projects started in

2001 by the two countries opinion leaders (Italy and France). Havaianas Sandals attended a show

about Latin America at the Galerie Lafayette, in Paris. The success of this event made it easier to

export Havaianas to other countries, including England, Belgium, Switzerland, Greece and
 3
Running head: Havaianas

Monaco.

In the U.S., for example, there were several action events such as participation in New

York Fashion Week, the distribution of the product to mega events like the Grammys and the

Oscars in 2003 and the MTV Awards. This work was carried out in conjunction with the

distributor. The focus of the construction of brand image was in its association with events,

prestige people and celebrities.

Promotional Strategy

Havaianas Sandals followed a strategy of adjusting the mix of promotion in all countries

where it operates. The local distributor coordinates the promotional activities and several

adjustments are made, especially in packaging, sales promotion and implementation of

advertising campaign. The adaptation of the communication was crucial, because the artists that

advertised the product in Brazil were not known abroad. This adaptation occurred, for example,

in campaigns in Latin America. In European countries and the U.S., on the other hand, the

emphasis is on activities of the press office, in which artists are caught the wearing Havaianas

Sandals at parties or during leisure time.

Advertising

Colorful, vibrant and rubbery, the international campaign “Portraits of Brasil" will be

marketed in the USA. There are three ads on double pages where icons of the Brazilian culture

will pop out of the page, mixed with other not so famous or well known images and, however

interesting, among them are the multicolored Havaianas sandals.

One of the goals of the campaign is to reinforce the brand Havaianas in the United States,

taking to the young public it values - simplicity, joy and irreverence - and the relaxed and joyful

lifestyle of the Brazilians.

The first advertising will pay a tribute to the singer and actress Carmen Miranda. In it, the

picture of Carmen and several other images that have strong links with Brazil gained prominence
 4
Running head: Havaianas

alongside the Havaianas. Examples include birds, fruits, Christ the Redeemer, along with several

other images. The tribute is the perfect link between the two countries from 1930 to 1960,

Carmen Miranda was a hit in Brazil and the United States of America, singing and representing

the radio, theater, cinema and television. Her colorful clothes and decorated turbans with

flowers, fruits and Brazilian objects wore by the Star made her an international icon.

Furthermore, the Brazilian culture is vast and sports is a fundamental part of it- especially

football. Therefore, the sport could not miss a campaign that takes a bit of Brazil to the world. In

the ad that has this issue as a national passion, the main colors are from the national flag, green

and yellow. Among the pictures of the sandals are the Maracana Stadium in Rio de Janeiro, the

players, the drawings of the sidewalks of the beaches of Rio de Janeiro and Sugar Loaf.

The campaign will be marketed in the following magazines: Glamour, GQ, Jane, Lucky,

BlackBook, Vogue, W, Complex, Elle, Foam, Marie Claire, Nylon, Ocean Drive, Justapoz,

Paper, Planet, Radar, Spin and Mean.

Sales Promotion

In an effort to build relationships with the distribution channel and to instigate them to

carry and promote Havaianas, the Company will invest in trade promotions.

The components of this promotion are:

- Point of purchase (POP): The company will display, in high traffic areas of the channel,

“flower beds” in the shape of Havaianas sandals. The purpose of this action is to increase the

probability that the products will standout and to remind customers that designs and color are

always connected to nature. For channel partners, POP displays can result in significant sales

increases compared to sales levels in a normal shelf position. Also, Havaianas will lower the per-

unit cost of products in the POP display as an incentive for retailers to agree to include the

displays in their stores (Know this, 2010).

- Trade Allowances: This promotion will offer channel partners price breaks for agreeing
 5
Running head: Havaianas

to stock Havaianas. The purpose of this promotion is not only to encourage the purchase of the

product but also as an inducement to promote the product in other ways such as by offering

attractive shelf space or store location, highlighting the product in company-produced advertising

or website display, or by agreeing to have the retailer’s sales personnel “talk-up” the product to

customers.

Direct Marketing

For this promotion Havaianas will target customers that have subscriptions to the

following magazines: Glamour, GQ, Jane, Lucky, BlackBook, Vogue, W, Complex, Elle, Foam,

Marie Claire, Nylon, Ocean Drive, Justapoz, Paper, Planet, Radar, Spin and Mean. The company

will send out with the magazine a key chain that will look exactly like a real Havaianas sandal,

the same material and vibrant color. With the little gift will be a letter introducing the sandal to

customer, where to buy and a special discount associated with that promotion for a limited time.

The purpose of this promotion is to support the advertising campaign “Portraits of Brasil” and

also to introduce the product to those customers that are not familiar with.

Personal Selling

Havaianas will heavily invest and train people to be part of its Sales Force. As part of its

strategy to build relationship with the channel the Company believes that the use of face-to-face

communication between seller and buyer permits a better interaction and offers a win-win

situation.

Objectives of Havaianas Sales Force:

- Building Product Awareness: To educate customers on product offerings. This will

allow the Company to control and take advantage of word-of-mouth marketing (Know this,

2010).
 6
Running head: Havaianas

- Creating Interest: The fact that personal selling involves person-to-person

communication makes it a natural method for getting customers to experience a product for the

first time. In fact, creating interest goes hand-in-hand with building product awareness as sales

professionals can often accomplish both objectives during the first encounter with a potential

customer (Know this, 2010).

- Reinforcing the Brand: Havaianas values its channel as much as its customers. The

Company intended to build long-term relationships with the distribution channel. A strong

relationship can only be built over time and requires regular communication with a customer.

Meeting with customers on a regular basis allows salespeople to repeatedly discuss their

company’s products and by doing so helps strengthen customers’ knowledge of what the

company has to offer (Know this, 2010).

- Stimulating Demand: By far, the most important objective of personal selling is to

convince customers to make a purchase.

Public Relations

Havaianas will still count on Public Relations to establish credibility for its product and

company. The product first time on the spot light in the US market was due to Public Relations

intensive work and determination to expose the products on important events such as the Oscars

and New York Fashion Week.

Public Relations main responsibility will be to continue to introduce the brand to events

of great importance to the fashion world, to magazines that dictate styles and trends and to

expose the brand to celebrities and icons of the fashion industry. The goal is to create interest for

the product, build product awareness, reinforce the brand and stimulate demand.

Distribution Channel
 7
Running head: Havaianas

The best distribution strategy for Havaianas is a mix of direct and indirect

channels of distribution. Its Sales Force in Brazil and its website are full of responsibility for

Havaianas and are considered direct channels. Having control over its Sales Force allows

Havaianas to have a direct contact to its customer, deliver a proper message, change it when

necessary and focus on specific target groups and promotions. Because the company is also

investing in offering mass customization over the website a direct sale is important due to quality

assurance, customization, and possibility of large orders. The Company already has in place a

logistics system that is able to embrace deliveries to the entire country.

On the other hand, exports still represent a small percentage of the total business for

Havaianas. The best strategy in this case is indirect channels until the brand is stronger and solid

in the international market, because investing in its own Sales Force and Production is costly and

will not bring ROI (return on investment) as desired in a relatively profitable time. In order to

attend its international demand, the Company should create an export department to manage the

relationship with its agents and local distributors. The would, in turn, work with agreements of

mutual exclusivity, allowing business promotion and brand exposure in points of sale according

to the characteristics and peculiarities of each country. These distributors and agents would also

use their knowledge of the local market to propose marketing and sales activities and to assist

customers at trade shows and events. The main goal of the agent would be to bring suppliers and

buyers together. Havaianas would offer the agent product knowledge, materials and also

understanding of the business culture of the Company. Distribution Centers would be firms who

work mainly in the business-to-business market selling products obtained from industrial

suppliers, in this case Havaianas. According to the geographical area, the Distribution Center

would be able to have a direct relationship with the Export Department or this relationship could

be intermediated by an agent.

The benefits of using the channel members are:

 8
Running head: Havaianas

- Cost Savings in Specialization: Members of the distribution channel are specialists in

what they do and can often perform tasks better and at lower cost than companies who do not

have distribution experience, which is the case of Havaianas in the international market.

- Reduce Exchange Time: Not only are channel members able to reduce distribution costs

by being experienced at what they do, they often perform their job more rapidly resulting in

faster product delivery.

- Create Sales: Resellers are at the front line when it comes to creating demand for the

marketer’s product. In some cases resellers perform an active selling role using persuasive

techniques to encourage customers to purchase a marketer’s product. In other cases they

encourage sales of the product through their own advertising efforts and use of other promotional

means such as special product displays.

Downsize of utilizing channel members:

- Loss of Revenue: Resellers are not likely to offer services to Havaianas unless they see

financial gain in doing so. They obtain payment for their services as either direct payment (e.g.,

marketer pays for shipping costs) or, in the case of resellers, by charging their customers more

than what they paid the marketer for acquiring the product (termed markup). For the latter,

Havaianas has a good idea of what the final customer will pay for their product which means the

Company must charge less when selling the product to resellers. In these situations Havaianas

are not reaping the full sale price by using resellers, which they may be able to do if they sold

directly to the customer (Know this, 2010).

- Loss of Communication Control: Havaianas not only give up revenue when using

resellers, it may also give up control of the message being conveyed to customers. If the reseller

engages in communication activities, such as personal selling in order to get customers to

purchase the product, the Company is no longer controlling what is being said about the product.
 9
Running head: Havaianas

This can lead to miscommunication problems with customers, especially if the reseller

embellishes the benefits the product provides to the customer (Know this, 2010).

- Loss of Product Importance: Once a product is out of the Companies’ hands the

importance of that product is left up to channel members. If there are pressing issues in the

channel, such as transportation problems, or if a competitor is using promotional incentives in an

effort to push their product through resellers, Havaianas’ product may not get the attention the

Company feels it should receive (Know this, 2010).

Today the company is able to accelerate its international expansion, but intends to

maintain the positioning strategy of focusing on Havaianas as a product for upper to middle

class. This is due, to the lack of capacity in the only factory that the Company has, located in

Brazil. The development of new industrial plants will certainly be a challenge for expansion of

international operations of the brand.

So far Havaianas has worked heavily on building the brand Havaianas, and obtained good

results in terms of image, profitability and reputation. The reputation of the brand and its

association with Brazil offers opportunities to extend the brand to other products such as towels,

shirts, bikinis and beach articles, more associated with lifestyle than with the footwear industry.

Another way to accelerate sales in key markets is linking the product to known

personalities in international markets, Brazilian or not. The partnership with famous people

abroad could certainly add value to the brand Havaianas and facilitate the marketing of the

product in new points of sale and / or attract new consumers of the product.

In terms of distribution, the Company sells much of its production through distributors

and agents internationally, while the remainder is negotiated directly with retail. This system

proved to be the most appropriate for the current product portfolio and is unlikely to be changed.

In seeking to build a strategic positioning for the brand internationally, Havaianas

managed to combine strategies for product, distribution, price and promotion focusing on the
 10
Running head: Havaianas

target market. An important piece of this puzzle is distributors and agents appointed by the

company in each country. They are responsible for various activities of the marketing mix

(public relations, actions at the point of sale, distribution, relationships with retailers) in each

place where the flip-flops are marketed. This model requires great coordination effort of these

various intermediaries by the Brazilian team.

The triumph of new markets for the Company allowed the construction of a new brand of

footwear internationally, whose history is only in its beginning and that will certainly have

interesting developments in the coming years and new challenges for the company and its

managers.

References

Winter, S.R. (2007). Marketing Management. Upper Saddle River, NJ: Prentice Hall.

Wood, B.M. (2008). Marketing Plan Handbook. Upper Saddle River, NJ: Prentice Hall.

Havaianas Brasil. (2010)

Retrieved March 06, 2010, from

http://www.havaianas.com.br

Journal of Business & Economics Research

Retrieved March 06, 2010, from

http://www.cluteinstitute-onlinejournals.com/PDFs/1005.pdf
 11
Running head: Havaianas

Know this - Knowledge source for marketing

Retrieved March 20, 2010, from

http://www.knowthis.com/principles-of-marketing-tutorials/types-of-sales-

promotion/trade-allowances/

Know about

Retrieved March 20, 2010, from

http://womeninbusiness.about.com/od/marketingyourbusiness/tp/hub-

directmarketing.htm