e-book Comparisons of prices and real products in Latin America

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It is reasonable to think that they could try to negotiate regional deals, obtaining better prices, better discounts, squeezing pharmaceutical companies margins. I will stop with these four storms, although one could argue that there are others on the way: take biosimilars for instance. The difference here is that the company that owns the branded biological has the choice of lowering the price or not. The four storms are arriving at different paces - but at some point they will merge and we must be prepared.

The increased demand was not enough to maintain sales, neither in the payers segment nor in the out-of-pocket market. Worse, the price cut will trim your margin more than the sales itself as well. However, this has proved to be very tricky and brings many risks. If you have a product that is mostly in the out-of-pocket segment and is taking a big price cut, you must try to increase your sales mass as much as possible.


The way out is getting access to large cohorts of patients, which can only be achieved through payers. And the name of the game for payers is Value - thus, you will have to develop a strong Market Access culture that unites all areas of the company market access, medical, marketing, sales and so on.

For those who have responsibility for multiple countries, it is critical to have some level of price uniformity across them, even if this will hurt competitiveness in smaller countries with low price levels. What you cannot allow is to have this small country with very low price become reference for a bigger country and hurt overall business. Looking at Latin America, Ecuador comes as a good example of a small country with pharmaceutical prices frozen for many years - and decreasing - becoming reference to a larger market Colombia , causing price cuts and jeopardizing business there.

If you do not know every word of the price regulations, you will probably lose money by allowing price erosion that otherwise could be avoided. Sometimes even how the company manages a new product registration will make a difference. In some countries, if you register a product as line extension it will be priced based on the existing product. If you apply with a new registration dossier, you may be able to set a new and better price.

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The new pricing environment calls for a professional that goes beyond following the regulations and calculating official price increases. You need professionals that find pricing opportunities, understand the impacts of neighboring countries' prices, are familiar with pricing studies, can dialogue with the pricing function at headquarters and have a good understanding of health economics principles. So you need someone else in charge. Pharma has always been somewhat careless with commercial conditions, since margins were comparably higher than in many other industries.

This is no longer the case, so you need to go in great depth on all types of discounts, rebates, promotional allowances etc. Do you really know the cost-to- serve for every client? If not, it is time to start doing your homework. In industries with slim margins beverages, consumer goods there is the role of Revenue Manager who is in charge of maximizing Net Sales by close control of the gross-to-net elements. Few pharmaceutical companies have this role yet.

Thus, local brands "signal" respect for and unique fit into cultural traditions, and pride in representing the local economy. Local brands are frequently seen as more authentic and down-to-earth, thus offering a more intimate basis for nurturing consumer-brand relationships. Local brands may be perceived as local icons, associated with local culture, tradition, and country Winit et al, Culture, it seems, is harder to standardize than economic organization and technology.

Several product categories as food breakfast, meal solutions, frozen and fresh foods, snacks, cookies and candy , beer, media, and mineral water, could be local maybe because of a better response to local needs, flavors and tastes e. The complexity of food, in particular, is noteworthy. Food preferences vary dramatically over the globe because of basic differences in local tastes, customs, and access to fresh, local products. It would be strange if curry powder, which is part of the Malay and Indian culture, were to use a "Western" brand name and image to make it more commercial.

Generally, a product that is closely related to its culture must use local branding strategy Douglas et al. H4 Product categories related to local tastes are positively associated with local brand success. The importance of the trust construct has already been demonstrated in sustaining buyer and seller relations. Trust is an attitudinal or mindset construct. It is the consumer's belief about whether or not the brand keeps its promises.

Trust is defined as a willingness to rely on an exchange partner in whom one has confidence. It represents the confidence that the relational party in an exchange will not exploit the other's vulnerability. Accordingly, to trust a brand implicitly means that there is a high probability or expectancy that the brand will result in positive outcomes for the consumer.

A trustworthy brand is one that consistently keeps its promise of value to consumers through the way the product is developed, produced, sold, serviced and advertised. In Europe, Schuling and Kapferer documented that the image of trust is significantly stronger for local brands than for global brands Similarly, Pinar, Girard, and Eser show that brand image is significantly higher for local banks than for global banks.

Trust reflects cumulative effects over time on loyalty in high-involvement, high-service product markets. Consequently, significant opportunities could exist for local brands in product categories that require image of trust e. H5 Product categories related to trust are positively associated with local brand success. In China, consumers perceived global brands as high quality products, durable, innovative, and customer-oriented product design. Firms from emerging markets are not known for having the most innovative technology, superior human capital, or worldwide-recognized brands.

In Latin American countries, several studies have demonstrated that the brand is seen by customers as a sign of product quality, assisting them to make their purchasing decisions e.


The electronics, computer, and automotive product categories have global brands, and these products appear to be more universal in terms of how they are used and how they are viewed. Jaffe and Martinez found that Mexicans rate American and Japanese electronic brands much more positively than Mexican electronic brands.

Consequently, in Latin America small opportunities could exist for local vs global brands in high-tech product categories. H6 Product categories related to high-tech are negatively associated with local brand success. In the s, technology opened borders digitally, if not physically, initially with satellite communication, then with wired and wireless transmissions. Media e. A global identity means that consumers feel they belong to the global community and identify with a global lifestyle.

Global brands carry an "exporting" culture, attract the "cosmopolitan" elite, and induce the aspiration to live in a global consumer community.

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Hall describes a growing global mass culture as driven by Western societies in terms of technology, capital, techniques, and advanced labor. With images and stories emanating from the West, this global mass culture "is centered in the West and it always speaks English" Hall, , p.

They argue that the development of a global economy does not lead to an increasing level of uniformity of Western culture across the world; instead, it contributes to the continual development of cultural diversity. A single global brand name also provides the advantage of the development of a unique brand image across countries. It is especially important in certain product categories e. Global brands are perceived to be more value-added for the consumer by enhancing the consumer's self-perception as being cosmopolitan, sophisticated and modern Friedman, ; Holt et al.

Findings also suggest that consumers in less developed countries associate global brands with an aspiration toward the lifestyles of more advanced economies Alden et al. Consequently, in developing countries, a brand's country of origin not only serves as a "quality halo" or summary of product quality Han, , but also possesses a dimension of non-localness that, among some consumers and for some product categories, contributes to attitudinal liking for status-enhancing reasons Batra et al.

H7 Product categories related to global citizenship are negatively associated with local brand success. In Latin America, there were five studies that reported rankings of brands published over the past years. Such reports were used in our study - an attempt to obtain more recent ones was unsuccessful. Spanish is the main language in the majority of Latin American countries.

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Portuguese is spoken primarily in Brazil, where it is both the official and the national language. Consequently, for each top brand reported, three coders - graduate students - fluent in Spanish and Portuguese, were instructed to code for the following items: global or local brand and product category See Exhibit 1. A total of 39 product categories were used. These were: alcoholic beverages, airlines, beer, breakfast excluding cereals , cars, cereals, credit cards, clothing, computers, conglomerates, department stores, electronics, energy distribution, fast food restaurants, financial services, frozen and fresh foods, health care services, home appliances, home care, hotels, internet websites, jewelry and accessories, meal solutions, media television, radio, newspapers, magazines , medicines, mineral water, nonprofit organizations, pension fund management, personal care, soccer teams, soft drinks, snacks, cookies and candy, retail banking, sportswear, supermarkets, telecommunications services, tobacco, and other brick-and-mortar retailers.

In order to examine the source of variations in the success of local and global brands, a detailed measurement of specific product category characteristics local production, subscriptions, face-to-face relationships, local tastes, trust, high-tech, global citizenship would be needed.

These measures were obtained through three new coders - graduate students - as no secondary data sources comprehensively cover the large array of product categories included in this study See Exhibit 1. For each product category, the coders were shown the name of the product category and a picture of a typical product. Therefore, all variables used in this study were categorical measurements with two categorical levels.

Table 1 provides a summary of the sample characteristics. Discriminant function analysis is very similar to logistic regression, and both can be used to answer the same research questions. Logistic regression does not have as many assumptions and restrictions as discriminant analysis. Consequently, in order to test the hypotheses, the study design considers estimating a logistic regression on a binomial dependent variable measuring whether top brands are global or local brands with product category characteristics as independent variables.

Specifically, standardized regression estimates were obtained by regressing local brand success on the independent variables - local production, subscriptions, face-to-face relationships, local tastes, trust, high-tech, global citizenship, and the markets Argentina, Brazil, Chile, Mexico as control variables. A positive regression coefficient means that an increase in its associated variable will increase decrease the probability of local global brand success.

On the other hand, a negative regression coefficient means that an increase in its associated variable will increase decrease the probability of global local brand success. These are reported in Table 2.


To begin, the variance inflation factors for each regression coefficient ranged from a low of 1. Since no particularly strong multicollinearity among the independent variables is found, all of them are included in the final model. As can be seen, the overall regression is significant Chi-square d. Therefore, H 2 and H 4 are supported. Thus, H 1 , H 3 and H 5 are not supported. Consequently, H 6 and H 7 are supported.