Ad-Lider Embalagens, Sa: Marketing Research for Drawstring Trash Bags in Brazil

Applied Business Research

Written Analysis of Case: Ad-lider Embalagens, SA: Marketing Research for Drawstring Trash Bags in Brazil

Submitted to: Dr. Huma Amir

Submitted By: Hadia Siddiqui (00914)

Dated: February 6th, 2017

Executive Summary

The senior executives at Ad-lider Embalagens, SA, Lazlo Sved and Emilio Figer face the decision of new product development based on the results of the research conducted by the assigned research agency Sinergia. Convinced of the idea that the current product portfolio would not be able to drive long term profits to the company, the pair is set to understand that latent customer needs and use it to develop a competitive advantage for the firm. In a booming economy, Ad-lider can witness unprecedent growth if the right product is provided to the users at the right time and in the right manner.

The research undertaken provides the users with 6 factors that affect the purchase behavior of the products the company has to offer., The decision for Ad-lider lies in the tradeoff between these factors while developing a new product to offer.

1. Quality/Resilience
2. Practicality
3. Ease of Use
4. Price
5. Color
6. Size

The research shows that there is a wide gap between the consumers’ needs and the current product offered by the manufacturers. With a low brand recall among the various sellers and the product is distinguished by the color or the quality experience. None of the current offering focus on the ease of use and tie in facility that is sought by the users. Ad-lider should focus on the ease of use, quality and price factors while development of a new product to serve the market.

Statement of Problem

The case “Ad-lider Embalagens, SA: Marketing Research for Drawstring Trash Bags in Brazil” discusses the problem faced by the two senior executives of Ad-Lider Packaging, Inc, Lazlo Sved and Emilio Figer. With a rise in the customers’ purchasing power and improvement in lifestyle of the Brazilian population, the challenge for Ad-lider is to develop a product, that meets the customers’ needs of garbage disposal bag and provides the company with long term sustainable profits.

Brazil is one of the highly populated countries of the world with approximate population of 170 million. After the successful implementation of the Plano Real, the Brazilian economic stabilization plan, the purchasing power of the lower income segments of the population had been restored in the 1990s. The economy of Brazil saw a drastic improvement in the lifestyle and standards of the masses. The socio-economic classification developed and adopted by the local researcher, marketers and advertisers differentiated the population into 5 segments based on the parameters of income, education and material possession. This advancement in the economic situation allowed the masses to afford numerous consumer goods which were inaccessible to them earlier, while providing tremendous sales growth to the manufacturing industries.

In face of the growth opportunities provided by the economic conditions, the challenge for the management team at Ad-lider packaging lay in developing a long term sustainable competitive advantage for the company by developing product that offered better cost benefit relationship for the customer. In presence of competition from national brands like Dover Roll by Fort-Roll and Koleta by Colmag, Ad-lider could not simply rely on its brand Limp-o-Lixo to meet the changing customer needs and provide growth in profits to the company. Lazlo was convinced that unless a modern product that meets the customers’ unmet needs is developed, the current product mix at Ad-lider would not be able to bring in satisfactory profits in the long term.

With this opinion, Ad-lider focused on understanding the consumer needs and preference when purchasing garbage bags. The insight developed through the research undertaken for the purpose would be used for new product development, Hence the most important questions for Ad-lider was what factors effected the purchase decision in case of garbage disposal bags, consumer preferences and habits and what drove the perceived competitive advantage for the firm.

Cause of Problem

During the 1990s, the Garbage Disposal Bag market displayed huge potential to the manufacturers of the disposal bags. In 1997, the industry was estimated to be of a value of about US$120 million. The main variety of the bags were the different sizes ranging between 15 liters to 100 liters of capacity, offered in two colors, black and blue. These bags were available to the purchasers in 2 different packaging, rolled and folded. The consumer product market was led by 3 major brands, Limp-o-Lixo by Ad-lider, Dover Roll by Fort-Roll and Koleta by Colmag. Of these, Fort-Roll was the main competitor for Ad-lider with its product Dover Roll targeted towards the Consumer class A and B.

In the growing economy, the garbage disposal bag industry had come to a product stagnancy point where a very limited product range was offered to the consumers and limited information is available about their needs and perception. To improve sales and performance, understanding of the consumers satisfaction and perception became a pre-requisite. Ad-lider hired a research firm Sinergia in November 1999 to aid in understanding the latent needs of the customers and enable the firm to develop a new product to serve the market better.

Since garbage disposal is a household chore least liked and paid attention to, the researchers had limited secondary data available on the consumer preferences in this regard. Therefore, primary research was undertaken and involved a 2-tiered process. The 1st part of the research comprised of Focus Group Discussions among some randomly selected purchasers of disposal bags from super markets.

Through the focus group, the researchers evaluated the acceptance of the new Easy Close garbage bag, learned about packaging preferences, and determined the perception of the easy close feature. A total of 3 focus group interviews were held, in Sao Paulo and Rio de Janerio. The participants of the discussion were females who administered their households and lived either in houses or apartments. These were aged between 28 to 42 years of age and were responsible for making purchase of the garbage disposal bags.  Although the feedback received for the focus group interviews varied widely, there were some common opinions that were distinguished to some extend in all the discussion.