In this work, I will apply all the concepts studied in the subject that concerns me, (Marketing Strategies), as well as important concepts learned in previous years.
It is very important in university life to develop real cases, as I will present in this work to the Arcor company. For this reason, I appreciate the opportunity and the constant support that Professor Rodolfo Salas gave me in carrying it out.
To carry out this work, I had to choose a business unit (UEN) of the company, and carry out a strategic study of the activities to be carried out so that the business is successful in present and future markets, both locally and in the global.
strategies-employed-by-a-latin-american-company-of-world-success-case-expanded-arcor-In this particular case, I will address the "Chocolates" business unit, where I will develop the marketing strategy for the product lines that comprise it.
Product strategy is the central axis of all action, since our environment is very changing, whether due to the economic, social, technological or political factor.
In this context, Arcor will have to adopt certain strategic decisions that will allow it to anticipate possible changes, thus preventing it from being affected by the consequent problems of this turbulent context, as the Argentine economy constantly experiences it.
The marketing that should be used in these times should:
- Create lasting and profitable relationships with clients. (Relational MKT) Retain the client through value. Give participation to both their clients and their suppliers. You must have complete databases, in this way effectively direct promotional activities. Promote an organizational culture, in which employees seek the total satisfaction of all customers. Use the Benchmarking tool, to adopt the best practices in the market. Be global and local. Offer new channels of communication, distribution and sales. Use Ecomerce,, and direct MKT, as viable alternatives to a transaction. Possessing a social and environmental conscience; as well as knowing which are the ethical aspects supported or rejected by society.Differentiate our offer to the maximum from those of our competitors, in order to be seen as different, and not seen as a company that offers "more of the same".
Development:
Grupo ARCOR, was founded in 1951 and is based in the city of Córdoba, is an Argentine multinational company that produces more than 1,500 varieties of caramels, chocolates, cookies and other foods. ARCOR, has 31 factories and more than 13,000 employees, also exports its products to more than 100 countries worldwide.
History of the company:
Since its foundation, the purpose of the company was to manufacture sweets, but to be able to tell the story of the company one must go back to 1924. It was that year when Amos Pagani, a young Italian immigrant, decided to settle in Arroyito, a small Argentine town in the Province of Córdoba, to install a bakery.
Years later, he was the one who would plant the seed of a great company by proposing the idea of setting up a candy factory to a group of pioneering entrepreneurs, among whom were his brothers Renzo and Elio; the brothers Modesto, Pablo and Vicente Maranzana; Mario Seveso and Enrique Brizio.
In 1951 the construction works of the first factory are developed. Finally, on July 5, the brand new plant is inaugurated and production begins.
In 1958, ARCOR had already reached 600,000 kilos a day of sweets. By then, it had ceased to be exclusively a candy factory, from the foray into different industrial activities. Activities that had a clear objective: self-supply of some basic supplies in order to achieve the best quality and the best price.
In the 70s -and in the face of the reality of a closed economy in which it was very difficult to obtain inputs at competitive prices- Arcor began to build plants that meet the diverse needs of the company, from raw materials to packaging, even going through energy.
Thus, Arcor inaugurates a plant in Tucumán in 1970; in 1972, one in San Rafael (Mendoza); in 1975, in Villa del Totoral (Córdoba); in 1978, in San Pedro (Buenos Aires); in 1979, again in Villa del Totoral; And in 1980, in Paraná (Entre Ríos).For these years, ARCOR had become a vast industrial complex, leading the way among companies in their country. However, the company would continue to grow both in Argentina and in different countries in the region. In 1976 he settled in Paraguay, in 1979 in Uruguay, in 1981 in Brazil and in 1989 in Chile.
As can be seen, ARCOR had early understood the value of Latin American integration and the potential of a large common market in the region, creating "its own MERCOSUR" long before the word itself existed.
In 1990, Don Fulvio Salvador Pagani died.
Hugo Enrique D´Alessandro, one of its current Directors, assumes the Presidency. In this period, the Colonia Caroya Chocolate Plant was built, the then largest and most evolved in Latin America; The Pilar-Arroyito gas pipeline is built to supply the company with a vital element and Águila Saint, one of the most traditional and prestigious Argentine chocolate companies, is acquired.
On the social level, the company accentuates its presence. The ARCOR Foundation was born in 1991, with the aim of providing solutions in the areas of health, culture and public education, aiming to make the company's wish to contribute to a better quality of life for the population a reality.
In 1993, the Accountant Luis Alejandro Pagani, Don Fulvio's eldest son, assumes the Presidency of ARCOR. ARCOR then takes a renewed impulse, which projects it definitively towards the world. For this, the company carries out a deep transformation process of its management, reaching a high level of professionalism, an essential condition to adapt quickly and effectively to the new local and international economic scenarios. Competition in the region intensifies, as a result of the entry into the game of other multinational companies.
Under the leadership of Luis Pagani, ARCOR acquires Noel, another recognized brand of food and sweets, with more than a century of prestige. The most evolved cookie plant in Argentina is inaugurated in Salto, Province of Buenos Aires, equipped with the latest technological advances in the field and built in record time of just one year, and a new plant for the production of corrugated cardboard boxes in Luján, Buenos Aires Province. This plant would help consolidate the national leadership of Cartocor, one of the Arcor Group member companies. Continuing with its strong expansion in Latin America, ARCOR landed in 1996 in Peru, building an important candy-producing plant to be closer to Latin American consumers.
In 1998, the Arcor Group completed one of the most important operations of its business life. Acquires the Chilean company Dos en Uno, leader in sweets and chocolates in its country and with an extensive penetration in the region. This purchase strengthens Arcor in the countries of the Andean Pact and allows it to establish better commercial relations with the NAFTA markets. A year later, in 1999, another spectacular milestone: Arcor installs in Brazil the most advanced chocolate factory in the region, which has the largest product distribution center in the country. A venture that places the company at the technological and productive forefront on the continent and that allows it to consolidate itself in the highly attractive Latin American market.
The extraordinary Bragança Paulista plant in Brazil allows Arcor to underpin its vision of becoming the number one candy and chocolate company in Latin America. This vigorous drive has led ARCOR to become one of the region's most important "multilatinas" and a successful example of international expansion. Currently, the Group leads most of the categories where it participates with its more than 1,500 products. Among its most recent records, the following stand out: Arcor is the world's leading producer of candies, leader in the manufacture of chocolates in Latin America and the main exporter of sweets in Argentina and MERCOSUR.
To fully reflect these achievements and its global business dimension, in 1999 the ARCOR Group renewed its symbolism, creating a highly innovative visual identity.
Corporate objective: Its main objective is to be self-sufficient in some basic supplies in order to achieve the best quality and the best price.
Business vision: The company wants to become, in the next few years, the number one candy and chocolate company in Latin America.
Commitment to the consumer: It is expressed in the words that define its slogan: «give flavor»
This simple phrase has great strength and significance for them, since it synthesizes the challenge that those who are part of the ARCOR team have taken on: to offer citizens of the world the best of them, to put passion in what they do to « give flavor »to those who, day by day, choose their products.
Organizational structure:
The company has 10 Business Divisions and 10 Functional Divisions.
These units report to the Executive Directorate, which supervises and plans the activities of the entire organization. However, each Division has autonomy to make its own specific decisions, set production and management criteria and manage its resources.
In this way, not only individual responsibilities but a strong teamwork spirit are encouraged, implementing improvements fluently and achieving a high degree of specialization and competitive capacity.
Business Divisions:
• FOOD
• SWEETS
• CHOCOLATES
• GALLETITAS
• ARCOR DO BRASIL
• ARCOR DE CHILE
• INTERNATIONAL
• PAPER AND CARDBOARD
• AGRO-INDUSTRY
• FLAVORS
Functional divisions:
• INSTITUTIONAL COMMUNICATION
• HUMAN RESOURCES
• FINANCE AND CONTROL
• COMMERCIAL
• COMPUTERS
• LEGAL
• INDUSTRIAL ENGINEERING
• AUDIT AND SOCIETIES
• QUALITY AND ENVIRONMENT
• SUPPLIES
COMPANY DIRECTORY:
President: Mr. Luis Alejandro Pagani
Vice President: Mr. José Alberto Donato Giai
Secretary General: Mr. José
Enrique Martin
Titular Directors:
Mr. Hugo Enrique Lafaye
Mr. Jorge Luis Seveso
Mr. Fulvio Rafael Pagani
Alternate Directors:
Mr. Alfredo Gustavo Pagani
Mrs. María Rosa Pagani De Babini
Mrs. Zunilda Ramona Giordano De Maranzana
STRENGTHS OF THE COMPANY:
- Commitment to the consumer: the best quality at the best price.
Arcor concentrates in its hands strategic stages of the manufacturing process of each product, ensuring rigorous quality control throughout the different stages of production (from obtaining raw materials to manufacturing many of its packaging). This - together with the backing of ISO 9000 certifications - enables it to offer its consumers around the world products of the highest level of competitiveness. In other words, the best quality at the best price.
- Reinvestment and technological modernization:
Arcor permanently reinvests in technology, seeking to achieve the highest standards worldwide. The constant improvement of its production methods allows it to stay at the forefront of its business worldwide, being an example for companies in Latin America.
- Highly creative, innovative and efficient management:
Management is for Arcor a true competitive advantage. Fundamentally, due to its high level of creativity, its strategic vision of business and its great decision-making power.
- Highly qualified collaborators with a strong sense of belonging:
Aware that they are its maximum competitive strength, the Group offers its collaborators the most advanced training and education methods. Caring not only for their professional preparation but for their comprehensive training as people. This and the constant search to improve the quality of life of its personnel make another of the keys to ARCOR's success.
- Adequacy to market requirements:
Despite its dimensions, Arcor is a flexible and highly responsive company. A company that permanently evaluates international markets, in order to detect new business opportunities and provide innovative solutions. A company that knows the "palate" of consumers around the world well, and that develops specific products and flavors for them.
- A unique distribution and sales system:
One of Arcor's strengths has always been its vast and efficient distribution system. Arcor's distribution network covers the entire Argentine territory, extends across the Continent and projects to the world through its own commercial offices in countries of high strategic value.
- Community concern and solidarity:
As the engine of economic progress, Arcor is aware of the role that a company plays in society. For this reason, it launches initiatives and contributions of all kinds, ranging from the construction of housing for its staff to actions in the field of health, education, and culture, mainly developed through the Arcor Foundation.
- Ecological awareness and care for the environment:
A great company must think beyond the short term and the immediate benefits. At Arcor we understand that caring for non-renewable resources and protecting the environment is much more than an obligation to the community: it is a long-term investment for the well-being of all the world's citizens.
- Respect for traditions:
Despite being strongly focused on innovation and always looking to the future, the company values, respects and encourages the traditions and idiosyncrasies of each community where it is established.
- Strong business ethics:
Arcor's ethics understands that the first social function of a food company is to make its products accessible to as many of the population as possible, always aiming at improving their quality of life. In the field of business, transparency and the fulfillment of the commitments assumed are an indisputable premise for Arcor and the basis of any lasting commercial link.
Company figures:
The Arcor Group has a total of 31 plants in Latin America: 25 of them are located in Argentina and the remaining 6 in Brazil (2), Chile (3) and Peru (1).
| Group sales (Millions of US $) |
| 1994 ----- 741.0
1995 ----- 886.3 1996 ----- 914.0 1997 ----- 1046.0 1998 ----- 1240.0 1999 ---- --1150.0 2000 ------ 1100.0 |
| Busy staff |
| 1994 -----– 9,260
1995 -----– 9,447 1996 -----– 9,981 1997 -----– 11,000 1998 -----– 13,000 1999 ------ 13,000 2000 - ----– 13,000 |
* Argentine exports in millions of u $ s
Arcor exports to more than 100 countries around the world, being the Argentine company with the largest number of open markets abroad.
* Group exports in millions of u $ s
| Exports (Millions of US $) |
| 1994 -----– 92
1995 -----– 126 1996 -----– 150 1997 -----– 171 1998 -----– 200 1999 ------ 200 2000 - ----– 217 |
* Total investment of the decade in millions of u $ s
Arcor has an institutional communication that is carefully planned by a team of experts, so that the reported position is not different from historical standards.
This positioning is achieved by communicating through the price, the quality of its product lines, the promotion of these lines, the pakcagings used, the distribution used, etc.
Arcor positioning map:
"Arcor offers quality at the best price"
Arcor Image:
In the Clarín Ranking of 2002, five Argentine companies rank first among the 100 most admired in Argentina:
¨ Arcor (food).
¨ Techint (steel industry).
¨ Quilmes Brewery (now merged with the Brazilian Ambev).
¨ Pérez Companc (the oil company recently acquired by Petrobras, from Brazil).
¨ Mastellone Brothers (dairy).
Finally, the different attributes and the position reached by Arcor in each of them can be seen:
¨ Quality of its products and / or services (3rd).
¨ Economic and financial solvency (8 °).
¨ Creativity in commercial management and marketing (4th).
¨ Business honesty and ethics (3rd),
¨ Ability to adapt to the economic crisis (1st).
¨ Quality of management (4th).
¨ Trajectory (2nd).
¨ Future projection (3rd).
¨ Relationship with the community and the environment (2nd).
Investigation of consumer perception:
This company is a leader in both chocolates, sweets and food. They have a leadership in all the areas in which they participate, by far, and in the one of cookies, despite the short time they have been in the development of the product, today they are already second, under Nabisco.
This process of adoption by the consumer is greatly simplified as they are top quality products such as Arcor products, and also because of the image that this brand evokes in the market.
Company social marketing:
Labeling strategy:
The pakcagings contain printed nutritional information in different languages, from Spanish to Chinese, in order to use the same packaging, which is understandable both in the local market and in the rest of the world, without causing possible language distortions about the contents of the container.
Brand strategies used by Arcor in this business unit:
- Individual name marks: With a small mention that Arcor is the Manufacturer of said product. This brand strategy serves to prevent the company from damaging its image, in the event of a possible failure of a product. Multimarcas: The company has several products with different brands to limit the participation of competition. In the case of the Alfajores line, Arcor has a wide range of varieties from different brands, all of excellent quality that will significantly reduce the participation of the competition in this area. New brands: This strategy is used in case of introducing totally innovative products. Manufacturers brands:In certain products this strategy is used when it is seen that the positioning of said product cannot be improved using another brand. In this case we have the Arcor chocolate tablets, the new launch of Águila specialties, the entire Águila confectionery line, the selection of Arcor chocolates, etc.
In addition, another of the applied characteristics, regarding brands, is that Arcor introduces line extensions, that is, that it introduces additional articles in the same product categories, under the same brand name. Such is the case of all the variants offered by the Bon or Bon Name.
Marketing channel decisions:
Distribution:
The important distribution and logistics structure that the company owns, the largest for mass consumer products in Argentina, makes it possible for them to reach and supply more than 180,000 points of sale in the country, through a network of 160 official distributors.
At Arcor they want to have a mutual and fluid connection with their "Official Distributors", for this reason they have developed a site that will allow them to learn more about the problems and needs of the channel.
Arcor has two distribution modalities:
- On the one hand, it uses a direct channel, through the use of its Internet sales site, in which it is in charge of directly marketing customer orders anywhere in the world. ArcorSales constitutes a new communication and sales
channel This new channel will allow Arcor to consolidate its international presence, strengthening the image of its brands, increasing the possibility of attracting customers and achieving great penetration in the global market. On the other hand, it uses indirect channels of more than two levels of intermediation, since it uses official distributors, wholesalers, and retailers (kiosks, etc.)
TYPES OF DISTRIBUTION USED:
- Exclusive distribution: official Distribution centers strategically located throughout the country distribute Arcor products. In the Global sphere, Exclusive distribution falls into the hands of ArcorSales.com and all the commercial offices distributed in those countries with the greatest commercial influence. Selective distribution: according to the product line in question, you must carefully select which are the indicated sales points for certain products. Such is the case of the different variants offered by the Bon or Bon line, the Cofler, Los Alfajores TOFI lines of chocolates, etc. That is, in some cases it will be chosen to distribute through retailers only (kiosks), or through hypermarkets or supermarkets. Intensive distribution:In this type of distribution, you will have to find as many points of sales as possible, to maximize coverage of the total market. This is the distribution that is used to locate the bars of cereals, chocolates, alfajores, that is, these product lines will have to be placed in the largest number of kiosks throughout the country.
Dynamics of channels that Arcor uses: they use horizontal Marketing systems, since it establishes commercial relationships with companies in other areas, in order to take advantage of emerging opportunities. This relationship (joint venture) is usually temporary, or permanent.
It is very important to avoid conflicts in distribution, so the company must try to minimize the reasons that may motivate such conflicts. That is why the company has to form an interrelated system of clients, suppliers and distributors, in order to provide feedback on all the respective needs, in order to satisfy the objectives of each member of the channel, these being clear, from the outset, to avoid future discrepancies.
It is important to distinguish that the modalities of the same product are often distributed differently in the different channels for various reasons:
- Due to the different characteristics that consumers have in different geographical locations (it is not the same to market packages of Bon or Bom in kiosks, as in a supermarket), that is, they do not only have to see the characteristics of the target market, but also the consumption characteristics that exist on certain occasions.Because the prices must be different according to the physical place where it is marketed, it is normal for retail prices (kiosks) to be similar within a certain geographical area, but this is not usually be like this, if we acquire another presentation of the same product, in another place, such as, for example, in a supermarket, or from a wholesaler; In these places, the unit price of the products is usually much lower than the price paid in the retail chains.It will be different according to the type of acquisition you have, products are usually promoted in supermarkets, since a greater number of products are purchased at one time than in a kiosk, so coupons usually come attached or within the packs in the supermarket, or the hypermarket.
For distribution to be effective, it is necessary to coordinate logistics tasks (order processing, warehousing, inventory, transportation). If the company and suppliers optimize and coordinate their activities, both parties can benefit.
Supplies required for the manufacture of chocolates:
| • CBR Hydrogenated Vegetable Oil
• Hydrogenated Vegetable Oil for Fillings • Non Pareil almonds, whole, with skin, toasted, Caliber 30/40 u. x Ounce, Vacuum Packed with Nitrogen / CO2 • Non Pareil almonds, whole, with skin, toasted, Caliber 36/40 u. x Ounce, Vacuum Packed with Nitrogen / CO2 • Roasted almonds, with skin, cubed, Vacuum Packed with Nitrogen / CO2 • Paper Labels, Printed 8 colors, Ilustracote 90 g paper, die-cut, embossed and stamping. • Paper Labels, Printed 6 colors, Ilustracote paper 90 g, straight cut. • Skim Milk Powder. • Whole Milk Powder, Minimum Fat 26%. • Soy Lecithin with Non GMO Certificate, Minimum Phosphosphate 62% • Alcanilized Cocoa Liqueur • Natural Cocoa Liquor, Minimum Fat Matter 52% • Raw Runner Peanut size 60/80 units per Ounce • Peanut Runner Roasted, peeled, in peanut halves 40/60 u. x Ounce, Vacuum Packed with Nitrogen / CO2 • Peanut Runner Roasted, peeled, in peanut halves 70/80 u. x Ounce, Vacuum Packed with Nitrogen / CO2 • Deodorized Cocoa Butter • Peanut Paste, Fineness: 50 Microns Maximum • Alkaline Cocoa Powder, Fat Material 10-12%, 4% maximum Moisture and 6.8 to 7.4 PH • Natural Cocoa Powder, Fat Material 10-12%, 4% Maximum Moisture. |
The suppliers of these raw materials must comply exactly with the quality standards pre-established by the company.
ANNEXES:
Arcor's move: Interview by the Clarín newspaper.
- the strategy to compensate the fall of the internal market is the export?
-We have always had an export vocation, but since the end of the year we have given it a greater boost.
In recent months, Pagani opened offices in Barcelona, from where it serves the European market, Africa and Japan, and plans to open a new headquarters in Hong Kong before the end of the year, with the aim of conquering the Asian market, especially China.
The sharp drop registered in the domestic market during the first half of 2002 encouraged Pagani to personally take the lead in the company's foreign trade.
“The financial part, happily, is fine, professionalized and with managers for each area. And although I am informed about everything that happens on a day-to-day basis, since the end of the year I have been more involved in the external market ».
In volumes, the fall in the domestic market was 20% (between 50,000 and 60,000 tons less consumption), during the first half, and in exports there was a growth of 2% from Argentina. If until last year the internal market represented 60% of Arcor's operations and the external market 40%, this year that relationship was reversed.
- the devaluation favored the exports?
-Not. I believe that the devaluation did not necessarily favor exports, except to some sectors of the industry. It is seen that there is not a recovery in the economy but a fall in prices. Exporting takes time and is not a matter of fashion. Winning a market and beating a competitor takes a lot of work.
We were favored by being in the external market.
-How is the regional crisis affecting you?
-In Brazil, this year we grew. Perhaps the countries most affected by the Argentine crisis have been Paraguay and Uruguay where, during the first half of the year, the same "fall effect" was felt as here.
-If the internal market continues to be ironed as before, do you think it will be able to continue?
- The ideal is that there is a financial system, and as the saying goes: "whenever it rained, it stopped." Our investments are less than last year, but we have not stopped them, especially those that have to do with technology. I think that as long as there is no institutional change in Argentina, it will be difficult to foresee a take-off of consumption.
-Does it depend solely on an institutional change?
Here there is a crisis of confidence and expectations would really change with a change of government. If the rules of the game were given well, there would be a recovery. In general, despite the moment Argentina is experiencing, there is strong competition from multinationals.
_ Did the devaluation take you by surprise?
- Deep down I always believed in the peso and the financial system, and I think it is a pity that we have to pass this moment. We are paying a very high cost. I never thought that this was going to happen at this magnitude.
-Have plants closed in the interior of the country?
-No, we have not closed plants, nor have we fired personnel. At the beginning of the year we have had suspensions in some plants, such as the one in Catamarca, because they are very focused on the domestic market and we have been left with stock.
Conclusion:
Carrying out this work allowed me to learn about the work methodology used by a model South American company, such as Arcor. In this way I managed to understand the concepts read in specialized marketing books.
It is important in this century to take as examples certain marketing and administrative practices of companies like Arcor, it is not about copying an established model, since all organizations are managed differently, but rather it is about taking the best techniques that are applied in the market. This method, which many successful startups use, is known as Benchmarking.
Benchmarking is essential for companies, as is information technology. The more informed we are about what is happening around us, the more certainty we will have about what can happen in our market and our environment.
In this process, the strategy plays a fundamental role in all the activities that an organization must undertake. The strategy is the one that gives us a starting point for action, that is, being able to manage entrepreneurial actions judiciously, without letting them drift, as it normally did in the past.
It is convenient in this century to understand strategy and strategists, since you cannot succeed without thinking strategically. That is why it is convenient to coordinate all the activities that take place in the company, both marketing, finance, accounting, etc. In other words, it is necessary to act all areas together, trying to minimize all the differences and conflicts that may occur from this interrelation of operating areas.
Sources consulted:
Web pages visited:
- arcor.com.ararcorsales.comportalpublicitario.comrelacionespublicas.comwinred.cominfonomia.com.arhttp: //rws.tripod.com.arbaquia.com
Bibliography consulted:
- KOTLER Marketing management. Editorial Prentice - Hall. Year 2001.SALAS Business strategies for an unexpected future. Editorial WinRed.Com. Year 2002. Diario Clarín - Economy and Business Supplement of 4/8/2002.
