Country Notebook PERU

The Country Notebook— A Guide for Developing a Marketing Plan

NAMES:
 Blanca Lopez
 Natalia Cortez
 Ana Maria Rodriguez
 Santiago Munoz
 Jorge Estupiñan

The Country Notebook Outline

• I. Cultural Analysis
• II. Economic Analysis
• III. Market Audit and Competitive Market Analysis
• IV. Preliminary Marketing Plan

I. Cultural Analysis

Guideline

I. Introduction

In this section, we’re going to talk about the culture of our target country that is Peru.

II. Brief discussion of the country’s relevant history

Peru is a country in western South America; it was home to the Norte Chico civilization, one of the
oldest in the world, and to the Inca Empire, the largest state in Pre-Columbian America. The Spanish
Empire conquered the region in the 16th century and established a Viceroyalty, which included most
of its South American colonies. After achieving independence in 1821, Peru has undergone periods of
political unrest and fiscal crisis as well as periods of stability and economic upswing.

III. Geographical setting

Peru is divided into 25 regions and the province of Lima. Each region has an elected government
composed of a president and a council, which serves for a four-year term. These governments plan

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regional development, execute public investment projects, promote economic activities, and manage
public property. The province of Lima is administered by a city council.

Regions:

 Amazonas  Lambayeque
 Ancash  Lima
 Apurímac  Loreto
 Arequipa  Madre de Dios
 Ayacucho  Moquegua
 Cajamarca  Pasco
 Callao  Piura
 Cusco  Puno
 Huancavelica  San Martín
 Huánuco  Tacna
 Ica  Tumbes
 Junín  Ucayali
 La Libertad

Province: Lima

A. Location .
Peru covers 1,285,216 km2 (496,225 sq mi). It borders Ecuador and Colombia to the north, Brazil
to the east, Bolivia to the southeast, Chile to the south, and the Pacific Ocean to the west. The
Andes Mountains run parallel to the Pacific Ocean, dividing the country into three geographic
regions. The costa (coast), to the west, is a narrow plain, largely arid except for valleys created by
seasonal rivers. The sierra (highlands) is the region of the Andes; it includes the Altiplano plateau
as well as the highest peak of the country, the 6,768 m (22,205 ft) Huascarán. The third region is
the selva (jungle), a wide expanse of flat terrain covered by the Amazon rainforest that extends
east. Almost 60% of the country's area is located within this region.

B. Climate

The climate of Peru varies quite a bit depending on the region and on the time of year.

Humidity on the coast produces a sensation of cold, although temperatures rarely dip below 12°C.
During the summer the sun beats down and temperatures often top 30°C. The central and southern
sections of the coast feature two well-defined seasons: winter from April to October, and summer from
November to March. The north coast is not touched by the effects of the cold current, which means it

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enjoys 300 days of sunshine a year and warm temperatures all year-long (as much as 35°C in the
summer). The rainy season runs from November to March

The highlands are much colder than the coast. A characteristic of the mountain region is the drop in
temperature during the night. Temperatures commonly range around 24°C at midday before plunging
to -3°C at night.

The jungle features high humidity all year long. In the southern jungle, there are sometimes cold spells
known locally as friajes or surazos, cold fronts which drift up from the far south of the continent
between May and August, where temperatures can drop to 8-12°C.

C. Topography

Peru is divided into three contrasting topographical regions: the coast (costa), the highlands (sierra),
and the eastern rainforests (selva). The coastline is a narrow ribbon of desert plain from 16 to 160 km
(10 to 100 mi) broad. It is scored by 50 rivers, which water some 40 oases. Only a few of these rivers,
which have their source in the Andean snowbanks, reach the sea in all seasons.

Although the coastal region constitutes only 12% of the national territory, it contains the ports and
chief cities of Peru. Inland, the low costa rises through the steep wastes of the high costa (760–2,000
m/2,500–6,500 ft), and then ascends abruptly to the western cordillera (Cordillera Occidental) of the
Andes, which, with its ridge of towering peaks, runs parallel to the coast and forms the Peruvian
continental divide. The less regular Cordillera Central and Cordillera Oriental merge in central Peru
with the Cordillera Occidental.

They branch off to the southeast, meeting a transverse range that becomes a crescent of peaks forming
the drainage basin of the 8,288 sq km (3,200 sq mi) Lake Titicaca, the highest large navigable lake in
the world (about 3,810 m/12,500 ft high), which is bisected by the Peruvian-Bolivian border. Of the 10
Peruvian peaks that rise above 5,800 m (19,000 ft), Huascarán, 6,768 m (22,205 ft), is the highest.

IV. Social institutions

A. Family

1. The nuclear family

The "Peruvian family" is of course not a homogeneous entity, but rather reflects both ethnic
and socioeconomic factors. If there is a generalization to be made, however, it is that
families in Peru, no matter what their status, show a high degree of unity, purpose, and
integration through generations.

2. The extended family

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 The average size for families for the nation as a whole is 5.1 persons per household, with the
urban areas registering slightly more than this and, contrary to what might be expected, rural
families, especially in the highlands, being smaller, with a national average size of 4.9
persons.

The roles of the different family members and sexes tend to follow rather uniform patterns
within social class and cultural configurations. In terms of family affairs, Hispanic Peruvian
patterns are strongly centered on the father as family head, although women increasingly
occupy this titular role in rural as well as urban areas, amounting to 20 percent of all
households.

Family life at all levels of society is nourished by an ample number of ceremonial events
marking all rites of passage, such as birthdays, anniversaries, graduations, or important
religious events, such as baptisms, confirmations, and marriages. Family life is thus marked
by small fiestas celebrating these events and passages. In this context, Peruvians have
greatly elaborated the Roman Catholic tradition of godparenthood (padrinazgo) to
encompass more occasions than simply celebration of the sacraments of the church,
although following the same format.

Women's roles in the squatter settlements cover a wide variety of tasks, including hauling
water from corner spigots and beginning the daily preparation of food over kerosene stoves.
In the 1975-91 periods, the food supply for substantial numbers of the urban lower class in
Lima and other coastal cities came from the United States Food for Peace (Public Law 480)
programs administered by private voluntary organizations.

Women also keep their wide-ranging family members connected, seeking the food supply
with meager funds, and doing various short-term jobs for cash. According to social scientist
Carol Graham, the poor urban areas have a high percentage of female-headed households, as
well as a large number of abandoned mothers who are left with the full responsibility for
supporting their households and raising the children.

B. Education

1. The role of education in society

Education is nominally free and compulsory for children ages 7 to 16. For the year 2000, the
adult illiteracy rate was estimated at 10.1% (males, 5.3%; females, 14.6%). The government
has been responsible for public education since 1905; free secondary education began in
1946, but with far too few public schools to meet the need. Several long-term projects have
been initiated to increase literacy and raise living standards among the adults of the remote

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 Sierra and Selva areas. In March 1972, new education legislation enhanced the central
authority of the Ministry of Education, granting the government control over all teaching
appointments in the public schools and increasing its authority over the private sector.

a. Primary education (quality, levels of development, etc.)

The student begins in the first cycle, which consists of the first and second
grade. The age of the children entering this stage of their education is six years.
This level begins at first grade, and ends with sixth grade and is divided, for
curricular purposes, into three cycles: cycle one (first and second grade), cycle
two (third and fourth grade), and cycle three (fifth and sixth grade); after sixth
grade, the student passes on to secondary school. Additionally, there are
decision-making systems available for the parents to determine whether they
want to send their child to public or private school.

b. Secondary education (quality, levels of development, etc.)

Secondary school consists of five years, from first to fifth year.

c. Higher education (quality, levels of development, etc.)

Higher education in Peru consists of technological colleges, both public and

private. They offer courses lasting three years (approximately 3,000 hours of
study), graduating with a title as Technical Professionals. Some courses may
be four years in length (approximately 4,000 hours of study), and a student
would graduate with the title of Professional.

2. Literacy rates
Literacy was estimated at 92.9% in 2007; this rate is lower in rural areas (80.3%) than in
urban areas (96.3%).

C. Political system

1. Political structure

Peru is a presidential representative democratic republic with a multi-party system.

Under the current constitution, the President is the head of state and government; he or
she is elected for five years and can only seek re-election after standing down for at least

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 one full term. The President designates the Prime Minister and, with his advice, the rest
of the Council of Ministers. There is a unicameral Congress with 120 members elected
for a five-year term. Bills may be proposed by either the executive or the legislative
branch; they become law after being passed by Congress and promulgated by the
President. The judiciary is nominally independent, though political intervention into
judicial matters has been common throughout history and arguably continues today.

2. Political parties

 APRA
 Peruvian Nationalist Party
 UPP
 PPC
 National Renewal
 Cambio 90
 Sí Cumple
 Popular Action
 Possible Peru
 National Restoration

3. Stability of government
Generally speaking, Peru has a lot of stability in its government; its policy has been
marked by different periods cited below:
 The Inca Empire and Spanish conquest in 1521
 Independence.- from 1981 to 1824
 Military Rule and the Role of the Democracy.
 Instability at 1980’s.
 The Fujimori decade.- (1990 – 2000)
 The Garcia Administration

4. Special taxes
Peru applies a value-added tax (VAT) rate of 18 percent to most products, and special
consumption taxes, ranging from 10 to 50 percent, on certain items. Peru's methodology
of applying a "consolidated rate" to assess special consumption and sales taxes on
imported goods is burdensome, since the taxes are applied consecutively.

D. Legal system

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 1. Organization of the judiciary system

The judicial branch of government is headed by a 16-member Supreme Court seated in

Lima. The National Council of the Judiciary appoints judges to this court.

The Constitutional Court (Tribunal Constitucional) interprets the constitution on matters

of individual rights. Superior courts in regional capitals review appeals from decisions by
lower courts. Courts of first instance are located in provincial capitals and are divided into
civil, penal, and special chambers. The judiciary has created several temporary specialized
courts in an attempt to reduce the large backlog of cases pending final court action.

2. Code, common, socialist, or Islamic-law country?

Peru's legal system is based on civil law system. Peru has not accepted compulsory ICJ
jurisdiction. In 1996 a human rights ombudsman's office (defensor del pueblo) was created
to address human rights issues. The Peruvian legal system is based generally on the
Napoleonic Code. The 1993 constitution guarantees the independence of the judiciary.

3. Participation in patents, trademarks, and other conventions

In Peru exists The Copyright Act and Supreme Decree 061-62 to protect copyrights. It
includes the copyright to all works of production of creative, scientific and artistic domain
in every way of expressing it.
Copyrights protect each other several types of creations: literary works, artistic works,
scientific works, others like phrases, titles, translations, adaptations with permission and
software.

4. Marketing Laws.
There isn’t restrictions for marketing.

E. Social organizations

1. Group behavior

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Peru is a multiethnic country formed by the combination of different groups over five
centuries. Amerindians inhabited Peruvian territory for several millennia before Spanish
Conquest in the 16th century; historian David N. Cook estimates that their population
decreased from an estimated 9 million in the 1520s to around 600,000 in 1620 mainly
because of infectious diseases. Spaniards and Africans arrived in large numbers under
colonial rule, mixing widely with each other and with indigenous peoples. After
independence, there has been a gradual European immigration from England, France,
Germany, Italy, and Spain. Chinese arrived in the 1850s as a replacement for slave
workers and have since become a major influence in Peruvian society. Other immigrant
groups include Arabs and Japanese.

2. Social classes
Between the extremes of wealth and power represented by the white upper class and the
native caste is the predominantly mestizo and cholo population, which largely comprises
the lower and middle sectors of rural and urban society. These are the most numerous and
diverse sectors, constituting the core of Peruvian national society in culture, behavior, and
identity. Together, these sectors include a wide range of salaried workingclass families,
persons in business and commercial occupations, bureaucrats, teachers, all military
personnel (except those related to elite families), medical, legal, and academic
professionals, and so forth.

In terms of occupation, residence, education, wealth, racial, and ethnic considerations, the
population is diverse, with few clear-cut markers differentiating one segment from another.
Yet, there are obvious differences among the regions of the country that combine with
those indicators to suggest a person's social position in relation to others.

4. Race, ethnicity, and subcultures

Peruvian culture is primarily rooted in Amerindian and Spanish traditions, though it has
also been influenced by various African, Asian, and European ethnic groups. Peruvian
artistic traditions date back to the elaborate pottery, textiles, jewelry, and sculpture of Pre-
Inca cultures. The Incas maintained these crafts and made architectural achievements
including the construction of Machu Picchu. Baroque dominated colonial art, though
modified by native traditions. During this period, most art focused on religious subjects;
the numerous churches of the era and the paintings of the Cuzco School are representative.
Arts stagnated after independence until the emergence of Indigenismo in the early 20th
century. Since the 1950s, Peruvian art has been eclectic and shaped by both foreign and
local art currents.

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F. Business customs and practices

Peru, the third largest South American country and over twice the size of France, is the world's sixth
largest producer of coffee with an estimated 1.9% of total world production. It is the third largest
producer in Latin America, which produces 60% of the world total coffee production of which 30%,
comes from Brazil and 10% from Colombia.

Almost 90% of Peru's coffee production is exported. In 1989/90 this totaled 1,369,000 (60 kg) bags
the main markets, which were 44% to the U.S., 18% to Japan and 13% to Germany. Unfavorable
exchange rates caused a drop in exports to around 970,000 bags in 1990/91 but should increase
slightly about 1,100,000 bags in 1991/92.

In total, an estimated 500,000 workers depend on coffee for a living and it is one of Peru's major
exports. Average annual production runs at 1.2 million bags; the 1991/92 crop is expected to be in the
region of 1.3 million bags up 13% from the previous year's total. While the crop has benefitted from
favorable climatic conditions, it has been affected by low market prices, high production costs, lack of
credit, competition from coca (from which cocaine is derived) and civil unrest. As a result and as in
recent years, a large portion of the crop will not be reaped.

V. Religion and aesthetics

A. Religion and other belief systems

1. Orthodox doctrines and structures

The Peruvian government is closely allied with the Catholic Church. Article 50 of the
Constitution recognizes the Catholic Church's role as "an important element in the historical,
cultural, and moral development of the nation." Catholic clergy and laypersons receive state
remuneration in addition to the stipends paid to them by the Church. This applies to the
country's 52 bishops, as well as to some priests whose ministries are located in towns and
villages along the borders. In addition each diocese receives a monthly institutional subsidy
from the Government. An agreement signed with the Vatican in 1980 grants the Catholic
Church special status in Peru. The Catholic Church receives preferential treatment in
education, tax benefits, immigration of religious workers, and other areas, in accordance with
the agreement.

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 Although the Constitution states that there is freedom of religion, the law mandates that all
schools, public and private, impart religious education as part of the curriculum throughout
the education process (primary and secondary). Catholicism is the only religion taught in
public schools. In addition, Catholic religious symbols are found in all government buildings
and public places.

2. Relationship with the people

Religious activity in Peru is important, and for many people, one of the "centers of energy" in
the world is the city of the Cusco.

3. Which religions are prominent?

In the 2007 census, 81.3% of the population over 12 years old described themselves as
Catholic, 12.5% as Evangelical, 3.3% as of other denominations, and 2.9% as non-religious.
The religion of Peru is an inheritance of the Spanish conquest, for this reason, it is a mainly
Catholic country (more than 75% of the population).

4. Membership of each religion

Seventh-day Adventists mission efforts in Peru began in the 1920
There are currently 769,980 Seventh-day Adventist members in Peru split into 2 conferences,
according to the church website. This would represent 2.6% of the current population.
Latter-day Saints Mormon missionaries first arrived in Peru in 1956. In 1981, the Lima Peru
Temple was dedicated.
The church has seen rapid growth in Peru. In 2008 The Church of Jesus Christ of Latter-day
Saints claimed more than 460,000 members in Peru.[5] There is currently only one LDS
temple in Peru, located at La Molina in Lima. However, Church leaders announced the
building of a second temple in Trujillo on December 13, 2008.[6]

5. Any powerful or influential cults?

Since the 16th century, along with Catholicism, expressions of the native religion, based on
the cult of the Sun, the Pachamama (Mother Earth) and elements of nature, have also been
present. Those who study religion, still can’t agree how to treat two very different religions in
a process of fusion or of parallel beliefs.

B. Aesthetics

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Art of Peru includes wood carvings, stone sculpture, pottery, painting, etc.
Due to excellent art and craft of Peru the network of exporters are increasing day by day. The
qualities of the artisans of Peru are seen in the concord of the geometric designs in weaving, the
minute portrayal of barbarian farming life, etc.
Many arts and crafts stores are found in Lima and other Peruvian cities.

Pre-Columbian Art and Inca art are the two categories of Peru Art. Some of the forms of Inca art are:

 Peruvian Mirrors
 Inca Ceramics
 Andean Painting
 Carved Stone
 Tapestries and Rugs

Peruvian Mirrors are wooden mirrors which are covered up with bronze leaf and mirrors in different
shapes ans sizes. The colonial mansions and churches of Peru were adorned by these mirrors. Carved
stones are the semi-precious stones of Andes. These stones are the good luck charms which are carved
by proficient craftsmen in the shape of eggs, spheres and pyramids. Andean Painting is an oil painting
of Peru which is composed by Peruvian artists in various manners.

Among Pre-Columbian Art Moche ceramics are well known. Moche pottery, Moche metalwork, effigy
pots, etc. are best known among Pre-Columbian Art in Moche.

Peru has many art shops. One of the best art shops of Peru is Peru Arts and Crafts Stores. The
products available in this store are leather goods, jewelry, carved gourds, tapestries, musical
instruments, mirrors, copper sculptures, etc.
All the varieties of Peru Art are very beautiful as well as attractive.

VI. Living conditions

A. Diet and nutrition

1. Meat and vegetable consumption rates

The diet of the Peruvian population has a strong potato and rice, since the annual
consumption in both cases reach 80 to 45 kilos per capita per year respectively. Also they
consumed per year in addition to potatoes and rice, 22 kilos of bread, 10 kilos of pasta and 19
gallons of oil.

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 In rural families, people consume Andean tubers and grains, while in low-income urban
families food basket is also covered with tubercles, with very few grains and mainly industrial
products like wheat, with which it makes the bread and noodles.

2. Typical meals
Peru has a huge variety of typical meals

3. Malnutrition rates
Malnutrition in Peru is by 4.3 percent until 2009, but that index is higher in rural areas where
chronic malnutrition is over the 32.8 percent.

B. Housing

1. Types of housing available

There exist many kinds of housing:
 Detached houses.
 Department in a building.
 Housing estate
 Neighborhood home.
 Hut.
 Makeshift housing.
 Others

C. Clothing

1. National dress

In Peru s rural areas, the way people dress makes an important distinction, as a
result of the blend of pre-Hispanic influences with the European clothing that
the natives were forced to wear during the colonial era. Traditional dress tends
to be capped off by woolen or straw hats, sometimes in various colors. But in

12
 the coldest reaches of the Andes, the highlanders tend to wear the chullo, a
woolen cap fitted with earflap decorated with geometric motifs.

Regional dances require different forms of dress, depending on the area. Along
the coast, an exponent of the marinera dance replaces cotton with silk for their
embroidered skirts. In the Andes, meanwhile, the danzantes de tijeras or scissors
dancers decorate their fine outfits with small mirrors and embroider an image of
their guardian deity on their backs.

2. Types of clothing worn at work

As in Ecuador, it depends of the work, exists different rules to use clothes for
every occasion and every place.

D. Recreation, sports, and other leisure activities

1. Types available and in demand

2. Percentage of income spent on such activities

E. Social security

F. Health care

VII. Language

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A. Official language(s)

Spanish, the first language of 83.9% of Peruvians aged five and older in 2007, is the primary language
of the country. It coexists with several indigenous languages, the most important of which is Quechua,
spoken by 13.2% of the population.

B. Spoken versus written language(s)

Other native and foreign languages were spoken at that time by 2.7% and 0.1% of Peruvians,
respectively.

Sources of information

II. Economic Analysis

http://www.mhhe.com/business/marketing/cateora13/country_notebook/writing_guide/economic.html

I. Introduction

We have to know everything about the country target, such as number of habitants, lifestyle,
economic situation and others to analyze the different factors that will change the normal
course of the business

II. Population

With about 29.5 million habitants, Peru is the fourth most populous country in South America.
Its demographic growth rate declined from 2.6% to 1.6% between 1950 and 2000; population
is expected to reach approximately 42 million in 2050. As of 2007, 75.9% lived in urban areas
and 24.1% in rural areas. Major cities include Lima, home to over 8 million people, Arequipa,
Trujillo, Chiclayo, Piura, Iquitos, Cusco, Chimbote, and Huancayo, all of which reported more
than 250,000 inhabitants in the 2007 census.

Sources of information

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II. Economic Analysis
http://www.mhhe.com/business/marketing/cateora13/country_notebook/writing_guide/economic.html

Guideline

I. Introduction

II. Population

With about 29.5 million inhabitants, Peru is the fourth most populous country in South
America. Its demographic growth rate declined from 2.6% to 1.6% between 1950 and 2000;
population is expected to reach approximately 42 million in 2050. As of 2007, 75.9% lived in
urban areas and 24.1% in rural areas. Major cities include Lima, home to over 8 million people,
Arequipa, Trujillo, Chiclayo, Piura, Iquitos, Cusco, Chimbote, and Huancayo, all of which
reported more than 250,000 inhabitants in the 2007 census.

A. Total

1. Growth rates

Population growth rate: 1.193% (2010 est.)

2. Number of live births

3. Birthrates

2009 19.38
19 births/1,000 population (2010 est.)

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B. Distribution of population

1. Age

Age structure: 0-14 years: 29.1% (male 4,370,923/female 4,216,364)

15-64 years: 65.2% (male 9,695,270/female 9,574,018)
65 years and over: 5.7% (male 796,631/female 893,757) (2010 est.)

2. Sex

Sex ratio: at birth: 1.046 male(s)/female

under 15 years: 1.04 male(s)/female
15-64 years: 1.01 male(s)/female
65 years and over: 0.89 male(s)/female
total population: 1.01 male(s)/female (2010 est.)

3. Geographic areas (urban, suburban, and rural density and concentration)

Urbanization: urban population: 71% of total population (2008)

rate of urbanization: 1.3% annual rate of change (2005-10 est.)

4. Migration rates and patterns

Net migration rate: -0.93 migrant(s)/1,000 population (2010 est.)

5. Ethnic groups

III. Economic statistics and activity

A. Gross national product (GNP or GDP)

1. Total

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 GDP (nominal) 2010 estimate

- Total $153.549 billion

- Per capita $5,195

2. Rate of growth (real GNP or GDP)

The Peruvian economy expanded 8.31 in October of 2010, as measured by the year-over-
year change in Gross Domestic Product (GDP YoY). Unlike the commonly used
quarterly GDP growth rate the annual GDP growth rate takes into account a full year of
economic activity, thus avoiding the need to make any type of seasonal adjustment. The
Peru Gross Domestic Product is worth 127 billion dollars or 0.20% of the world
economy, according to the World Bank. From 1992 until 2010, Peru's average annual
GDP Growth was 4.86 percent reaching an historical high of 17.64 percent in March of
1994 and a record low of -8.60 percent in July of 1992. This page includes: Peru GDP
Growth Rate chart, historical data and news.

Its 2010 per capita income is estimated by the IMF at US$5,195

B. Personal income per capita

C. Average family income

D. Distribution of wealth

1. Income classes

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 2. Proportion of the population in each class

3. Is the distribution distorted?

E. Minerals and resources

Investors in the mining and petroleum sectors are also entitled to several tax benefits. There are no
restrictions on remittances of profits, dividends, royalties or capital.

F. Surface transportation

Peru's transportation system faces the formidable challenge of the Andes and the complex Amazon
River system, which add to the high production costs

G. Communication systems

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 1. Types

2. Availability

We are dedicated to implement projects with high technical level

We design, physical and logical installation, preventive and corrective maintenance, certification and
administration of local area networks and wide, both in intranet servers and web servers on the Internet.

We want to achieve the integration of electrical, data, telephony and multimedia optimizing your project in
addition to providing security, modernity and comfort.

Projects
· Facilities power and special systems (communications and security) in buildings of all kinds.

• Design professional lighting and indoor lighting, outdoor large public areas, energy security decorative signs,
warning lights, etc.

Design of CCTV security systems and digital recorders.

• Design, automation and installation of electrical panels

IPNET S.A.C Communications company specializing in fiber optics, structured cabling, ups, call centers,
telephone exchanges

3. Usage rates
H. Working conditions C:\Users\User\Downloads\writing_guide\economic_III_H.html

1. Employer-employee relations
the relationship of employee and the employer is not very good because it has not come to get a
high percentage of 80% confidence is causing low work efficiency with which it is not reliable
for the customer

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 2. Employee participation
Is based on the way employees work, has most uninsured and are treated well, with good self-
esteem by the employer, they have a 60% particicpacion labor. There is more than 150 employees
in these companies

3. Salaries and benefits

ETELCOM the company of aintains electricity networks and a basic salary to
employees for commissions,
Its benefit is that within this salary does not appear that the value of insurance, doctor
appointments, because of illness may be well served by choice of the company, cover
weight

I. Principal industries

1. What proportion of the GNP does each industry contribute?

2. Ratio of private to publicly owned industries

J. Foreign investment

In Peru, laws support enormously to foreigners, because the government is very flexyble with all kind
of financial credits and legal proceedings to stablish an enterprise, the bareers to entry of new
competitors are really weaks but it gaves facilities to Sweet & Coffee to penetrate the market. For
example, is stablished to private foreign enterprises that want to entry Peru that the credits are given to
very long time and with huge grace period to start paying the debt.

K. International trade statistics C:\Users\User\Downloads\writing_guide\economic_III_K.html

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 1. Major exports
The export of Peruvian coffee HUANCARUNA PERALES added $ 632 000 406 000 000 January and August
this year, ie 56 percent over the same period last year, when shipments totaled 259 million 206 thousand U.S.
dollars, reported the Association Exporters (ADEX).
Germany is the first purchaser orders for $ 973 000 163 000 000 (40 per cent of the total), followed by America
with 82 million 549 thousand (20 percent), Belgium with 36 million 423 thousand (nine percent) and Colombia
20 million 222 thousand (five percent).

Other target countries are Italy, Canada, Sweden, France, UK, Japan, Republic of Korea, Spain, Finland,
Netherlands, Greece, Switzerland, Norway, Russia and Denmark, among others.

Also, in the first eight months of the year there were new destinations such as Sao Tome and Principe, Tunisia,
Barbados and Slovenia, where coffee was exported more than $ 50.000, while Costa Rica and Aruba samples
were sent.

a. Dollar value

Exporting companies are Perales Huancaruna which increased its shipments by 28 percent (115
million 243 thousand U.S. dollars), followed by Commerce & Co. (46 million 134 thousand), Cía.
Café International (36 million 664 thousand) and Central Cocla Cafetaleras Agricultural Cooperatives
(17 million 355 thousand), among others

b. Trends

21
 2. Major imports
This was reported by Ricardo Huancaruna, president of the Peruvian Chamber of Coffee and Cocoa,
who said that the product is having the best prices in the last 13 years. Currently, the pound was sold at
U.S. $ 1.8, 30% more than last year.

He also indicated that our main customers are the European Union and U.S., the latter an especially
important market for specialty coffees.

He stressed that this product has become the first national agricultural exports and provides more jobs
than mining, it employs about two million people in the country.

However, the per capita coffee consumption in Peru very low, ranging between 300 and 600 grams of
coffee, compared with Brazil and Colombia, where consumption is about five and 1.9 kilos
respectively.

Huancaruna further explained that the quality of Peruvian products have reached levels as optimal,
which for two years, Colombia imported Peruvian coffee to meet demand. "In recent months,
Colombia has become the largest importer of Peruvian coffee in Latin America, "he said

a. Dollar value
Currently, the pound was sold at U.S. $ 1.8, 30% more than last year. He also indicated that our main
customers are the European Union and U.S., the latter an especially important market for specialty
coffees. However, the per capita coffee consumption in Peru very low, ranging between 300 and 600
grams of coffee, compared with Brazil and Colombia, where consumption is about five and 1.9 kilos
respectively.

b. Trends

3. Balance-of-payments situation

a. Surplus or deficit?

22
 b. Recent trends

4. Exchange rates C:\Users\User\Downloads\writing_guide\economic_III_K_4.html

a. Single or multiple exchange rates?

b. Current rate of exchange

c. Trends

L. Trade restrictions

1. Embargoes

2. Quotas

3. Import taxes
Import taxes as in Ecuador, are fixed by a government entity called ADUANAS, which
is based in the General Customs Act and Customs Tariff. Import taxes are separated in
different groups and exists a different tax to each one of them.

23
 [http://www.eumed.net/libros/2010a/640/Impuesto%20a%20las%20Importaciones%20
en%20Peru.htm]
4. Tariffs

5. Licensing
Exist a large quantity of kind of licenses that people need to obtain to operate a business
legally in Peru, for that reason exist a different rule to every specific case of license.

6. Customs duties
All the custom duties that Peruvian ADUANA gives to customers are fixed in the
General Customs Act and Customs Tariff.

[http://www.aduanet.gob.pe/aduanas/informag/tribadua.htm]

IV. Developments in science and technology

A. Current technology available (computers, machinery, tools, etc.)

B. Percentage of GNP invested in research and development

99% of world coffee production is obtained for 50 tropical and subtropical countries and involves
over 70 countries in the export business. According to FAO reports, the average annual value of
coffee exports for the decade of the nineties, represented 14 billion dollars.
The coffee remains central to the economies of tropical and subtropical regions. Its importance is
such that in many developing countries (approximately 40), in tropical areas, coffee remains the
main source of income. In Africa, countries like Uganda,

24
C. Technological skills of the labor force and general population

V. Channels of distribution (macro analysis)

A. Retailers

1. Number of retailers

In total, an estimated 500,000 workers depend on coffee for a living and it is one of
Peru's major exports. Average annual production runs at 1.2 million bags; the 1991/92
crop is expected to be in the region of 1.3 million bags up 13% from the previous year's
total. While the crop has benefitted from favorable climatic conditions, it has been
affected by low market prices, high production costs, lack of credit, competition from
coca (from which cocaine is derived) and civil unrest. As a result and as in recent years,
a large portion of the crop will not be reaped.

2. Typical size of retail outlets

There are 144 coffee exporters in Peru who have largely replaced the inefficient
cooperatives of which only four remain.

3. Customary markup for various classes of goods

4. Methods of operation (cash/credit)

5. Scale of operation (large/small)

25
 6. Role of chain stores, department stores, and specialty shops

Sources of information

III. Market Audit and Competitive Market Analysis

I. Introduction

Peruvian’s coffee market isn’t exploited because people now a day is starting to get a “Coffee culture”
that, years ago didn’t have it. With this habit recently acquired, the coffee shops businesses had
created a growing market with few competitors giving a lot of opportunities to investors for putting
new cafeterias and create a more competitive market.

II. The product

Basically, the products that Sweet & Coffee will sell in the franchise will be the same that the sold in
Ecuador’s cafeterias until know the customers better and remove or introduce other kind of products or
varieties to satisfy them.

A. Evaluate the product as an innovation as it is perceived by the intended market

1. Relative advantage

There are two soluble coffee plants in Peru. Internal coffee consumption is estimated at
around 5,000 tons annually. Coffee drunk in Peru is generally weaker than in other
South American countries. Tea is more popular and is also produced locally.

Last year, 16 coffee shops opened in Lima. Gloria Jean's Coffee and Holly’s Coffee
represent the strongest foreign entries, while La Folie, Orgäanika Coffee & D'Elite and
Mr. Muffin are locally-owned enterprises that stand out as delicious discoveries. In
Peru, the sales reach more than 40 percent.” Consistent with what their market research
revealed, the executive says they have developed 40 salty desserts and 70 sweet desserts

26
 with advice from renowned chefs. At the opening, he claims to have launched 20 sweet
desserts and 12 salty ones, a mix that will be replaced shortly, after three months of
ganging their customers' tastes.

2. Compatibility
Sweet & Coffee has a lot of compatibility with this businesses, because in Ecuador, the
products sold in the cafeterias are similar, exists a variety of coffees and also different
kind of deserts to try.

3. Complexity

Despite so many coffee enterprises, the per capita coffee consumption in Peru is one of
the lowest in the Andean region. Several years ago, Peru was a country that used to
consume a very small part of the coffee they produced, and people in general didn’t
have the habit of drinking coffee, now a days, the levels of coffee consumption has
risen since 0.9 kg per year (by person) to 110 cups of coffee in a year, its more than
100%.

4. Trial ability

5. Observability

B. Major problems and resistances to product acceptance based on the preceding evaluation

The principal problems that customer could show is a reject because the biggest competitor, Starbucks,
is a multinational enterprise with a big reputation and fame around the world, and Sweet & Coffee is
only a very recognized cafeteria in Ecuador, it’s probably that they just let their “fidelity” to a mark
don’t let them try a new product.

III. The market

A. Describe the market(s) in which the product is to be sold

27
1. Geographical region(s)
Peru covers 1,285,216 km2. It borders Ecuador and Colombia to the north, Brazil to the
east, Bolivia to the southeast, Chile to the south, and the Pacific Ocean to the west. The
Andes Mountains run parallel to the Pacific Ocean, dividing the country into three
geographic regions.

2. Forms of transportation and communication available in that (those) Region (s)

Those regions have a lot of mobility, transport hasn’t an incredible technology but it is
useful to the customers.

3. Consumer buying habits

a. Product-use patterns

b. Product feature preferences

Internal coffee consumption is estimated at around 5,000 tons annually.

Coffee drunk in Peru is generally weaker than in other South American
countries.

c. Shopping habits

4. Distribution of the product

a. Typical retail outlets

b. Product sales by other middlemen

28
 5. Advertising and promotion

a. Advertising media usually used to reach your target market(s)

Television, radio, social networks and publicity in avenues

b. Sales promotions customarily used (sampling, coupons, etc.)

6. Pricing strategy

a. Customary markups

b. Types of discounts available

Discounts to groups, when a person is with more than 5 persons they
will have the 20% of discounts in all kind of desserts. Discount to a
regular customer, people can have a card to sign it every time that
they buy something in a cafeteria, and after that they will have a
discount card.

B. Compare and contrast your product and the competition’s product(s)

C:\Users\User\Downloads\writing_guide\market_III_B.html1. Competitor’s
product(s)

a. Brand name
One of the biggest coffee shops in Peru is Starbucks, it seems to bet more on
the sale of coffee and that translates to their meager display of sweet and salty
desserts.

29
 b. Features
The Seattle firm would rather seek to consolidate its portfolio of beverages,
since last July it announced the sale of wine and beer through its store format
15th Avenue Coffee and Tea. If this concept is imported to Peru, a new
battlefield could emerge.

c. Package

Starbucks sells drip brewed coffee; expresso based hot drinks, other hot and
cold drinks, coffee beans, salads, hot and cold sandwiches and Panini, pastries,
snacks, and items such as mugs and tumblers.

2. Competitor’s prices
It’s considered as Sweet & Coffee’s biggest competitor Starbucks coffee, for that
reason, it’s necessary to set prices in relationship to the competition.
For example, a croissant in Starbucks costs between $ 4.2 to $ 5.25 (12 to 15 soles) and
in Ecuador the same croissant is sold in Sweet & Coffee by $ 1.25, its clear that Sweet
& Coffee can compete enormously with Starbucks in prices.
Politics in Peru, gives a lot of facilities to enterprisers for investments, and it makes
easier to amortize its liabilities without set high prices.

3. Competitor’s promotion and advertising methods

Other advertising methods that are used: vans that offer samples of coffee on the
streets, coffee tastings, exhibitions, courses, website, etc.
STARBUCKS uses the experience and culture as their main sources of marketing. The
success of Starbucks demonstrates that a costly advertising is not a requirement to
create a brand, since most advertising is Starbucks customer by customer, store by
store, and market by market to be the best way to inspire loyalty and trust in each
customer.
4. Competitor’s distribution channels

Starbucks will now have an outlet of the chain with a full menu aboard the Allure of the
Seas, the newest ship in Royal Caribbean’s fleet.

SOMECSA, one of Peru's leading coffee exporters

30
IV. Preliminary Marketing Plan

I. The marketing plan

A. Marketing objectives

1. Target market(s) (specific description of the market)

Several years ago, Peru was a country that used to consume a very small part of the
coffee they produced, and people in general didn’t have the habit of drinking coffee,
now a days, the levels of coffee consumption has risen since 0.9 kg per year (by person)
to 110 cups of coffee in a year, its more than 100%. In this period, the target market has
been the same, people between 18 to 60 years, that it’s a big range of ages to the target.
2. Expected sales 20.
We expect that for introduction, sales will be regular, that is between 400 and 600
dollar per day.
3. Profit expectations 20.
As a new business, we don’t expect a huge profit margin, because exists a big risk that
the products or the enterprise will not get the goals fixed; for that reason, we consider
that a profit margin of 10% is enough to be a recently opened business.

4. Market penetration and coverage

The best manner to penetrate a target market is with a franchise, because the owner of
Sweet & Coffee is selling a mark of a business that will be administrated by a person
that does not belong to the company. The products that will be sold in Sweet & Coffee
will not change; this will be the same that in Ecuador also because are the same sold in
the biggest competitor. With a response of the customers about the products offered in
Sweet & Coffee, the administration will choice which product can or can’t continue
selling in the shop and if it is necessary to enter a new one.

B. Product adaptation or modification

1. Core component

31
 The basic element of the product is the label; disposable cups, napkins, and different
kind of elements that are used when a person enjoys a cup of coffee are basic to
signpost and mark a difference.

2. Packaging component
It depends of the product, for cups of coffee, the package consist in a disposable cup
with Sweet & Coffee’s logo impressed, a napkin, and a teaspoon. For desserts the
package is a box with Sweet & Coffee’s logo which is white to salt desserts and
transparent to the other ones.

3. Support services component

C. Promotion mix

1. Advertising.
Sweet & Coffee has been known to be present in all the malls of Guayaquil. Given
the quality of their product has managed to secure the loyalty of its customers, in
addition to the variety of products and good customer service providing servers.
On many occasions, Sweet & Coffee featured in magazine advertising business and
when they are produced interviews with the owners of the franchise. The strategy of
word of mouth is the strongest they have and the fact of being located in strategic
places such as malls and gas stations.

a. Objectives
Show to our target market the image that Sweet & Coffee represents in
Ecuador as a place with the elegance and service perfect to enjoy the moment
of drinking an excellent coffee.

b. Media mix
It’s important to do a big campaign in television, radio, and social networks
like facebook and twitter to promote the opening of a new cafeteria, as the
range of ages of our target market is big, it’s necessary to reach all ages that it
covers, social networks is for persons between 18 to 32 years old mainly, and
radio and television for the other ones. Also its necessary to do some

32
 announcements in the principal avenues and streets in the cities where Sweet
& Coffee will be located to show every kind of persons the cafeteria.

c. Message
The message we like to promote is basically “Enjoy the moment”, it is to
make the moment of drinking a coffee and eating a dessert, a delectable
moment to people because of the service and the good tastes in the products.

d. Costs.

2. Sales promotions
It’s important to do some promotions for introduction to the market, it will
be more attractive the business to go for a first time and it will make that the
customer tastes our products and live the experience of drinking a coffee in a
place like Sweet & Coffee.

a. Objectives
To attract a huge quantity of customers to taste the products sold
in Sweet & Coffee and to get free publicity with them.

b. Coupons
For introduction, it can be really successful to give some free
coupons with newspaper or magazines. It will helpful in two
things: one, publicity, because people see the products and can
have the impulse to go to the cafeteria, and two with low prices,
every product is more attractive.

c. Premiums
It could be prized the fidelity of the customer. For example with a
discount card for persons that go regularly to cafeterias.

d. Costs
As we analyzed earlier, the costs of produce and sell a cup of
coffee is similar to Ecuador, and comparing prices with the biggest
competitor Starbucks, it is profitable to give discounts in several

33
 products.

3. Personal selling
Personal will be choose in agreed to their experience, after that they will be
educated in relation to the politics of quality that Sweet & Coffee has.

D. Distribution: From origin to destination

It’s important to set the kind of distribution that the shops will have when they will be
penetrating a new market.

1. Port selection

a. Origin port

b. Destination port

2. Mode selection: Advantages/disadvantages of each mode

a. Railroads

b. Air carriers

c. Ocean carriers

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 d. Motor carriers

3. Packing

a. Marking and labeling regulations

b. Containerization

c. Costs

4. Documentation required

a. Bill of lading

b. Dock receipt

c. Air bill

35
 d. Commercial invoice

e. Pro forma invoice

f. Shipper’s export declaration

g. Statement of origin

h. Special documentation

5. Insurance claims

6. Freight forwarder

E. Channels of distribution (micro analysis)

1. Retailers
It is necessary to have different good retailers in a city, because is important to save
money and reduce costs of transport in some products.

36
 a. Type and number of retail stores
To buy perishable products like fruits, is a big problem because the risk of
loss them is very high, for that reason it’s necessary to get a reasonable
number of retailers to cover the demand that the cafeteria can have any
time.

b. Retail markups for products in each type of retail store

It isn’t necessary to set a mark of products, because the main demand is for
fruits but it’s imperative that the quality of them will be excellent.

c. Methods of operation for each type (cash/credit)

For facility, it’s better to have credit with the retailers, because it will avoid
the necessity to go to a bank to retire money from a bank account and only do
that to the end of the month when the credit must be cancelled.

d. Scale of operation for each type (small/large)

It is not necessary to operate with a big retailer; there is no problem if they
are small as long as they don’t fail with their responsibilities.

2. Wholesale middlemen

a. Type and number of wholesale middlemen

b. Markup for class of products by each type

c. Methods of operation for each type (cash/credit)

d. Scale of operation (small/large)

3. Import/export agents

37
 4. Warehousing

a. Type

b. Location

F. Price determination

1. Cost of the shipment of goods

2. Transportation costs

3. Handling expenses

a. Pier charges

b. Wharfage fees

38
 c. Loading and unloading charges

4. Insurance costs

5. Customs duties

6. Import taxes and value-added tax

7. Wholesale and retail markups and discounts

8. Company’s gross margins

9. Retail price

39
G. Terms of sale

1. EX works, FOB, FAS, C&F, CIF

2. Advantages/disadvantages of each

H. Methods of payment

1. Cash in advance

2. Open accounts

3. Consignment sales

4. Sight, time, or date drafts

40
 5. Letters of credit

II. Pro forma financial statements and budgets

A. Marketing budget

1. Selling expense

2. Advertising/promotion expense

3. Distribution expense

4. Product cost

41
 5. Other costs

B. Pro forma annual profit and loss statement (first year and fifth year)

III. Resource requirements

A. Finances

B. Personnel

C. Production capacity

IV. Executive summary

42
V. Sources of information

VI. Appendixes

43