Catholic University of Santiago de Guayaquil

International Business Management

MARKET AUDIT AND COMPETITIVE

MARKET ANALYSIS

Members of the group:

Juan Sánchez
Oscar Gayrey
Lisa Hani

Semester B-2014

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 INDEX

1. Introduction…………………………………………………………………………………..… 3
2. EXECUTIVE SUMMARY………………………………………………………………....…..4
3. Product
 Product Features…………………………………………………..………………..… 6
 Production and Variety in Ecuador……………………………………………..…..… 7
 Relative Advantage
 Compatibility
 Major problems and resistances to product acceptance………………………….
……………………………………………….… 8
4. Market
 Geographical Regions………………………………………………………………… 9
 Forms or transportation and communication
 Consumer Buying Habits…………………………………………………….……… 10
5. Distribution of the product…………………………………………………………………… 11
6. Advertising and promotion…………………………………………………………………… 12
7. Pricing strategy
 Competitors’ product(s)……………………………………………………………… 13
 Competitors’ prices……………………………………………………..…….……… 14
8. Market Size…………………………………………………………………………………… 15
marketplace……………………………………………………………………………….……16
9. Marketing Plan
 Marketing objectives…………………………………………………………….…… 17
 SWOT Analysis………………………………………………………………….…… 18
 Product adaptation
 Promotion Mix…………………………………………………………………….….. 19
10. Distribution: From origin to destination
 Port selection……………………………………………………………………….… 20
 Mode selection: Advantages/disadvantages of each mode
11. Channels of distribution………………………………………………………………..…. 21
 Price determination…………………………………………………………………… 22
12. Terms of sale……………………………………………………………………………… 23
13. Methods of Payment…………………………………………………………………….… 24
14. Pro forma financial statements and budgets
 Marketing Budget…………………………………………………………………...… 25
 Pro forma annual profit and loss
statement……………………………………………………………………….……… 25
 Requirements for financing …………..………………………………………………..26
 Production capacity ……………………………………………………………………27
 Exhibit……………………………………………………………………………...…...28
 References………………………………………………………………………...…….29

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1. Executive summary

After completing the research for this report, prepare a two-page (maximum) summary of the major
points of your successful marketing plan, and place it at the front of the report.

Our export project is based mainly on the sale of specially roses, spray roses and summer
flowers which are of high quality because they are considered the best in the world thanks to
its beauty. Our objective is to satisfy the needs of the Brazilian market and this goal is expect
to be reached in less time as possible by our company that is placed in Cotopaxi, Ecuador.
Our company “Exrocob Farms” is located in Lasso, a small village near Cotopaxi on zero
degrees latitude (Ecuador). This location allows us to have 12 hours of daily sunlight
throughout the whole year, and where grown long, durable flowers and with natural light.
With this unique location and the technical experience in cultivation and management of the
flowers, we have been able to sell almost all of our flower production in the European, Russian
and American markets. Due to the fact that the markets are asking for more every day, we have
decided to expand our business to Brazil.
The Brazilian market is incrementing their imports of Ecuadorian flowers due to our roses are
of good quality. This market gives us a lot of possibilities of success for our market, our
channels of distribution were chosen to attract almost the third part of Brazilians.
We are going to continue keeping records of our Air bill, commercial invoice and my other
documentation required for our business practices. Our marketing objectives outline our target
markets which are Brazilian people in general of all ages. Our method of payments were
detailed along with the types of payments that we will be using I different cases.
Our determination of price was based partially of what we have in South America. Our
promotion mix is for all of methods of social media we will use to promote our product. All of
our different strategies are going to be implemented to bring us the most possible success in
the near future because we are a company that is able to expand markets through the export of
roses and become the number one.

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Introduction

Our company “ Exrocob” is located in Lasso, a small village near Cotopaxi on zero degrees latitude
(Ecuador). This location allows us to have 12 hours of daily sunlight throughout the whole year, and
where flowers grown long, durable and with natural light.
With this unique location and the technical experience in cultivation and management of the flowers,
we have been able to sell almost all of our flower production in the Europen, Russian and American
markets. Due to the fact that the markets are asking for more every day, we have decided to expand
our business to Brazil.

2. The product

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

Our core business is to sell flowers especially roses, spray roses and summer flowers. As these
flowers also exist in Brazil, our product is not a new innovation. But thanks to the climate and the
location of Ecuador, it generates the perfect conditions for growing all kinds of flowers, especially
high quality roses. Therefore we want to be known for our high quality.

2.1. Relative advantage

We have flowers with thick and very long stems, large buttons and bright colours. In addition our
flowers have a long life in vase after cutting them. Furthermore we are already well known in Europe,
Russia and in the United States.

2.2. Compatibility

Flowers have always been a top gift choice for any occasion and are always very appreciated by most
people. It is said that 92 % of women can remember the last time they received flowers and 97 % of
men and women recall the last time they gave a floral gift.

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B. Major problems and resistances to product acceptance

The competitor’s prices of flowers could be a problem for us. Especially flowers from Colombia are
cheap and good quality. But with our relative advantages we will try to establish a great market share
in Brazil and we do not see other problems or resistances to a acceptance.

3. The market

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

At present day the floral industry is a dynamic, global, fast-growing industry, which has achieved
significant growth rates during the past few decades. The floral industry essentially consists of three
major components: the growers, the wholesalers and the retailers. The recent trends are more towards
eliminating the wholesalers between the growers and the retailers, so that the flowers are made
available at considerably low prices.

3.1.1. Geographical region(s)

The sector of flowers and plants in Brazil has increased a lot in the last past years. Brazil is a
successful market but is still gaining more space in this sector. The retail distribution of flowers and
plants in Brazil has nearly 18,000 outlets. The products are usually sold in large centers (Ceasas),
being the Ceasa of São Paulo, Ceasa of Campinas Campinas, and Veiling Holambra Cooperative the
largest centers of commercialization in the country.

3.3. Availability of transportation and communication

Flowers are perishable goods. Therefore we need to export them as fast as possible, which means in
our case by plane. Brazil with its more than 4’000 airports gives us the opportunity to export to the
whole country.
The new relations between the governments and to the new strategies such as promote the productive
matrix is helping to the private sector and is creating a better communication to exports our
Ecuadorian flowers to Brazilian companies.

3.4. Consumer buying habits

3.4.1. Product-use patterns

There is always a reason to buy flowers. It might be for the birthday or congratulations or to say thank
you, I love you or thinking of you. Especially also on public holidays like Saint Valentine’s Day or
Mother’s Day flowers are very appreciated and a very popular gift. Of course there are people who do
not buy flowers for any reasons. Because they think that flowers do not last very long or they find it

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too expensive. Nevertheless, most people appreciate the beauty and ephemeral nature of flowers. In
addition, in Brazil it is very polite to bring the hostess some flowers or a small gift if invited to a
house. This is another reason for buying flowers. But flowers are not just for giving as a gift. There
are a lot of people buying flowers for themselves as decoration for example.

3.4.2. Product feature preferences

Flowers can be bought for personal purpose, or to facilitate and enhance social relationship.

3.4.3. Shopping habits

It is said that women are more likely to buy flowers at the supermarket, and men from a florist. This
confirms the statement that men spend more on floral gifts. But women are more tending to buy
flowers for themselves. In general consumers consider the quality and freshness of the flower as the
most important reason when choosing the flower. The price also plays an important role but it is not
the most significant.

4. Distribution of the product

4.1. Typical retail outlets

As already mentioned above, the retail distribution of flowers in Brazil has nearly 18,000 outlets. The
products are usually sold in large centers (Ceasas), being the Ceasa of São Paulo, Ceasa of Campinas
Campinas, and Veiling Holambra Cooperative the largest centers of commercialization in the country.
Therefore we plan to export direct to retailers in Brazil.

5. Advertising and promotion

5.1. Advertising media

We are planning to advertise especially online. Our homepage is a main content. In addition to that,
we will also be present in social media, as it is nowadays a very successful advertising media.
Especially before Saint Valentine’s Day and Mother’s Day we will reinforce our advertising, so that
the retailers are going to order from us.

5.2. Sales promotions

Sales promotions are planned especially at the beginning. Entering a new market is not easy and we
have to create a brand image first and then try to get a brand loyalty. Primarily, we will send 100 roses
to the four main centres for free. After that we will offer a 10% discount for each order in the first 3
months to companies which are interested in buy our flowers.

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6. Pricing strategy

6.1. Customary markups

At the beginning we will apply a low cost strategy offering good quality, this method will help us to
sell and to catch new customers in order to grow in the market.

6.2. Types of discounts available

Discounts of 10% will be offered for orders before Saint Valentine’s Day and Mothers Day as well as
for orders higher than USD 200.

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

1. Competitors’ product(s)

The main exported species is the carnation (standard and miniature), followed by the rose, with
over 60% of total exports and others such as heliconias, astromelias, chrysanthemums and
anthuriums..

a. Brand name
The export their flowers with the brand name” Colombia Tierra de Flores”.

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 b. Features

Colombian flowers have a prominent place in international consumer preferences for high
quality, colorful, beauty, size and variety but Ecuador have flowers with thick and very long
stems, large buttons and bright colours. Besides the big feature of the Ecuadorian rose is its
long life in vase after cutting.

c. Package
To export the product boxes made of corrugated cardboard sheets are used and the box lid is
marked with the logo.
2. Competitors’ prices

Prices vary according to market, product variety and stem is traded penny per centimetre,
which is the most acceptable and of interest to grower’s price (there flowers 40, 50, 60, 70,
80, 90 and up to 1.5 m. But the Colombian flowers are cheaper due to the alliances that they
have with the importers.

3. Competitors’ promotion and advertising methods

 Flower Fair held in the city Medellin

 National flower festival in Buenos Aires Argentina.

The potential buyers come to this fairs to observe meticulously the right features and buying
opportunities such as the price and the quality that they offer also in most of the cases Colombian
producers send free flowers to Brazil as samples.

4. Competitors’ distribution channels

Antioquia is the second national producer of flowers with a 17% after the Sabana de Bogotá
participating with 79% of total exports. However, in the Oriente region Antioqueño most of
the production of Antioquia in the municipalities of La Ceja with 39% concentrate, Rionegro
with 30%, the Carmen de Vibrola with 12%, La Union with 7%, 6% Marinilla and other
municipalities with 6%.

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 The Colombian producers export their flowers with the brand name “Colombia tierra de
Flores” since the government is an intermediary which promote the exports of this kind of
products and also the alliances is a strategic which allow to increase the market share.

C. Market size

The sector managed to become internationally as the third largest exporter globally the main
target markets for Ecuadorian flowers are: United States with a share of 40%, followed by
Russia with 25%, the Netherlands with 9%, 4% Italy, Canada and Ukraine with 3% and Spain
with 2%.

1. Estimated industry sales for the planning year

According to this figures and to expoflores the expectative of sales to this year will be a 8%
more than the past year, rising to $918.000 k the exports of flowers and this goal will reached
thanks to the support of the government to this sector.

2. Estimated sales for your company for the planning year

25 millions of dollars

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D. Government participation in the marketplace

The government participation in this year have increased, due to the decline in the
price of the oil, the government won’t have enough profitability for that reason is
promoting to the private companies in this case the floricola sector to export their
products and avoid a disequilibrium in the balance of trade.

1. Agencies that can help you

Pro Ecuador every time is looking for new producers of flowers to participate to export their
products providing help and information to do it.

2. Regulations you must follow

For export to any other country is necessary to obtain a certificate of origin, as this authenticate
document the origin of the product is one country which I will produce it, ie countries with Ecuador
which has bilateral or multilateral agreements preferences tariff and Can, Aladi. And others such as:

Verify Status phytosanitary Check if the destination country has lifted restrictions on access to
health products of plant origin Ecuadorian through the phytosanitary status. What is a Phytosanitary
status? Consists of information detailing the SPS situation flowers in Ecuador for review and approval
of the destination country (Pest risk analysis, cultivation methods, etc.). See website Agro quality if
the phytosanitary status or request: www.agrocalidad.gob.ec -> Plant Health -> Export -> Official
Listings -> Official List of Phytosanitary Export Restrictions for Plant Products.

Log in Agro quality: Request the operator log on the website Agro quality (www.agrocalidad.gob.ec)
depending on whether the user is Exporter, Producer, Producer - Exporter.

Documents Required: RUC, copy of charter, constitution of the company and appointment of the
legal representative (legal entity), location sketch collection centre (exporter) and culture (exporter -
producer) Invoice payment as requested by the registration.

Inspection: A Statutory agro quality detailed inspection performed in sketch document delivered as
required place, and prepares a report which must be approved by AGROCALIDAD.

Once approved the report is issued a certificate of registration and a registration code which support
the registration agro quality operator (this record and recognized internationally) to the user.

Phytosanitary Certificate request: The phytosanitary certificate is required for each export and it
must apply maximum two days before clearing it.

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Inspection or pre-inspection (if the gathering place or culture is outside the teeing load) this is done in
the control point (airports, seaports, border crossings) or provincial coordination is requested Agro
quality in the case of a pre-inspection.

Documents required: Register as operator copy of shipping manifest, preform invoice or other
document showing information sent.

For pre-inspection a provisional certificate swapped by the Phytosanitary Certificate in the checkpoint
is issued.

In the case of an inspection once approved phytosanitary certificates for the shipment to be held was
granted.

MARKETING PLAN

I. The marketing plan

We will apply at the beginning a strategy of low cost that will generate a mark-up for us of 10%, this
will create losses but at the same time will create profits in the future since we are increasing our
market share because applying this strategy all social classes will buy the flowers and they realize the
quality of our products also TV ads and banners in the principal cities of Brazil.

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

Our target customers are florist, restaurants, and Brazilian people in general of all ages who could
buy our products like a gift or to decorate places.
Florist who can use our products to make flowers arrangements in order to be sold.
Restaurants, the flowers can be used to prepare exotic dishes or to decorate plates in luxuries
restaurants.
Brazilian people, in special seasons and occasions such as San valentine, Mother’s Day, festivals.
Valentine's Day 36%

Mother's Day 27.4%

Christmas & Hanukkah 15.1%

Administrative Professional's Day 1.1%

St. Patrick's Day .09%

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 Grandparent's Day .09%

Father's Day .04%

Source: American Floral Endowment Consumer Tracking Study

2. Sales forecast years 1-6

We plan to increase our sales 10% in the 2016 and then 5% by year and as a result we will get
$61’690k in sales in 2021.

3. Profit forecast years 1-5

2,016.00 (2,759,509.60)

2,017.00 (425,384.19)
2,018.00 2,328,071.04
2,019.00 5,736,291.58
2,020.00 9,682,018.49

In the current year we will get low profits due to samples that we send to our potential buyers for that reason we
focus our results from the next year to 2021. We will increase our sales acquiring new technology increasing our
installed capacity.

4. Market penetration and coverage

We promote the products to our target market showing the quality of the flowers in comparison of
competitor’s flowers. We will demonstrate to our customers the special features such as more lifetime,
bright colours and also we will apply a low cost strategy.

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B. SWOT Analysis
1. Strengths
Our Flowers with thick and very long stems, large buttons and bright colours. Besides the big feature of
the Ecuadorian rose is its long life in vase after cutting. Better sunlight.
2. Weaknesses
Lack of installed capacity
Lack of qualified work force
3. Opportunities
The new alliances between the countries is benefiting to flowers producers to export this kind of
product to Brazil.
Lack of resources to Brazilian flowers producers.
4. Threats
Previous disputes between the countries due to the breach of a Brazilian company in the construction of
a hydroelectric.

3. Support services C. Product adaptation or modification—using the product component model as your guide,
indicates how your product can be adapted for the market.
1. Core component
Just the box in order to export the flowers
2. Packaging component
component (if available)
Special papers to preserve the fowers

D. Promotion mix
1. Advertising
We are planning to advertise in magazines, banners and especially online. Our homepage is a main
content. In addition to that, we will also be present in social media, as it is nowadays a very successful
advertising media. Especially before Saint Valentine’s Day and Mother’s Day we will reinforce our
advertising, so that the retailers are going to order from us.

a. Objectives
The main objective of advertising by this type of media is to attract the Brazilian market with 100%
Ecuadorian flowers, where our future consumers, are attracted by the quality and variety of our
flowers and thus be having openness within the Brazilian market.
The specific objectives are:
1. Determine the target of consumption of flowers in Brazil.

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 2. Design an optimal logistics process at the time to promote our flowers

b. Media mix
* Publicity ATL
*Magazines
We expect to promote our flowers in different Brazilians magazine in order to attract the attention of
the Brazilian market.

* Publicity BTL
*Banners
Our product logo will be in banners located during the first month in 3 different places of Brazil.

*Digital Publicity
We are planning to advertise especially online. Our homepage is a main content. In addition to that,
we will also be present in social media such as instagram, twitter, Facebook, etc because nowadays a
very successful advertising media.

c. Message
The message that we want to give to our Brazilians costumers is that they could have fresh and
beautiful flowers with a very high quality in a low price.

d. Costs
The cost is estimate according to the season.

2. Sales promotions
Sales promotions are planned especially at the beginning. Entering a new market is not easy and we
have to create a brand image first and then try to get a brand loyalty. Primarily, we will send 100 roses
to the four main centres for free. After that we will offer a 10% discount for each order in the first 3
months to companies which are interested in buy our flowers.

a. Objectives
Our objective of this sales promotion is to make known our flowers by these four main centres in
Brazil, then show that our flowers have the best quality and finally reach the fidelity of the Brazilian
market.

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b. Coupons or discounts
We will offer a 10% discount for each order in the first 3 months to companies which are interested in
buy our flowers.
c. Costs
The cost that we estimate to spend is approximately $5650 per month, promoting our flowers has the
best quality and finally of this we can reach the fidelity of the Brazilian market.
3. Personal selling
Thinking of clients who do not usually give flowers but are willing to do so, we have prepared
information with the benefits that the company offers. The form of contact will be through
personalized, phone, referrals of friends and with the application of the website sale.
The sales strategy will emphasize different elements of the service, including: Agility in attention,
professionalism in product development and delivery timely.
We have developed a slogan that identifies our strengths as a company and in turn, gives you
customer confidence.
4. Other promotional methods
Although increased demand dates are February 14 and Mother’s Day, will promote sales on other
dates renowned as Women's Day, Father's Day, Secretary's Day, Christmas and the Day of the Dead.
In the months that do not have important dates will be offered discounts promotional.
Promotional means that we have established are:
Advertising via the website, customer visits to publicize the product and meet your requirements.
E. Distribution: From origin to destination
1. Port selection
a. Origin port
Our company “Exrocob Farms” is located in Lasso, a small village near Cotopaxi on zero degrees
latitude (Ecuador).
We chose the Airport Cotopaxi because it has the flower abused less and reversed a lower percentage
in transportation and refrigeration of the product, the flowers should follow a cold chain that cost
much to companies as this is not true you have higher losses .
Cotopaxi, with its International leading and fully functioning Airport, opens immediate prospects for
investments in hospitality, services, and all attachments to the tourism industry needs and will be the
engine that drives more exports.

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b. Destination port

The São Paulo International Airport is one of the four airports serving the city of São Paulo, Brazil,
located in the city of Guarulhos, 22 kilometers northeast of the city center of São Paulo is also the
busiest airport in Brazil and Latin America. We choose this airport because the products are usually
sold in large centers (Ceasas), being the Ceasa of São Paulo, Ceasa of Campinas Campinas, and
Veiling Holambra Cooperative the largest centers of commercialization in the country.

2. Mode selection: Advantages/disadvantages of each mode

a. Railroads
Advantages disadvantages
shortly contaminant Share the railway with passenger transport,
which are preferred.
Avoid traffic problems Do not over speed
Reliability: low accident rate Subject to physical constraints of height and
volume passing through the different types of
gauges.

b. Air carriers
Advantages
It has a high level of technology.
The goods are transferred in the shortest time
possible between all modes of transpor
Factor cleaner in transportation
disadvantages
Air transport has always commercial purposes
Its freight cost is too high.
At the time of loading and unloading of cargo,
there is good security. Are most commonly used

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 marketing terms (Incoterms)

3. Packing
a. Marking and labelling regulations
In reference to the origin
Information that allows the consumer to know who the manufacturer of the product is and where it
was made. You must have the necessary information to contact the manufacturer if necessary.
Referring to content
Indicates the total amount of product inside the packaging. The value must be expressed in mass
quantities or volume.
Referring to the lot
It is a number that is part of the production control. If necessary it can be recognized the lot to which
the product belongs.

b. Containerization
The air carrier will bring 500 boxes with 100 flowers per box.
 

Calculation of Volume per box

Formula: Length X Width X Height

0,70m X 0,80m X 0,50m
0,28 m3
Number of boxes per air carrier: 500 boxes

c. Costs
The biggest cost in this medium is related documentation; specifically with cutting guide.
This is generated by the degree of organization should have the burden as a result of the various
transfers that must suffer the same; in most cases.
 
Minimum Charge = USD. 40 or USD. 60 - (M)
General:
- Normal; (-) 45 kgs. (N)
- From number: (+) 45 kgs. (Q)
Class:

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- With the rise. (S)
- With reduction. (R)
-Commodity. (C)
(M) Correspond to the lower amount charged for transporting a shipment between two points,
regardless of weight or volume.
(N) Established for less than 45 kgs general cargo.
(Q) It provides a discount percentage considering the amount sent; ie the greater weight or volume;
the lower will be the unit rate.
(S) Are special rates for a small group of commodities, such as gold, precious stones, live animals,
human remains, etc.
(R) comprises books-magazines - brochures, etc.
(C) Are rates that apply to the carriage of goods specifically designated, such as fruits, vegetables,
cheeses, some seafood, meats, aquarium items such as corals, fish meals, flowers, seeds, fabric, thread
etc.

4. Documentation required

a. Bill of lading
This document will be issued by the airline hired by the exporter, her reception and cargo on board the
merchandise is detailed. Three original copies and other non-negotiable copies must issue because this will also
allow the removal of the goods to the exporter.
b. Dock receipt
A commercial document issued by a buyer to a seller on the terms of a transaction, including types of products,
quantities and prices.
c. Air bill
Is the document containing the contract of international air transport and serves as proof of delivery of the goods
on board the aircraft. As an international transportation contract, the AWB mainly records:
Contracting parties (carrier, shipper and consignee).
Goods transported (nature, weight, volume).
Itinerary.
Means of transportation (aircraft and flight number).
Freight (carriage).
d. Commercial invoice
The main document used by customs officials for control, valuation and duty determination. Serves as the basis
for all other documents covering the shipment. Necessary for all shipments with a value of at least US$1 and
relating to commercial transactions, regardless of the value. Must be in English or accompanied by a translation.
Required details include the buyer and seller, a detailed description of the goods, quantity, purchase price or fair
market value, terms of the sale, and the date. Should show freight, insurance, commission and other charges as
separate items. Should be signed and, if possible, attested to by a bank.

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e. Pro forma invoice
Acts as a preliminary invoice, presenting the same information as the final invoice without claiming payment.
Enables the end purchaser to apply for letters of credit, import licenses or foreign exchange allocation..
f. Shipper’s export declaration
A Shippers Export Declaration is used for two purposes. First, it serves as a census record of U.S. exports. Many
reports are generated by the government using these statistics. Second, because the commodity's export license
designation appears on the form, the SED serves as a regulatory document. The SED is required for shipments
when the commodity's value exceeds more than $2500 per Schedule B number and for postal shipments if the
value is at least $500 U.S dollars. SEDs must also be prepared, regardless of value, for all shipments requiring
an export license or for shipments to embargoed countries. This form can be filled out by either you or your
freight forwarder (if power of attorney has been recognized). The SED does not leave the United States and
does not travel along with the other export documents through the banking channels on the letter of credit or
other transactions. Instead the Shippers Export Declaration is delivered to the exporting carrier (airline or vessel
line) and then presented to the U.S. Customs Service at the port of export.
g. Statement of origin
Verifies the country in which the product was manufactured. Required by certain foreign countries for tariff
purposes. Must be validated and notarized by a local chamber of commerce.
h. Special documentation
To avoid delays, all documents must be correct and consistent. The air waybill and Commercial Invoice require
some of the same information:
"Consignee" is the recipient, the person to whom a shipment is being sent.
“Shipper” is the sender, the person with whom the shipment originates.
The value to declare for customs purposes is the price paid or payable for the goods, including any selling
commissions, assists, royalties, packing and proceeds. It does not include freight and insurance charges.
Genuine samples up to the value of US$200 are not subject to duties. The Commercial Invoice and air waybill
must state "Sample supplied free of cost," and contents need to be marked as samples.
A description of the contents includes:
 What the product is
 What material it’s made of
 Schedule B or HTS code
 Intended use
 Country of manufacture
 Parts or serial numbers (if applicable)
 Quantity and unit of measure
 Value, per unit and in total

5. Insurance claims

6. Freight forwarder.

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Our company does already export flowers to Europe and Russia. We will use the same freight forwarder as for
our supplies to the other countries. We are located in Lasso and we will transport our flowers with our own
truck to the airport in Quito. This truck has a cooling system in order to keep the flowers fresh. Upon arrival at
the airport our contracting freight forwarder will prepare all necessary documents. Then an airfreight cargo
company for example Tame Cargo or Lan Cargo will do the transportation to Brazil. Arrived at the destination
we will hire company, which will distribute our flowers to the retail stores, hotels and restaurants.

F. Channels of distribution (micro analysis). This section presents details about the specific types of
distribution in your marketing plan.

1. Retailers
a. Type and number of retail stores
The retail distribution of flowers in Brazil has nearly 18,000 outlets. The products are usually sold in large
centers (Ceasas), being the Ceasa of São Paulo, Ceasa of Campinas Campinas, and Veiling Holambra
Cooperative the largest centers of commercialization in the country. In the first years we will focus especially on
the region of São Paulo and as well as hotels and restaurants in this region. Once successfully entered the market
there we will expand to other big cities in Brazil.

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

As mentioned above we will apply a low cost strategy at the beginning in order to grow in the market. But we
will add to our expenses a 30% extra charge which will be our profit.

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

Retailers can pay by credit card or bank transfer to our account. We will also accept common payment systems
as for example PayPal.

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

This depends on the demand of the Retailers. We will try to deliver and sell as much flowers as we can.

2. Wholesale middlemen
We export directly to retailers, restaurants and hotels and do not deliver to 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
Our import and export agent will be the cargo airline.

4. Warehousing

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a. Type
We do not store the flowers in a warehouse because they are perishable goods. We need to export them as fast
as possible and we need to distribute them directly to our customers. Once arrived at the airport in Sao Paulo,
our distributing company will deliver our flowers by truck to the different stores, restaurants and hotels. Also
this truck has a cooling system in order to keep the flowers fresh and to ensure our high quality.

b. Location
We will use the airport in Sao Paulo because we will focus on this region.

G. Price determination
It’s determined according to the unit cost and production including other fees.

1. Cost of the shipment of goods

We use the transportation by truck in order to move goods from and to the airport and a cargo company will do
the air shipment.

2. Transportation costs
With the exception of tropical breeds, cut flowers and plants should be cooled rapidly to temperatures of around
33-35 F throughout their travelling time. Truck transport of flowers can be a preferable method because
temperatures can be managed more easily and cost and environmental impact can be reduced. Inadequate pre-
cooling and temperature fluctuations can result in condensation which in turn means that flowers are more
vulnerable to the Botrytis infection, a vicious mould that will attack all breeds of flowers.

Unfortunately there are few regulations to determine exportation conditions, but the cool chain is a standard
practise that most countries observe in order to obtain the best results from their flowers.
3. Handling expenses
As we will use Tame Cargo as our carrier we will have a special agreement with them. In this agreement will be
included all the expenses from the airfreight, loading and unloading charges, insurances, customs duties and
taxes.
a. Pier charges  included in agreement with Tame Cargo
b. Loading and unloading charges included in agreement with Tame Cargo
4. Insurance costs included in agreement with Tame Cargo
5. Customs duties included in agreement with Tame Cargo
6. Import taxes and value-added tax included in agreement with Tame Cargo
7. Wholesale and retail markups and discounts
We will give special discounts to wholesale who buy in big quantities:
10% Discount getting mark-up depending of the price of the season in which the product will be sold 30%-50%
8. Company’s gross margins

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At the beginning we will apply a low-cost strategy for that reason the projections are made with a increase of
10% each year
9. Retail price
Average retail price competitors:
 $100-200 (270.16- 540.31Brazilian real) per flower arrangements.
 $2 (5.40 Brazilian Real) per flower.

Transportation Insurance Taxes Gross Profit

Flowers Price 0.10% 0.03% 0.15% 0.30%
100 $ 0.55 $ 0.61 $ 0.62 $ 0.72 $ 0.93
200 $ 0.45 $ 0.50 $ 0.51 $ 0.59 $ 0.76
300 $ 0.45 $ 0.50 $ 0.51 $ 0.59 $ 0.76
400 $ 0.45 $ 0.50 $ 0.51 $ 0.59 $ 0.76

H. Terms of sale
1. EX works, FOB, FAS, C&F, CIF
FOB Airport (Exhibit 1)
We will use this incoterm since as we are a company that will export and deliver our products directly to
retailers (the stores), we don’t have inconvenience because the risk in case of loss will be transfer from the seller
to the buyer at such time and both buyer and seller belong to the same company.

2. Advantages/disadvantages of each

EX works, FOB, FAS, C&F, CIF: These incoterms don’t represent advantage or disadvantage since we don’t
use them.

FOB Airport Advantage

The company have the control of all the process of exportation and importation of the flowers.

FOB Airport Disadvantage

We don’t have any disadvantage, because once the flowers arrive to Brazil, We will take all respective
processes.

I. Methods of payment
Direct billing:
The payments will be established according to the season but in general must be monthly.
Since we are our own exporters and importers would not exist any problem and the intervention of third parties
won’t needed if payment is not made, the relevant documents will be sent by courier. Once the person have the

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documents for receiving flowers in Brazil, it proceeds without delay to the internment of the merchandise upon
arrival at the destination.

1. Cash in advance
Cash in advance is not necessary.
2. Open accounts
3. Consignment sales
100% of our sales will be consignment.
4. Letters of credit
The Guarantee was stipulated in the financing contract with the CFN.
II. Pro forma financial statements and budgets
A. Marketing budget
1. Selling expense

2. Advertising/promotion expense
It’s is in the budget (excel)- Expenses
3. Distribution expense
4. Product cost
COSTO DE MATERIAS PRIMAS

Precio ($/unidad)
Materia prim a Costo

1 Semilla $ 200,000.00 $ 0.0667

2 Abono $ 175,000.00 $ 0.0583
3 Fertilizantes $ 150,000.00 $ 0.0500
4 Tierra de Sembrado $ 200,000.00 $ 0.0667
5
Costo de producción unitario $ 0.24
Especificaciones técnicas:
1.. Depende de la temporada
2.. depende de la cantidad requerida por las tiendas en Brazil
3..

COSTO DE MATERIALES INDIRECTOS

Rubro Costo Precio ($/unidad)
1 Cajas $ 100,000.00 $ 0.0333
2 Cintas $ 35,000.00 $ 0.0117
3 Papel empaquetado $ 50,000.00 $ 0.0167
Costo de producción unitario $ 0.06

5. Other costs

COSTOS INDIRECTO DE FABRICACION

Rubr Costo
o   mensual
Suministros de producción (mandiles, guantes, mascarilla, $
1 etc.) 80,000.00

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B. Pro forma annual profit and loss statement (first year through fifth year)
ESTADO DE PERDIDAS Y GANANCIAS
Exrocob farms
PROYECCIÓN A 5 AÑOS

Precio $ 1.25 $ 1.29 $ 1.33 $ 1.38 $ 1.43

Costo de produccion $ 0.30 $ 0.31 $ 0.32 $ 0.33 $ 0.34
Uidades de Producción 30,240,000.00 33,264,000.00 36,590,400.00 40,249,440.00 44,274,384.00
Inflacion 3.66% 3.49% 3.35% 3.50% 3.45%
Tasa de crecimienm to 10% 10% 10% 10% 10%
AÑO 2016 AÑO 2017 AÑO 2018 AÑO 2019 AÑO 2020
INGRESOS
VENTAS 37,800,000.00 42,910,560.00 48,665,232.00 55,544,227.20 63,312,369.12

COSTOS 30,436,020.00 31,498,237.10 32,553,428.04 33,692,798.02 34,855,199.55

MATERIA PRIMA DIRECTA 7,257,600.00 7,510,890.24 7,762,505.06 8,034,192.74 8,311,372.39
MATERIAL INDIRECTO DE FABRIC. 1,814,400.00 1,877,722.56 1,940,626.27 2,008,548.19 2,077,843.10
SUMINISTROS Y SERVICIOS 960,000.00 993,504.00 1,026,786.38 1,062,723.90 1,099,387.87
MANO DE OBRA DIRECTA E INDIRECTA 20,404,020.00 21,116,120.30 21,823,510.33 22,587,333.19 23,366,596.19

MARGEN DE CONTRIBUCIÓN 7,363,980.00 11,412,322.90 16,111,803.96 21,851,429.18 28,457,169.57

GASTOS 11,692,622.51 12,079,592.22 12,459,927.82 12,853,324.74 13,269,689.58

ADMINISTRATIVOS
PERSONAL ADMINISTRATIVO 4,527,714.00 4,685,731.22 4,842,703.22 5,012,197.83 5,185,118.66
SUMINISTROS Y SERVICIOS 2,250,000.00 2,328,525.00 2,406,530.59 2,490,759.16 2,576,690.35
DEPRECIACIÓN 53,586.72 53,586.67 53,586.67 36,920.00 36,920.00
AMORTIZACIÓN 1,200.00 3,200.00 3,200.00 3,200.00 3,200.00
VENTAS
FUERZA DE VENTAS 1,390,960.80 1,439,505.33 1,487,728.76 1,539,799.27 1,592,922.34
COMISIÓN EN VENTAS 21,600.00 22,353.84 23,102.69 23,911.28 24,736.22
PUBLICIDAD Y MARKETING 106,050.00 109,751.15 113,427.81 117,397.78 121,448.00
PRODUCCIÓN
PERSONAL OPERATIVO 2,523,522.00 2,611,592.92 2,699,081.28 2,793,549.12 2,889,926.56
GASTOS DE SUMINISTROS Y SERVICIOS 720,000.00 745,128.00 770,089.79 797,042.93 824,540.91
GASTOS FINANCIEROS 97,988.99 80,218.09 60,477.01 38,547.37 14,186.54

UTILIDAD ANTES DE IMPUESTO Y PARTIC. TRABAJ. (4,328,642.51) (667,269.32) 3,651,876.14 8,998,104.44 15,187,479.99
(-) 15% PARTICIPACIÓN TRABAJADORES (649,296.38) (100,090.40) 547,781.42 1,349,715.67 2,278,122.00
UTILIDAD ANTES DE IMPUESTO (3,679,346.13) (567,178.92) 3,104,094.72 7,648,388.77 12,909,357.99
(-) 25% IMPUESTO A LA RENTA (919,836.53) (141,794.73) 776,023.68 1,912,097.19 3,227,339.50
UTILIDAD NETA (2,759,509.60) (425,384.19) 2,328,071.04 5,736,291.58 9,682,018.49

III. Resource requirements

A. Finances
Leverage:
Equity-30%
We will invest 30% of our own resources.
Juan Sanchez 10%
Oscar Gayrey 10%
Lisa Hani 10%

Borrowed capital-70%
To This new Project we will count with the support of the CFN to finance the 70% of the project.

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DESTINATION
Fixed assets: Civil works, machinery, equipment, agricultural development and semoviente.
Working Capital: Purchase of raw materials, supplies, direct and indirect materials, payment of labor, etc.
Technical assistance.
BENEFICIARY
Individuals.
Legal persons regardless of the composition of their (private, mixed or public) capital, under the control of the
Superintendence of Companies.
Non-financial cooperatives, associations, foundations and corporations, with legal status.
AMOUNT
Up to 70% for new projects.
From US $ 100,000 *
Value fund (percentage of total investment):
* The maximum amount will be defined according to the methodology of risk of CFN.
TERM
Fixed Assets: up to 10 years.
Working Capital: up, 3 years.
Technical Assistance: up, 3 years.
GRACE PERIOD
It will be set according to the characteristics of the project and projected cash flow.
INTEREST RATES
Working capital: 10.5%;
Fixed Assets:
10.5% at 5 years.
11% to 10 years.
WARRANTY
Negotiated between the CFN and the client; in accordance with the provisions of the General Law of Financial
Institutions to the satisfaction of the National Financial Corporation. Should be collateral shall not be less than
125% of the secured obligation.
The CFN reserves the right to accept collateral in accordance with the relevant technical reports.
DISBURSEMENTS
According to schedule approved by the CFN. For each disbursement shall be furnished securities representing at
least 125% of the amount owed to the CFN.
SPECIAL SITUATIONS OF FINANCING
Contribution from the client:
Construction: Up to 40% of project costs, according to current regulations of the CFN (includes value of land).
It is funded:
Plot: Alone in relocation or expansion projects, according to current regulations of the CFN.

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REQUIREMENTS
For loans of up to US $ 300,000 project evaluation is not required.
For orders above US $ 300 000 credits required to complete the evaluation model that CFN provided on
magnetic media.
Statement of income tax last fiscal year.
Title to the collateral offered.
Charter payment of taxes.
Operating permits and construction where appropriate.
Building plans approved in the case of civil works.
Proformas machinery acquired.
Proformas of raw materials and supplies to be acquired.

B. Personnel
Minimum wage:
724 Real Brazilian
314 American Dollars

In order to improve and keep a good management in the company, new offices will be open in order to
inform all the events quarterly.

 1 General Manager
 1 Finance and Administration Manager
 1 Operational Manager
 1 Marketing and logistic Manager
 1 Accounting Manager
 1 Administrative Assistant

Also in each store in Brazil will be hire

 2 persons to administrate the store.

 1 person in the warehouse

Additional office:

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  Quality boss
 Warehouse ( person in charged )
 Cleanning
(Specified in excel) - expenses

C. Production capacity
We count with 20 hectares to cultivate unless 3 millions of flowers.
 20 roses for each m2.
Hectares m2 Hectares Flowers per M2 Total
1 10000 1 20 200000.00
2 10000 5 20 1000000.00
3 10000 10 20 2000000.00
4 10000 15 20 3000000.00
5 10000 20 20 4000000.00

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Exhibit 1

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References:

http://www.cfn.fin.ec/index.php?option=com_content&view=article&id=48:financiamiento-
estrategico&catid=56:productos-y-servicios
http://www.kwintessential.co.uk/resources/global-etiquette/brazil-country-profile.html
http://thebrazilbusiness.com/article/social-classes-in-brazil
http://www.nationsencyclopedia.com/economies/Americas/Brazil.html
http://www.nationsencyclopedia.com/Americas/Brazil-TOPOGRAPHY.html
http://en.wikipedia.org/wiki/Climate_of_Brazil
http://en.wikipedia.org/wiki/Education_in_Brazil#Educational_Statistics
http://www.brazil.org.za/brazil-education.html#.VIUpsDHF9s0
https://prezi.com/qb3usbtisob7/brazilian-family-structures/
http://www.oas.org/juridico/mla/en/bra/en_bra-int-des-ordrjur.html
https://www.cia.gov/library/publications/the-world-factbook/geos/br.html
http://www.cronista.com/legales/La-ley-brasilena-de-participacion-de-los-trabajadores-en-las-ganancias-
vs.-el-proyecto-argentino-20110211-0006.html
http://www.economywatch.com/economic-statistics/economic-indicators/Investment_Percentage_of_GDP/
http://www.bbk.ac.uk/events-calendar/education-science-and-technology-the-pillars-of-development-in-
brazil
http://www.tradingeconomics.com/brazil/inflation-cpi
https://es.santandertrade.com/gestionar-embarques/brasil/acuerdos-y-procedimientos-aduaneros
http://www.deloitte.dbbrazil.com.br/show.aspx?idCanal=Tap1ogfxsUipt3uYP2l7JA==
http://globaledge.msu.edu/countries/brazil/tradestats
http://www.revistas.una.ac.cr/index.php/derechoshumanos/article/view/93
http://www.tradingeconomics.com/brazil/minimum-wages
http://thebrazilbusiness.com/article/salary-negotiation-in-brazil

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