Chile: Country Overview
By Mauricio Martinez Vázquez
General Manager – Kantar Insights
After a prolonged period of slow economic growth, the outlook for Chile in the months ahead looks brighter. This is thanks to factors such as a recovery in the price of copper – a key element of the country’s economy – as well as the finalization of elections during the last quarter of 2017.
Both situations have created a greater sense of optimism and market stability, forming a sturdy platform for sustained growth in exports and greater internal dynamism, including higher levels of private consumption.
Beyond this good news on positive change in internal demand, there are important social and recent historical peculiarities of the country that affect Chilean consumption patterns.
Chileans, more incredulous than ever
In the past few years, the Chilean consumer has been witness to a variety of scandals in different settings, both political and corporate. All this has triggered substantial disenchantment among Chilean consumers, and created a crisis of confidence toward different entities, including brands.
Multiple Kantar Millward Brown and Kantar TNS indicators show that the Chilean consumer has become more critical, more open to trying new options, and is breaking away from convention. This dynamic has opened the door to the development of new brands, and new dynamics in purchase channels, such as a rise in buying on promotion in the modern retail trade, a phenomenon documented by Kantar World Panel in the past few months.
From isolation to open door
The geographic isolation that results from having natural borders in all four directions has inevitably made Chile a country that has looked inward. Yet economic strategy promoted by recent governments has made it one of the countries with the most free trade agreements in the world.
Today, multiple global economic and political forces have made Chile an open-door market. The influx of immigration from Colombia, Venezuela, the Dominican Republic and Haiti has shown extraordinary growth in the last decade. In Chile, brands must attend the changes these new social dynamics involve, understanding the impact that these new arrivals can have on local market preferences.
Chile’s increasingly open view on the world is not only reflected in levels of immigration, but also in Chilean brands’ increasing presence in other parts of the region. Retail brands in particular have developed solid consumer awareness outside Chile by exporting key features, such as their financial services and loyalty programs, but above all, by being meaningfully different to competing brands in these new markets.
View of the future
Chilean brands that have stayed in the BrandZ Top 15 Most Valuable Chilean Brands over the past few years have understood the changes taking place in this dynamic society, and the implications of those changes on their strategy to deliver what the consumer wants.
As discussed, Chileans have become more critical and informed consumers, demanding better service that draws on recent technological advances. They understand brands, seek out those that best serve their needs, and they are willing to looking at new brands.
Among even the country’s leading brands, there is still much work to be done. The Top 15 Chilean brands have Brand Equity scores of 140 (40 percent higher than the market average). However, if we compare them to the most valuable global brands, which have scores around 200, there is significant room for improvement. These Chilean brands have many opportunities to strengthen consumer perceptions of what they stand for, boost affinity, underline their important differences, and transmit their messages more convincingly.
The communications challenge
It is noticeable that Chileans enjoy advertising significantly less than consumers in the rest of Latin America. Only 33 percent say they enjoy it either somewhat or a lot, while the regional average stands at 62 percent. If we add media fragmentation to that fact, we see that we face a very complex setting in which brands must communicate. In this market, brands that know how to send out messages across different channels in a consistent and high-impact way will be the ones that establish difference, build competitive advantage, and will surely grow at a faster pace.