Latin America is not a country - Chief Concern

Chief Executive, The, Feb, 2002

As told by CHARLES HERINGTON to C.J. Prince

I have spent most of my professional career taking global brands into Latin American markets--first for Procter & Gamble, later for PepsiCo Restaurants, and then for Revlon. And my impression is that U.S. companies generally do a pretty good job of it; many established global brands are as popular in Latin America as those originating there.

But that doesn't mean there isn't plenty of room for improvement. Latin American consumers are just as discerning and demanding as their U.S. counterparts, and one really must understand the culture in order to appeal to them. It is a challenge, even for those of us who have been doing it for decades. Yet, as consumer awareness of quality products continues to grow--thanks to better access to more information with the growth of the Internet--so does the opportunity for companies with strong products and services to gain ground.

But success in Latin America means avoiding the cultural missteps that can lead to failure, from the obvious mistakes, such as when a CEO misplaces the capital of a country, to more strategic errors. Most of the difficulty U.S. company leaders have faced in Latin America has resulted from a lack of knowledge or understanding. One very popular misconception is that Latin America is just one huge country south of the Rio Grande, rather than a number of very unique countries. There are cultural similarities among them, of course, but one cannot simply call it Latin America and treat it as a country.

Once that is understood, you can begin to look more closely at what is important to consumers in this region, both within each country and across the region. Family is very important, for example. Music and religion are both big cultural influences. And then there are annual events particular to each country, which will be central to advertising campaigns at those times. In Brazil, around January and February, for example, much of the business activities will revolve around the four-day ritual celebration of Carnaval.

Because it's so difficult to keep up with remote local cultures, we were careful at AOL Latin America to build teams with people who live the culture in each region. In Brazil, 100 percent of our teams are Brazilians. We don't have a single ex-pat manager in that region. The same is true in Mexico and Argentina. Even here in our headquarters in Ft. Lauderdale, the great majority of our team is from Latin America. Personally, I'm glad I'm bilingual, but I am much more comfortable speaking Spanish than English.

Being local helps us evaluate marketing strategies and campaigns developed by our parent company to determine how effective they might be for Latin consumers. Just because it works there doesn't mean it will work here. But having the perspective of our parent company also gives us an edge in the local market. For example, when we entered Latin America, we were competing with local ISPs who had not yet learned some basic lessons that AOL had learned in the U.S. Nearly all our regional competitors offered free Internet services at one time. Of course, we knew that, based on all the experience of AOL worldwide, there was no financial business model associated with free services. But there was a lot of pressure on us to join in, and because our competitors were giving away something for nothing, our service looked more expensive to consumers. Eventually, as we predicted, those models died out. But it challenged our local brand-building efforts.

Partnerships are key as well. Recently, Latin American companies have voiced more interest in creating alliances with foreign companies. Fortunately for us, we have some very strong anchor partners in Latin America, such as the Cisneros Group, which has a history of bringing global brands to the region and growing them, and Banco Itau from Brazil, which offers local expertise in our largest market and access to their 1.8 million online banking customers.

Cultural differences aside, the winners in Latin America will be those companies that understand that Latin consumers want--and demand--the same things U.S. consumers want: a quality product and excellent customer service at an affordable price.

Charles Herington is president and CEO of Ft. Lauderdale, Fla.-based America Online Latin America, a joint venture of AOL Time Warner, the Cisneros Group of Cos., and Banco Itau of Brazil.