Although Brazilian has a growing population of 186 million people and it experiences 86% literacy levels, just as in most of the LDCs, the inequality gap is still a substantial issue in Brazil. There are huge income gaps between the rich people and the poor people. "The 10% richest people earn 50% of the totally income and the 10% poorest people only get less than 1% (source?)." Therefore social status is very meaningful, especial for the middle-classes. As IKEA has been very proficient in selling lifestyles to its customers (KeyNote, 2008) the status importance amongst Brazilians could turn out to be advantageous for IKEA. However, credit option is extremely limited among most consumers in Brazil, and consumers expect to pay for their goods in instalments. Sometimes consumers opt for a certain product not because if its quality, but because of the payment facilities. Consumers can pay for a TV of the equivalent of £300 in 10 instalments and without any added interest. IKEA should certainly be aware of consumer's buying behaviour as to not have any problems regarding to its liquidity ratios.
Technological environment:
As the telecommunication penetration rate in Brazil remains low, IKEA would not be able to rely in online sales in Brazil in the middle future and its online advertising should be very efficient
Legal Environment
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Environmental factors:
Brazil shelters dense forests in northern regions including Amazon Basin that can be use for wooden furniture: half of the country is covered by forests. However, over the past couple of years, the government has been very cautious about global warming caused by MNC's deforestation. So IKEA would need to ensure the Brazilian government that its practices are very sustainable.
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