Andréa Novais

Andréa Novais


The Brazil Business

Updated

fulminating

Consumer Behavior in the Favelas

Andréa Novais

Andréa Novais


The Brazil Business

Updated

This article will give you an overview of Brazilian shantytowns, focusing on the consumer habits of its residents.

Favelas (shantytowns) are the consequence of income inequality and housing deficit in Brazil. It is an urban phenomenon and is caused by the rural exodus the country has faced in the 70's and the constant migration of people from other regions (especially from the Northeast) in search of work and in hope of a better life.

Favelas are usually located in the outskirts of the cities and in areas that were not destined to housing, such as hills and environmental protection areas. As these neighborhoods are constructed illegally and without any previous planning, these areas often lack basic services, such as electricity, sewage and water treatment.

However, the lack of basic services does not prevent these communities of being targeted as potential consumers or the settlement of several services such as stores, restaurants, post offices, hospitals and even banks.

Who lives in the favelas?

The majority of the people living in favelas belongs to classes D or E, which are the base of the Brazilian society pyramid.

For a long time they lived on the margin of the consuming society, but with the advent of loans and the offer of credit without income proof, these people started to consume more and more, even though it means to spend the rest of their lives indebted.

Differently from what many may think, they do not want to buy cheap things. They want the best commodity or service their money can buy.

As an example, we can mention a computer company who recently launched a line of computers to be sold at lower prices, hoping they would make a lot of money out of classes D and E. What they did not know is that these people do not want to be identified as the ones who can only buy things that are designed for the poor. They want to be able to buy the same things the middle class is buying.

Another example is a hairdresser who makes 600 BRL a month, but bought a 52 inches plasma TV that barely fits on the TV stand she has in her tiny living room.

Major Favelas

As favelas are an urban phenomenon, we will consider Rio de Janeiro and São Paulo as examples, as they are the main destinations of migrants who come from the poorest areas in the country.

Rocinha (Rio de Janeiro)

One of the biggest favelas in Rio de Janeiro, it is located between two upper-middle class neighborhoods, exposing the contrast in the city.

This contrast is also visible when we notice that many points of the community lack basic services, such as sewage, but there are fast-food chains, paid TV services, hospitals, post-offices, banks and several restaurants and internet cafes at Rocinha, although this last one is gradually losing its popularity due to free wi-fi in the area.

This contrast also proves that despite the government has shown no interest in these communities, they have been more and more important for private companies, who clearly see their potential as consumers.

Paraisópolis (São Paulo)

Just like Rocinha, Paraisópolis is surrounded by upper-class neighborhoods. Paraisópolis was born in the 50's, when the construction of these upscale houses attracted cheap migrant work force. As many of these people had no place to live and could not afford buying a house, they started to invade some of the land that was reserved for this enterprise and built their own residences.

Many of these workers would live in Paraisópolis, creating the current contrastive landscape in the wealthiest areas in the city, such as Morumbi neighborhood.

Only 25% of its population have access to sewage, 60% use electricity illegally and only half of the streets are paved. Differently from Rocinha, Paraisópolis does not have as many services offered within the community limits.

However, the prefecture has been working on the infrastructure of the area, providing basic services s and has building several condominiums in order to relocate some of the families

Tendencies

Class D, which is the predominant in the favelas, corresponds to 64 million Brazilians. Moved by the incentive of loans and easy credit, these people are willing to buy everything, from frugal items to sophisticated ones, such as cars, computers and mobile phones.

This class alone was responsible for 33% of all computers sold in 2010. The reason is that the majority of these families is headed by women, who valuate education and see it as way of social climbing.

It has become a common practice for entrepreneurs (such as bankers, presidents of food companies,etc) to visit these communities in order to map their consuming habits and create products that would call their attention.

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