Product Marketing Challenges in Argentina: Colgate Case (Essay Sample)

Product Marketing Challenges in Argentina
Student’s Name
Institutional Affiliation
Introduction
Argentina has a stable economic development that makes it strategic for business partnerships. Many countries have always considered partnering with Argentina because of its rich and diversified cultural practices. The country also has large majority of literate population driving industrialization and financial sector. Argentina also has stable government with strong financial backing. Argentina is also blessed with extensive natural resources such as minerals and large water bodies thus promoting industrialization. The country also participates in intensive agricultural activities meant for external markets. They export majority of their agricultural produce. Argentina has also in the past experiences uneven economic variances with major recession making the county not fit for both international and local business. Product marketing in Argentina has faced major challenges forcing Argentina’s bilateral trade with other countries to be at a standstill.
Product marketing challenges faced in Argentina
Slower Economic Growth has derailed market penetration of some key products in country. This may largely because of the complex fiscal systems in the region. Argentina has the most complex taxation system that threatens development of both startup companies and old companies as well. The taxation system in the region mostly increases the cost of production making final product expensive hence loses customer loyalty. Customers in Argentina tend to shy away from such products which in the end lead to the collapse of such companies. An example of products that faced stiff challenges due to complex tax system is Colgate. The company having initially originated from the USA found tough taxation measures, which thwarted its operation. The tax complexity made Colgate’s operation in the region very difficult; leading to continuous loses due to slow penetration in the market (Stanford et al., 2004).
The second product marketing challenge in Argentina is strong trust for local products. Since the country is fully developed and has capacity to produce goods and services to suffice its people, penetration of a new product from external markets does not marshal business strength. Most products used by the county are manufactured from within and the trust given to local products is meant to protect local industries and ensure their local industries produce excess goods and services to serve external market. The dynamic toothpaste industry in Argentina led to the falling of Colgate and rising of local products such as Kolynos. The Kolynos toothpaste has gained trust by the argentines forcing an upward increase of the production capacity, therefore leading to product export to the neighboring countries.
The third complexity facing product marketing in Argentina is Language barrier. Argentina being one of the Latin America countries has diverse languages such as Spanish, English and French. The Argentines are majorly known to speak Spanish, thus requiring translators, in case of marketing new products with foreign backgrounds. Colgate’s ability to penetrate the Argentine market was thwarted by major language barriers and conservative nature of Argentines. The Argentines believed in buying their own products that will not require translators in case of during purchase. The conservative culture of Argentines made it difficult to open up Colgate’s operations in the region. This was also contributed to by the unfriendly nature of the locals making products sales difficult and very expensive. Since the official language of argentines is Spanish, all business transaction and government requirements had to be drawn in Spanish, making it difficult for foreign ventures such as Colgate to pick up full operation in the region. For foreign businesses to smoothly operate in the region, they require an employee base with multilingual acumen to easily understand the conservative consumers in Argentina (Stallings and Peres, 2000).
Another threat to the penetration of foreign products in Argentina is that the country has very tough measures that govern business operations. Foreign investments have difficulty in completing their registration to commence operation in the region. The tough and bureaucratic nature of dealing with foreign ventures made it difficult for Colgate to dominate the market. All the Colgate abilities were faced with tough government policies in the region. These included heavy taxation of the company forcing cost of production to be overwhelmingly high, restrictions in the markets to access, heavy permits by the local authorities on their daily operations and finally long periods taken by the government to process the company documents that allow commencement of operation in regions with potential customers. These restrictions were put by the Argentine government to protect local industries and avoid any anticipated foreign dominance. Colgate ceased operation in major regions of Argentina because of poor publicity of their products by the government. The government believed that local industry had high potential of serving the market better than the foreign ventures. The policy put by the government that foreign companies must employ more than a third its locals to be awarded business permit, also affected Colgate market penetration. This is because they had to employ locals with conservative approach to marketing, which would not promote the culture expected by any foreign venture for their dominance (Wild et al., 2008).
The fifth product marketing challenge is inflation in the country. Argentina has faces a series of inflations revolving close to four decades. Such inflationary challenges affected the financial sector in Argentina. The uneven nature of inflation in the region has destabilized the market making money to lose its meaning. This led to the high costs of Colgate’s operation in the region since most of its core resources were imported thus becoming expensive to the company. The inflation caused the cost of purchasing company raw materials, both in Argentina and from forei...