Pikaso Print Supplies Ink Jet & Laser Cartridges

BRAZIL

Background Information Population –190 million people National Language –Portuguese 1 US dollar = 2.14 Brazil Real

7 Reasons for Choosing Brazil Strategic Location and Market Sustained growth Innovation and Technology Infrastructure Investment profitability Work Force Natural resources

Strategic Location Eastern South America, bordering the Atlantic 8.6 million square kilometers Brazil shares borders with every South American country except Chile and Ecuador 2,680 miles north to south from Cape Orange to the Arroyo Chuy and 2,690 miles west to east from Olinda to Peru.

Market Size $ 2 Billion USD (2007)

Sustained Growth Brazil is the sixth biggest economy in the world GDP growth rate reached 5.3% in 2007 with an inflation rate of 3.7% Brazil is a world player in agriculture, mining, ethanol production and meat and poultry exports. More than 32% of all jobs created in Latin America in 2007 were in Brazil

Innovation and Technology Growth rate of personal computers increased by 120% between 2002 and 2007 –40% of all computer users in Latin America Brazilian internet users increased by more than 270% in the last 5 years –53 million users.

Infrastructure 67 airports handle a flow of 110 million people annually There are 46 ports with a capacity of 600 million tons per year A well developed rail system extends over 30, 000 km. 1.6 million km of roads makes Brazil the third largest road mesh in the world

Infrastructure Communication 125 million mobile lines 42 million fixed lines More than 1 million public telephones.

Investment Profitability 2007 Brazil received 30% of the Foreign Direct Investment intended for Latin America –resulted in a 99% growth rate. Return on investment in Brazil has overcome the 26% annual mean in the last years Foreign companies are free to send their profits to their country of origin.

Work Force 99.5 million people make up Brazil’s work force Brazil’s Economically active population represents 36% of Latin America’s total population. Sixteen million people have higher education levels performing technical and scientific activities. There are six million registered college students in 2006 There has been an increase in the Brazilian work productivity in recent years.

Natural Resources World’s largest producers of ethanol Largest producer of iron ore World’s largest producer of coffee, sugar cane, fruit juices. Largest exporter of soy, meat, chicken and leather. Self sufficient in oil. Brazil’s energetic matrix has 45% renewable sources compared to an average of 14% worldwide.

Pikaso Print Supplies Ink Jet & Laser Cartridges

Mission Statement “Our mission is to provide our customers with the greatest value in print products. We are committed to social responsibility and improving the environment while maintaining high profitability and our commitment to our stakeholders.”

Product Printer Cartridges –Compatible with all major printers used in Brazil –20% More print –Made of Recyclable materials

Pricing Pricing: Comparison: Pikaso inkjet (HP1200) HP model 57 $35.00 USD (56 reals) Suggested Retail Price $42.00 (67 reals) MSRP Retail Markup Shipping and Handling Manufacturers Profit Labor Material 0 For every 1 million units sold a gross profit of $10 million USD is realized Every unit sold will generate $10 in gross profit –After taxes and business expenses, a net profit of 6.00 per unit realised.

Distribution Manufactured in Mexico Shipped to Brazil Sent to distribution center/warehouse (Trucks) Sent to local stores

In Brazil Offices and Warehouse will be established in the city of Sao Paulo –Serves as distribution center Sao Paulo –Business capital of Brazil –Consumer population –Close proximity to Port Santos

Promotion Advertising boards that run the entire length of soccer fields – Soccer is the most popular sport in all of Brazil –Seen by the fans in the stands (tens of thousands) –People who watch the games on television. – Gain of an international audience when the international play starts Website –Able to use in both Portuguese and English –Cheap to produce –Effective for international marketing Radio Television Sports Sponsorships

Promotion (cont.) Radio Trade Shows –Label Summit Latin America 4/28/09 – 4/29/09 –Expoprint Latin America 5/26/10 – 6/01/10 Pikaso Stadium (future)

Example of Promotion

Competition Main competition from foreign print companies In 2002 printer producers controlled 60% of the market share –Hewlett-Packard (HP) 50% –Epson 40% –Lexmark 10% (shared with Canon) –Canon 10% (shared with Lexmark) –Xerox 1999 Invests $12 million (US) in creating a printer cartridge manufacturing plant in Brazil

SWOT Analysis Strengths: –More affordable than competitors –Greater ink capacity –Compatible with all major computer printers –Marketing –Customer knowledge –Sales to customer, both online and retail outlet –Environmentally friendly Weaknesses: –Not a known brand name –Small relative new company –Smaller budget, finances –No onshore manufacturing facility - Customer involvement Opportunities: –Potential share in the market –Greater use of technology in Brazil –Product development –Marketing –Customer involvement Threats: –Economy –Government regulations –Competition from larger corporations - Customer loyalty to larger brands

Bottom Line Break Even point – 6 Months Initial investment of $3 million (USD) and capture of 1% of the market = $20 million (USD) –Gross profit realized in the first year