Pricing

A key selling factor in the Peruvian market is product pricing.  Products from Asian markets, such as China, Taiwan, and South Korea, often outsell more expensive European or North American products in the consumer electronics, appliances, and automobile industries.  Additionally, counterfeit and pirated goods are readily available.  U.S. goods can ensure competitiveness by investing in sales promotion, intellectual property enforcement, and post-sales service.  Consumers often prefer more expensive U.S. or European products in the capital goods sectors (including advanced electronics and construction machinery), where equipment performance and efficiency are critical.  Peruvian consumers appreciate the high quality, durability, technology, customer support, and regional service that U.S. firms offer.

Outside of Lima and some other major cities in Peru, the market is under-populated and under-developed and generally does not offer an attractive market potential.  However, certain exceptions exist, including large-scale mining operations along Peru’s Andes mountain range and petroleum operations in the Amazon jungle.  Payments for major purchases are generally on a net 30-day basis.  Therefore, requesting up-front payment or obtaining a confirmed, irrevocable letter of credit when entering a new market or dealing with new customers is advisable.  Businesses make purchases with cash (U.S. dollars are widely accepted), wire transfers, or credit cards.  Most retailers use credit terms as a sales technique, and major department stores issue their own credit cards.

Distributor mark-ups vary according to product type but usually range between 12% and 25%.  All imports are subject to an 18% value-added local sales tax, which can be used as a tax credit by the importer.  Some exceptions include enterprises established in industrial free zones and special treatment zones and companies with operations in the jungle regions of Loreto, Ucayali, Madre de Dios, Amazonas, and San Martin, per the Peruvian-Colombian Amazon Cooperation Treaty.  A few specific goods, such as cigarettes, beer, wine, and liquors, pay an excise tax under the lists and rates mentioned in Appendices III and IV of Legislative Decree No. 821 (passed on April 23, 1996).  In May 2019, Peru instituted a 10% excise tax for new automobiles and 40% for used vehicles.  Separate, preferential tariff schedules cover imports from countries with which Peru has bilateral or regional agreements.

Trade Promotion and Advertising

The latest pre-pandemic numbers indicate that Peruvian advertising totaled $442 million, decreasing from the previous year. Advertising expenditures have started declining since 2016, following an overall trend of increases since 2004. TV was Peru’s most effective ad medium, accounting for nearly 43% of the total ad spend. In Peru, advertising campaigns through Facebook reach 26 million people, the most preferred platform whose audience is nearly all of the active population in social networks over 13 years old.

Facebook opened 2021 with an increase of 4%, adding 1 million new users to its platform.  Its audience is 46% women and 54% men.  Instagram is Peru’s fourth most used social network, reaching 42% of urban users.  Peru has 5.1 million users on Instagram, the sixth highest number in Latin America, behind Brazil, Mexico, Argentina, Colombia, and Chile.

The El Comercio Group owns the most influential paper (El Comercio) and five other major dailies aimed at different audiences: Perú21, business journal Gestión, popular Correo, and tabloids Trome and Ojo. Other major dailies include La República, Expreso, Diario Uno, La Razón, and El Popular.  El Peruano, founded in 1825, is the government’s newspaper of record, publishing all legislation and decrees and reporting news.  Caretas, a magazine founded in 1950, is also one of Lima’s most influential news publications.  In July 2019, the Ministry of Transportation and Communications (MTC) reported 1,829 television stations and 5,667 radio stations in Peru.  The highest number of television stations are in the Cusco region (with 199 stations), followed by Puno (161 stations), Ancash (136), Lima (134), and Cajamarca (124). For radio stations, the Cusco region is also the leader (509 stations), followed by Cajamarca (466), Ancash (412), Lima (396), and Puno (382).  Radio has the largest audience of all communications media, reaching even the most isolated populations in Peru.  It is often the first source of current news and is the principal means for transmitting information about local issues and events in the regions outside Lima.

The key Peruvian television providers are the six major Lima-based networks: Latina, América, Panamericana, ATV, ATV+, and Global, along with TV Perú, the state-owned network, which is the only station available in many parts of Peru.  These broadcasters use affiliates in the provinces.  Additionally, numerous smaller, independent stations serve particular cities and regions.  A report by TV regulatory agency Osiptel concluded that 70% of households used cable television, mostly pirated cable TV connections.  Canal N, a 24-hour cable news channel owned by El Comercio Group, and RPP, the cable channel for one of the most widely heard radio stations, are highly influential. 

The main cable service companies are Spain’s Telefónica del Perú, offering “Movistar TV” with 62% market share, the U.S. DirecTV Group with 20% market share, and Mexico’s America Móvil Perú, offering “Claro” with 9% market share. 

Sales Service/Customer Support

Peruvians consider customer service and support as critical factors in final purchasing decisions, especially for products requiring periodic services.  Therefore, a reliable distributor must sell the product to guarantee quality assurance.  For example, servicing and availability are two of the perceived advantages that Asian-manufactured automobiles enjoy in Peru compared to their U.S. counterparts.  Similarly, U.S. after-sales service has a superior reputation with mining equipment compared to third-country competitors.

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