Marketing to the Bottom of the Pyramid Case Study
- Length: 6 pages
- Subject: Business - Advertising
- Type: Case Study
- Paper: #28828180
Excerpt from Case Study :
Marketing to the Bottom of the Pyramid
Ethical issues: 7
Social Issues: 7
Market Opportunity: 8
Value for underprivileged: 8
The underdeveloped countries are becoming major emerging markets with a huge potential based on the large populations. The large corporations operating in developed markets also expand in international markets. The multinational companies operating in under developed and developing countries also look for opportunities in the market through a different approach. The key question that needs to be answered is that these markets have different dynamics in terms on consumer preferences, geographical locations, and income at the disposal of a large number of inhabitants. The businesses including major multinational corporations also look for opportunities in establishing their reach and appeal to the locals that are under privileged and in some cases the bottom of the pyramid (BOP) market segment. These underprovided populations not only live under the poverty line but they also have a small income on their disposal to afford consumer products. In case a company decides to look further into the possibility of marketing the BOP segment they need to address the below mentioned factors to use in marketing strategy (Chikweche, & Fletcher, 2012).
According to Chikweche et al. (2012) the market strength should be clearly identified that needs to be targeted. The countries with scattered populations and large number of underprivileged inhabitants tend to have less structured information. The companies need to conduct market research at their own and identify the qualitative and quantitative data to extract required information. The relevant demographic features of the targeted market should be thoroughly reported in order to lay a foundation for their marketing strategy and plans. The numbers should be calculated and accurately projected in terms of market strength, income at their disposal, likely hurdles in approach, and available resources. The future profit, feasibility, and viability projections should also base on the results of market research.
The underprivileged populations have a specific aspect associated with their earnings and income at their disposal. They are least likely to buy in bulk and as a result the capacity to stockpile is also minimal. The populations living above the poverty line are likely to buy in bulk and as a result they can save their time and frequency of trips for consumer products. However the BOP market segment is more likely to buy only required goods to pass their day and they also do not mind frequent trips to the convenience stores. This is an important factor to consider while developing a marketing strategy. The likelihood of product availability at distributors should address these factors (Kacou, 2010).
The product design and features should also be specifically designed to cater the market requirements. The BOP populations often live in the conditions where uncertainty in the regular supply of utilities is also an issue. Therefore it is required to address the product's operational features. The requirement for battery timings, re-charging, and use of electricity for consumer electronic devices should address all these issues. The consumers in BOP market segment are also likely to have different operating environment where product performance in case of dust, noise, and humidity can be affected. The products designed for BOP market segment are designed according to the external environmental conditions by the organization.
The BOP market segment is perceived as less likely to be able to utilize features that are advanced. It is considered as a wrong perception. The products should be technologically advanced to cater the needs and demands of the market. The innovative and qualitative feature requirements for this market segment are also advanced and it requires the product design and marketing strategy to be addressing these issues. The innovative, cost effective, and reliable products are more likely to gain market share and appeal to the targeted customers.
The development of a product should be a complete package with localized features. The language used as the operating system of electronics designed for the BOP market segment should be in line with the local population's needs and operating capabilities. The element of simple product features should be considered for repair purposes at the same time. The BOP market segment is more likely to appraise a long lasting product according to their economic conditions. The marketing instructions as well as instructions for use should also be developed according to the level of education and capabilities of the targeted segment.
The financial capacity of the BOP market segment is also minimal. It is observed that the population is least likely to make an over the counter payment for consumer products. It is also likely that the total income at their disposal is considerably less than the product or services cost. Therefore it is required to offer financing facilities to the segment. The financing facilities should be creative to help the customers of the target market. IT is likely that the consumers might take a longer period for the deal to be finalized and therefore the interest rate is slightly more than the normal rate offered in the prime lending market. However the element of developing a creative product deal is essential to serve the market.
The BOP market segment is more likely to live in the villages and areas far from the large city markets. The multinational corporations have their distribution centres in the large city according to market requirements. The likelihood of a traditional distribution network to work efficiently in for the BOP segment is lower. The distribution network has to competitive and effective to generate appropriate number of distributions. The creative approach is required to establish a distribution network. It is also likely that the business has to facilitate the local distributors to reach connected areas. The cost of distribution also needs to be managed through an innovative approach in order to increase profitability.
The businesses looking for developing a BOP market segment should also consider the collective and collaborative approach for training and financing. The groups are an easy approach to handle through cost effective and efficient professional reach. The development of a collective group-based training and financing again requires a creative approach for managing teams and work groups based on the localized infrastructure and facilities. The individuals can be trained in the form of a groups and develop a sustainable interconnected network of distributors to help further the development and penetration in the market.
As explained earlier the BOP market segment is least likely to purchase and consume large product packages. They are also least likely to take advantage of bulk package discounts. The specialized individual and sachet sized packaging is required for this segment. The packaging should be designed and developed according to individual needs of consumer according to their buying trends. The cost of individual packaging is a factor that can impact on the total cost of the product. However it has to specifically target to encourage the consumers in making their purchase decisions. The above mentioned factors are important questions that a business should address prior to making a BOP market entry decision.
The BOP market segment is targeted by the corporations as it has a huge potential for generating sales. The market segment comprises of populations that are living under the line of poverty. The monthly income is low and so is the buying power. The corporations design and develop various strategies in terms of financing, marketing, sales, and distribution to this segment of the market. The specialized financing facilities are also a part of the strategy to elevate sales. It is mentioned that the corporations arrange loan facilities to customers whose income is less than $100 monthly. However the interest rate is also higher than the prime lending market rates and usually it is 20%. They help in purchasing TV, cell phones, and other consumer durables. It is noted that these facilities are a mere dream in the lives of under privileged communities in their entire life. Therefore the difference created through offering loan facilities is justified and it is a positive impact on the lives (Kahn, 2011). The details of the justification in relation to the ethical, social, market opportunity, and value for deprived BOP segment is discussed below. Furthermore the help created through providing growth, sustainability, and self-reliance is also discussed as following.
The issues related to ethics are justified in relation to high interest rate as compared to the prime lending interest rates in the capital market. The BOP population is not able to complete the normal cycle offered in the regular market through various leasing companies and banking institutions. They are likely to offer instalment payments of rather small denominations. Therefore the administrative cost to collect these payments is higher. The organizations facilitate them through offering lease and charge interest based on the packaged feasibilities. The interest rate is yet lower than the subprime market.
The social impact crated through helping the BOP market segment is also one of the major advantages. It not only helps them acquainted with the latest technology and…