Danimal in Tier 5 Markets

Management Innovation at the Bottom of the Pyramid Many managers intuitively believe that a premium product is the ideal route to drive revenues. However, as the Danimal case proves, substantial revenues can also be generated in tier 5 communities in which the target market has little disposable income. Tier 5 markets can be defined as those who have income that falls below one thousand five hundred dollars annually.

Despite the fact that average purchasing power in this market is comparatively low, the population of this segment is the largest of the markets; therefore the collective purchasing power is extremely high and, for the most part, competition is not as intense as found in other markets. However, to be successful in this market it requires innovation at every level. There are many challenges that must be overcome to enter such a market.

One of the primary challenges results from the lack of infrastructure that can be found in these areas. There is little opportunity to build modern distribution channels to bring the products to market. Danimal overcame the infrastructure challenges in South Africa with an innovative solution. They provided the Daniladies with their own mobile retail operations that consisted of a cart, cooler box, umbrellas, and even promotional materials such as leaflets to help them do their own marketing.

As opposed to trying to infiltrate the underdeveloped retail networks, Danimal brought the products straight to the target market with their recruitment of Daniladies and by providing them their own mobile capabilities. The creation of the Danimamas and the Daniladies was also an innovative solution to widespread distribution. However, to create this distribution network of females, there were also many barriers that had to be overcome. The company targeted entrepreneurial ladies that were self-motivated to be successful.

However, despite their desire to succeed, they had very little in the way of training or business skills. Therefore, the company had to create a comprehensive training program that was able to equip the women with the skills necessary to be effective Danimal representatives as well as basically operate their own small business. Pretorius and Berry created a two-day training program specifically for new recruits to bring them up to speed and prepare them to sell the product basically on their own.

The women came up with their own strategies to do so. For example, some of them would go door to door while others would frequent busy areas. By giving the control to the local representative with greater market knowledge, the empowered the associates to find the best local opportunities to sell the yogurt. The company also produced innovative ways to manage the distribution networks.