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7/31/2019 Fortune @ BOP in China
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Fortune at THE BOTTOM OF PYRAMID
Presented by:
Augustine kujur
Kartikeya
Nayan
Paritosh Anand
Pawan Sable
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Bottom of Pyramid Proposition
Low-income markets present a prodigious
opportunity for the worlds wealthiest
companies to seek their fortunes and bring
prosperity to the aspiring poor.
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The Bottom of Pyramid - China
China is the third largest country in the world andhome to more than 1.3 billion people
125 million peoples income is below $1.25 perday
800 to 950 million residents
60000 residence in rurals and urbans decrease over the last 30 years in the number of
people living in absolute poverty.
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BOP
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"Master Kong", of the Spring and
Autumn Period.
The superior man understandsrighteousness;the inferior man
understands profit.
-Confucius (551 - 479 BC)
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Role of Private Sector
Poor as Consumers
Facilitate purchase
Marginal impact
Actual customers are very small
Lower price without lowering quality
Lower price and lower quality
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Alcohol and Poverty The poorer people spend a greater fraction of their
income on alcohol than the less poor.
Alcohol abuse exacerbates poverty: impact on workperformance, health, accidents, domestic violenceand child neglect.
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IFADs strategy in China
It has provided loans for 23 rural development
programmes
project areas are located in Chinas remote
and mountainous regions, where there are
large numbers of poor indigenous peoples.
land improvement and irrigation and water
conservation, as well as production of food,
cash crops, livestock and fish.
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Target Market: BoP Costumers
Large number of customers.
In wide geographical area.
Challenges of distribution
Selling directly to end users is not cost effective
Fragmented distribution system
Solutions
Sophisticated infrastructure
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Computer based company(1984)
Well known for sophisticated
warehouse and efficient supplychain management.
Failed because in rural areas want
to see the product before they
buy it July 2010, Dell boosts around
6000 stores and channel outlets
around the tier 3 markets.
Case
Study:DELL
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Strategy
Penetration in low income vast Market
Direct sales
Dell chooses small, local retailers to which itdirectly delivers its products
Establishing official service centre
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Hangshu Wahaha (1987)
Beverage company
marketing and distribution systems
Sugar-and-alcohol distribution
network co-operated with state
Failed: Due to emerging private-run
distribution networks
New sales network by linking up
with the powerful local distributors
Hampered: Due to market for health
and food products matured did
competition increase
Set up of own distribution network:
consists of four layers
WA
HAHA
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Provides a lot of free consulting and support, staff
and funding for advertizing campaigns
They kept following this strategy and often put upshop in poor, underdeveloped areas, boosting the
local economy
Success:
Very efficient and more cost optimization than total
integration
Profit optimization and social entitlement
upliftment
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At present condition targeting BOP in China is
profitable and it helps in uplifting of poor
people also.
And Chinese trying to penetrate BOP of other
countries.
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