Fortune @ BOP in China

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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Documents

Fortune @ BOP in China