Oppurtunities at Bottom Of Pyramid

8/14/2019 Oppurtunities at Bottom Of Pyramid

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The Fortune at

the Bottom of thePyramid


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An Invisible Opportunity


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What is needed is a better approach:

To help the poor,

Involves partnering with them to innovate

andachieve sustainable winwin scenarios The poor are actively engaged and, at the

same time,

The companies providing products and

services to them are profitable.


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Basic Direction The greatest harm big companies have done to

the Tier 4, is to ignore them altogether

Tier 4 is the new growth opportunity for theprivate sector and a realm for innovation

Tier 4 should not be relegated to CSR

This market can provide sustainable advantageas well as profits


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Lets take each

assumption anddissect it ?


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1. There is no money atthe BOP


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Spending patterns Spend on items traditionally considered Luxury

No Legal title to land they live on-

No interested in spending on better sanitaition,

running water etc. 85% have Color TV

75% have a pressure cooker

66% have gas stoves

70% have a telephone (landline / mobile)


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2. Distribution access isdifficult URBAN

No. of cities by 2015:

Africa: 225

Asia: 903

Latin America: 225 More than 400 will have more than 1 million in

population

RURAL:

Till now lack of knowledge of products & services solvedby Sat.Comm. & Mobile Telephony

Ex. HLL Project Shakti


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3. The BOP are not brandconscious

Aspirations for a new and improved quality of life

Access to mass media

BOP consumers are value buyers

Brand = more value for same amount ofmoney


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4. The BOP consumers arenot connected

China: 400 million, 600 million by 2009

India: 200 million, exp. 390 million by 2009

Adding 5 mn. every month (at least)

Bangladesh: Grameen Phone Brazil: TeleFonika

PCO Kiosks, Internet Kiosks etc.

Unprecedented effect of WOM Add the effect of fiercely competitive Media

channels


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5. Are laggards atTechnology India

ITC E-Chaupal

10,000 villages, 40 Mn. People by 2010

USD 2 Bn. In turn over Kerala:

Fishermen: Mobiles for market rates

Farmers: MCX, C-Bot

Aqua-Guard


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Challenges in the 86%Markets Markets, culture and environments are demanding

Extremely fragmented markets

Youthful and growing populations

Limited income and space

Underdeveloped infrastructure

Weak supply and distribution channels

Rapidly changing markets

Can these Challengesbe converted into Opportunities?


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The Imperative


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1. Create the Capacity toConsume


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The 3 As Affordability

Ex. Single Serve packages

Access Stores selling after 8 pm (after consumers

daily work is done)

Availability Buy with cash at hand cannot defer purchase


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2. Need for new good andservices

Amul:

Ice-cream at less than Rs. 5 a serving

Prodem FFP, Bolivia ATMs with touch screen, fingerprint

recognition, voice commands in 3 locallanguages


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3. Dignity & Choice ITC E-chaupal

ICICI Bank, micro-finance

HLL Project Shakti

Grameen Phone


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4. Build Trust E-chaupal

Casas Bahia, Sau Polo Consumer Durables Chain Trucks dont need security

Bimbo, Mexico Bread & Fresh Produce

Grameen Bank Default rate less than 1%


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Dont Build A CarWhen You Need A Bullock Cart

Less is more Product formulation and design

must reflect the environment

Poor infrastructure - strip things

down to basics

People dont need advanced

functions they need to get work

done . Eg: Simputer -India

Low price doesnt mean lowquality Emerging market customers

expect the most from their

meager resources. Eg: Grameen

Bank housing -Bangladesh

Dont Build A Car


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Look at the deeper meaning of

products

Products may have deeper

meanings than their intended use

Address deeper elements of culture

and religion

Eg: talking Farah dolls - Middle

East

No customer culture Lack an understanding of

consumerism

Need to be educated about how to

be customers

Eg: Air Deccan, India

Dont Build A CarWhen You Need A Bullock Cart(cont.)


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Connect Brands to theMarket

There is no such thing as an

Indian or Chinese market

Every national market is made

up of several highly unique and

fragmented markets

Local brands thrive

Localize the brand

Tailor brand to individual

markets

Use the national/regional

language

Eg: MTV Asia


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Think Young

Young countries Young adults make up

nearly half the population inseveral of these countries

High birth rates Create loyal customers

when theyre young Make your product cool

Huge market forentertainment, apparel,computers, fashion andother such youthfulproducts and services

Young celebrity

endorsements. Eg: Fastrackwatches MTV India VJs

G Bi B Thi ki


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Grow Big By ThinkingSmall Reducing pack size to reach a

larger audience

Smaller packages for price,

not convenience

Installment plans for productsthat are expensive or out of

reach to most

Eg: The Maruti Suzuki car for

at a down payment of

Rs.2000($45) and 0% interest


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Working with Technology

Create markets in the gaps

Find ways to fill gaps in infrastructure

Eg: Aquaguard in India, Sulabh

International Create work around solutions

Work within limitations of climate,

infrastructure and resources

Eg: Crank powered radio in Africa

Build infrastructure to support

the business or use existing

infrastructure creatively

W ki ith T h l


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Working with Technology(cont.) Recognize unseen rivals

Thriving business in counterfeits

Build barriers, such as qualityguarantees to keep them out

Modify and Apply existingtechnologies in new ways Eg: CNG Autos in Delhi or fuel

flex cabs in Mexico

Digitize and MPower Digital media more accessible

Cheaper to run. Eg:telemedicine


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Take the Market to the People:

Position for the smallestshop owner The organized retail sector in

emerging markets is often only 2-

8% of total Small stores number in the

millions and have greater reach

Eg: the kirana stores of India

Build strong supply and

distribution channels Distribution systems are only just

being developed

Look for local or entrepreneurialnetworks that help understand

and connect to local markets


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Take the Market to the People(cont.)

Take the bank out of the

branch

Finance and credit options

scarce, but very important inemerging markets

Banks need to reach the

smallest customer to tap

Fortune at the Bottom of the

Pyramid

Eg: Micro Credit in Africa


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In Conclusion

"The transformation is just beginning.

There will be hiccups along the way

The only certainty is, the BOP markets are here to stay.

Even though they won't become developed tomorrow, they are the

future.

And the companies that can develop the right solutions to meet their

needs will find a rich source of growth.

Most imp it needs a New Way of Thinking

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Oppurtunities at Bottom Of Pyramid