My topic: selling to the bottom of the pyramid

I’ve always found it of great interest when professors and business leaders talk about seeking a potential marketing opportunity in the bottom at the pyramid – within the world’s poorest. Mainly what I find most interesting about this topic is:  How can companies actually profit from this market, when this market it’s made up of people with low purchasing power and who doesn’t buy many products as well? I think for companies/brands the key relies in deeply understanding their needs, behaviors, preoccupations and their environment so that they can successfully develop products and services that result of great use for them.

It is obvious that products created for rich people are not suitable for the poor. You can’t sell them let’s say an Ipod or a TV because they have to satisfy first their most basic needs- health, shelter, food, water, etc. Also for example, packaging must be approached very differently within this market- poor people don’t have enough money to invest in inventory (everyone knows that products sold in packages are cheaper, but not them). So taking all of this into consideration, marketers and companies must really dig in for important insights to be able to understand this particular segment of the population.

I live in Mexico and for me, it’s no surprise to witness this huge gap between the rich and the poor- in Mexico there are about 53 million people who live in poverty conditions and they represent about 51% of the population in total. That’s a big number. But also we must recognize that this same gap is present in 8 developing countries around the world: China, India, Brazil, Russia, Indonesia, Turkey, South Africa and Thailand. For marketers this is a potentially huge and interesting market- there’s an estimated of 4 billion poor people, constituting two-thirds of the world’s population. However marketers must also keep in mind that the ways they reach this market and their particular needs, interests, etc. will not be any similar as for the upper and middle classes- as I just mentioned before. Effective strategies for reaching these people will require remarkably different approaches.

Another question that I find quite interesting related to this topic is: How do huge multinational companies suddenly change their strategies and start focusing on selling to a whole new and different target? Within the last few years, companies like Nestle and Unilever have been developing products for the BOP market, and they’ve been quite successful about it. Even though it’s a challenge for them – particularly in balancing their initiatives in a cost-efficient way- they have also allowed some social-economic development to happen. By establishing themselves in developing countries they’ve enhanced new micro entrepreneurs by offering them new sources of work opportunities.

One article that is helpful and interesting for my topic is called, Portioning to make products affordable for the BOP, and it talks about how this market has particular differences mainly in their shopping habits. Below it’s the website where the article can be found. Another interesting article talks about how Nestlé Venezuela successfully managed to position it’s products among the low-middle class people, and it explains all the challenges it faced as well as the strategies Nestlé followed.

Articles:
http://designchile.wordpress.com/2010/08/30/portioning-to-make-products-affordable-for-the-bop/
http://www.globalens.com/casedetail.aspx?cid=1429090