Marketing to the Bottom of the pyramid - Case Study Example

? Marketing to the Bottom of the pyramid Table of Contents Answer 3 Market development approach 3 Rethinking marketing mix strategies 4 Guidelines for market mix strategies 4 Answer 2.a 5 Cons 5 Works Cited 7 Name of the Student Name of the Professor Course Number Date Answer 1 Thinking about the “bottom of the pyramid” can lead us to create an impossibly low-cost yet a high-quality new and robust business model (Sangeet “Strategies for succeeding at the bottom of pyramid (bop) market in telecom services sector”). A sound marketing strategy directed towards the people at the bottom of the pyramid (BOP) can help the company to provide cheaper products and enhanced access to technology thereby providing the necessitous people with an opportunity to become entrepreneurs and educate them. This can be viewed as a mutual benefit process, given that it will provide the company with a huge market as a source of revenue stream. Alongside giving the company a top-line revenue growth, cost saving and innovations will also influence the existing business models and management practices of the company (Saini “Bottom of the pyramid marketing”). But one thing that the management needs to be well aware of is the fact that selling into BOP markets is difficult and the hardest part is to continue the work responsibly and consistently. Being a highly unexplored market, the strategy has to be formulated in such a way that it brings real benefit to the impacted communities as well as the company. However, in order to ensure that, the company should follow important guidelines and lessons from leaders in the industry known to have set examples of successful expansion in the BOP market. Prahalad (27-35) had coined the term BOP, referring to a population which is largely ignored by the private sector in terms of providing services. As such, the author had identified the market as prospective and it had become the next segment of increased attractiveness for firms. The author highlighted the huge size of the market in terms of its population cover and its elevated purchasing power and thus, many companies identified a prospective opportunity to serve this market and become profitable. Different market segments require different approaches and so does the BOP market as it is a largely unexplored area. Consumers in this category are becoming demanding and sophisticated. Thus, the management has to understand that although producing low cost product is a significant factor which is essential for marketing in this segment, it is not the only expectation that consumers have (Barki and Parente 11–23). Market development approach The primary task that the company needs to initiate is converting of the BOP consumers from unorganized and inefficient to just the opposite. This is a crucial strategy as it will help the company to elate the benefits for the market if the company is allowed to do business with them. The primary requirement is for the consumers and the company to be on the same pathway. Both the consumers and the company need to have a common belief in order to completely align their requirements and objectives. The approach should include a broader perspective ensuring a long term development and sustainability of the concerned parties. In order to convert the BOP consumers into organized and efficient, the management has to ensure the development of a robust infrastructure as the inadequacy of the same leads to inefficiency. Besides that, in order to thrive in the lower income market, the company has to formulate strategies that enhance the buying power of the end consumers (Mardh and Correia “Marketing Mix Strategies towards the Bottom of the Pyramid: a study of the Brazilian market”). This will help the company to convert the purchasing power of the consumers into their profit. In return, they can eradicate poverty by bringing prosperity to the poor. Product innovation and consumer education have to be effectively carried out in order to foster aspiration in the minds of the consumers. Better distribution and communication channel has to be ensured in order to improve the mode of access. In addition to that, the product that the company wishes to market initially has to be tailored according to the local requirements so that it can give the consumers a certain degree of benefit (Pitta, Guesalaga and Marshall 393-401). Rethinking marketing mix strategies It is quite obvious that expanding into an unexplored sector will require a completely new set of marketing mix compared to the marketing requirements in a conventional sector. Therefore, it is very critical for the company to differentiate between the lower tier consumers and the ones belonging to the upper tier. This will help the company to assess the areas of investment or rather, the area that needs the maximum development and will provide them with the maximum return. Guidelines for market mix strategies In order to formulate an effective strategy, the company has to emphasize on certain important guidelines or rather questions in order to determine the ability of the strategies to provide answers to such questions. Is the price of the product affordable? The management has to understand the fact that affordability is the core idea behind serving the BOP consumers. The company needs an innovative pricing strategy that will help them to manufacture superior quality products but at low cost. This is particularly because researches have suggested that BOP consumers also thrive for quality besides affordability. The company has to make sure that the pricing of the product is done in such a way that it is accessible to a wider customer base. Is the product being properly promoted? Brand or product awareness is a crucial factor ensuring the success of a company and naturally, they need to make sure that their product is efficiently promoted. Moreover, the guideline that the company needs to follow is to make the BOP consumers realize about the benefits that they can achieve by availing the product or service being offered by them. With the increasing awareness about the product among people, the company will be able to accrue more business out of the market as well as contribute to the development of the BOP segment. Is the product accessible? In this particular context, the company needs to have an in-depth assessment of its target, the BOP segment. The product has to be designed in such a way that it caters to the need of the target segment and is easily accessible. Although there is hint of connection between this factor and the price of the product, there are other factors which ensure an easy accessibility of the product. Product features, the degree of innovation and potential value added to the customers are few factors that need to be emphasized upon. The management has to make sure that the product that they intend to market is being manufactured with these factors taken into consideration. This is primarily because the abundant presence of these factors will make the product more accessible to the target segment. Are adequate places available for selling the product? This factor represents the ‘P’ of marketing mix strategies. The company needs to assess the place where the product will be introduced. The design and pricing of the product is heavily based upon the availability of place. The company needs to adopt one of the three strategies i.e. whether to be exclusive, selective or intensive. This choice will depend on whether they want to sell one brand in few places or have an extensive presence. In order to adopt the appropriate strategy, that company has to understand the size as well as the requirements of the target market so that the product can be marketed efficiently. Answer 2.a Cons Selling soaps, shampoos, PCs, ice-cream and so on and so forth to consumers with little disposable income can never be identified as a means of exploitation. There are number of reasons that can be attributed to this. First of all, considering that the consumers under concern have little disposable income, the choice to avail these products lies in their hand. They reserve the right to accept and reject the products as and when they deem appropriate. Thus, the statement about exploiting these people by selling the products mentioned above does not stand true at least from this point of view. Using soaps and shampoos are associated with health and hygiene. Therefore, a company which sells such products is focused towards improving the personal hygiene of their consumers. According to a report published by the World Health Organization (WHO), 1.8 million people die every year due to diarrhea related diseases which is associated with improper health and hygienic practices. Thus, selling products such as, shampoos and soaps makes them easily accessible to the consumers. Proper usage of these products will keep the consumers protected from unhealthy consequences. Moreover, these products are priced at a very cheaper rate so that even people from the low disposable income groups can use them. The companies in one way are promoting health and hygiene. Thus, the fact about exploiting the people can be refuted from this perspective as well. Personal Computers are considered as a valuable asset. In today’s world, where almost half the processes carried out are computer based, this product bears a significant importance. Selling computers to the lower income group promotes the need for computer literacy. Being computer literate can help the consumers to conduct many processes right from their home, thereby avoiding the inconvenience of visiting the place where the process is being conduct. Moreover, computer serves as an effective communication channel whereby information can be shared very efficiently. With the use of internet technology, programs associated with mass awareness can be carried out over the web. In this way, a wider audience can be reached thereby achieving both cost efficiency and time efficiency. As far as buying a computer is concerned, they can be easily bought by paying in installments. Moreover, there are companies who sell computers at a cheaper rate along with low installment schemes. This can help the low disposable income group consumers to buy without worrying about paying a lot of money upfront. The above facts show no evidences of exploitation. Ice-cream and similar products are more of a taste based product than an everyday necessity. Products like these are only marketed towards a certain age group and are not frequently bought. People with low disposable income can choose to buy it only if required, as an ice cream does not serve any purpose apart from satisfying somebody’s taste. Selling an ice cream cannot be an apt consideration in order to assess whether companies are exploiting the people or not. Works Cited Barki, Edgard and Juracy Parente. Consumer Behaviour of the Base of the Pyramid Market in Brazil. Greener Management International 56 (2010): 11-23. Print. Mardh, Patrik and Teresa Correia. “Marketing mix strategies towards the bottom of the pyramid: a study of the Brazilian market.” Uppsala Universitet (2013): 1-51. PDF file. Pitta, Dennis A., Rodrigo Guesalaga and Pablo Marshall. The quest for the fortune at the bottom of the pyramid: potential and challenges. Journal of Consumer Marketing 25.7 (2008): 393-401. Print. Prahalad, Coimbatore K. The fortune at the bottom of the pyramid: eradicating poverty through profits. 5th edition. Upper Saddle River, N.J: Pearson Education, 2010. Print. Saini, Vikas. “Bottom of the pyramid marketing.” Slide Share, Slide Share, Aug 16, 2012. Web. 12 November. 2013. Sangeet, Sai. “Strategies for succeeding at the bottom of pyramid (bop) market in telecom services sector.” Sri Satya Sai University (2007): 1-12. PDF file. Read More