Oppurtunities at Bottom Of Pyramid
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Transcript of 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