When selling to poor consumers, companies need to begin by doing something basic; They need to
When selling to poor consumers, companies need to begin by doing something basic; They need to create the market By Erik Simanis. The World Street Journal, Monday October 26 2009 Around the world, four billion people live in poverty. And Western companies are struggling to turn them into customers. For the past decade, business visionaries have argued that these people, dubbed the Base of the Pyramid, make up an enormous, untapped market Some of the world’s biggest, savviest corporations have aimed to address their basic needs-by selling them everything from clean water to electricity But. time and again, the initiatives have quietly fizzled out. Why? Because these companies were looking it all wrong. Put most simply The Base of the Pyramid is not actually a market. True, those billions of low-income people have a lot in common But they don’t have two of the vital characteristics you need to have a consumer market They have been conditioned to think that the products being offered are something one would even buy. And they haven’t adapted their behaviours and budgets to fit the products into their lives. A consumer market is nothing less than a lifestyle built around a product. Think of an example close to home. In the 1970s, bottled water was a foreign idea to most Americans-it wasn’t part of American consumers’ lifestyle. It took decades for large numbers of consumers to accept the notion of buying something you could get free out of a faucet and turn bottled water into a big business. For many poor consumers, paying for dean water or sanitation products seems just as outlandish. What is the possible answer? Companies must create markets new lifestyles among poor consumers. They must make the idea of paying money for the products seem natural, and they must induce consumers to fit those goods into their long-held routines. That means working closely with local communities in developing products and businesses, to give consumers a stake in adopting the goods. What’s more companies must take a wide-ranging approach in their marketing, to give buyers as many reasons as possible to give the products a try. Inertia means inactivity, inaction, disinterest or laziness a) Base of pyramid refers to the largest but poorest socio-economic group. The billionaire and philanthropist. Bill Gates describes base of pyramid as an intriguing blueprint for how to fight poverty with profitability. This article describes the situation, the problem and the solution of base of pyramid consumers. You are required to identify the situation, problem and solution described by the article. b) As an entrepreneur, what can you do to help those at the bottom/base of the pyramid? What are the marketing strategies that you can adopt or adept?
Expert Answer
a).The situation in the article is one where there are 4 billion persons across the globe who are living in poverty.This category of the population is a huge potential market for the various giant corporations .
The problem is that this large proportion of the population is not a consumer market as it lacks 2 very basic features .These are-
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- They are not accustomed to think that the proposed commodities are something one would even purchase.
- They have not altered their behaviors and finances to fit the commodities into their lives
The solution is that in order to tap this potential segment , corporations must develop markets among these poor customers.They must make the notion of paying funds for various commodities appear natural, & they must pursue customers to fit the products into their routines.
b)The marketing startegies are-
- The chief barrier to overcome when launching a fresh item, in any market, is aiding the customer comprehend the advantage of doing something in a changed manner. A archetypal strategy—attempting to alter individual’s mind set & behavioral patterns using an educational drive—is usually a time-consuming, uphill task that needs extensive & persistent messages.
Rather, firms should begin by getting the communal involved in creating, executing and modeling the business itself. The perception of ownership this accompanies will secure that interest in the firm’s commodity is extensive and sustained
- Rather than launching just one item, firms should come up with a cluster of ideas, all concentrated on the same fundamental technology, hoping that at least one/ two may click.
This portfolio of commodities should be introduced with least fixed cost —to enable option of redistributing the resources.
