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Bottom-of-the-Pyramid Marketing Strategy

The Concept
Selecting mass marketed product Targeting the segment with low affordability Also targeting value-for-money segment Product of daily consumption Product having a permanent demand Keeping the costs low Minimum amount spent on R&D / High tech soln Minimum cost on packaging No product diversification

Advertisement
Word-of-mouth advertisement Constant product features for easy and sustained recognition Unchanged packaging material No advertisement through any other medium Theme for any moderate advertisement highlights product utility Production concept

Adoption of the Concept


Shri Mahila Griha Udyog Lijjat Papad in 1959 Promoted by Jaswantiben Jamnadas Popat and six other women Started with Rs.80 borrowed from a money-lender No change in product profile, packaging, or marketing No advertisement Turnover in 2002, Rs.200 crore

Adoption in the Western Style


Shahnaz Husain Herbals started with `Rs.35000 through a single salon in Delhi Promoter, Shahnaz Husain had a totally different educational background from that of Jaswantiben Western Education coupled with Islamic Religion, Pakistani origin and Indian Upbringing Sought Ayurvedic Formulations for beauty care No money was spent on advertisement She believed in word-of-mouth advertisement Money was spent on R & D 640 salons are established in 104 countries with 600 franchisees

Superiority of the Concept


Logical consumers Wide market and hence stability Research can confine to cost cutting Helps in avoiding an image of Hubris Guides in taking every available opportunity Attention to Rural Marketing Promotion of Inclusive Policy Employing the Rural Folks

MNCs: Change in the Attitude


Packaging Revolution brought in by Velvette International and Chick Shampoo Sachet marketing extended to every type of FMCG products Focused on affordability and consumer convenience including travelling consumers Companies like Hindustan Unilever and P&G fought it, but had to adopt Korean & Japanese manufacturers had to go to Rural Marketing in India

A Modern Awakening
C.K.Prahlads advocating the policy Modys Free Eye camps in collaboration with Rotary's and Jaycees brought national level recognition to Dr.Mody Prahlad collected a lot of case studies from all over the world and formed his theory Prahlad called it, "Eradication of Poverty through Profits

What it promotes.
Segmenting the markets into two, the first one paying for the next CSR is incorporated into the marketing strategy rather than to be pursued as a separate strategy Priority and Profitability converge Volume driven business Reduces the role of government, NGOs and other social organisations

A Cost-Conscious Production
Most of the industries like confectionary, coffee, tea, eatables and biscuits are extremely cost-conscious Chinese production progressively reduces the prices so that every segment gets the affordability In the process, income levels go up and employment is generated in rural areas

Requirement
Four billion poor can be the engine of the next round of global trade and prosperity. Serving the Bottom-of-the-Pyramid consumers will demand innovations in technology, products and services, and business models. More important, it will require large firms to work collaboratively with civil society organisations and governments. Market development will also create millions of new entrepreneurs at the grass root level-from women working as distributors and entrepreneurs to village level microenterprise C.K.Prahlad

Mode of Implementation
Innovations in technology Delivery of product & services Collaborative competition Engagement of private sector with social and government organisations Creation of millions of new entrepreneurs at the grass roots levels Creation of distributors at the village level

Experiments that are Made


Amways Network Marketing Hindustan Unilevers Streeshakti ITCs echoupal EID Parrys Agricultural Initiative - Agriline Vasan Eye Cares Marketing Model Mobile Service Providers Tower Sharing Indian Companies setting up manufacturing bases in China like Bajaj Auto, Mobile Set Manufacturers

Overall Impact
Rural masses served Rural savings are mobilised Companies will have stable models Companies will not act against their own interest Companies will not act against the interest of consumers Cost-conscious operations Avoiding wasteful advertisement

Overall Impact
Miniaturising the production units Entrepreneurs at village levels Women entrepreneurs Better services available in the rural areas May reverse the process of migration to urban areas Employment Generation in the rural areas Better environment protection