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Latin America: Low-Income Millennials Present Big Market Opportunities

07/09/16 21:45

Latin America: Low-Income Millennials Present Big Market


Opportunities
Hardly a day passes without a new article on how businesses are analyzing the needs,
wants and spending trends of millennials. In the US alone, millennials (or Generation Y),
those born between 1980 and 2000, represent 30 percent of the population. By 2025
they will be 75 percent of the workforce.The impact that millennials are starting to have
on the global economy, the environment, and politics is enormous.
But millennial mania is dominated by studies, research and marketing efforts that
focus on affluent individuals. Meanwhile, in Latin America and the Caribbean a market
of 77 million low-income millennials goes almost unnoticed.
Latin American GenYers who live on less than US$10 a day (the base of the economic
pyramid, or BoP) will shape the demands of the future middle class in this region in the
coming decades. The people in this segment roughly 20 percent of a Latin American
BoP market of 405 million people, worth $759 billion per year are more connected,
more educated, and have more disposable income than ever before.
Their economic appeal is undeniable. Any company or financial institution interested in
running profitable businesses that serve the low-income segment must consider BoP
millennials in their business plans and growth strategies.
As these millennials reach adulthood, they start having families, deciding whats
consumed at home, how to save, what to eat, how to access the internet, and how
important health is. This has big implications for markets, ways of doing business, and
the BoP consumer profile.

http://www.forbes.com/sites/skollworldforum/2015/08/04/latin-ameriincome-millennials-present-big-market-opportunities/#695cc5de4576

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Latin America: Low-Income Millennials Present Big Market Opportunities

07/09/16 21:45

Photo: Lin Mei


Business opportunities abound: data collected by the Inter-American Development
Bank (IDB) in Peru, for example, shows that 50 percent of millennials between the ages
of 18 and 35 have money left at the end of the month. Eighty-nine percent of them
save it, and only 18 percent put it in a savings account.
If this is not a business opportunity, what is? It opens the door for financial institutions
to strengthen their financial literacy efforts and expand their client base. Its also an
opportunity for insurance companies who could target the segment and identify how
much of those savings are earmarked for emergencies.
BoP millennials become even more attractive as they enter the middle class, a segment
characterized by more discretionary spending in recreation, eating out, financial
services and technology. The good news is that by 2020, 35 million low-income Latin
Americans will move into the middle class and a significant percentage will be
millennials.
Additionally, almost half of these GenYers will be educated women, often heads of
households and active in the workforce and the economy. The result: a segment of
female consumers and new mothers with the power to influence which goods and
services the family purchases.

http://www.forbes.com/sites/skollworldforum/2015/08/04/latin-ameriincome-millennials-present-big-market-opportunities/#695cc5de4576

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Latin America: Low-Income Millennials Present Big Market Opportunities

07/09/16 21:45

If youre wondering how to access this market, technology and the internet are the
answers. Mobile phone penetration in Colombia is 105 percent, and in Peru 91 percent
of millennials have a cellphone. Seventy-six percent of Mexican heads of households
between 18 and 35 use the Internet.
While the BoP market for information technology and communications represents only
about three percent (US$25 billion annually) of total expenditures at the base of the
pyramid, the market grew at an annual rate of four percent between 2000 and 2010.
According to Lexia, a Mexican firm that specializes in low-income markets,
smartphones are a primary need for BoP millennials in Mexico. Interestingly, theyve
discovered that Mexican millennials primarily use the Internet to connect with people,
as opposed to looking for information.
This hints at how different the interests of the BoP are in contrast to more affluent
market segments, and could help direct marketing efforts aimed at BoP millennials; for
example, those that promote higher education or preventive health practices.
Technology and the internet are already enabling companies to reach BoP millennials.
Mexicos Barared is an example: it is a network of more than 1,000 kiosks in
convenience stores in BoP neighborhoods. The kiosks are equipped with iPads with
high-speed broadband that clients can use to access to a myriad of financial and
telecommunications services, such as phone calls, cellphone top-ups, bill payments,
email access, Skype videoconferences, and banking services.
Daviplata, in Colombia, is a mass mobile money platform that allows BoP consumers to
manage their cash with only a feature phone. Clients can transfer money, withdraw
cash, pay utilities and receive remittances, among other services.
Dont miss this opportunity. The market for new, impactful businesses that target BoP
millennials unmet needs and desires is vast. And those who start building bonds of
loyalty with this segment today will be the preferred brands of tomorrow.

http://www.forbes.com/sites/skollworldforum/2015/08/04/latin-ameriincome-millennials-present-big-market-opportunities/#695cc5de4576

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