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INTRODUCTION

Casas Bahia is a in Brazilian retail chain

which specializes
appliances.

in furniture and home

It was founded in 1958 in `So Caetano do

Sul So Paulo by Polish immigrant Samuel


Klein.
Samuel

Klein started
his career as
a peddler selling products to immigrants
from the Brazilian Northeast.

By 2010, it had more than 500 stores in

eleven states.

FOCUS
Brazils population was divided into affluent

class and lower income group.


Out of which 84% was considered to constitute

the lower income group.


The high end product companies did not target

lower groups.
Casa Bahia decided to serve lower income

group by providing them option of credit


purchase on lower rates.
Primarily
maidservants,cleaners,cooks,independent
street hawkers and construction workers were
its customers.

BUSINESS MODEL
Credit financing was the core business model.
90% of the total revenue came from credit

sales.
To finance purchases customers required to

submit to an SPC credit check.


The client receive a credit limit depending

upon his/her total income.


All the information collected was centralized

and made available at all the stores .


Casas

bahia maintained records on the


personality traits of its customers for future
references.

Contd.
The information was utilized by company to

evaluate the creditworthiness of its clients to


see their potential to buy new items.
Rate of intereset varied for different credit
period.
Casas Bahia could by from suppliers at

lower cost from competiors and was able to


sell at little lower prices.
Cross selling constituted another reason for

the impressive sales figures of Casas Bahia.

TRUST IN
THE POOR
WAS THE
CRUX OF
CASAS BAHIA
PHILOSOPHY

Contd.
Aggressive marketing was considered

another reason for the success and


popularity of Casas Bahia.
Company invested around 3% of its

revenue on advertisement.
Sales were promoted using famous

singers
,actors
personalities.

and

television

Success of casas Bahia business also

depended on the strategic location of


its stores.

CRITICISM FACED BY CASAS BAHIA


Casas Bahia came under criticism that it is

exploited the poor in the name of selling


them
branded
products
in
easy
instalments.
Casas Bahia targeted the poor working

class people by taking advantage of their


vulnerabilities and yearning for expensive
consumer goods.
Analysts also commented that casas Bahia

cheated the poor by saying that it charged


lower rate of interest whereas the prices of
goods are inflated.

Q1.Study and explain the unique features of Casas Bahias


business model? What are the reasons for Casas Bahias
success? Explain
The company developed a sustainable business model
focused on low-income groups. It comprised of the following
features:
Trust in customers-crux of their philosophy
Credit financing-

clients creditworthiness
records for future reference

Innovative installments system CARNE -

Art of Vender - selling, achieved economies of scale


Cross selling -income derivation & maintaining

relationships
Aggressive marketing involving singers, actors & famous

personalities
Ideal location reduced costs & high profits
Operational management- cost cutting & economical

Q2.Critically examine and comment on Casas Bahias


marketing strategies that targeted BoP market ?
BoP market was untapped at the time when this company
entered. BoP constituted a large chunk of the economy
leading to following strategy adoption:
Wrong assumption had money but no accessibility
Investing in the interest of poor
Acknowledging their efforts for timely payments
Modifications of financial terms & promotions

electricity cuts & unemployment insurance


Brand conscious ,extremely value conscious by
necessity

Q3.Examine the criticism leveled against Cases Bahia? Do


you agree or not.
Casas Bahia came under criticism that it is exploited the

poor in the name of selling them branded products in easy


instalments.
Casas Bahia targeted the poor working class people by

taking advantage of their vulnerabilities and yearning for


expensive consumer goods.
Analysts also commented that casas Bahia cheated the

poor by saying that it charged lower rate of interest


whereas the prices of goods are inflated.

No we dont agree with the critics that Casas Bahia

exploited the poor because low income group people also


have needs and desire for branded products.
Casas Bahia made it easy for the poor people by financing

their purchases.
Moreover Casas Bahia kept the consumer spending active

even when economy in slump

Q4.What do you understand by BOP market? Comment on


importance and potential of BOP market.
The bottom of the pyramid is the largest, but poorest socio-economic
group. As to keep the consumer spending up the MNCs are required to
focus on bottom of pyramid.
Around 4-5 billion people in world are at the bottom of pyramid so we can
see the potential.

The Bottom of the Pyramid (BOP) has emerged as a dominant concept in

business.
MNCs should view BOP markets as an unexploited opportunity and be

proactive in fulfilling the needs and wants of low-income consumers.


To tap the vast markets at the BOP, MNCs must specially design and

develop quality products and services, or and make available at lower cost.

It helps in making innovative techniques for serving the

customers.

Rachit Gulati
Yashdeep Sethi
Akhil Kashyap
Veni Sehgal