Bottom-of-the-Pyramid Marketing Strategy

-B.V.Raghunandan,SVS College, Bantwal

MBA Department, St.Joseph’s Engineering College,

Vamanjoor, MangaloreOctober 8, 2010

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 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 ` 80 borrowed from a money-lender

No change in product profile, packaging, or marketing

No advertisement Turnover in 2002, ` 200 crore

Adoption in the Western Style

Shahnaz Husain Herbals started with ` 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 (IBM’s Follies) 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.Prahlad’s advocating the policy Mody’s 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

Amway’s Network Marketing Hindustan Unilever’s Streeshakti ITC’s e’choupal EID Parry’s Agricultural Initiative Vasan Eye Care’s Marketing Model Mobile Service Provider’s 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

THANK YOU