Marketing to the Bottom of the Pyramid

The concept of the Bottom of the Pyramid (BOP) market was originally developed by C.K. Prahalad in “The Fortune at the Bottom of the Pyramid” to highlight a large potential market made up of a large segment of the world’s population that has, until recently, been an ignored market segment among multinational companies. In an age of increasing global competition and near-saturation for some products in more mature markets, this multi-cultural segment, made up of people from all parts of the world that earn less than two dollars a day, can generate significant revenues and be profitable for companies who have developed appropriate strategies for reaching this market segment.

Among the issues related to BOPMs are establishing appropriate distribution channels, developing and pricing products that have value for those in these markets, and finding creative ways for financing. In terms of financing, this would include not only that related to the purchase of a product for those with relatively low incomes, but would also include strategies for financing business initiatives on the local level.

Perspectives

Stakeholder would include the local populations that make up the BOPMs. Cultural considerations must be a key component of product development and advertising. Care must be given that products will not harm those to whom they are marketed.

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Also, companies are stakeholders in that new strategies including BOPMs may be important ways for a company to grow organically. In extension, many large multinational firms are public-traded companies. As such, shareholders are the owners and increasing shareholder value is a goal.

Discussion

• Ethics of marketing certain products to people in the BOPM.

• Issues related to distribution channels.

It seems that companies marketing to BOPMs must think beyond the traditionally accepted distribution channels. Many people in BOPMs live in remote, harder to reach, areas.

• Issues related to advertising.

Television and radio advertising are one approach, but may not be the best way to reach the target market.

Action/Recommendation

Distributions Channels

A successful strategy for marketing to these segments would include more direct marketing, with people getting paid on commissions. For retailers, marketing efforts should be geared toward lower volume sales in smaller stores. In contrast to what we are accustomed to in our domestic market in which we shop in large retails stores where the prices per unit decreases as the product size increases, BOPMs would require a different approach. These markets would require smaller, possibly individual-size products that could be purchased for a relatively small amount of money for people that probably do not have credit and do not have a significant amount of money on any given day.

Product Development

In addition to the size of products offered, other important factors need to be considered. In terms of packaging, climate is important—products may be offered in small, more or less open-air stores in hot climates, for example. More important for products that have a technical component, consideration also needs to be given to the level of features available. Whereas some features ,such as battery capacity—important as noted in the case for those without reliable sources of electricity—may be critical for product success, others may not be useful and my unnecessarily increase the price or the complexity of the product.

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