INNOVATION AT THE BOTTOM OF THE PYRAMID BUSINESS INITIATIVES TO SPUR YOUR THINKING

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Angelica McCarthy
8 years ago
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1 WOMEN S FORUM FOR THE ECONOMY AND SOCIETY INNOVATION AT THE BOTTOM OF THE PYRAMID BUSINESS INITIATIVES TO SPUR YOUR THINKING

2 KEY FACTS BOP MARKET: 3.7 Billion people earning less than US$ 8 per day 1.1 billion earn US$ 2 8 per day 1.6 billion earn US$ 1 2 per day 1 billion earn under US$ 1 per day 98% of the BOP is concentrated in Asia, Africa, and Latin America 60% is in India and China. 68% live in rural areas Annual income 2.3 trillion GROWTH 8%

6 billion earn US$ 1 2 per day 1 billion earn under US$ 1 per day 98% of the BOP

3 Renault Nissan DATSUN Datsun? Datsun is an automobile brand owned by Nissan Motor Company and currently used for a lineup of inexpensive cars MARKETS RUSSIA INDIA INDONESIA SOUTH AFRUCA GOAL Producing a Datsun car for as little as $3000 per vehicle

and currently used for a lineup of inexpensive cars MARKETS

4 Hindustan UNILEVER (Unilever s Indian Subsidiary) HYGIENE AND CARE PRODUCTS BOP STRATEGY? Small Individual Packaging Network of local entrepreneurial women Targeted market: rural poor people Cheaper products More accessible products

5 COCA COLA AERATED DRINKS SMALLER PACK SIZE Provide solar coolers to retailers LESS EXPENSIVE Access to areas where there is no power supply Clean energy Extension of the consumer base Extension of the consumer base Sustainable development

there is no power supply Clean energy Extension of the

6 PEPSI CO SNACKS AND DRINKS Co Pack model Cheaper materials Mini packs Incentives for shopkeepers to recommend the products to consumers Affordability (low prices)

7 NESTLE NESTLE CAMEROON S INITIATIVE MILK NIDO Packaging SMALL SACHETS B O P M A R K E T Distribution: Network of women entrepreneurs

8 ITC e CHOUPAL Network computers internet access for poor rural areas CONNECT INDIAN FARMERS WITH PCs IN THEIR VILLAGES (Installation/Training) OFFER FARMERS UP TO DATE MARKETING AND AGRICULTURAL INFORMATION

THEIR VILLAGES (Installation/Training) OFFER

9 CHOTUKOOL FRIDGE ² A GODREJ PRODUCT (INDIA) SMALL FRIDGE CHEAP PRODUCT PORTABLE FRIDGE DESIGNED FOR INDIAN RURAL AREAS (where electricity no available most of the time)

10 NIRMA (India) Low priced detergent Reduction Of Smaller Quality Packaging

11 CASAS BAHIA (Brazil) RETAIL CHAIN TOP QUALITY BRANDS PRODUCTS MADE AVAILABLE TO BOP CONSUMERS PARTICULARLY BY PROVIDING FINANCIAL CREDIT

12 Danone Reduce poverty and malnutrition in Bangladesh through the provision of affordable and healthy nutrition supplied via a business model which incorporates resources from local communities WITH Building of a low cost production facility in Bogra. Development of new types of yogurts fortified with important nutrients lacking in the local diet Development of two networks : Dairy farmers who supply milk to the plan Sales ladies who visit customers door to door Funding: Danone created the «Danone communities» fund, dedicated to social ventures, open to all investors

Development of new types of yogurts fortified with important nutrients lacking in the local diet Development of two networks : Dairy farmers

13 Cemex Patrimonio Hoy Cemex observed that low income populations in Mexico were spending their week ends extending their homes, one room at a time, and that they were unhappy with building material sellers (low quality products sold at a high price). Cemex launched the Patrimonio Hoy ( Assets now *) program (2008) Targetting Do it yourself market Breakthrough: innovative business processes, rather than technology based products Micro financing program Promotores : community members making door to door calls Cycles of ten week programs : first two weeks : consumers save money distributors deliver the raw materials, valued at their ten weeks worth of collection during the eight following weeks, the program members reimburse the loan

Cemex launched the Patrimonio Hoy ( Assets now *) program (2008) Targetting Do it yourself market Breakthrough: innovative business processes, rather than technology based products

14 AN OPPORTUNITY FOR SMALL AND MEDIUM ENTERPRISES Growing local incomes and globalization are two basic trends affecting the BOP and creating attractive growth opportunities, particularly for SMEs. Not only can SMEs benefit the most from growing local demand by offering goods and services geared to the specific needs of huge numbers of customers at the base of the pyramid, but globalization is facilitating efforts to set up production in BOP markets, giving rise to a wide range of business opportunities. Above all, this is creating interesting opportunities for SMEs to expand, either by producing goods and services themselves or by supplying multinational companies. Another way of helping BOP markets : support to small business and local small and medium enterprises

globalization is facilitating efforts to set up production in BOP markets, giving rise to a wide range of business opportunities.

15 Lafarge Low-cost housing for low-incomes families Medan, Sumatra Island Design a low-cost house : build faster, reduce wasted time, save products Agreement between Lafarge, local municipality, Indian Government: 5,000 dwellings Lafarge guarantees the supply of cement Some houses a few weeks before handover (late 2010) Source : François Perrot, Multinational Corporations at the base of the Economic Pyramid: A Strategic Analysis Framework, 2011 Banda Aceh, Sumatra Island Microcredit to enable populations to extend and improve housing Construction of a gas station Source : François Perrot, Multinational Corporations at the base of the Economic Pyramid: A Strategic Analysis Framework, 2011

Multinational Corporations at the base of the Economic Pyramid: A Strategic Analysis Framework, 2011 Banda Aceh, Sumatra Island Microcredit to enable populations to extend

16 GRAMEEN PHONE (Bangladesh) ACCESS TO PHONES Grameen Telecom equipped village women with mobile Village women make it available for a small fee To local populations (Incoming and outgoing calls)

Bottom of the Pyramid

Bottom of the Pyramid Marketing Ethics Ed Vallorani 5/7/2010 Ethical issues and solutions Bottom of the Pyramid Marketing I think that not marketing to the bottom of the pyramid (BOP) raises ethical issues.