Capitec Bank (South Africa) Implementing the Bottom of Pyramid Strategy

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Project Report
On
“ CAPITEC bank (South Africa) implementing the Bottom of Pyramid strategy ”
Submitted To:
Dr.Veena Dutta

Prepared By:
Fagun Naiyyer
PGDM 2011-13
11GM021

Executive Summary

Little research has yet been undertaken in South Africa about commercial banks that are servicing the microenterprise and micro lending market. The objective of this project was to investigate the key factors that should be considered by capitec bank in South Africa servicing the microenterprise market. The focus for the study was on identifying the key factors and on investigating how the key factors were being considered. The part of the current study aimed to identify the key factors that required consideration, the focus was on Capitec bank that offered microfinance services, especially to microenterprises and low level income group. The intention was to obtain an overview of how and why the Capitec bank has considered the need to implement the bottom of pyramid strategy. From the case studies it was seen that the Capitec bank considered certain factors more than others. The other differentiating factor is how the key factors were considered, because the operating context of the different commercial banks differs. In South Africa, Capitec Bank have considered the key factors, which makes to different from others and thus enjoying that bottom of pyramid strategy which was full of potential and share

Table of Content

1. Introduction Bottom of Pyramid concept

2. Capitec Bank at glance

3. Need of BOP by Capitec Bank

4. Implementing BOP

5. Key Differentiator

6. Consumer Orientation

7. STP

8. Marketing Mix

9. Conclusion

10. References

Bottom of Pyramid – concept

The phrase “bottom of the pyramid” was used by U.S. president Franklin D. Roosevelt in his April 7, 1932 radio address, The Forgotten Man and subsequently in several books and journal articles including ‘The fortune at the bottom of the pyramid’ by C.K. Prahalad.

(BoP) as referring to the largest but poorest socio-economic group of some 2.5 billion people who live on less than US$2.5 per day as individuals or who belong to families that have combined annual family incomes of less than US$3,000 per annum. Multinational corporations (MNCs) have only targeted customers at the upper end of the economic pyramid and have ignored BOP customers, assuming them to be inaccessible and unprofitable. To tap the vast markets at the BOP, MNCs must specially design and develop quality products and services, or they must select some to alter and make available at lower cost. Serving BOP customers is a profitable opportunity for corporations. It is also a social imperative, given that two-thirds of the human population (about four billion people) are at the bottom of the economic pyramid. By addressing the BOP, MNCs can curtail poverty and improve the living conditions of the worlds poorest Many developing countries, especially the least developed countries (LDCs), are characterized by extreme poverty. Many factors make it unrealistic for the private sector to participate in economic development in most LDCs. Among them are inefficient regulation, widespread corruption, lack of basic infrastructure, extreme poverty, and the underdeveloped financial and banking structure. In these countries, people’s most basic needs must be fulfilled before anyone can look at them as profitable BOP markets. The success stories of MNCs serving poor customers ,Research and Publications cited in the BOP literature are predominantly in fast-growing economies such as India,

Where the GDP per capita remains low, as well as in countries like Brazil and Mexico with higher per-capita income. Not surprisingly, BOP advocates fail to provide cases of MNCs serving the BOP population in LDCs.

When we talk about “doing business with the world’s 4 billion poorest,” we count the entire population of both developing...
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