Strategies to Overcome Challenges in Marketing to the Bottom of the Pyramid

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STRATEGIES TO OVERCOME CHALLENGES IN MARKETING TO THE BOTTOM OF THE PYRAMID - Digging diamond is not easy, but it is worth digging.


Submitted for paper presentation at the 6th MMA All India Management Students Convention ______________________________
GDP growth of the planet is at 7.74%, of which the developing countries and the Economies in the transition show a significant double digit growth, 16.53 % and 26.64% respectively1. This is an invitation for the marketers to dig out the diamond mine underneath. The diamond mine is the Bottom of the Pyramid.

The benefits of the growing economy are mainly enjoyed by the rich and the upper middle class. In developing countries, particularly in India the rich become richer and the poor become poorer. In today’s world of growing differences between the rich and poor, the bottom of the pyramid plays a major role in deciding the future economy of the globe. Most of the developed markets show a lower growth rate and the corporates are exhausting resources in growing the Tier1 & Tier2 markets. It is time to nurture the bottom of the pyramid (BOP) markets and reap the fruits.

BOP exists because of the people on the upper layers. If a person on the top of the pyramid wants to go up further, why cant the people in the BOP? It would be inappropriate to blame only the people on the top, but reinforcing the collective responsibility of MNC’s, SME’s, Government, NGO’s and the people would be more appropriate. Reaching the BOP is difficult, even establishing a brand to the Tier 1 market is challenging too, because of cut-throat competition. It is time now to search for newer markets, and the market is just here. Incorporations have seen success in launching business models for accessible markets and it is possible to market profitably even to the BOP.

Rural areas are the ones perceived as the deprived markets, but in reality 25 percent of the BOP is distributed in the metros and the other cities. For example, Mumbai being a home for more than 11.9 Million people, 26.5 percent of the people live under the monthly house hold income of less than Rs.5000 ($125)2, which is very low compared to the cost of living in Mumbai. The spending pattern of the deprived shows a clear room for the marketers to take a share, without making a hole in their pockets. In long term the BOP tends to increase the standard of living with a good saving potential. For example: a local money lender charges interest rates of up to 20 percent a day, which means a vegetable vendor borrowing Rs.100 in the morning must return Rs.120 in the evening. Even Rs.200 sales will earn only Rs.80 as a profit. Add to that, the local illegal practice, where BOP pays a premium to the gangsters for having a shop in a particular locality. Extending credit to the BOP will certainly help themselves elevate economically. Grameen Bank has reversed conventional banking practice by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. Grameen Bank provides credit to the poorest of the poor in rural Bangladesh, without any collateral. Founded by Professor Muhammad Yunus, the bank provides financial resources to the poor people on terms and conditions that are appropriate and reasonable As of May, 2007, Grameen Bank has 7.21 million borrowers, 97 percent of whom are women. With 2431 branches, provides services in 78,659 villages, covering more than 94 percent of the total villages in Bangladesh3, shows the vital role of banks in development of the BOP profitably. Further in this article, we will see the change of the shape of the economic pyramid, and the benefits which can be reaped by the marketers, possible challenges and the strategies to overcome the challenges in marketing to the Bottom of the Pyramid.

From Pyramid to a Diamond: Diamond trying to come out, by itself The distribution of wealth and the capacity to generate...
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