OPPORTUNITIES, CHALLENGES AND MARKETING STRATEGY FOR SERVING BOTTOM OF THE PYRAMID MARKET

Topics: Marketing, Bottom of the pyramid, Poverty Pages: 15 (4515 words) Published: January 17, 2014
ABHINAV
NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN COMMERCE & MANAGEMENT

www.abhinavjournal.com

OPPORTUNITIES, CHALLENGES AND MARKETING
STRATEGY FOR SERVING BOTTOM OF THE
PYRAMID MARKET
Mridanish Jha
Assistant Professor, Cambridge Institute of Technology, Ranchi, India Email: mridanishjha@gmail.com

ABSTRACT
This article present insight into the nature and characteristics of BOP markets, the challenges that organization will encounter when venturing into them and the strategies to counter these challenges. In the recent past, there has been an interest in marketing to the Bottom of the Pyramid (BOP) market and several successful initiatives have shown that the poor can be served equitably and profitably by developing specific marketing strategy. The economic growth and technological advancement that India has witnessed in the past two centuries saw increase in the purchasing power and product consumption of large part of the population. However a large part of India’s total population is at the bottom of pyramid with regard to economic development. The organizations need to thoroughly revamp their products and the marketing strategies to enter into this market. Innovations could improve the lives of millions of people and could greatly expand business in India. The marketing strategies followed by the companies in catering the premium segment will not be fruitful for this segment. The company needs to develop strategies with regard to its marketing mix.

Keywords: Bottom of the Pyramid Markets, Low Income Consumers, Multinationals, Marketing Mix, Strategy.
INTRODUCTION
The term BOP was first coined by C.K. Prahalad, in his book “The fortune at the bottom of the Pyramid market: Eradicating poverty through profits”. According to him the various markets with their magnitude of business in the developing economies are huge. He has explained the distribution of wealth and the spending capacity of the world population in the form of an economic pyramid. According to C.K. Prahalad, "If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up". C.K. Prahalad describes in comprehensive detail how "bottom-of-the-pyramid" thinking can lead to the creation of "an impossibly low-cost, high-quality new business model." Although the BOP population consists of both rural and urban poor people, the incidence of poverty is much higher in rural areas in India. According to the National Council of Applied Economic VOLUME NO.2, ISSUE NO.2

ISSN 2277-1166
117

ABHINAV
NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN COMMERCE & MANAGEMENT

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Research (NCAER), in rural areas fifty five percent of households are in the “destitute and aspirant” category, with annual incomes under Rs 16,000 or between Rs 16,001 and 22,000, respectively; the corresponding figure for urban areas is 27 percent. Hence comparisons of rural vs. urban patterns also reveal broad patterns in the BOP and non-BOP populations. Prahalad and Stuart Hart argued in 2002 that 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. Prahalad and Hart argued further that MNCs should view BOP markets as an unexploited opportunity and be proactive in fulfilling the needs and wants of low-income consumers. 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) is at the bottom of the economic pyramid. By addressing the BOP, they say, MNCs can curtail poverty and improve the...

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