Monday, October 26, 2009

at the base of the pyramid: creating the market for poor consumers

at the base of the pyramid: creating the market for poor consumersfrom wall st journal: Around the world, four billion people live in poverty. And Western companies are struggling to turn them into customers.

For the past decade, business visionaries have argued that these people, dubbed the Base of the Pyramid, make up an enormous, untapped market. Some of the world's biggest, savviest corporations have aimed to address their basic needs—by selling them everything from clean water to electricity.

But, time and again, the initiatives have quietly fizzled out. Why? Because these companies were looking at it all wrong.

Put most simply: The Base of the Pyramid is not actually a market. True, those billions of low-income people have a lot in common. But they don't have two of the vital characteristics you need to have a consumer market. They haven't been conditioned to think that the products being offered are something one would even buy. And they haven't adapted their behaviors and budgets to fit the products into their lives. A consumer market is nothing less than a lifestyle built around a product.

Think of an example close to home. In the 1970s, bottled water was a foreign idea to most Americans—it wasn't part of American consumers' lifestyle. It took decades for large numbers of consumers to accept the notion of buying something you could get free out of a faucet—and turn bottled water into a big business. For many poor consumers, paying for clean water or sanitation products seems just as outlandish.

The answer? Companies must create markets—new lifestyles—among poor consumers. They must make the idea of paying money for the products seem natural, and they must induce consumers to fit those goods into their long-held routines...

One final thought: When marketing to the Base of the Pyramid, companies should be positive. Instead of telling consumers that a product will alleviate their hardships, companies should stress how the product will make their lives more enjoyable.

2 comments:

Zachary Bosart / Terra Goulet said...

I'm getting sick of seeing all these pyramids. Food & Nutrition Pyramids. Dollar bill y'all. Pyramid schemes. The PT Pyramid of military exercise. The pyramid front company in Watchmen. On and on.
It's almost as if it's a sacred symbol to a group of people, but that can't be...

Kirti Prasanna said...

Though base of pyramid is a big market but these billion poor are not a homogeneous lot and so no one solution would work in order to target these customers. There is a need to develop very cutomised and localised strategies to reach to these customers. I have the privilege to work with such segments in India for large corporates. The mantras that work for me is how you quickly adopt yourself to local conditions in terms of the social value systems, community dynamics, innovate ways to distribute at the last mile, communicate in local language, make poor a stakeholder not a consumer etc.

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