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    Session 17

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    tansley007
    iim kashipur

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    Session 17

    Uploaded by

    tansley007
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    iim kashipur

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    iim kashipur

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    0 views10 pages

    Session 17

    Uploaded by

    tansley007
    iim kashipur

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 10

    BOTTOM OF PYRAMID (BOP)

    STRATEGIES IN EMERGING MARKETS – SESSION 17


    UNDERSTANDING BOTTOM OF THE PYRAMID

    • Low income : ($3-$5/day) -- 1.4 Bn


    people
    • Subsistence : ($1-$3/day) -- 1.6 Bn
    people
    • Extreme Poverty : (Below $1/day) --1 Bn
    people

    Source : Hammond, A. L., Kramer, W. J., Katz, R. S., Tran, J. T., & Walker, C. (2008). The next 4 billion: Characterizing BOP markets. Development Outreach, 10(2), 7-26.
    INDIA’S INCOME PYRAMID – THE CHANGING DIMENSIONS
    Households in Mn
    Annual Income –
    INR 2000
    thousands

    >1000 1.2 3.3

    500 - 1000 2.4 5.5

    200 - 500

    90 - 200

    <90

    2005 2015 2025

    Source: McKinsey Global Institute, 2007


    SEGMENTATION OF BOP MARKET
    Bottom Heavy Markets in Asia Other Emerging Markets
    Eastern Europe market is $ 458 Bn USD

    Indian BOP market is $1.2 trillion

    African market is $ 429 Bn USD

    LATAM market is $ 509 Bn USD


    Source : Hammond, A. L., Kramer, W. J., Katz, R. S., Tran, J. T., & Walker, C. (2008). The next 4 billion: Characterizing BOP markets. Development Outreach, 10(2), 7-26.
    KEY CHALLENGES OF THIS SEGMENT
    • Lower Income and Savings

    • Low Disposable incomes


    • Uncertainty about earnings

    • Fragmented Markets and Less Connected

    • Culturally and Geographically diverse, not much scope for economies of


    • Poor roads, communication, electricity and infrastructure and last mile delivery esp. in rural areas

    • Low Literacy and Media Penetration

    • Low literacy and media penetration


    • Large number of local languages increases cost of marketing
    ADDRESSING THE ACCESSIBILITY ISSUE

    2) Community Models
    1) Proprietary Distribution Model

    The company establishes its own distribution network including Pureplay


    Cost Sharing
    appointing C&F agents, stockists, wholesalers and retailers Gov’t provides info
    Women VLE to sell kiosks in all villages
    shampoo and soaps who requiring private partners
    fund their own working to make investments
    capital

    VLE Models

    3) Piggyback Model
    Multilevel
    Quasi
    Direct selling agents and
    Companies use this method to dramatically and quickly expand reach Requires a VLE to
    multi level marketing
    interface with firm, risk
    and/or reduce the costs of developing their own network lies with firm
    schemes to sell its
    products to BOP segment
    WHICH VALUE CREATION STRATEGIES THAT WORK BEST FOR BOP

    • Providing Appropriate and Affordable products and services


    Sweet Spot : Low Income
    directly to consumers

    • Enlisting individuals or small businesses to provide efficient


    reach and coverage
    Sweet Spot : Subsistence
    • Engaging the community to coproduce value – for example in
    the supply chain

    • Forming commercial partnerships with Gov’t and NGOs Sweet Spot : Extreme Poverty
    DOES THIS MARKET EVEN HAVE A POTENTIAL

    THE TALE OF WASHING POWDERS


    NINE KIND OF OPPORTUNITIES IN BOP

    Source : Simanis, E., & Duke, D. (2014). Profits at the bottom of the pyramid. Harvard Business Review, 92(10), 86-93.
    THANK YOU

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