Bottom Of The Pyramid Marketing Essay

Bottom Of The Pyramid Marketing EssayThe Bottom of the Pyramid (BOP) is the largest and poorest socio-economic collection in the society. There are to a greater extent than than four billion people who live their lives on less than $2 per day. Indias agrarian majority today accounts for more than US$100 billion in consumer spending, making them by far the biggest buyers in the country and contributing significantly to Indias gross domestic product.To tap the vast grocerys at the BOP, MNCs must specially design and develop quality products and services, or they must select some to alter and make available at deject be. Serving BOP customers is a profitable opportunity for corporations. It is also a social imperative, given that two-thirds of the human population (ab let out 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.HYPOTHESISIS THERE SUFFICIENT OPPURTUNIT Y AT THE BOTTOM OF THE PYRAMID?70% of the Indian population lives in rural areas. This segment, which is commonly referred to as the bottom of the pyramid, presents a huge opportunity for companies. To expand the foodstuff by tapping the countryside, more and more MNCs are foraying into Indias rural securities industrys. Among those that have made some headway are Hindustan Lever, Coca-Cola, LG Electronics, Britannia, Standard Life, Philips, Colgate Palmolive, Amul and many foreign-invested telecom companies.The OpportunityIn earlier times rural consumer had to go to a nearby town or city to buy a branded product. The growing power of the rural consumer is now forcing big companies to faithful to rural markets. At the same time, they also throw up major challenges for marketers. Servicing rural markets involves ensuring availability of products through a sound distribution network, overcoming general attitudes and habits of rural customers and creating brand awareness. Price-sen sitivity is another key issue. Rural income levels are largely frontent on the vagaries of monsoon, and demand is not easy to predict. The Indian rural market currently contributes to 50% of the annual consumption of FMCG goods and is increasing year on year. As a result it is becoming an important market place for steadfast moving consumer goods as well as consumer durables.The NecessityThe rural market is certainly tempting since it comprises 70 % of the countrys population, 41 per cent of its middle class, 58 per cent of its disposable income and a large consuming class. Today, real growth is taking place in the rural-urban markets, or in the 13,113 villages with a population of more than 5,000. In order to efficiently and cost-effectively target the rural markets, companies cover many independent retailers since in these areas, the retailer influences purchase decisions and stock a single brand in a product category.Most of the companies have started tinkering with pack sizes and creating new price points in order to reach out to rural consumers. Thus, sachets and miniature packs, as in the case of shampoo sachets priced at Re 1 and Rs 2 or toothpaste at Rs 10, have become the order of the day and help improve market penetration. Yet, driving consumption of goods in rural areas is not just about lowering prices and increasing volumes but also about product innovation and growth indigenous products to cater to their demands. For example, soap makers use advanced technology to coat one side of the soap bar with plastic to prevent it from wearing out quickly.Impact of globalisationThe impact of globalisation is felt in rural India as much as in urban. It will have its impact on target groups like farmers, youth and women. Farmers, today keep in touch with the latest information and maximise both ends. They keep their cell phones constantly attached to global markets. Surely, price movements and products availability in the international market place seem to drive their local business strategies. On youth its impact is on knowledge and information and while on women it unflustered depends on the socio-economic aspect.The marketers who understand the rural consumer and fine tune their dodging are sure to reap benefits in the coming years. In fact, the leadership in any product or service is linked to leadership in the rural India except for few lifestyle-based products, which depend on urban India mainly.Coca-Cola IndiaIn 2001, Coca-Cola India attempted to gain leadership in the Indian market and capitalize on the rural markets. In rural markets, salving drinks category was undeveloped. Coca-Cola India believed that the first brand to offer communication targeted to the smaller towns would own the rural market and went after that objective with a comprehensive scheme. The rural segments primary winding need was out-of-home thirst-quenching and the soft drink category was un variousiated in the minds of rural consumers. Additiona lly, with an average Coke costing Rs. 10 and an average days wages round Rs. 100, Coke was perceived as a luxury that few could afford.In an effort to make the price point of Coke within reach of this high-energy market, Coca-Cola launched the Accessibility Campaign, introducing a new 200ml bottle, smaller than the traditional 300ml bottle found in urban markets, and concurrently cutting the price in half, to Rs. 5. This pricing strategy closed the gap between Coke and elementary refreshments like lemonade and tea, making soft drinks truly accessible for the first time. At the same time, Coke invested in distribution infrastructure to effectively serve a disbursed population and increased the number of retail outlets in rural, increasing market penetration.Coca-Colas advertising and promotion strategy pulled the marketing plan together using local language and idiomatic expressions which even won them some campaign of the year award in the publicize MarketCoca-Cola doubled its s pend on Government Channels, increased price compliance from 30 per cent to 50 per cent in rural markets and trim down overall costs by 40 per cent. Result the rural market accounts for 80 per cent of new Coke drinkers and 30 per cent of its volumes.CONCLUSIONThe basic problem with brand marketing is its high cost. Local Markets do offer a cost-effective method of marketing. With the virtual Local Markets the cost saving is still better. Consider for example the case of marketing farm inputs like fertilisers, seeds and pesticides. In the brand marketing approach, the same information is provided by several marketers through different media and methods. In the virtual Markets, several people can join hands and provide best possible information in a most cost effective manner to the farmers.The rural market grab has already begun. Once the rural consumers get attached to these new forms of virtual Local Markets they are spill to procure most of their requirements from the same sourc e and sell their produce in the same Markets.This offers an interesting challenge for those companies that are selling in the rural market including the agri-input companies, farm equipment companies, FMCG and consumer durable manufacturers. The bottom of the value-chain pyramid indeed represents a huge gambit of opportunities. Here lies a fortune that is waiting to be explored