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Nairobi May 2010
Pikay Richardson, PhD,Manchester Business School
University of Manchester
Strategic Marketing ModelsFor Reaching The Base of The Pyramid
Copyright © 2008 The World Bank – International Finance Corporation
Coverage
1. How do you make customers?
2. The BOP Market and what it offers
3. Succeeding in the BOP Market
4. Building an effective Marketing Plan
5. The Fortune at the Base of the Pyramid
6. Finale
Copyright © 2008 The World Bank – International Finance Corporation
The Purpose of the Firm
The ultimate purpose of any business is to create and retain profitable customers –
the Marketing Process
Copyright © 2008 The World Bank – International Finance Corporation
Making Customers: The Marketing Process
Marketing Mix –
the combination of different elements (4Ps) used to achieved marketing objectives (of serving the needs of customers profitably).
Copyright © 2008 The World Bank – International Finance Corporation
The Marketing Mix: The 4Ps
1.Product2.Price3.Place4.Promotion
Copyright © 2008 The World Bank – International Finance Corporation
Product
A PRODUCT
is a bundle of need-satisfying physical, service or symbolic attributes offered
to the market for attention, use of consumption.
Copyright © 2008 The World Bank – International Finance Corporation
The Firm and Its Products
The role of marketing is to make sure that the company offers the right products, that they are currently positioned for the chosen target
segments, and supported by the best marketing mix.
Copyright © 2008 The World Bank – International Finance Corporation
Product Plan/Strategy
Product line Product mix Packaging Labelling Branding Product research,
improvements and innovation
Copyright © 2008 The World Bank – International Finance Corporation
Price: the Exchange Value of a product from
perspective of both seller and buyer.
Price influences consumers perception of the product (VFM).
Pricing
Copyright © 2008 The World Bank – International Finance Corporation
Pricing Policy
To enable the firm earn a fair return To meet or stay ahead of the competition To maintain or increase the firm’s share
of the market To ensure stability of the prices of its
products.
Copyright © 2008 The World Bank – International Finance Corporation
Channels of Distribution:
Direct: Provider/Producer-Consumer
One Level: Producer-Retailer-Consumer
Two levels: Producer-Wholesaler-Retailer-Consumer
Place (Distribution)
Copyright © 2008 The World Bank – International Finance Corporation
Communication Mix
all those methods of communication an organisation uses to reach its various audiences.
Promotion
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Advertising Promotion Personal selling Public relations Other publicity
Communication Mix
Copyright © 2008 The World Bank – International Finance Corporation
What Does BOP Market Present?
Huge base of consumers – 4bn Largest and fastest growing segment of world
population Substantial gross PP
But large informal economy poses unique challengesHence global capabilities and subsidiary strategy models
inappropriate, rather,
Requires strategic partners, and, Dealing with certain Macro issues
Copyright © 2008 The World Bank – International Finance Corporation
BOP Market Entry Challenges
Limited individual purchasing power High volume business based on small
individual transactions Peculiarities of human and social capital of
low-income communities Poor infrastructure Inadequate connectivity Corrupt intermediaries and officials
Copyright © 2008 The World Bank – International Finance Corporation
New and Relevant Models Required
It should be noted that BOP Markets require:
advanced technology creative financing affordable packaging local partnerships, with relevant experience attention to societal performance
Copyright © 2008 The World Bank – International Finance Corporation
Lessons from Success Stories
Look for organisations in your target BOP market that are already serving the poor
Build relationships with a number of organisations as early as possible
Understand the strategic objectives, culture and organisational structure of these BOP models
Indentify important bottlenecks once relationships are built Start thinking about replicating appropriate existing competencies to
support the building of markets Ensure that the business model supports, and increase in the real
income of people Monitor the development of partners’ strategic objectives
Copyright © 2008 The World Bank – International Finance Corporation
Succeeding in the BOP Market: The Marketing Mix
Product- technology-based- simple, but good quality- packaging (sachets, mini-key soap)- branding (Nokia phone)
Copyright © 2008 The World Bank – International Finance Corporation
Marketing Mix in the BOP Market
Price–economies of scale–Low-cost–affordable
Copyright © 2008 The World Bank – International Finance Corporation
Promotion- reach is more important than attention
- information hungry; entertainment starved
- face-to-face promotion
Marketing Mix in the BOP Market
Copyright © 2008 The World Bank – International Finance Corporation
Place (Distribution)– Affordable packaging
(sachets, one-use)– Intermediary/partner channels
Marketing Mix in the BOP Market
Copyright © 2008 The World Bank – International Finance Corporation
Building an Effective Marketing Plan (6 Steps)
Developing a Marketing Plan gives you the opportunity to organise your thoughts and
discover any trouble spots in your strategy
Copyright © 2008 The World Bank – International Finance Corporation
Step 1
Describe your product/service in detail:
- What are the most significant features?
- Is the product/service in demand?;
- What is the level of demand; Is it a growth market, etc?
Copyright © 2008 The World Bank – International Finance Corporation
Identify your target market:- Who will the product/service appeal to
most?
- What information does your market research throw up – sales trends, geographical region, customer segments, etc, ?
Step 2
Copyright © 2008 The World Bank – International Finance Corporation
Size up the competition:
- Who are your major competitors?- How does your product/service compare to
them?- How strong a foothold do they have in the
market?- How do they market their products/services- How do you create and sustainable competitive
advantage?
Step 3
Copyright © 2008 The World Bank – International Finance Corporation
Detail your Marketing Strategy:
- How will you advertise and market your product/service?
- Which features of the product will you focus on?
- Is Branding an option?- What price should you charge and why?
Step 4
Copyright © 2008 The World Bank – International Finance Corporation
Describe your operations:- What plans do you have for customer service –
credit, sales terms, after-sales service, etc- Are your employees geared up for service –
skills and motivation- Where is the best location for the business?- Is your management team competent – able to
manage, read the signs, provide direction, etc?
Step 5
Copyright © 2008 The World Bank – International Finance Corporation
Prepare a financial statement based on projections of sales, operating costs and expenses:
- Undertake cash-flow projections- Profit-and-loss reports and income statements
for at least 3 years- Is the business viable? If no, why not?- What are the options open to you?
Step 6
Copyright © 2008 The World Bank – International Finance Corporation
Fortune at the BOP?
The world’s biggest retailer, Wal-Mart, was created to serve the low-income market
Designing products for the BOP is NOT about making cheap stuff, but about making technologically advanced products affordable
It is worth the effort if the BOP market can be served efficiently, effectively and profitably; it is also about making a difference
Copyright © 2008 The World Bank – International Finance Corporation
An Important Opinion
“everyone wants brands. And there are a lot more poor people in the world than rich people. To be a global business and to
have a global market, you have to participate in all segments”,
Keki Dadise, Hindustan Lever
Copyright © 2008 The World Bank – International Finance Corporation
Can You Fault This?
“I can’t think of a more noble way to have an immediate
impact on the lives and future of people who need light to help
them find their way”
-Actor Tom Hanks, Freeplay Foundation Patron
Copyright © 2008 The World Bank – International Finance Corporation
Encouragement
“If we stop thinking of the poor as victims or as a burden and start recognising them as a resilient and creative entrepreneurs and value-minded customer, a whole new
world of opportunity will open up”,
C K Prahalad
Copyright © 2008 The World Bank – International Finance Corporation
Exhortation
“Mt talent is trusting the poor and giving the poor good service. Many poor
have a better character than the rich. I was poor once”,
Samuel Klein, Founder of Casas Bahia
Copyright © 2008 The World Bank – International Finance Corporation
The End of the Matter
There is considerable commercial market opportunity and the willingness to pay for off grid lighting products, globally and in SSA
Recent technological advances such as LEDs promise technology-based solutions to the African marketplace
The era of the incandescent bulb is fading, as energy efficiency and superior lighting technologies take hold
The most expedient and sustainable way to bring affordable, reliable lighting to Africa is by supporting the industry to design and market an array of products tailored to the needs of the African consumer
Copyright © 2008 The World Bank – International Finance Corporation
Finale
Things work only if we make them work
Things work only as well as we make them work