Integrated approach to understanding consumer behavior at bottom of pyramid

Abstract

Purpose -It is estimated that the poorest of the world, termed as being economically at the bottom of the pyramid (BoP), have a purchasing power of $5 trillion. This paper aims to study what and why they consume, and how firms can best address those needs, an area that is relatively new. Design/methodology/approach -The authors categorize the products and services people at the bottom of the pyramid consume with specific examples of both products and companies in Asia, Africa, and Latin America, and look at the theoretical frameworks that could explain those consumption patterns. Findings -The authors find that despite income and resource constraints, BoP consumers are sophisticated and creative. They are motivated not just by survival and physiological needs but seek to fulfill higher order needs either to build social capital, for cultural reasons or as a compensatory mechanism. They also find that when firms offer products that also fulfill these higher order needs, especially through linkages to education and job offerings, there is a greater chance of their success.Research limitations/implications -The evidence is based on inference from examples in literature and related research on developmental economics. Empirical research to uncover motivations and their linkages to product success in different BoP markets would help to better understand sustainable approaches to BoP marketing. Practical implications -BoP markets offer profitable opportunities. A lot can be learnt from both local and multinational companies successfully operating there. Firms should go beyond the mentality of merely removing features or services to make them cheaper. The lesson here is relevance, adaptability and tailoring products to suit specific BOP needs in an efficient manner. Also, enabling BoP education and providing marketplace services make for more sustainable approaches. Originality/value -The study adds to BoP literature by examining consumption of this segment in an integrated manner: across various categories and linking it to motivation theories. This broad perspective would be useful not only for potential BoP marketers, but also for government and aid agencies.

Microfranchise emergence and its impact on entrepreneurship

“…For the most part, people depend upon the local informal economy which is inefficient, offers poor quality goods, and has poor distribution (Hammond, Kramer, Katz, Tran and Walker, 2007;Subrahmanyan and Gomez-Arias 2008).…”

Open Global Innovation Networks as Enablers of Frugal Innovation: Propositions Based on Evidence from India

“…The cases described above seem to support the first proposition that frugal innovations have a greater chance of commercial success if their value proposition can fulfill the twin objectives of reducing the cost of ownership, as suggested in (Tiwari and Herstatt, 2012a) while matching customer aspirations in terms of image and quality (Subrahmanyan andGomez-Arias, 2008, Prahalad andMashelkar, 2010). The involvement of various collaboration partners was found to have been substantial in all phases of the innovation process and seems to have helped considerably to reduce the cost of ownership for the endconsumer, which is in accordance with other studies of supplier-integration in the process of product development (Kersten and Kern, 2003).…”

Relações entre Consumidores de Baixa Renda, Empresas e Governo: “eles lá e nós aqui”

“…Em alguns casos, mostram como empresas contribuem para elevar a qualidade de vida desses consumidores, por meio de inovações para baratear alimentos nutritivos e melhorar téc-nicas de purificação e distribuição de água (SUBRAHMANYAN; GOMEZ-ARIAS, 2008). Em outros, discutem como empresas, tais como a subsidiária indiana da Unilever, a Hindustan-Lever, Ltd., educam seus consumidores sobre a importância do uso de produtos de higiene (SRIDHARAN; VISWANATHAN, 2008).…”

“…Pesquisadores em marketing passam, então, a demonstrar como equacionar lucros e ajuda contra a pobreza, em ações voltadas para a BP, quando empresas adaptam suas ofertas a fim de proporcionar maior acesso desse segmento a, por exemplo, alimentos e água, produtos de higiene pessoal, serviços de telecomunicações e, até, de beleza (ANDERSON; BILLOU, 2007; SRIDHARAN; VISWANATHAN, 2008;ALMEIDA, 2008;SUBRAHMANYAN;GOMEZ-ARIAS, 2008).…”