Challenges in Marketing of Goods for the Poor (Nirma Case)
A case study Challenges in MarketingSocially Useful Goods to the Poor The University of California; Bernard Gerrette, Aneel Karnani 2010 Birgit Pulk (X) José Stênio Melo Rodrigues Júnior (Y) Prof. Carlota Perez Tallinn 2012
Summary– Text about Marketing of Socially useful goods to the poor– Allign profitability with goods that are effectively improve the life of the poor (BOP)– The traps: Danone, Essilor and P&G (Unmet needs, affordability, distribution, multiple objectives)– Sucess stories that avoid these traps: Mobile Phones and NirmaThe traps Success stories
Locating the case: product (X) – Essilor and vision correction, P&G and cleandrinking water, Danone and child nutrition: unmet need does not constitute a market, products ment for BOP, used by middle class, companies focus products and technolgies on their existing markets, adapting them to the BOP market – Nirma, Cell phones – maturity phase; standardization, ruggerization and simplification; Nirma case: products suffer from commodification.Product sales Maturity phase mobile phones and Nirma products
Locating the case: context (Y)– Nirma – 1969/1970, Maturity Phase : Oil, Automobiles and Mass Production (1970) Disadvantages: Several but most relevant is logistics.– Cell Phone, Frenzy Phase Age of TI and Global Telecommunications: Nokia 1001 (2003) Disadvantages: less pronounced than the detergent mainly in distribution, infrastructure already existed in many cases.1. Strategy: reach the BOP segment2. Impact of the context – alleviate poverty minimizing public spending and in case of Nirma fighting an industry whose paradigm phase often leads to the existence of oligopolies.3. No or minimal role of the government/ but not meant to replace government – unmet need is not a market.4. Public opinion favorable but there was backlash in case of cell phones – India and USA
Lessons and applicability Lessons Applicability1. Choice of Technology: Products use simplest 1. Simple technologies can be technologies to reach a public that had no applied, yet most important is to previous acess to certain type of products: keep in mind the level of increased complexity can be a problem (low simplifaction and ruggerization quality: better than no product, brand image)2. Organizational aspects: existing models don’t 2. New businessmodels for both to work, the need for creating new products the developed and in developing and production processes world (concepts can’t be too complicated) 3. Businesses that could sell socially 3. Need for large price and cost reduction needed products to the poor, being profitable at the same time
Key points for the lecture1. Frugal innovation can be applied to several technologies across several types of products and services (Medical, automotive, aviation, etc).2. Demand for affordable and reliable products is not fulfilled in BOP/Emerging Markets segment.3. Opportunity for in developing countries to industrialize due to large number of consumers4. The generics pharmacy Philippines/Medley Generics Brazil5. Innovation not only exists in product, but in business models and processes 5.1 Cost trade off is not an excuse: Reliability Engineering/Quality management essential. 5.2 ICT is pervasive6. Need for continuous innovation - Nirma7. Frugal innovation can revamp products/services in maturity8. BOP is an economy of scope that has some of the advantages of scale and positive sum games.