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Marketing to the Bottom of the Pyramid

I recently made a presentation to a group of marketing experts at the 2nd Annual Marketing to Low Income Consumers Master-class.

Attached was my presentation. In summary, whatever marketing strategies we have employed in the past are irrelevant. It seems no one really knows how to market to this economic class. What we do know is that Africa has the fastest urbanization rate in the world and so the key thing is how do we make transition easier for them with our products?

Marketing shouldn’t meet customers at their station in life, it should ASPIRE to a higher level and offer a social value; quite often that is the failure of the strategies at the BOP.

Our products must have a purpose. They should cater for people with rural income but urban aspirations.

Please go through the presentation and I look forward to your views on this topic. As marketers, we need to fully understand the BOP; who are they? and only then can we begin to crack and develop strategies that work for them.

Many companies have resulted in developing LUP's for the sake of driving penetration, distribution and affordability. Do you think this is the right way to go? Personally, I think there's so much more to it than just driving penetration with smaller packs.

Share your views and let's discuss more.

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Marketing to the Bottom of the Pyramid

  1. 1. 2nd Annual Marketing to Low Income Consumers Jade Oyateru Intercontinental Hotel
  2. 2. MARKETING TO LOW INCOME CONSUMERS Jade Oyateru Meet the Speaker Shopper & Customer Marketing Manager, Unilever Unilever Global Foundation Ambassador Worked in Sales & Marketing: • Nestle UK & Nestle Nigeria • Unilever Nigeria & Unilever East Africa Education: • Harvard University - International Business • Imperial College Business School - MBA
  3. 3. MARKETING TO LOW INCOME CONSUMERS What do we know?? Most people in sub-Saharan Africa live on less than a dollar a day Poverty in Sub- Saharan Africa stands at 42.6% The share of Africans living in urban areas is projected to grow from 36% in 2010 to 50% by 2030 Projections also indicate that between 2010 and 2025, some African cities will account for up to 85% of the population
  4. 4. MARKETING TO LOW INCOME CONSUMERS We Don’t Know Shhhhh!!! Let’s throw it out!! All the information, all the statistics, all the assumptions!!
  5. 5. MARKETING TO LOW INCOME CONSUMERS Declaration of Ignorance!!! • Cemex is one of the largest cement and building supply corporations in the world, with over $15 billion in net sales in 2014. • Cemex identified low-income families in Mexico as a market with a steady need for the company’s products and a large potential for growth. • The only issue was that Cemex had no idea how to adopt its traditional assets and strategies to target a low-income market • Then the company did something unprecedented, Cemex issued “Declaration of Ignorance”. • The company publically stated that it had no idea how to reach low-income markets
  6. 6. MARKETING TO LOW INCOME CONSUMERS Perceptions of The BOP • Why do we assume that we are different from the BOP?? • Why do we assume that the marketing strategy that works for middle-income, higher-income always has to be different than the ones from the BOP. • Have you ever seen a Rolls Royce advertisement on television?? But you see Mercedes all the time. • Marketing shouldn’t meet customers at their station in life, it should aspire to a higher level and offer a social value; quite often that is the failure of the strategies at the BOP • The human quality of aspiration is what ties all groups in the pyramid together
  7. 7. MARKETING TO LOW INCOME CONSUMERS Current Perception • The Current perception of the consumer at the BOP Psychological Safety Love/belonging Esteem Self- actualization
  8. 8. MARKETING TO LOW INCOME CONSUMERS Where is the BOP Market?? Source: Working with the Bottom of the Pyramid; Success in Low-Income Markets [2007] Dansk Industri There are about 4 Billion people at the Bottom of the Pyramid (BOP). The African BOP constitutes 71% of the purchasing power for the continent. The BOP constitutes a $5 Trillion global consumer market.
  9. 9. MARKETING TO LOW INCOME CONSUMERS The BOP’s future is urban and young Africa has an urban future, between over the coming fifteen years, cities in Africa will, every day, become home to at least another 40,000 people. Between 2005 and 2010, Lagos grew by 1.8 Million people, Kinshasa by 1.6 Million and Luanda by 1.2 Million. Ernst & Young predicts that by the year 2030, 90% of the world’s young urban population will live in large cities in some of Africa’s fastest-growing economies. Source: Ernst & Young Emerging Economies will live in large cities 90%
  10. 10. MARKETING TO LOW INCOME CONSUMERS Resurrecting Dead Capital • A Peruvian economist, Hernando de Soto, introduced the concept of ‘Dead Capital’ in which he estimates that about $1Trillion is locked in the informal sector in Africa. • This amount is three times sub-Saharan Africa's annual GDP, and more than 70 times the amount of aid the continent receives each year.
  11. 11. MARKETING TO LOW INCOME CONSUMERS The Marketing Mix at the BOP Product Price Promotion Place Purpose??
  12. 12. MARKETING TO LOW INCOME CONSUMERS The Social Entrepreneur “There are many positive ways for business to make a difference in the lives of the poor - not through philanthropy, though that is also very important, but through initiatives, that over a period of time, will help build new markets” - Kofi Annan, ex-UN Secretary General Gbemiga is a unique micro-enterprise initiative that is both a catalyst for rural wealth creation and a successful business operation
  13. 13. MARKETING TO LOW INCOME CONSUMERS The Dollar Shave Club • In 2011, the Dollar Shave Club was formed as a response to the frustration faced by men in buying affordable grooming products from giants like Gillette. • They created a community of consumers and packages that suited them “The Humble Twin” (two blades per razor, five razors per month, $3 per month). • Dollar Shave Club’s sales have steadily increased since its launch, from $4m in 2012 to a projection of between $140m and $150m in 2015, with 2.4 million users. • The big boys have noticed, Gillette filed suit last year for infringement.
  14. 14. MARKETING TO LOW INCOME CONSUMERS Cemex Patrimonio Hoy • After their declaration of ignorance and researching new approaches for the market, Cemex launched Patrimonio Hoy. • In 2000, the company launched Patrimonio Hoy, a membership program for low- income home improvement customers.
  15. 15. MARKETING TO LOW INCOME CONSUMERS How It Worked Members apply in groups of three. Group is responsible for 70 week payments of $10-15 which is held as payment towards material. Payments buy a package of building material with architectural and engineering services. Price of materials held fixed over course of work to avoid fluctuations.
  16. 16. MARKETING TO LOW INCOME CONSUMERS Delivery Value for the BOP • Patrimonio Hoy became profitable in 2004. In 2005, a study found that than 99.2% of the $42 Million in materials and loans provided by Cemex had been paid for on time. • Company estimates that, since inception, Patrimonio Hoy has extended over $135 Million in microcredit to customers. • Assisted over 350,000 to build their own homes.
  17. 17. MARKETING TO LOW INCOME CONSUMERS Turning Rubbish to wealth • Two Ugandan high-school drop outs formed Lat Photo Energy. • Using pyrolysis from their shacks, they convert refuse and waste and turn it into fuel. • Kampala produces about 1500 tonnes of waste a day, three quarters of which is left uncollected and rots. • Processing over three tonnes of wastes and turn it into fuel for “boda boda drivers” and sell it to them at under $1 a litre, half the price at the stations. • They even have three types “Super”, “Premium” and “Pure”.
  18. 18. Thank You MRS. JADE OYATERU

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