Seven Golden Rules  to deconstruct misconcepts and  clichés aiming to create win-win business models oriented to BOP in em...
<ul><li>1.  Don’t be misguided by  income indicators ; </li></ul><ul><li>2.  Use  consumption indicators  just as a starti...
Don’t be misguided by income indicators 1
Don’t be misguided by income indicators and about the number of people living below poverty line MDOs and governments over...
Data gathered by national governments Country level interpretation  Data gathered by World Bank and MDOs Consolidated glob...
<ul><li>60 million </li></ul><ul><li>46 million </li></ul><ul><li>44 million </li></ul><ul><li>22 million </li></ul><ul><l...
<ul><li>Taking into account the Census of 70, 80 and  91,  FGV releases the Atlas of Hunger in Brazil: </li></ul><ul><li>5...
<ul><li>Now, taking into account the Census of  2001,  FGVs releases the Atlas of Hunger in Brazil II: </li></ul><ul><li>5...
“ 60 million below the poverty line” 15 de abril de 2004
Income per capita? How much is your monthly income? National census and surveys ask the head of the household: Formal econ...
Don’t pay attention to the researches avaliable about number of people living below the Poverty Line Methods to estimate t...
Income <ul><li>48% does have formal labour relationship </li></ul><ul><li>52% does not have formal or consistent income </...
MDB and other development organizations and governments overestimate the size of poverty
Use consumption indicators as a starting point to solve the puzzle 2
Appliances: market penetration per strata 2000
 
<ul><li>48% does have formal labour relationship </li></ul><ul><li>52% does not have formal or consistent income </li></ul...
Development organizations Indicator: INCOME per capita Objetive: Determine the needs of society
Corporations Indicators: MARKET PENETRATION  of goods and services per household Objetive: Figuring out what consumers wan...
Income per capita? How much is your monthly income? Census and Surveys ask the head of the household Formal economy ==> no...
When you focus on Income you get a very poor picture about the reality, especially when informal economy becomes more sign...
Consumption? Do you have a TV set, car, what apparels, your level of education etc.? Marketing research Very tangible ques...
On the other hand, when you focus on consuption we get a more accurate picture not only about the purchasing power but als...
Bear in mind that there is a very dynamic process of mass market formation and at same time market mass market fragmentati...
<ul><li>Rich/Affluents </li></ul><ul><li>Middle class </li></ul><ul><li>Poor    </li></ul><ul><li>Deprived </li></ul><ul><...
Brazil 2004 182 million inhabitants 47,5 million household Critical mass of an emergent middle class
The New Brazilian Middle Class Former Middle Class The New Middle Class Emergent Middle  Class
 
Don’t underestimate the vitality of low income emergent markets 4
1963-1990
 
Avoid the macro-economics myopia and invest in gaining in-depth knowledge about the fabric of society 5
Lack of Poverty Segmentation <ul><li>Low income </li></ul><ul><li>Vulnerability related to groups (gender, youth, elderly)...
Strive to understand people’s desires not only needs 6
Don’t get fooled by the label “low-income”, that doesn’t mean the customer have low quality standard expectations 7
Source: David Meyers, The American Paradox O paradoxo do progresso e da felicidade na sociedade contemporânea
 
Wealth and poverty are both a moving target
Fast food casual restaurant oriented for low income segment
28 deparment megastore chain in Rio 2 million active clients only in the RJ state  (13,8 million inhabitants)
Health insurance for low income strata in the states of RJ and SP increased the number of clients from 250 thousand to  40...
Government, Society and Business Players should revise and integrate the concepts of:  Poverty,  Social Vulnerability,  Lo...
Thank you! Brazil Half-Full Half-Empty
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Bottom of Pyramid in Brazil - Old and Obsolete Clichés and Misconceptions

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Bottom of Pyramid - Erradicanting Poverty and Making Profit -- World Resources Institute International Conference

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Bottom of Pyramid in Brazil - Old and Obsolete Clichés and Misconceptions

  1. 1. Seven Golden Rules to deconstruct misconcepts and clichés aiming to create win-win business models oriented to BOP in emergent markets Lessons that I learned working with development organizations and also as a marketing and strategy consultant to corporations Or... Brazil Half-Full Half-Empty
  2. 2. <ul><li>1. Don’t be misguided by income indicators ; </li></ul><ul><li>2. Use consumption indicators just as a starting point; </li></ul><ul><li>3. Bear in mind that there is a very dynamic and simultaneous process of mass market formation and fragmentation ; </li></ul><ul><li>4. Don’t underestimate the dynamism of emergent markets; </li></ul><ul><li>5. Avoid fiercely the macro-economics myopia , and invest in gaining in-depth knowledge about the fabric of society ; </li></ul><ul><li>6. Strive to understand people’s desires not only needs; </li></ul><ul><li>7. Don’t get fooled with “low-income” tag, give these customers low quality and wait for the backlash. </li></ul>
  3. 3. Don’t be misguided by income indicators 1
  4. 4. Don’t be misguided by income indicators and about the number of people living below poverty line MDOs and governments overestimate the size of poverty MDOs use secondary data sources (national governments), which are inconsistent and use inadequate methodologies
  5. 5. Data gathered by national governments Country level interpretation Data gathered by World Bank and MDOs Consolidated global analysis by MDOs Mainstream media <ul><li>General Public </li></ul><ul><li>Opinion makers, </li></ul><ul><li>Politicians, </li></ul><ul><li>Social Activists </li></ul><ul><li>Business Sector </li></ul>Anatomy of a Misconception Formation
  6. 6. <ul><li>60 million </li></ul><ul><li>46 million </li></ul><ul><li>44 million </li></ul><ul><li>22 million </li></ul><ul><li>16 million </li></ul><ul><li>FGV </li></ul><ul><li>Hunger Zero Program </li></ul><ul><li>Workers Party </li></ul><ul><li>IPEA </li></ul><ul><li>FGV dissidents </li></ul>BRAZIL 2004 = 182 million inhabitants Governmental Brazilian Think-Tanks, processing the income data of Census 2001, came to the following figures for Brazilians living below the Poverty Line:
  7. 7. <ul><li>Taking into account the Census of 70, 80 and 91, FGV releases the Atlas of Hunger in Brazil: </li></ul><ul><li>50 million Brazilians live below the poverty line </li></ul><ul><li>29.3% have less than R$80 monthly per capita. </li></ul>Rio de Janeiro, 10 July 2001 Guidance for policymaking Most influential think-tank for public policy issues in Brazil
  8. 8. <ul><li>Now, taking into account the Census of 2001, FGVs releases the Atlas of Hunger in Brazil II: </li></ul><ul><li>59 million Brazilians live below the poverty line </li></ul><ul><li>1/3 population has less than R$79 monthly per capita. </li></ul>Rio de Janeiro, 15 April 2004
  9. 9. “ 60 million below the poverty line” 15 de abril de 2004
  10. 10. Income per capita? How much is your monthly income? National census and surveys ask the head of the household: Formal economy ==> not very reliable data Informal economy ==> no consistent income
  11. 11. Don’t pay attention to the researches avaliable about number of people living below the Poverty Line Methods to estimate the income per capita are extremely inconsistent specially in markets where the informality is high
  12. 12. Income <ul><li>48% does have formal labour relationship </li></ul><ul><li>52% does not have formal or consistent income </li></ul>The issue of the INFORMAL ECONOMY and how it mess up the CENSUS conclusions Poor knowledge
  13. 13. MDB and other development organizations and governments overestimate the size of poverty
  14. 14. Use consumption indicators as a starting point to solve the puzzle 2
  15. 15. Appliances: market penetration per strata 2000
  16. 17. <ul><li>48% does have formal labour relationship </li></ul><ul><li>52% does not have formal or consistent income </li></ul>Better knowledge about the different segments of the society as a whole Consumption and Life Styles
  17. 18. Development organizations Indicator: INCOME per capita Objetive: Determine the needs of society
  18. 19. Corporations Indicators: MARKET PENETRATION of goods and services per household Objetive: Figuring out what consumers want and their behavior
  19. 20. Income per capita? How much is your monthly income? Census and Surveys ask the head of the household Formal economy ==> not very reliable data informal economy ==> no consistent income THE BIG TROUBLE WITH INCOME DATA
  20. 21. When you focus on Income you get a very poor picture about the reality, especially when informal economy becomes more significant...
  21. 22. Consumption? Do you have a TV set, car, what apparels, your level of education etc.? Marketing research Very tangible questions
  22. 23. On the other hand, when you focus on consuption we get a more accurate picture not only about the purchasing power but also about people’s lifestyle
  23. 24. Bear in mind that there is a very dynamic process of mass market formation and at same time market mass market fragmentation 3
  24. 25. <ul><li>Rich/Affluents </li></ul><ul><li>Middle class </li></ul><ul><li>Poor </li></ul><ul><li>Deprived </li></ul><ul><li>300 thousand households </li></ul><ul><li>2,5 million households </li></ul><ul><li>12,5 million households </li></ul>90 million inhabitants 15 million households Consumer society Out of Consumer Society ------------------------- Poverty line ------------------------------ Brasil of the 70s
  25. 26. Brazil 2004 182 million inhabitants 47,5 million household Critical mass of an emergent middle class
  26. 27. The New Brazilian Middle Class Former Middle Class The New Middle Class Emergent Middle Class
  27. 29. Don’t underestimate the vitality of low income emergent markets 4
  28. 30. 1963-1990
  29. 32. Avoid the macro-economics myopia and invest in gaining in-depth knowledge about the fabric of society 5
  30. 33. Lack of Poverty Segmentation <ul><li>Low income </li></ul><ul><li>Vulnerability related to groups (gender, youth, elderly) </li></ul><ul><li>Subnutrition </li></ul><ul><li>Unemployment </li></ul><ul><li>Mental and physical disabilities </li></ul><ul><li>Family disagregation </li></ul><ul><li>Drug and Alcohol Addiction </li></ul><ul><li>Homelessness </li></ul>
  31. 34. Strive to understand people’s desires not only needs 6
  32. 35. Don’t get fooled by the label “low-income”, that doesn’t mean the customer have low quality standard expectations 7
  33. 36. Source: David Meyers, The American Paradox O paradoxo do progresso e da felicidade na sociedade contemporânea
  34. 38. Wealth and poverty are both a moving target
  35. 39. Fast food casual restaurant oriented for low income segment
  36. 40. 28 deparment megastore chain in Rio 2 million active clients only in the RJ state (13,8 million inhabitants)
  37. 41. Health insurance for low income strata in the states of RJ and SP increased the number of clients from 250 thousand to 400 thousand over the last 3 years
  38. 42. Government, Society and Business Players should revise and integrate the concepts of: Poverty, Social Vulnerability, Low Income and Informality
  39. 43. Thank you! Brazil Half-Full Half-Empty

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