Bottom of pyramid approach in rural marketing

1. MADAN MOHAN MALAVIYA UNIVERSITY OF
TECHNOLOGY, GORAKHPUR(U.P) INDIA
SEMINAR REPORT PRESENTATION
ON
BOTTOM OF PYRAMID APPROACH IN RURAL MARKETING
PROJECT GUIDE:-
Dr. Vinay Kumar Yadav
(ASST. PROFESSOR)
CMS MMMUT
SUBMITED BY:-
Vishal Gupta
MBA II Year
(2017063158)
2017-19

2. What is bottom of pyramid
• In economics, the bottom of pyramid is the largest,
but poorest socio-economic group
• It is also often referred to as the “Base of the
Pyramid” or just the “BoP”
• Current usage refers to the “ billions people living on
less than $2 per day “
-As defined by Professors C.K Prahalad
Stuart L. Hart (in 1998)

3. The World Economic Pyramid
PURCHASING POWER PARITY POPULATION IN MILLIONS
IN DOLLAR
TIER 1
>$20,000 75-100
TIER 2 and 3
$1,500-20,000 1,500-1,750
TIER 4
<$1,500 4,000

4. Why does this market opportunity
remain invisible
• The poor are not our target consumers because MNCs, with their current
cost structures, cannot compete for that market.
• The poor cannot afford and have no use for the products and services
that are sold in the developed markets. Product is our focus, not
functionality. We worry about detergents not cleanliness.
• Only the developed markets appreciate and will pay for new technology.
The poor can use the last generation of technology. We focus on product
and process innovations and not business innovations.
• The bottom of the pyramid is not important to the long-term viability of
our business. We can focus on Tiers 1-2 and leave Tier 3 and 4 to
governments and non-profits. We do not see the bottom of the pyramid
forcing us to innovate around sustainable development.

5. Rural Marketing
Rural Marketing is a function which manages all
those activities involved is assessing, stimulating and
converting the purchasing power into a effective
demand for specific products and services and
moving them to the people in rural area to create
satisfaction and a standard of living to them and
there by achieves the goals of the organization.

6. Reasons For The Interest
There are quite a few reasons for the growing interest in
rural markets are :
• The large number of consumers
• Market size and potential
• Increase income and purchasing power
• Competition in urban market
• Consumer Behaviour changes

7. Commercial Challenge
• Cash poor consumer
• Geographic, economic and cultural distance
• Limited product awareness
• Working with longer time frames

8. BoP From MNCs’ Perspective
• Income is to low, the poor can’t buy MNCs’ products.
• Good sold in developing markets are so cheap that
MNCs’ can’t make reasonable profit.
• The poor don’t waste money on luxury product they
only fulfil basic needs.
• Poor don’t have the required skills for the use of
advanced technology.

9. Hindustan Liver Limited Case
• An illustration of the successful execution of this strategy
comes from Hindustan Liver Limited, a subsidiary of Unilever
widely considered the best managed company in India. Like
most MNCs for over 50 year it catered to the need of the elite
of India the top of pyramid.
• A local firm Nirma challenged HLL in its detergent business by
creating a new business system- a new product formulation
new manufacturing process, distribution packaging and
pricing. HLL like most MNCs initially dismissed Nirma as a low
end producer.
• As Nirma grew rapidly, HLL realized both its new opportunity
as well as its vulnerability. Nirma was attacking , in its
detergent business, from the bottom of the pyramid.

10. • As Nirma grew rapidly, HLL realized both its new opportunity
as well as its vulnerability. Nirma was attacking , in its
detergent business, from the bottom of the pyramid.
• HLL responded will its own offering for this market-
drastically altering the traditional HLL business model.
• HLL create a new product formulation which dramatically
reduced the ratio oil to water in the detergent thereby
reducing significantly the pollution associated with washing
cloth in river and other public water system.
• The decentralized the production, marketing and
distribution of the product to take advantage of the
abundant labor pool in rural India and quickly penetrate the
thousand of small outlets where people at the bottom of
pyramid shop

11. Conclusion
• Bottom of pyramid can not be ignored because it is
an huge opportunity.
• Proper product and services should be designed to
provide the maximum satisfaction to BoP.
• BoP may offer opportunities to create value for
companies and the poor
• BoP is continuously evolving and is now a good
opportunity for future rural marketing activities

12. THANK YOU