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Apresentação bid bop_workshop_eng2


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Apresentação bid bop_workshop_eng2

  1. 1. Myths and Realities of Low-income Markets Notes from Brazil July /2010
  2. 2. CONTENTS 1. Social mobility in Brazil 2. Behaviour of BoP population 3. The movement of companies 4. What about classes DE?
  3. 3. Context Overall Moment of huge social mobility, with reduction of DE families and increase of class C families
  4. 4. Social Mobility Class Differences in Brazil CLASS REGIONAL AGE GROUPS Differences Differences Differences In the last 5 years... Children High growth of C group in Brazil (0 to 9 yrs) It is not possible to Group C went from 13 to 19 think of a strategy million families for the Northeast A large proportion of increase in without considering national income is in class C the significant participation of DE 1 AB 10,6 CDE + Us154 billion dollars of classes: Young adults purchase power of groups BC (20 to 39 yrs) 72% of + 23 billion dollars of households purchase power of groups DE 1 AB 5,8 CDE PlanoCDE Study (from the consolidation of IBGE data, PNAD 2002 and 2008) * Deflated by IPCA Jul./2008 values. MW in 2002 indexed by IPCA (51,7%)
  5. 5. Context Overall Each specific segment whithin the BoP requires consideration; each has different needs and undergoes distinct consumption moments
  6. 6. Social Mobility The way the BoP population defines themselves may be very different from the parameters used by companies of other social classes • No social class identifies themselves as poor • For classes DE, poverty is a condition, a circumstance in life Only 21% of the population • Oscilation in the social scale is due to: of Recife and São Paulo – Greater presence of informal work – Vulnerability (diseases, job loss) define themselves as poor, • Increase in purchase baskets of class C, and these are poorer and had less formal education. which include services: – Low cost private schools PlanoCDE research published in Valor Econômico – School transport – Interest in closed condos – Health services Fonte: Narayan, Ptrichett and Kaapor. Moving out of poverty. Palgrave MacMillan and World Bank 2009.
  7. 7. Social Mobility Different experiences and realities generate different consumption logics Focus on the concept Focus on the concept of DIFFERENTIATION of INCREASE of personalization consumption and COMFORT A Focus on the concept B of ACCESS to opportunities and C services D Focus on the concept E of INCLUSION in the consumption Social classes universe(basic)
  8. 8. Context Overall Far from having circumscribed and linear practices, consumption within the BoP population is social and modern and operates within the logic of social networks
  9. 9. Types of assets and capital Economic relations are embedded in social networks Types of assets relevant to BOP: • Physical capital: housing, building materials, durable goods • Financial/ productive capital: safety at work (type of work), productive goods (car, sewing The social capital may have machine, etc), income from rents and other a greater weight than the sources. financial capital • Human capital: education: higher degree of schooling increases chances of access to other forms of capital • Social capital: at home and in the community – the capacity to mobilize these networks of relationships to their help Source: Moser, C. (1998) The asset vulnerability framework: reassessing urban poverty reduction strategies. In: World Development, vol 26, No 1, pp 1-19.
  10. 10. Social networks BoP Practices Brazil nó rede Family network Community network Virtual networks • Multinucleated families • 60% socialize purchase • 170 million mobile phones: opportunities 85% are prepaid • 42% have relatives living in the • The network ‘knots’ have a • 18 million Internet users in same neighbourhood strategic role: circulation of class C • Consumption units information inside and • 48% of users connected in outside the community 100 thousand Internet cafes: • Require specific consideration for • Network knots, who are 82% in classes DE using products and services: they: telecom, cards and financial – Door-to-door salespeople services – Small retailers – Tour organizers – Hairdressers, manicures, etc. Sources: McCann Erickson, CDI Lan, CEBRAP .
  11. 11. Example Aline Benavente Resident in Vila Carrão, Zona Leste Avon Rep With the help of social medias such as Blog in the company’s portal and Twitter • Her income per campaign was doubled “I used to sell R$400,00 per campaign and, last month, I sold R$1,000” • Increased the clients’ portfolio: Other cities •New Selling Strategy: Blog: promotions and campaigns. Twitter: new arrivals or new promotions. Avon website: access to electronic catalogue E-mail: place an order Has 150 followers in Twitter, all clients. • Payment: awaits the voucher and then posts the order Source: O Estado de São Paulo/ Sept 2009
  12. 12. Context Overall Moment of great experimentation where companies are testing different strategies in the BoP market
  13. 13. Different ways: 1. Strategy Migration of business models CD to the top of Bottom up: the pyramid 2. Strategy Adaptation of business models AB to the base Top down: of the pyramid a. Emergent Companies that have always operated on the base of the pyramid without formalizing a Strategy specific project for the BOP b. Deliberate Companies that have decided to formally position themselves to the BOP Strategy (Brazil: especially class C)
  14. 14. 1. Strategy From BOP Bottom up: toTOP From the BOP to the Top of the pyramid New services and products for the BOP • Network of beauty saloons (9) located in BOP neighbourhoods in RJ and ES • 43,000 clients served/ month • Development of products directed to women with curly / afro hair • Information and focus on women’s self esteem Baixada Fluminense Ipanema
  15. 15. 2. Strategy Shop Top down: positioning in BoP neighborhood a. Emergent Strategy • Shop in Paraisópolis • Branch in Heliópolis
  16. 16. 2. Strategy Top down: b. Deliberate Strategy Emphasis on the product: Emphasis on the product: sub brands new brands • Ideal Powder Milk • Dolca • Low cost and adapted to BoP taste and habits • Developed exclusively for the North and Northeast • Provides whiteness, perfume and economy at an acessible price. • Ala Tablete version (bar soap) providing abundant consistent foam to meet the needs of CD women • OMO Tanquinho
  17. 17. 2. Strategy Top down: b. Deliberate Strategy Emphasis on the channel Community Marketing: using social networks • Door-to-door • Training for young people: Retail lessons • Product tasting • Partnering with local small retailers: • Information about nutrition business plan and managing • Micro credit • Digital inclusion
  18. 18. 2. Strategy Top down: b. Deliberate Strategy Emphasis on the channel Community Marketing: using social networks a flooring manufacturer, developed a business Project Shakti uses innovative distribution model to reach the low-income population, in methods that allow products to reach rural partnership with social organizations. consumers in remote country regions. partnering with a social entrepreneur, uses a network of 27,000 entrepreneurs Colceramica was able to link with and is currently is present in 82.000 villages community leaders in India. community participation helped the company connects self-help groups with business recruit sales people, gain valuable marketing opportunities insights and generate consumer acceptance creates income-generating for BoP women for its product by providing a sustainable micro-enterprise usage of existing networks in the community opportunity. ability to reconcile the world of conventional supported by micro-credit business with BoP informal reality easy financing
  19. 19. In Synthesis To operate in the DE markets requires reinvention of the business model in greater depth • Generate actions of approximation with the community • Rethink the value chain • Educate the consumer This means not only to do business, but to contribute to social inclusion
  20. 20. 11 3037.7781