The
Case Study Paper
The bottom of the pyramid market consists of four billion
people with a purchasing power of five trillion dollars (Sim, 2014). The
consumer base at the bottom of the pyramid offers companies an opportunity for
innovation and growth. This is why many companies attempt to enter developing
markets. However, because the consumers at the base of the pyramid often “lack
market sophistication, meaningful purchasing options and economic leverage” and
the conditions are perfect for exploitation, many question if marketing to the
consumers at the bottom of the pyramid is ethical (Santos & Laczianiak,
2012, p. 1). It depends on the marketing strategy used and the product offered.
Low-income consumers have the same basic needs as other income levels. In fact,
families with low-incomes spend more on healthcare, rent, and food (Solomon,
2017). Marketers can minimize unethical practices by carefully considering the
needs, values and incomes of the consumer. If a company redesigns its products
and distribution then it can meet the needs of the company and consumers
ethically.
To understand the needs of the bottom of the pyramid and
identify any necessary marketing changes, companies can consider the 4A’s
framework of addressing low-income consumers. The 4 A’s are: awareness,
affordability, availability, and acceptability. Companies tailor the product to
the market through awareness and acceptability. Awareness involves knowing
which outlets are appropriate for the product and using a combination to reach
the consumers. Sometimes companies also form partnerships with public and
private organizations to assist with product promotion (Solomon, 2017). For a
product to gain acceptance by low-income, companies will develop a product
according to the consumers’ needs which may require innovative-thinking
(Solomon, 2017). Companies restructure the value chain by considering
affordability and availability. To make a product affordable for consumers,
companies may need to reduce the packaging size to lower the unit price, manage
production costs, or remove unnecessary and costly additions. Considerations
for availability are the length of the supply chain and localized sourcing and
retailers (Solomon, 2017). Companies may need to alter several, or all, aspects
of the 4A’s framework for successful market entry.
Proctor & Gamble changed their products and cut costs
before their market entry into India with the Gillette Guard. After
experiencing failure with an earlier product the Vector, the company did
extensive product and consumer research before releasing the successful Guard
razor. The company conducted 3,000 hours of research over 18 months including
home interviews with Indian men (Solomon, 2017). Through this research the
company learned that many Indian men shave with a bowl of water because of
limited access to water. While cost is an important consideration for Indian
men, safety is their primary need (Solomon, 2017). Proctor & Gamble stripped
down the razor to cut costs and still meet the basic needs of the consumer. The
company reduced the cost for the Gillette Guard to 34 cents for the razor and
12 cents for the blades. Through this process of reverse-innovation the Guard
became the fastest-growing product in the Indian market for Proctor &
Gamble (Solomon, 2017).
Proctor & Gamble’s entry into the Indian market was
an ethical approach because the company provides consumers with a needed
product for a reasonable price, but some companies do exploit the bottom of the
pyramid market especially those focused on short-term. For example, within the
last decade micro-lending processes in Mexico left many low-income consumers
with a large debt, while the mortgage crisis in the United States occurred due
to unethical loan practices (Santos & Laczianiak, 2012). For ethical market
entry into any country a company can operate in a way that benefits both the
consumer and the business. The company can establish authentic engagement with
consumers to communicate trustworthiness and create trust. Proctor & Gamble
took a genuine interest in understanding the shaving habits of Indian men and
were able to meet their needs with the Guard.
The Caux Round Table Principles, presented to the UN
World Summit by Frederik Phillips of Philips Electronics, address ways for
companies to treat consumers with non-exploitative intent. These Principles
include using collaboration as a means to gain a competitive edge, not taking
advantage of consumers’ weaknesses, and setting long-term goals that improve
the quality of society and the environment (Santos & Laczianiak, 2012). Whether
a company is marketing to the bottom of the pyramid in the United States, or
any county, companies can focus on providing a benefit the lives of those
consumers. By considering the 4A’s and these principles companies can build
trust with the bottom of the pyramid market, create needed products, and
increase a company’s chance for success marketing to the bottom of the pyramid.
References
Santos,
N. & Laczniak, G. (2012). Marketing to the base of the pyramid: A corporate
responsibility approach with case inspired strategies. Business and Politics, 14(1),
1-42. DOI: 10.1515/1469-3569.1364
Sim,
J. (2014, July 29). Four reasons the poorest four billion matter to business. Forbes.
https://www.forbes.com/sites/ashoka/2014/07/29/4-reasons-the-poorest-4-billion-matter-to-business/#4a1e141e3d2a
Solomon, M. R. (2017). Consumer behavior: Buying, having,
and being (12th ed.). Retrieved from https://content.ashford.edu
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