Bottom of the Pyramid Case Study

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Bottom of the Pyramid Case Study

Pyramid代写 Bottom of the Pyramid Case Study:As indicated in the case, a global market is shifting to the poor majority working for less than $2 a day.

Question 1  Pyramid代写

As indicated in the case, a global market is shifting to the poor majority working for less than $2 a day. More than 4 billion peoples are in this category of poverty but have high purchasing power (Simanis and Duke, 2014, p. 88). It is this majority group in the society that makes the bottom of the economic pyramid (BOP).

With the large population constituted by this group, the market for products targeting the group is also significant.

Organizations have begun to see the value in the BOP market. They are now seeking to make their presence larger in this market with suitable products and services (Simanis and Milstein, 2012). It has thus become a strategic organizational plan, and BOP market also needs investment especially the use of advanced technology (Raj and Aithal, 2018, p. 70). Unfortunately, for a company to succeed in this market initiative, the investment must be accompanied by relevant and adequate support infrastructure. Notably, for the products directed to these groups, demand is contingent on the customers having the willingness and sufficient purchasing power.

Business model  Pyramid代写

With this in mind, coming up with a business model aim to capture the value in this market begins with fundamental insight rather than tinkering or tailoring a minor detail of the current business model for another market (Angot and Plé, 2015, p. 12). BOP needs a distinct model of entry since the market is considered particularly relative to other markets (Sinkovics, Sinkovics, and Yamin, 2014, p. 704). Pyramid代写**格式

It is paramount for companies and retailers to note and appreciate the importance of creating markets out of unmet needs. As such, companies need to ensure that their products generate value for them in the market and serve the requirements of the groups as well as it is of importance to them. Thus, the BOP is a market that challenges most marketers. The marketing not only accounts for the 4Ps of marketing but also needs to accommodate the four main challenges of BOP marketing. Pyramid代写**格式

The four main challenges besides the 4Ps of marketing include awareness, availability, accessibility, and affordability. They act as obstacles to the achievement of market value in a BOP. They also determine the success or failure of the product or services in market. If the company uses them in the right in the mix, then it will make enough and sustainable profits. However, these cannot be achieved if the management does not have thorough understanding of this unique market. Therefore, they can apply relevant and pragmatic marketing strategies.

The BOP cannot work in all companies.  Pyramid代写

Because the market needs high initial investment and enabling infrastructure, most businesses find it impenetrable. It is thus dominated by government and aid agencies as well as non-profits organizations. Most companies do not have the strategy to capture this market and consider it not worth investment. The main reason they shy away from the market is that the group is made up of a population that is constrained in its income, and hence propensity to spend is low.

Assuming that the production of a reasonable quality product is high the price for it will also be high making the product unaffordable by the BOP group. Also, the consumption rate tends not to increase but static in BOP market. Regarding these considerations, there are many questions that companies should ask about the target BOP market.

Pyramid代写
Pyramid代写

Some of the pertinent issues that need to be asked include  Pyramid代写

a. What BOP market should we enter?

b. Looking like the product categories in the BOP market, does the company identify unmet basic needs?

c. Which product categories are most successful in the market?

d. Is there a range of product options that the company can offer or diversify?

e. What is the level of competition in this market, and if competition is present, what is the scale and whether it is sustainable?

f. If the competition is harsh, how do we enter the market, and what type of differentiation do we have?

g. What kind of longevity does the market offer? Pyramid代写**格式

h. What adjustments that the company would need to make throughout the market?

i. What product is the most suitable in the BOP market?

j. Will the company product be of value to the BOP market? Will it look like a form of exploitation in the market?

k. What is the feasibility of producing a product that would be affordable and accessible to the BOP market?

l. What are the company’s price points?

m. Are there payment options available to increase product affordability in the market?

n. If the product is feasible, which is the most strategic location?

o. Which distribution method would mostly suit the market?

p. What are the marketing strategies available to reach the market?

Question 2  Pyramid代写

According to Gupta, and Jaiswal (2013, p. 30), the exploitation of the BOP group depends on the type of product that is offered, marketing strategies used, and the pricing on them. It should be noted that the BOP group has low buying power and little propensity to consume. The level of income notwithstanding these groups have needs in life if not urge for luxuries. The regular business model of capturing value does not work in these markets simply because BOP is a unique market that needs different approaches to realize its importance. Pyramid代写**格式

The low purchasing power of the group leads companies to being creative and innovative first to deliver value and secondly get value in return in form of profits (Prahalad, 2012, p. 8). It should be noted that there are many strategies that businesses can use to enter the market and attract customers and loaning is one of them. Therefore, loaning to low-income consumers for them to afford products that they otherwise would not have afforded is not only profitable to the business and beneficial to the recipients but also ethical to allow them to live a decent life.

Conventionally, loans are products for the rich.  Pyramid代写

As such, some people may tend to argue against when it is marketing in the BOP market amounts to exploitation. However, just like the rich, the loans give the poor the power to afford what they cannot afford their regular income. Credits should also be perceived as the effort to salvage them to poverty by trying to elevate them to better housing, access to investments or even education (Karnani, 2007, p. 106). Assuming that no microfinance institutions are targeting these groups, then the poor would be locked in the cyclic poverty with no way out. There are also no reasons to devoid the loans. Ultimately, consumers have the choice whether to consume loan products or not and hence, there is a need to accord them the option.

Additionally, there is an argument pertaining to the stimulation of economic growth (Dolan and Rajak, 2016, p. 514).  Pyramid代写

The economy cannot grow without investments. Poor people lack disposable income.  Investment is the remnant of the income made. Therefore, if there are institutions that offer a loan as capital for investment then the overall disposable income for the poor will increase. The earnings from investments are also used by these people to improve their lives.  The standard of living for these groups will also improve since they will be able to afford quality healthcare, access to education, proper housing and other necessities. At high income, the poor will have a higher propensity to consume and hence contributing to the aggregate demand. Investment is a critical factor in gross national income.

Pyramid代写
Pyramid代写

Moreover, in regard, to the case, ICICI Bank recognized that BOP groups face financial challenges to start their enterprise.  Pyramid代写

Local money lenders were exploiting them due to the high demand for soft loans. This presented an opportunity to not only for profit-making but also to help the people in India. The bank turned to a creative marketing strategy that would make advancing loans to these groups less risky and cheaper. It used village self-help groups and local microfinance institutions to facilitate investments at affordable interests to the BOP. Pyramid代写**格式

Today, through the initiative of ICICI Bank, there are more than 10,000 groups that have benefited, and more than 200,000 women are beneficiaries. The women were able to start small businesses to support their families. In this context, if it were not for the creative and innovative marketing strategy by the bank, more than 1 million households would not have access to affordable credit facilities. Pyramid代写**格式

However, it is indisputable that there might unscrupulous companies that might want to take advantage of these groups. Exploitation can take the form of expensive loans with short repayment duration with collateral. At the end of it all, the lender target auction the low-income family property that was used as guarantee for the loan. However, it is an onus to the people in this segment to choose what is best for them. Consumers are assumed to be rational in that they will consume products that only have value and fulfill personal preferences.

Main reasons  Pyramid代写

Overall, marketing loans to consumers in BOP is justified for three main reasons, as seen above. First, loans allow them to afford what they otherwise would not have afforded. These include investments, housing, education among other needs. Secondly, the poverty cycle is likely to be broken through investment and hence contribute to the aggregate demand and economic growth. In this case, the standard of living improves as disposable income increases. Lastly, in a free market, government regulation does not apply to make a choice. Consumers are assumed to be rational unless there was coercion, in which case it is a crime. Otherwise, they have the opportunity to a consumer or not depending on their social and economic status.

References  Pyramid代写

Angot, J., and Plé, L., 2015. Serving poor people in rich countries: the bottom-of-the-pyramid business model solution. Journal of Business Strategy, 36(2), pp.3-15.

Dolan, C., and Rajak, D., 2016. Remaking Africa’s informal economies: Youth, entrepreneurship and the promise of inclusion at the bottom of the pyramid. The Journal of Development Studies, 52(4), pp.514-529.

Gupta, S., and Jaiswal, A.K., 2013. Making a case for harming the poor–A review of marketing tactics at the bottom of the pyramid. Journal of Applied Business and Economics, 14(5), pp.30-40.

Karnani, A., 2007. The mirage of marketing to the bottom of the pyramid: How the private sector can help alleviate poverty: California management review, 49(4), pp.90-111.

Prahalad, C.K., 2012. Bottom of the Pyramid as a Source of Breakthrough Innovations. Journal of product innovation management, 29(1), pp.6-12.

Raj, K. and Aithal, P.S., 2018. Generating Wealth at the Base of the Pyramid–A Study using the ABCD Analysis Technique. International Journal of Computational Research and Development (IJCRD), 3(1), pp.68-76.

Simanis, E., and Duke, D., 2014. Profits at the bottom of the pyramid. Harvard Business Review, 92(10), pp.86-93.

Sinkovics, N., Sinkovics, R.R. and Yamin, M., 2014. The role of social value creation in the business model formulation at the bottom of the pyramid–implications for MNEs? International Business Review, 23(4), pp.692-707.

 

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