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Wednesday, September 28, 2005

Sachet Marketing - the Best Strategy?

By John Paul

Trendwatching.com recently posted a good piece on Sachet Marketing, a BOP strategy already being used successfully to sell a variety of consumer products ranging from soap to cell phone minutes. The approach involves serving up products, services and loans in affordable portions, sachets or sizes, so that consumers get to know and like a brand. The practice was named after Hindustan Lever's successful introduction of single-use shampoo sachets in India.

The strategy of miniaturization provides an easy inroad to the BOP for companies wary of the perceived risks and uncertainties of entering this new market. I think of it as the low-hanging fruit, or BOP-lite, in that there really isn't much product innovation involved. Rather, it's simply repackaging or tweaking the distribution of what a company is already doing.On one hand, this is good, in that it's easier to create buy-in within a large company for something that isn't perceived to be a radical shift away from business as usual. If this gets more businesses looking at the BOP as a business opportunity, I'm all for it. The risk though, is that this is as far as a company's perspective will go. For some, this will inhibit otherwise valuable innovation. In others, which have products and services that don't scale down well or are simply not that relevant to the poor, it will lead to wasted money and time.

The most interesting examples of successful BOP initiatives I have come across involve a more drastic rethinking of the market, looking at it not just as a group of consumers who have less to spend on the same products being marketed to their richer countrymen, but as consumers whose needs and wants may be fundamentally different from markets they are used to serving. Developing entirely new products, services and distribution platforms specifically tailored to these needs, often through innovative collaborations and cross-sector partnerships, are more likely to give a company a competitive advantage. This holds true for new markets, where a 'better fit' product will capture a bigger market share, as well as in existing markets, where the efficiencies gained and lessons learned from succeeding at the BOP allow a company to introduce better and cheaper products than their competitors.

The full article, which contains a number of examples of products using sachet marketing, can be viewed here.
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