Rob Katz

BOP Strategy in Action – Lessons from Hutchinson-Essar

Hutchinson EssarAn article in last Friday’s International Herald Tribune details the business strategy behind frenzied takeover bids for Indian mobile phone company Hutchinson-Essar by Vodafone, Reliance, Essar, and others.? Further into the article, writer Anand Giridharadas describes the BOP strategies of McDonalds, General Motors, Nokia, and others.? To NextBillion regulars, this article may seem like old news–that companies faced with flattening sales projections in their home markets would expand to the base of the pyramid just makes sense.? But to me, it’s great to see, since we’ve been trying to tell companies that the BOP is their next frontier for years now.? Between mainstream articles such as this one and academic research like Banerjee and Duflo’s The Economic Lives of the Poor, the case for BOP strategy and action has never been stronger. ?

How are these companies reaching out to the BOP?? A few examples from the IHT article:

  • General Motors is now figuring out how to make money on small car sales.
  • McDonalds has cut prices by 25 percent, including 15-cent per serving soft ice cream.
  • Coca-Cola introduced an 11-cent ?mini-Coke? bottle.
  • Nokia recently came out with a cell phone that retails for less than $50.
  • Hutchinson-Essar charges $23 for a lifetime package of unlimited incoming calls.

Read the full article, India’s Vast Market Lures Telecom Giants, for more evidence of the importance of BOP markets to multinational corporations? growth plans.