Serving the Bottom of the Pyramid
Friday, April 8, 2011
Business is brisk for Dheeraj Singh, a small kirana shop owner in Delhi’s Govindpuri area. He stocks a host of brands offered by the Indian fast-moving consumer goods (FMCG) companies in categories such as hair oil, shampoo, biscuit, fairness cream and tea, among many others. But he offers most of these products in their smallest pack sizes costing between Rs1 and Rs10.
This just works fine for Savitri, a regular customer at the store employed as domestic staff in a flat nearby. She is pleased to point out that the smaller and cheaper packs are affordable and she often buys tea, cream biscuits and talcum powder from the shop.
The store clearly caters to people living in the slums close by populated by daily wage labourers and people in sundry other low-paying, unskilled jobs. Marketeers think of this set of consumers as the “gold mine at the bottom of the pyramid (BoP)”, indicating consumption potential at the very low end.
There is no debate that BoP, both in urban and rural markets, is an emerging consumer segment attracting companies. However, the sachet/small pack revolution to reach out to this consumer is passe. To further influence consumption in this segment, a host of food and beverage companies are using the health and nutrition plank, reserved for the affluent customer up until now, to push their products.
Usually, food products are sold on the health, indulgence or convenience platform. However, to sell to the BoP consumer on the nutrition plank converges the companies’ social responsibility (alleviating micronutrient deficiency, for instance) and business objectives.