marketing to the bottom of the pyramid

2nd Annual Marketing

to Low Income

Consumers

Jade OyateruIntercontinental Hotel

MARKETING TO LOW INCOME CONSUMERS

Jade Oyateru

Meet the Speaker

Shopper & Customer Marketing Manager, Unilever

Unilever Global Foundation Ambassador

Worked in Sales & Marketing: • Nestle UK & Nestle Nigeria• Unilever Nigeria & Unilever East Africa

Education:• Harvard University - International Business• Imperial College Business School - MBA


What do we know??

Most people in sub-Saharan Africa live on less than a dollar a day

Poverty in Sub-Saharan Africa stands at 42.6%

The share of Africans living in urban areas is projected to grow from 36%in 2010 to 50% by 2030

Projections also indicate that between 2010 and 2025, some African cities will account for up to 85% of the population


We Don’t KnowShhhhh!!!

Let’s throw it out!! All the information, all the statistics, all the assumptions!!


Declaration of Ignorance!!!

• Cemex is one of the largest cement and building supply corporations in the world, with over $15 billion in net sales in 2014.

• Cemex identified low-income families in Mexico as a market with a steady need for the company’s products and a large potential for growth.

• The only issue was that Cemex had no idea how to adopt its traditional assets and strategies to target a low-income market

• Then the company did something unprecedented, Cemex issued “Declaration of Ignorance”.

• The company publically stated that it had no idea how to reach low-income markets


Perceptions of The BOP

• Why do we assume that we are different from the BOP??

• Why do we assume that the marketing strategy that works for middle-income, higher-income always has to be different than the ones from the BOP.

• Have you ever seen a Rolls Royce advertisement on television?? But you see Mercedes all the time.

• Marketing shouldn’t meet customers at their station in life, it should aspire to a higher level and offer a social value; quite often that is the failure of the strategies at the BOP

• The human quality of aspiration is what ties all groups in the pyramid together


Current Perception

• The Current perception of the consumer at the BOP

Psychological

Safety

Love/belonging

Esteem

Self-actualization


Where is the BOP Market??

Source: Working with the Bottom of the Pyramid; Success in Low-Income Markets[2007] Dansk Industri

There are about 4 Billion people at the Bottom of the Pyramid (BOP).

The African BOP constitutes 71% of the purchasing power for the continent.

The BOP constitutes a $5 Trillion global consumer market.


The BOP’s future is urban and young

Africa has an urban future, between over the coming fifteen years, cities in Africa will, every day, become home to at least another 40,000 people.

Between 2005 and 2010, Lagos grew by 1.8 Million people, Kinshasa by 1.6 Million and Luanda by 1.2 Million.

Ernst & Young predicts that by the year 2030, 90% of the world’s young urban population will live in large cities in some of Africa’s fastest-growing economies.

Source: Ernst & Young Emerging Economies

will live in large cities

90%


Resurrecting Dead Capital

• A Peruvian economist, Hernando de Soto, introduced the concept of ‘Dead Capital’ in which he estimates that about $1Trillion is locked in the informal sector in Africa.

• This amount is three times sub-Saharan Africa's annual GDP, and more than 70 times the amount of aid the continent receives each year.


The Marketing Mix at the BOP

Product Price Promotion Place Purpose??


The Social Entrepreneur

“There are many positive ways for business to make adifference in the lives of the poor - not throughphilanthropy, though that is also very important, butthrough initiatives, that over a period of time, will help buildnew markets”

- Kofi Annan, ex-UN Secretary General

Gbemiga is a unique micro-enterprise initiative that is both a catalyst for rural wealth creation and a successful business operation


The Dollar Shave Club

• In 2011, the Dollar Shave Club was formed as a response to the frustration faced by men in buying affordable grooming products from giants like Gillette.

• They created a community of consumers and packages that suited them “The Humble Twin” (two blades per razor, five razors per month, $3 per month).

• Dollar Shave Club’s sales have steadily increased since its launch, from $4m in 2012 to a projection of between $140m and $150m in 2015, with 2.4 million users.

• The big boys have noticed, Gillette filed suit last year for infringement.


Cemex Patrimonio Hoy

• After their declaration of ignorance and researching new approaches for the market, Cemex launched Patrimonio Hoy.

• In 2000, the company launched Patrimonio Hoy, a membership program for low-income home improvement customers.


How It Worked

Members apply in groups of three.

Group is responsible for 70week payments of $10-15 which is held as payment towards material.

Payments buy a package of building material with architectural and engineering services.

Price of materials held fixed over course of work to avoid fluctuations.


Delivery Value for the BOP

• Patrimonio Hoy became profitable in 2004. In 2005, a study found that than 99.2%of the $42 Million in materials and loans provided by Cemex had been paid for on time.

• Company estimates that, since inception, Patrimonio Hoy has extended over $135 Million in microcredit to customers.

• Assisted over 350,000 to build their own homes.


Turning Rubbish to wealth

• Two Ugandan high-school drop outs formed Lat Photo Energy.

• Using pyrolysis from their shacks, they convert refuse and waste and turn it into fuel.

• Kampala produces about 1500 tonnes of waste a day, three quarters of which is left uncollected and rots.

• Processing over three tonnes of wastes and turn it into fuel for “boda boda drivers”and sell it to them at under $1 a litre, half the price at the stations.

• They even have three types “Super”, “Premium” and “Pure”.

Thank You

MRS. JADE OYATERU