Marketing Management - II

Innovations in Marketing for BOP Consumers

1. Introduction 2. Bottom of the Pyramid i. Demographics ii. Socio-Economic Class 3. Opportunities 4. Leading Practices 5. Successful Innovations 6. What not to do! 7. Risks and Challenges 8. Supportive Frameworks

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9. Literature Review 10. Conclusion

6. What not to do !! Developing nations are no longer to be viewed by MNCs as a charity case . Emerging economies are infact, to be seen as a viable consumer base. Community engagement efforts should no longer be limited to CSR and philanthropy initiatives. Instead, these initiatives must be incorporated into core business strategy.

7. Risks and Challenges Exposure to new political and economic risks Resources, capabilities and knowledge of the complexities and subtleties of sustainable development are required. Consumers cant afford differentiated products Competing with local business can threaten the existing power structure. Market size unclear: estimates range from $0.3 trillion to $13 trillion.

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- Prahalad uses purchasing power parity and assumes 4 billion BOP spending $4/day to estimate $13 trillion. - Aneel uses financial exchange rates (that MNCs would use to expatriate profits) and assumes 2.7 billion BOP spending $1.25/day to estimate $0.3 trillion. Low margin; high fixed costs Distribution challenges; High price sensitivity and per unit transaction costs

8. Supportive Frameworks Frameworks and models that are have helped create innovative solutions shall be studied in detail. Two models are described in brief below: A. Understanding the connections and interactions of share of heart, global umbrella brands, responsible marketing and successful marketing to the bottom of the pyramid The relationship between share of heart, global umbrella brands, responsible marketing and successful marketing by multinational rms (MNFs) to the BOP can be understood in the form of a continuous cycle. MNFs that market responsibly to the BOP market (through cooperative engagement, partnership building, empowerment and trust) garner enhanced share of heart among BOP consumers, which it turn enhances the MNFs brands. If these actions are accompanied by positive perceptions of the global umbrella brand that covers the MNF, then BOP share of heart is further garnered and the overall image of the MNF brand is yet again enhanced. A cycle of positive perceptions, based on

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an astute cycle of learning leads ultimately to the much wanted, yet at times illusive doing well and doing good.

B. The Lead Market Model

Lead markets have been traditionally thought to exist in economically highly developed nations with high levels of per-capita income, customer sophistication and advanced physical and institutional infrastructure, to name but a few factors (Beise, 2004). These factors have been considered important as they often induced innovations from rms seeking (new) business opportunities. Of late, we can observe an increasing pattern of innovation activities taking place in countries like India and China, especially in the domain of frugal innovations. We plan to study the model of critical advantages that shape the lead market potential of a country.

9. Literature review
1. Socially Responsible Distribution: Distribution Strategies for Reaching the Bottom of the Pyramid Sushil Vachani and N. Craig Smith California Management Review , Vol. 50, No. 2 (Winter 2008), pp. 52-84

2.Marketing's Contributions to Society William L. Wilkie and Elizabeth S. Moore Journal of Marketing , Vol. 63, Fundamental Issues and Directions for Marketing (1999), pp. 198-218 Published by: American Marketing Association Article Stable URL: http://www.jstor.org/stable/1252112

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3. Jamie Anderson, Niels Billou, (2007) "Serving the world's poor: innovation at the base of the economic pyramid", Journal of Business Strategy, Vol. 28 Iss: 2, pp.14 - 21 4.THE DEMOCRATIZING EFFECTS OF FRUGAL INNOVATION: IMPLICATIONS FOR INCLUSIVE GROWTH AND
STATE-BUILDING

Type: Conceptual paper Author(s): Hanna Nari Kahle, Anna Dubiel, Holger Ernst, Jaideep Prabhu Source: Journal of Indian Business Research Volume: 5 Issue: 4 2013 5. Information, Direct Access to Farmers, and Rural Market Performance in Central India Aparajita Goyal American Economic Journal: Applied Economics , Vol. 2, No. 3 (July 2010), pp. 22-45 Published by: American Economic Association Article Stable URL: http://www.jstor.org/stable/25760218 6. How Emerging Markets are Reshaping the Innovation Architecture of Global Firms Type: Chapter Item Author(s): Venkatesh Shankar, Nicole Hanson Source: Review of Marketing Research, Volume: 10, 2013 7. Conflicts at the Bottom of the Pyramid: Profitability, Poverty Alleviation, and Neoliberal Governmentality Rohit Varman, Per Skln and Russell W. Belk Journal of Public Policy & Marketing Vol. 31, No. 1 (SPRING 2012) (pp. 19-35) Page Count: 17 8. Reinventing Strategies for Emerging Markets: Beyond the Transnational Model Ted London and Stuart L. Hart Journal of International Business Studies , Vol. 35, No. 5 (Sep., 2004), pp. 350-370 Published by: Palgrave Macmillan Journals Article Stable URL: http://www.jstor.org/stable/3875199 9. Studying financial inclusion in north-east India Type: Research paper Author(s): Disha Bhanot, Varadraj Bapat, Sasadhar Bera Source: International Journal of Bank Marketing Volume: 30 Issue: 6 2012

10. Assessing India's lead market potential for cost-effective innovations Type: Research paper Author(s): Rajnish Tiwari, Cornelius Herstatt Source: Journal of Indian Business Research Volume: 4 Issue: 2 2012

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11. Jumping hurdles in emerging markets: How to get your product to the customer Type: General review Source: Strategic Direction Volume: 28 Issue: 7 2012 12. Successful marketing by multinational firms to the bottom of the pyramid: connecting share of heart, global umbrella brands, and responsible marketing Type: Research paper Author(s): Van R. Wood, Dennis A. Pitta, Frank J. Franzak Source: Journal of Consumer Marketing Volume: 25 Issue: 7 2008 13. Crossing the bridge to poverty, with low-cost cars Type: Case study Author(s): Sofie Van den waeyenberg, Luc Hens Source: Journal of Consumer Marketing Volume: 25 Issue: 7 2008

14. The quest for the fortune at the bottom of the pyramid: potential and challenges Type: Research paper Author(s): Dennis A. Pitta, Rodrigo Guesalaga, Pablo Marshall Source: Journal of Consumer Marketing Volume: 25 Issue: 7 2008 Icon: Access. | View HTML | View PDF (112kb) | Abstract | Related items | Reprints & permissions

15. Understanding key factors in social enterprise development of the BOP: a systems approach applied to case studies i the Philippines Type: Research paper Author(s): Christine Nielsen, Patricia M. Samia Source: Journal of Consumer Marketing Volume: 25 Issue: 7 2008

16. Revisiting the marketing mix at the bottom of pyramid (BOP): from theoretical considerations to practical realities Type: Research paper Author(s): Tendai Chikweche, Richard Fletcher Source: Journal of Consumer Marketing Volume: 29 Issue: 7 2012

17. John Ireland, (2008) "Lessons for successful BOP marketing from Caracas' slums", Journal of Consumer Marketing, Vol. 25 Iss: 7, pp.430 438

18. Integrated approach to understanding consumer behavior at bottom of pyramid

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Type: Conceptual paper Author(s): Saroja Subrahmanyan, J. Tomas Gomez-Arias Source: Journal of Consumer Marketing Volume: 25 Issue: 7 2008

19. Yasser Bhatti, (2013) "Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth", South Asian Journal of Global Business Research, Vol. 2 Iss: 2, pp.279 282

20. C. Samuel Craig, Susan P. Douglas, (2011) "Empowering rural consumers in emerging markets", International Journal of Emerging Markets, Vol. 6 Iss: 4, pp.382 - 393

10. Conclusion
BOP represents an important marketing opportunity for multinational companies and those companies should not overlook the long-term opportunity that it represents for prot. Because the BOP market is so unique, it must be approached with a different mindset than one might bring to other markets. India and a few other emerging economies seem to be endowed with several factors that positively affect its potential as a lead market for cost-effective frugal innovations. These factors and specific examples where innovation comes to light shall be studied in detail.

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