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theessay.docxRunning head: BOTTOM OF THE PYRAMID 2
Title: “Bottom of the Pyramid”
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Overview
The consideration of rising economies to worldwide advertising, inside a set of an outlook change of worldwide business is gigantic. With increasingly reasonable dangers, the simplicity of correspondences and transportation, higher salary development and expanding customer buying power, there are new open doors for global companies to both offer to and minimal effort, excellent assets to purchase from. In any case, developing markets don't comprise of one market. They are different and can require a separate market section and market advancement methodologies. While the greater part of the writing on BOP has started from a business methodology examine the point of view what's more, has centered around business issues, there are numerous promoting difficulties and showcasing issues included in tending to business and profit openings in the BOP field.
Abstract
The ideas of Bottom of the Pyramid (BOP) and subsistence markets have pulled in considerable scholarly and administrative consideration as of late. The BOP proposal expresses that there are open doors for global organizations to accomplish significant incomes and profitability by structuring and executing showcasing programs went for individuals who possess the most reduced level on the planet's monetary pyramid. The quantity of individuals in this portion has been evaluated to be between 2.7 billion and 4 billion. This paper surveys the scholarly writing on BOP and subsistence markets and identifies significant issues identified with showcasing to these buyers. The survey depends on diary articles that have shown up in peer-checked on diaries and on contextual analyses distributed by presumed scholastic foundations. The writing survey first identifies various business issues like the size of BOP advertise, inspirations for undertaking BOP activities, morals, and linkages. At that point, specific promoting issues identified with the BOP section, for example, customer investigation, organization examination, teammates, rivalry and setting, division and situating and issues identifying with promoting program structure and execution are dissected. In view of this investigation, the paper builds up an examination motivation for future research on BOP and subsistence markets.
Introduction
In current environment of business, the extent of market and business base competition is increasing day by day. This intense and increasing competition is directly affecting the financial as well as operational performance of the business. Beside this, easy market entrance and exit base strategies has also affect the scope of business operations and number of businesses in every sector of an economy as well. Due to which, the businesses are facing several survival and customer retention base problems. Thus, to gain attention of more and more customers, the businesses are force to adopt effective and advance marketing strategies. Through which, the performance base gaps of the businesses can cope up easily. Due to such increase number of businesses and easy access towards national, local and international businesses, the customer’s brand loyalty and brand affiliation level are changing rapidly and they do not prefer to remain permanent customer of a particular brand. This trend has persuaded the businesses and particular the marketing department of businesses to explore and gain benefit by grab the attention of low income or poor earner of a society. The term Bottom of Pyramid in marketing is mainly used to reflect the least earner individuals of a society. This concept was introduced during 2005 when the intense slum raised among the global scale which adversely affect the economy of the several developed economies. After that, the leading global companies introduced a new marketing campaign by targeting the low earner category of the society.
Through which, those who has access towards limited earning opportunities are counter and considered by the businesses as the primary target market.
This Bottom of Pyramid mainly introduced by global companies while making entering into Asian markets. Being presence of more developing countries in Asian region mainly persuade the global companies to hit the low-class earner of the society. The most of individuals living in the developing country hold limited access towards earning opportunities. Beside this, the currency value is quite low. Due to which, the purchasing power of the individuals is quite low and they are not enough able to buy those goods which cost high prices and hold high economic worth.
Literature Review
Bottom of Pyramid reflect the lowest level of wealth present in the world. This concept is use to highlight the lowest or poorest people of the world. World Bank stats reflect that 2/3 of the world’s population fall in category of bottom of wealth pyramid. Only 1/3 of the world ‘s population can categories under elite and rich class. These earning differences directly affect the earning opportunities, buying behavior, consumption trends, spending level and income level of the individuals as well. Such wealth level of an individual directly formulates a demand level about various products and services in a country as well. When earning is low, the buying power goes down. This decrease in buying power directly effects the market equilibrium situation and decreases the demand which ultimately affect the supply level as well. This affects the business, their revenue and profit generating abilities as well.
In Asia, the majority of the individuals belong from the low earner category. World Bank state in its report that by end of 2010, more than 45% of Asian region fall in category of low or poor earner. Thus, targeting low earner category will enable the businesses to generate more sales. This concept mainly adopts with an intention to target lowest earner by mental influence them to buy products and services of renowned global brands at a less price to improve ale volume and to generate more and more revenue.
Bottom of Pyramid marketing mainly focus to adopt those marketing strategies, techniques and policies which can convince the lowest earner of a society as well to buy or purchase the products of several leading brands which hold global goodwill and recognition level. Mostly this concept brings numerous high profits towards the business by gearing up the demand level of the business products and services. As has been indicated developing markets offer global organizations numerous openings. In investigating these further given us a chance to take a gander at the base of the pyramid. In excess of 4 billion individuals, about 70% of the complete world, are in the Bottom of the Pyramid (BOP) of the worldwide monetary framework as characterized by Prahalad and Hart (2006), however, what is this market? The base of the pyramid (BOP) showcase alludes to the gigantic undiscovered capability of business sectors recently thought of as inaccessible or hard to reach. These business sectors are regularly or were frequently unlinked to the worldwide inventory chain and worldwide showcasing channels. The absence of improvement in promoting the framework, for example, interchanges channels for promoting, appropriation channels to supply the market and the low salary of this objective market made it troublesome and ordinarily unfruitful to enter this market. In any case, the base of the pyramid advertise is the world's biggest and the availability of this market is turning out to be a reality. Organizations working situated in developing economies who market to BOP and are presently going worldwide have some key points of interest, for example, access to a portion of the world's most dynamic development markets and gigantic pools of ease assets, regardless of whether it is creation laborers, engineers, land, oil, or iron mineral. These hopeful monsters are about significantly more than ease. The best of the pack is demonstrating as creative and expertly run as any in the business, insightfully retaining worldwide buyer patterns and innovations and getting new items to advertise quicker than their rivals. Through this concept, the renowned brand and businesses offer the same product and services at a relevant low rate through adoption of eye capturing marketing strategies to the lowest class of the society. A little compromise on quality bring massive increase towards sale volume of business. Most of businesses play with the mindset of the customers through this strategy. Under this strategy, the customers are psychologically trap by the businesses. Firstly, they establish high market standards and brand recognition level by charging and offering premium quality products at premium prices. This situation turns a particular brand and its related products and services as a sign of prestige in a society and status symbol as well. This mental influence attracts the Lowe earner as well to buy the products and services of the same brand at economical prices. The high trend of clearance and flat sale is the ultimate result of Bottom Pyramid marketing. This trend has changed the ways of doing business in entire Asian region and has developed a deep awareness about this strategy and its benefits among the entrepreneurs and businesses of all types, nature, size and kind. Use of bottom pyramid marketing increase the demand volume which persuades the entrepreneurs to increase the supply volume. This persuades the manufacturer towards economies of scale. These economies of scale concept directly affect the cost of production and volume of operating expenses in the business. This situation persuades the businesses to produce at large scale. Thus, the production cost reduce and the business become enough able to charge a relevant less price and can easily sale a large volume of products and services in the relevant market.
Benefits of Bottom of Pyramid Marketing:
Due to association of numerous benefits with the concept of Bottom of Pyramid concept, the trend of adopting this concept is increasing day by day. Some of its benefits are mentioned in below:
(i) Vast the Scope of Business:
Through use of this strategy, the businesses become enough able to make a direct access towards developing countries and emerging economies. Such economies hold large potential and can generate more revenue and profit as well. Through this, the businesses can offer their products and services for sale to developing countries which already hold enough strong brand recognition in developing countries. The potential among developing countries is quite large, thus, such strategy enough able the businesses to vast the scope of their business operations up to great extent.
(ii) Increase the Volume of Sales:
By targeting the lowest income earner which are the majority of the entire population, the businesses become enough able to grab the attention of large number of customers. This enables the businesses to produce at large scale which decrease the production cost and volume of operating expenses in business as well. This enables the business to produce the same quality at a relevant low price. Thus, a relevant less price is charged from customers. This decrease I price increase the consumer buying power and enable to purchase more and more. Through this, the demand level of customers goes up and positively strengthens the sale volume of the business up to great extent.
(iii) Brand Loyalty:
Lowest earner category of customers holds a perceived positive image of several brands and business of various industries. Such brands and their products and services are considered as a sign of prestige. Thus, when such leading brands offered the products and service at a relevant low price it automatically persuade the customers to purchase those things. Thus, in return of that the brand loyalty level of the customers regarding a particular business or its brand name goes up. This can strengthen the market value and market worth of a brand up to great extent.
(iv) Market Share:
Being presence of large population of the world from lowest earner category, when business target such category as the target market or potential target market for its business products and services ,the relevant market share of such businesses goes up . When the customers become able to get the same product with less changes in quality at a relevant low price, their interest towards such products goes up automatically. This leads the trend of impulsive buying among the customers. In result of which, the demand and usage of a specific business products and services goes up in relevant sector. Thus, the market share of a business goes up in relevant industry and make the business leader in relevant sector.
(v) Customer Retention:
Those target market of high and elite class usually do not remain the customer of a particular brand all time. Such customers hold quite large buying power and ready to buy from foreign and global markets as well. Thus ,in such situation ,such customers cannot consider while counting or considering the permanent customers of the business. But o other hand ,lowest class of society hold limited access and cannot afford or buy from foreign markets. In such situation, the customer retention level of a business can keep high ,persistent and positive as well when it target majority of lowest earner of a society or economy.
(vi) Earning Opportunities:
Through this marketing strategy, the demand of business products and services goes up. In result of which, the business vast scope of its business operations and demand more labor to execute or perform the production, manufacturing, distribution and other relevant activities. Thus, more employment opportunities can create in a society. Through this, the earning opportunities goes up in the society and make the individuals enough able to earn more by working through those businesses which are vesting their scope and sale volume. This increase in earning capacity directly improve the consumer buying power and bring ultimate advantages towards the businesses. Because when the earning of individuals goes up they can buy more which can improve the profit level of the businesses up to considerable extent.
(vii) Positive Image of Business:
When a business or a high-profile base brand name offers products and services at a relevant low price then it portrays the specific business or brand name as a positive one. This improves the brand or business image among the mind of customers and persuades them to purchase on continuous basis from that particular brand. This increases the brand attachment level among customers. In result of this, the business goodwill level goes up and strengthen the economic and market worth of its brand name and brand value a well.
Due to the above-mentioned positive factors, the trend of adopting and implementing Bottom of Pyramid of marketing are increasing day by day. This strategy directly improves the financial as well as operational performance of the business up to great extent.
Adoption of this strategy has become a common trend in contemporary business world. The several promotion techniques and clearance sale base strategies are the ultimate result of this strategy which use by the businesses of modern era.
Disadvantages of Bottom of Pyramid of Marketing:
Like all other things of world, this business concept also has negative aspects as well. Such negative aspects might be able to affect the scope of this business strategy up to some extent. The ultimate disadvantages of the bottom pyramid of marketing are mentioned in below:
(i) Difference among Society:
Adoption of this approach turns the society into two different categories which is poor and rich. This class conflict upon base of earning turns the society into an adverse direction. In result of which, the extent of hate and other criminal activities can increase among society. In such situation, the extent of superiority ad inferiority complex goes up in the society. The societies with such high class and economic conflicts hold limited or low collaboration and trust level with each other. Thus, the process of economy development and growth become slow and low as well.
(ii) Innovation Eliminated:
In such situation, when production cost is need to reduce, the business is no enough able to adopt and implement latest technologies ad new methods of manufacturing and production as well. Thus, the extent of creativity, innovation and novelty remain low among the products and services of the business. Thus, the extent of innovation remains low among those businesses which adopt this strategy of marketing and business.
(iii) Exploitation:
Such businesses misuse their brand name and goodwill level to exploit the lowest earner category of individuals. In such situation, the individuals spend more over luxuries instead of necessities of life.
This exploitation level persuades the customers to obtain loan to fulfill their needs. Having low price persuade such limited earners to adopt impulsive buying behavior which restrict the spending over the necessities of life. Thus, the consumers have to obtain loan which increase the exploitation of the consumers ad bring financial crisis towards majority of customers.
(iv) Gray Smuggling:
Through this strategy, the business and brands offer their product at a little less or low rate. Through which, the local retailers start sending such products through illegal means to other countries. Such conditions increase the trend of smuggling among the countries and destroy the economy of the countries and profit margin of such companies as well. This situation adversely affects the brand worth and brand name of the businesses as well.
Results and Discussion
The BOP theory (Prahalad and Hart, 2002) states that there were significant open doors for MNCs to create profits while at the same time making a social commitment through promoting exceptionally planned items and administrations to the individuals who involve the least level on the planet's monetary pyramid. The quantity of individuals in this section has been assessed to be between 2.7 billion and 4 billion what's more, the market esteem is evaluated to be between $1.2 trillion and $5 trillion. In this paper, the writing on BOP and subsistence markets has been evaluated and significant business issues have been identified. These issues are – the size of BOP advertise; inspirations for undertaking BOP activities; morals; and outside linkages. At that point specific advertising issues identified with the BOP fragment, for example, buyer examination, organization investigation, colleagues, rivalry and setting, division and situating and issues identifying with showcasing program plan and usage are broke down. In light of this examination, the paper builds up an exploration motivation for future research on BOP and subsistence markets. The examination plan for promoting to the BOP is created in four zones – brands and marking, showcasing correspondence, informal organizations, and research techniques. As for marking fascinating examine questions are – which brands are buyers as of now belittling? Are these neighborhood brands, or on the other hand, worldwide brands adjusted for the neighborhood advertise, or worldwide brands? Which brands do buyers yearn to utilize? What sort of connections do buyers have with their brands? Concerning advertising correspondence is valuable to find out the job of visuals and brand names in brand decision what's more, image pictures, the effectiveness of the different message and media methodologies and the favored media for these purchasers. Informal communities seem, by all accounts, to be significant in the BOP. Thus, scholastic research could concentrate on the sort of informal organizations that are most influential – family, companions, neighbors, collaborators and the job of interpersonal organizations in the presentation of new items, in the advancement of existing items and in the decision of procurement outlets. At last, look into techniques that are conveyed in exploring customers in higher salary levels may not be suitable for a BOP. In this way, future research could be coordinated towards the improvement of more effective research strategies utilizing a blend of subjective and quantitative strategies and fitting expository methods.
Conclusion
Overall, the bottom pyramid of marketing is an emerging concept which goes up as well as the trend of globalization and international trade goes up. This strategy holds numerous benefits and disadvantages ad well. But overall, the analysis ad in depth evaluation of this strategy shows that the volume and extent of benefits hold by this strategy for customers and businesses are quite much and highly significant as well. The extent of disadvantages is quite low. Through this, both the businesses and consumers can gain their desire results. Through this, the business can increase its sale volume and profit level up to great extent and vast the scope of its business operations and market share as well. Similarly, this technique enables the consumers to buy the all improve quality base necessities of goods and can buy those branded products as well which they want to purchase from a long time.
Through effective planning and pre active approach, the extent of disadvantages of this strategy can reduce and the business can work more efficiently and can increase its market penetration rate as well.
References
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VISWANATHAN, M. and ROSA, J. A., 2010: Understanding subsistence marketplaces: Towards sustainable consumption and commerce for a better world. Journal of Business Research, 63: 535–537
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