Poverty Alleviation as a Business

Poverty Alleviation demando: Having gone through many of your articles, in the newspapers and online, on this new concept of BoP marketing and markets for poor, can I therefore assume that BoP is poverty alleviation as a business, with another name? - Niyi Obasa

Considering the Bottom of the pyramid (BoP) marketing having bearing on markets for poor, being made up of business models which benefit likely initiators (the multinational companies or small private sector enterprises) and the poor (sometimes customer, through having a micro-enterprise), it is clear that ‘business’ is right at the centre of this aspect of alleviating poverty. Indeed, it’s a win-win situation for all parties – The initiators of the related business models benefit from achieving positive impacts (through products, services or technologies offerings), as the poor (the rural small farmer, in most cases) earns incomes that help him out of the $1 per day category.

Those readers who require catching up on what BoP is all about should call for these titles, in my series of related articles: “Marketing to the poor” (1&2); “Markets for poor and research institutes”; “Making bottom of the pyramid marketing work in Nigeria (1 & 2). Online adaptations, in the business section of “Iroyin” (www.iroy.in ) will also suffice.

In BoP, since the focus is on the creating a market for products, services or technologies which are useful to the poor, in order to allow them get out of the poverty trap, tell me what else qualifies more as a business? Just as it is often the case that any business requires pre-conditions before ‘launching’ into the market, some pre-conditions also apply for any venture that prefers to have a shot at BoP – (oni) The capacity to consume must be there, kaj (B) Products, services or technologies to be introduced into the market for poor have to be fashioned to suit the financial capabilities and lifestyles of the targeted consumers (the poor).

Measuring the poor (the consumer) in BoP can only be achieved in ways different from means business people are generally familiar with. Consumers are better measured in BoP through these characteristics:
• The poor are also conscious of brands, and extremely value-conscious. BOP consumers, are compelled by necessity, focus on having a high quality and performance for the price they can afford to pay. Branding has become quite relevant in this regard, as the poor not only has cause to ‘note’ a product which turns out to be favourable or appreciated, brands also represent the lifestyle the poor aspires to achieve (Who wan remain poor?).

• BoP consumers live on what they earn on day-by-day basis (purchases being effected just for the short term). tiel, any product offering reflective of large family packs seems insulting, as there is never cash to afford such. Wise business model designers turned this constraint of the poor into an opportunity – To develop single-sized packages (Ekz. sachets) for products which can be sold at prices the poor can afford, while the producer makes profits (a win-win situation).

• BOP consumers can also adapt to technological innovations. Poverty can portend lack of education (for obvious reasons), but does not mean stupidity on the part of the poor. Developers of new business models for BoP markets will discover that the poor, if subjected to any form of training learns very fast. Experience has shown that lack of infrastructure in poor communities has pushed for collective initiatives that successfully made the poor to adopt a new technology naturally. tiel, this is a very viable market for initiators of innovations which benefit the poor, and not to exploit them in the process.

As creation of markets for products or services which are useful to the poor aid their elevation out of the poverty trap, product development for BoP portends an interac­tive process which takes the poor seriously as a customer and tries to understand his/her needs and constraints. The products in this case must satisfy felt needs of the poor; must be affordable to the poor consumer; and must yield very high returns (especially from high volume).

The well known 4 Ps of marketing also apply in this form of business aimed at alleviating poverty. Product – What is being provided for financial exchange, in this business relationship with those at the 4th tier [(Ekz. product, services or technologies in point-of-use systems for water supply; healthier food products; micro-finance or low-cost remittance system; housing; and energy (off-grid power supply)].

Price – What it costs, mainly in monetary and real terms. Just like elsewhere, also in BoP, when the price is out of reach, the poor steers clear and this likely amounts to no sales. When too low, no profit for private sector operator. Here, sensitivity to prices as linked to quality applies, as the BoP consumer also deserves the best quality. In markets for poor, cash is such a precious good that the poor often buys in very small quantities (although consumers most times end up paying more on the long run). What works in this market is to pack the goods in very small units (Ekz. a village retail shop selling cigarettes by the piece, detergents by the ‘sachet’, and drinks by the glass or cup).

Place – Where the product can be bought in this market makes for involvement of dealers sometimes, with a good supply channel that entails profit margins to sustain itself and effectiveness. Most times, dealers even provide additional services to the customer (Ekz. after sales service, and even provide credit to their customers, as those in the village are well known).

Promotion – Products for BoP markets require rigorous promotion and marke­ting efforts, to make them known, within a delivery channel that can supply them profitably. Sustained and sometimes lengthy promotion is often required due to the conservative nature of the market for poor. Rural customers, most times, need to see what they want to buy, and how it works. This is why demonstration depicts a vital tool for promotion in BoP marketing.

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