Poverty Alleviation as a Business

Poverty Alleviation Question: 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 (BdP) 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) e os pobres (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 – (um) The capacity to consume must be there, e (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). So, 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 (por exemplo. 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. So, 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. Produto - O que está sendo fornecida para a troca financeira, in this business relationship with those at the 4th tier [(por exemplo. product, serviços ou tecnologias em sistemas de ponto-de-uso para abastecimento de água; produtos alimentares mais saudáveis; micro-finanças ou sistema de remessa de baixo custo; habitação; e energia (fonte de alimentação off-grid)].

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). O que funciona nesse mercado é para embalar as mercadorias em pequenas unidades (por exemplo. uma aldeia loja de varejo vendendo cigarros por peça, detergentes, através do 'saquinho', e bebidas a copo ou xícara).

Place – Where the product can be bought in this market makes for involvement of dealers sometimes, com um bom canal de abastecimento que envolve as margens de lucro para se sustentar e eficácia. Na maioria das vezes, dealers even provide additional services to the customer (por exemplo. serviço pós-venda, 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, dentro de um canal de entrega que pode fornecê-los com lucro. Promoção sustentada e, por vezes moroso é muitas vezes necessária devido à natureza conservadora do mercado para pobres. A classe rural, na maioria das vezes, precisa ver o que eles querem comprar, e como funciona. É por isso que a demonstração descreve uma ferramenta vital para a promoção em BoP comercialização.

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