Robert was the first speaker of the day. He kicked off by explaining the reasons for BoP studies and briefly went through the three main penalties suffered by BoP customers: price, quality and access. After giving an overview of business strategies at the BoP, he presented “The Next 4 Billion” study and explained some of the most important conclusions that the study sheds light upon, such as the significant unmet needs in the ICT and Transport industries.
The second part of the conference introduced several BoP case studies from different industries, presented by members of the BoP companies themselves. The case studies were the following:
- Adopem, a microfinance bank from the Dominican Republic, presented by its Vice President, Mercedes Canalda.
- Procter and Gamble, multinational manufacturer of products including personal care, household cleaning, laundry detergents, and prescription drugs, which started working in BoP markets 5 years ago. They were presented by Beatriz Rodriguez, president for Colombia and Ecuador and responsible for BoP markets in Latin America.
- Codensa, an energy retailer about which a post was done some time ago, presented by Commercial Director, Felipe Acosta.
- TIA-Multiahorro, an Equatorian retailer, presented by IDE professor, William Jacome
All these four presenters offered their insights into what had been the most important factors for their respective businesses in allowing them to succeed. Factors common to all four cases are well-known to NextBillion.net readers: knowing the customer, accessible products, products and services adapted to meet BoP needs and with a pricing structure that allows purchasing by BoP customers.
Finally, Juan Luis Martinez, professor at Instituto de Empresa, gave several take-away messages about the BoP that I feel are worthy of delving into.
Firstly, the BoP is not a segment, it is a market unto itself. This means that the BoP market has within itself several different segments and niches and thus different strategies can be successful depending on the targeted segment.
Secondly, to enter BoP markets one should turn on its head the standard analysis done by many firms in western markets. Firms should start by analyzing the capacity of target customers to pay, then check which margins they need and finally decide on the target costs.
Thirdly, quantitative information, such as that provided in "The Next 4 Billion" is important, but it is at least equally important to develop a feeling, an intuitive understanding, of the BoP customer. Thus, no BoP firm can be efficiently managed from western markets, regardless of the quality of the available data. This is something that Moses, pointed out in one of his posts recently.
Juan Luis also gave out a copy of his recent article published at the Business Strategy Review on Autumn 2007 (covered in one of our posts), a long interview to Codensa’s CEO and a study about Mobile Phone Financial Services that I finished last month and which has been published by IE as a Teaching Note. I had not been able to post it here yet, due to bureaucratic issues and legalese but I will do so very soon.
Overall, one of the most enjoyable parts of the conference were the debates that ensued after the presentations, touching such varied issues as the new role of NGOs as corporate partners at the BoP level, environmental concerns with BoP economic growth or the difference between Fair Trade products and the integration of BoP individuals into the value creating process in BoP firms (each worthy of a post by itself!).
add to del.icio.us
add to digg
related at technorati
A resounding success with 98% repayment, women borrowers outnumbering men by a factor of 4:1 and 10,000 new enterprises. And yet, it is almost unheard of.
This is I believe do to the misconception that the origins of advocacy for business models applied to eradicate poverty came post 2004, when in fact they were delivered as a white paper to US government nearly a decade earlier.
As a participant here I have never been able to write about it, or persuade editors to examine it.
Since 2004 P-CED has been a UK based software business, with a development presence in Ukraine. Our activism and advocacy being funded by software sales and maintenance revenue.
Our efforts over the past 4 years in Ukraine have been in raising awareness of corruption and mistreatment of children in institutional care and the preparation of a microeconomic 'Marshall Plan' with a nil overall cost outcome based on leveraging business investment for a mix of more-than and less-than full cost recovery social components.
While presidential candidates compete in their advocacy for a 'Marshall Plan' against poverty, the only plan that is more than political rhetoric sits largely ignored.
All of the above will be found, presented openly on the website link embedded next to my name above.
I'm frequently astonished of the extent to which an organisation like ours can both pioneer and be excluded from the dialogue on successful models for development.
Jeff Mowatt P-CED - Economics for humanity