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Bharat Bedmutha — Sat, 20 May 2006 09:05:20 -0400

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Bharat Bedmutha

Mumbai

India

9867520440

Marketing Programs to Reach India's Underserved

John Paul — Wed, 07 Dec 2005 13:04:11 -0500

Session Title:
Understanding BOP Markets

Date of talk or publication:
2005

Speaker Name / Title:
Kunal Sinha & John Goodman, Ajay Mookerjee & John Quelch

Organization:
Ogilvy & Mather India & Harvard Business School

Description:
Until the 1990s businesses in India focused only on the 50 million rich and middle class consumers, leaving the nation's 500 million poor underserved. As income levels of the poor have risen dramatically over the past decade so has demand for the sorts of products and services purchased by higher income consumers, creating a huge market potential.

To capture this opportunity requires an entirely different marketing approach. Logistically, distribution must be accommodated across more than 100,000 geographically dispersed rural areas as well as 3,700 urban centers. To understand consumer behavior requires not merely studies of individual behavior but immersion in community activities. Ogilvy India has adapted participatory appraisal techniques including wealth and village mapping and timeline methodologies and developed media reach indices by socio-cultural and purchasing power segments to tailor mass and new media choices. Interviews conducted with sales and marketing managers in the course of varied client assignments at companies that market goods and services ranging in sales velocity from fast moving consumables to durables to vehicles to financial services revealed that approaches required to market to the poor masses differ significantly from marketing approaches employed with higher-income markets. Among the companies studied were Hindustan Lever Limited (HLL), CavinKare, Castrol Engine Oils, Kodak, Bajaj Auto, and State Bank of India Credit Cards. Products for poor markets must be cheaper and therefore simpler, reduced to the key elements most important to the end consumer. Distribution is likely to be more reliant on direct, relationship-oriented channels, often leveraging the power of third parties. Reaching the poor relies more heavily on targeted promotions and support services than on brand-building advertising, although the degree to which the marketing mix must be adapted is a function of product sales velocity. High velocity, fast-moving consumables tend to require less customization-typically only at the market segment level-than low velocity products and services that must be mass customized or tailored to the individual. Low price per unit sale, often accomplished by simply reducing unit package size, is often sufficient for fast-moving consumables, whereas low velocity products must lower cost of use as well as purchase price to ensure affordability. Sales of low velocity products are also dependent on more customized relationship selling to individual consumers than can be achieved through third party direct channels. Finally, sales of high velocity, mass-market products are more reliant on promotion, sales of lower velocity products on ancillary services.

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Marketing Programs to Reach India's Underserved