Session Title:
Understanding BOP Markets

Date of talk or publication:
2005

Speaker Name / Title:
Arthur Segel & Nadeem Meghji

Organization:
Harvard Business School

Description:
In December 1999, CEMEX, a leading global building solutions company based in Mexico, launched Patrimonio Hoy (PH), a sales, distribution, and savings program intended to serve Mexico’s large self-construction housing market. CEMEX created the program with the dual purpose of alleviating Mexico’s housing crisis and creating value for the company. Patrimonio Hoy has proved to be a tremendous success, reaching more than 100,000 Mexican families in its six years of operation and intending to reach more than one million by 2010. The program emphasizes the promotion of social and economic development in low-income Mexican communities while also generating profits and growth for CEMEX. But conducting business with this traditionally underserved customer segment has posed some significant challenges for CEMEX.

Every key stakeholder has derived both direct and indirect benefits from participating in the program. Families served by PH gain access to credit, better living conditions, increased net worth, greater opportunity for entrepreneurship, increased confidence and agency, and improved savings behavior. Moreover, the program is now profitable, having generated net income of approximately USD$1.3 million in 2004 and total sales of USD$42 million since its inception. PH has also served to enhance CEMEX’s reputation as a socially responsible company. Finally, PH employees, who tend to come from low-income communities, have experienced direct economic benefits and personal empowerment through the program.

Mexico’s existing housing shortage is discussed and the program’s overall design described. An examination of the value created for PH's various stakeholders includes analyses of the benefits and costs to CEMEX as well as the benefits to distributors, promoters, customers, and the community at large. The program’s impact was assessed via a survey conducted with a random sample of 160 customers and conversations with numerous other stakeholders. The paper concludes with a discussion of the program’s expansion outside of Mexico.