[1]Boston Consulting Group [2] has been conducting extensive primary research into the spending habits and lifestyle of a segment of the population it identifies as the "next billion." The "next billion" are economically better off than the poorest of the poor, but earn just less than the current customer base of the formal economy.

BCG discusses business strategies to tap the next billion market segment and provides some data on the segment's population size, income, spending, and lifestyle in two papers released last week, New Rules for the Next Billion [3], and The Next Billion Consumers: A Road Map for Accelerating Telecommunications Growth in Brazil [4]. The former is a shorter and broader summary piece that contains much of the information presented in the latter report, a more in-depth treatment of the next billion telecom market in Brazil. Both focus on the next billion's untapped potential as a market for telecom companies but also present some tantalizing data that hint at BCG's depth of market research.  These reports come 4 months after two other short "next billion" pieces BCG released earlier this summer, The Next Billion [4] and The Next Billion Banking Consumers [4].

In Brazil, BCG surveyed over 1,300 next billion consumers and visited dozens of households. This primary research seems to have been combined with a BCG analysis of one of Brazil's 2005 national surveys to paint the following picture of Brazil's next billion:

• Earns a monthly income between $100 and $700
• Monthly savings between $30 and $300
• 45% do not live close to a slum
• 65% are married
• 60% do not work in formal jobs
• 82% receive their salary in cash
• 67% of households pool individual incomes

Household spending by the next billion breaks down as follows:

• 39% of spending goes toward food
• 23% of spending goes toward housing
• 72% of spending is on essential items, leaving
• 28% for discretionary spending

Both reports present the following strategies as key to reaching the next billion:

• Fit-to-constraint products: customize products and applications to fit the unique needs of next billion consumers
• Ubiquitous distribution: reaching the next billion requires "extensive distribution networks...viable at low volumes and low prices"
• Educational marketing: provide consumer education on the benefits of mobile telecom service
• Unshackled organization: BCG suggests a number of changes to the centralized, top-down corporate model to enable greater organizational responsiveness and flexibility
• Regulation: Mobile operators could benefit from working with regulators on creating a more competitive and supportive (e.g., lower taxes) regulatory environment for the telecom industry
• Partnerships and alliances: partner across industries, e.g., with financial institutions on mobile banking, to provide greater value to customers

Our own The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid [5] report covers some of the same data types and messaging regarding Brazil's BOP telecom spending, but BCG has innovated its own income pyramid to represent the distribution of "middle class consumers," "next billion consumers," and "subsistence class consumers," thereby repositioning the spotlight onto those at the upper end of the "traditional" base of the pyramid. (The corresponding income groups in The Next 4 Billion may roughly be those at the BOP1000, BOP1500, and BOP2000 income levels, for those familiar with the report.) It's great to see the private sector leveraging resources to deepen the available data set and discussion around low-income consumers.