Selling to BOP (Bottom of the Pyramid) market

Companies have attempted to innovate on any one or a combination of the 4 “Ps” of marketing in order to sell to Tier 3 or Tier 4 (BOP) customers. Here we quote some examples in this regard.

‘P’ for Product Innovation
An oft quoted example of product innovation to reach a new market is that of Nirma . Karsanbhai Patel (the entrepreneur behind Nirma) realized an unmet need of detergent powder around Ahmedabad which till now used primarily bars and cubes. HLL, which was leading the FMCG in detergent powder market, had a premium product Surf which was only accessible to a select few in India. HLL used high quality (high priced) ingredients like Active Detergent (AD), builder, buffer etc to ensure a superior wash. Nirma powder conformed to none of HLL’s carefully developed product formulae. It contained not ingredient to improve whiteness of fabric and the level of AD was half that of Surf and it had no perfume agent, and hence it was able to keep the price of the detergent low. In spite of being inferior to Surf and other premium powders on every single account, Nirma was able to capture one-third of the market by 1977.

‘P’ for Playing with Pricing (and packaging)
In a market where price was an important deterrent for consumers to start using shampoos for hair care (refer table 2 to notice the low penetration of hair wash products especially in rural India), Cavinkare came up with small 50p sachet packs which have revolutionized the way many products are sold in India now . The “sachet strategy” has especially helped in striking a cord with the rural consumers. Over the years, the sachet strategy has proved so successful that, according to an ORG Marg data, 95 per cent of total shampoo sales in rural India are by sachets. Sachets packets (or small packs) have now become popular even among biscuit (Tiger biscuits), hair oil (Marico), and cold cream (Vaseline) companies.

‘P’ for Placing the product at the remotest corners
Distribution is a major cost and problem while trying to reach rural customers. At the same time, rural India presents a huge untapped market for personal care brands. To achieve this, HLL’s personal products unit initiated Project Bharat (in 1998)-the first and largest rural home-to-home operation to have ever been prepared by any company. The project covered 13 million rural households by the end of 1999. Along with Operation Bharat, HLL conceptualised Project Streamline to enhance its control on the rural supply chain through a network of rural sub-stockists based in these villages. This gave the company the required competitive edge, and extended its direct reach to 37 per cent of the country’s rural population. As a rule the rural market is much more price elastic and involves more intensive personal selling efforts compared to urban marketing, and here HLL has been more than successful .

‘P’ for Promotion to create awareness
With a sizeable share of the Indian soap market, the HLL could simply focus its attention on persuading the millions of Indians who currently use soap made by its competitors to switch to Lifebuoy . For Unilever to build its business in India over the long term, though, it must attract new consumers, including the estimated 70 million people who never use soap. This is no easy challenge. Over 70% of India’s one billion populations live in rural areas not reached by television, radio or newspapers. If that were not challenge enough, illiteracy is widespread and there are deep-rooted beliefs about cleanliness that have to be addressed, such as the widely held belief that if hands look clean, they are clean. To achieve this objective of creating awareness (and hence expanding its market) HLL launched ‘Swasthya Chetna’ in rural India. To drive the message home, children are invited to take part in a ‘glowgerm’ demonstration. This involves applying a white powder to the palms of hands, then washing with water only. Hands are then held under a ultra-violet light and the powder glows where dirt remains, showing that hand washing without soap is not enough. The children then repeat the process, this time using soap, only to discover the UV light shows no trace of the powder –a simple but highly effective demonstration.
In a rural market, where only one-third of population uses toothpastes. Colgate Palmolive launched Operation Jagruti, to help the company increase its oral care penetration in rural areas synergistically with physical reach. The operation involves conducting village consumer contact programmes, creating awareness about the need for oral hygiene, increasing product penetration by generating product trials and seeding products in village outlets by exploiting Shandies / Haats and unconventional rural media to broaden consumption .