Welcome to class of Bottom of the Pyramid by Dr. Satyendra Singh University of Winnipeg Canada

Opportunity for growth 7 b people 2b can afford good products 5b Bottom of Pyramid (BOP) o We need to cater BOP and develop market oriented products accordingly o Emerging markets o Developing countries o Moral responsibility to cater BOP! o Because they’re denied resources and opportunities 75

Marketing Strategies for EMs… Need 2 strategies –Urban  Global strategy is applicable Consumers prefer global brands to local brand Global brand equates to quality and prestige Communicates sophistication and modernity Admire HIG lifestyle and the products that symbolize that Large cities have advanced distribution channels HIG customers are less price sensitive Serves as social distinction Firms do not need to be based in developed countries Concept of 3 rd world countries multinationals –E.g. Nando’s fast food from Africa  now in +30 countries Over engineered brands unlikely to be successful in EM

Marketing Strategies for EMs Bottom of the pyramid strategy –LIG  radically different Low price/value focused segment  Tata Nano –Less features, toothbrush with no angles (i.e new design is needed) No need to focus western markets in the beginning Satisfy needs of the mass markets –Mahindra and Mahindra tractors, India –Ranbaxy pharmaceuticals, India –Orascom telecom, Egypt –Embraer aerospece, Brazil These firms have learned to make a profit at prices unheard of the developed countries  due to mass marketing at low $

Firms from emerging markets Acer Bharti Airtel Hailer Lenovo LG QQ Samsung TATA  move from OEM (1-5% margin) to leadership position (+40% margin) 76

Successful low-Cost providers to BOP 77

Sachet distribution in BOP markets 78

Not Free in BOP Yet But Will Be Soon 79

Multipoint Pricing for BOP -- Indonesia 80

Serve maximum # of segments – multi-point pricing 81

Demand for luxury products is very High in BOP Make it affordable by making it small Create aspiration value 82

How to add value? You must do something or have something new to say Then we do branding, positioning and communication around it Commodity Goods Service Experience 19

Patek Caliber  $5m Most complicated watch X 2 Ferrari’s price!

TATA Nano: $3,000 30

Sources of Growth Hermés Birkin named after Jane Birkin $9,000-$150,000 31

World’s slimmest watch 32

Hermés Cap Cod -- Craftsmanship 33

Lamborghini ($445,000), 2013 model

Ultra-light Lamborghini: $23,000 Where is the value coming from? 35

18 hours of single craftsmanship 36

British History – typical lines

Gucci la pele Guccissima Shows mrf process

Creating value online is even more important for transaction Goal is to reduce abandoned carts with goods in it 87

IS BOP market suitable for your firm’s growth? Source: Simanis (2012), HBR, June 83

Strategy implementation in EMs Leadership  more involved –Socioeconomic Low formal education and high unemployment –Culture Highly embedded and hierarchical, risk avoidance Organizational structure –More centralized and formalized is appropriate –Small team, and group reward, collective society Intraorganizational relations –Social and relational identities Rank, status, self esteem, well being > relations Top managers available physically for guidance Learning

Five myths about EM! EM are technology backwaters –I.e. Use outdated technologies; may not be true in case of cell phones EM consumers won’t pay premium for brands –Brands affect preferences EM cannot afford technology purchases –May not true in case of BRIC countries Tech. from mature markets will succeed in EM –Develop new product with relevant feature –Nokia phone in India  flashlight, individual call tracking for shared use of phones, multiple address book EM consumers focus on products, not services

Where are Emerging Markets? Emerging Markets Trading Blocks Asia –Association of SouthEast Asian Nations (ASEAN) –Asia Pacific Economic Cooperation (APEC) Africa –Economic Council of West African States (ECOWAS) –Common Market for Eastern and Southern Africa (COMESA) South America –Mercosur (Mercosul)

ASEAN: Asso. Southeast Asian Nations Free Trade 10 countries –Brunei, Cambodia, Indonesia, Lao, Malaysia, Mayamar, Philippines, Singapore, Thailand, and Vietnam HO: Jakarta ASEAN scholarship ASEAN Univ.Network

APEC: Asia Pacific Economic Cooperation Eco. Growth & prosperity –Trade/invst Liberalization –Business Facilitation –Economic/tech cooperation Important –40% of world’s pop –50% of world’s GDP –40% of world’s trade 21 countries –Australia, Brunei, Canada, Indonesia, Japan, Korea, Malaysia, NZ, Phil, Singapore, Thai, US, Taipei, HK, china, Mexico, PNG, Chile, Peru, USSR, Vietnam HO: Singapore

ECOWAS: Economic Council West African States Economic integration –Mutual defense, court of justice –Ecowas rail, common currency 2015 –Gambia, Ghana, Guinea, Nigeria, Sierra L 15 countries –Benin, Burkina Faso, Cape Verde Cote d’lvoire, Gambia, Ghana, Guinea- Bissau, Liberia, Mali, Nigeria, Senegal, Sierra Leone, Togo –Niger – suspended 2009– election problem –Guinea – suspended 2008 – coup attempt –Liberia wants to join Ecowas HO: Abuja, Nigeria

COMESA: Common Mkt for Eastern Southern Africa Regional economic integration –Trade and investment 19 countries –Burundi, Comoros, Congo, Djibouti, Egypt, Eretria, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius Rwanda, Seychelles, Sudan, Swaziland Uganda, Zambia, Zimbabwe HO: Lusaka, Zambia Branding: Buy African, Build AfricaBuy African, Build Africa COMESA statistics

MERCOSUR Free trade and people movement Full member –Argentina, Brazil, Paraguay, Urguay Venezuela (Paraguay to ratify) Associate member –Bolivia, Chile, Columbia, Ecuador Peru Observer –Mexico HO: Sao Paula, Brazil