CS 12-1 Using the 4As framework in Figure 12.1, analyze the considerations that went into the development of the Gillette Guard razor for the Indian market. CS 12-2 Are companies targeting the bottom of the pyramid taking advantage of vulnerable consumers with limited resources? CS 12-3 More than half of U.S. workers earn less than $30,000 a year, barely above the poverty line for a family of five. What would you recommend to a company looking to target the bottom of the pyramid consumers in the United States?

SUCCESS AT THE BOTTOM OF THE PYRAMID? P&G'S GILLETTE GUARD SHOWS IT'S POSSIBLE Consumer behavior is influenced by internal and external fac- tors. One of the external factors that sets real boundaries te consumers is their level of income. Some marketers refer to strategies directed at different comme les as targeting certain levels of a pyramid. Marketing to the bottom of the pyra- mid," focusing on consumers with very limited financial man became well-known in 2004 when C.K. Prahallad wrote The Fortunattle Bottom of the Pyramid He wined companies 474 SECTION 4 Consumers in Their Social and Cultural Settings marketing adable products to the millions of consumers electricity, using a bowl of water and no mirror. Their primary around the world with limited income and unmet need. He objective is to avoid cutting themselves. This research proved to believed that companies could help consumers and be profitable be invaluable in the development of the new at the same time. The Gillette Guard was the result of what Alberto Carvalho, A number of companies have attempted to make this model vice president, global collette described as a focus on not only work. Purictan in-home water purification system manufac producing a razor that would meet the needs of these consum tured by Hindustan Unilever Limited, was developed for lowers, but doing it at ruthless cost. This meant paying attention income consumers and has found success by offering a 6-month to the smallest detnik, designing a stripped down single blade installment plan to make the $25 price more manageable. The rear with only four components versus the 25 found in more Nokia 105, introduced by Microso, is a $25 basic cell phone sophisticatedras. Jim Keighley, associate director for product with an alarm clock, flight, and FM radio. It was priced engineering, says "I can remember talking about changes to specifically for low-income consumers and has sold millions of this product that were worth a thousandth, or two thousandths phones since its introduction in 2013. of a cent." In the end they were able to produce a raor that cost However bottom of the pyramid strategies are not always one third of the previously introduced Vector Selling price for as workable as companies would have imagined. The Nokia the Gillette Guard ended up at 15 rupees (34 cents) and razor 5 has struggled to be financially sustainable and his faced Wades at 5 rupees (12 cents challenges as low-income consumers gravitate toward smart As a result of their painstaking research and attention to phones that are decreasing in cost. Other companies missed the needs of this unique target audience. P&G's market share the mark because of a lack of research. discovering in the end for reases and blades has grown significantly in India and at a that consumers could not afford their product or could opt for a faster rate than any other PG beund in India. Despite the chal cheaper, meer local cering. Some companies have been pushed lenges they encountered it appears that the Gillette Guard can by investors to show profitability in the short-term with their be considered a bottom of the pyramid success story low-income market initiatives, which has been difficult to ac- complish. In some instances the only way to make their business model work over the long term is to partner with a non- DISCUSSION QUESTIONS mental organisation (NGO) which could help them to gain ac- cess to consumers through their established connections within CS 12-1 lising the framework in Figure 12.1. analyse countries the considerations that went into the development of Let's consider the possibilities in India, a country with the Gillette Gaard more the Indian market. considerable bottom of the pyramid potential. World Bank CS 12-2 Are companies targeting the bottom of the pyramid 2013 data show India's population at 1.24 billion people and taking advantage of vulnerable consumers with li- per capita income at $125 a month. The McKinsey Global ited resources Institute estimates that 78 percent of the that population fall CS 12-3 More than half of US workers earn less than $30,000 into the bottom of the pyramid category, with the majority a year, barely above the poverty line for a family of live. living in rural India. They predict that this market may be What would you recommend to a company looking worth $1.5 trillion by 2020. The sheer numbers of consum- to target the bottom of the pyramid consumers in the ers and the overall potential make this market appealing to linited States marketers, but still the low level of income poses considerable challenges. For years Procter & Gamble (ra) has worked to find ways Mare Gunther. The law of the Willing to the to capture market share of the men's made market in India. Po wy" May 22, 2014. http://www.theguardian.com/antainable bine parabalad-be-bottom-pyramid-parodi-powered June 28, They felt that there was a significant opportunity to meet the 2015: Me Andellow India leped callet Rethink the law shaving needs of Indian men at the bottom of the pyramid. http://www.bostonglobe.com/2015/10/cheap-casa-made- Unfortunately, early foets. like their Vector raar, were us- ate-watched apardilar.html.com dermined by a misunderstanding of the shaving process for une 24, 2015: Procter & Gamble-India white http://www.pe.com _IN/, accedane 28. 2015: Iyon ton the Money Tour men in India, many of whom did not have access to running Ways to Advertise to the Low-income Shopper" http://masalast.com water. More recently, PSG Introduced the Gillette Guard. This udtal-advertising companyianpoint-blog/2014/10/214-www- raar was developed based on 3,000 hours of research over bio-i-low-cochopper de 3.2015 3aphie Wio, "Campanie Target Dollar Potentially Marlasting to the 18 months, some of it conducted in the homes of low-income Poehtp/www.cg/2014/10/02/cepsi-target-ce Indian men. They asked the men about their sharing rituals Juleppel. 22, 2013, by Amal Douglas Bryson and Amb amewa, "estyping the Aspiring and observed them in the process of shaving. What P&G found Indian Low-income Comer March 28, 2015, betp://www.worldian is that they typically shave on the floor of their huts with no ciali.com/p36, 25, 2015 The 4 A's of addressing low-income con consumers Promote offerings through mix of outlets Form partnerships with public and non- governmental organizations Reduce packaging size for low price per unit Maintain operations on zero (or near-zero) working capital Leverage scale effects and sourcing network Figure 12.1 THE 4 A's Source: Anderson and Niels Billou, "Serving the World's Poor: Innovation at the Base of the Economic Pyramid, Journal of Business Strategy 28.2: 14-21, reprinted in A.T. Kearney. Serving the Low-income Consumer: How to Tackle This Mostly Ignored Market, 2011, http://www.atkearney .com/index.php/Publications/serving-the-low- income-consumer.html Affordability Awareness Tailor offer to market 4 A's Restructure value chain Acceptability Availability Focus development on customers Employ innovative thinking to meet customer needs Establish local R&D Reduce cost serve Shorter supply chain Select and support retailers Devise stocking strategy Localize sourcing