Premium Essay

Segmenting the Base of the Pyramid

In: Business and Management

Submitted By aschmdt3
Words 517
Pages 3
The article „segmenting the base of the pyramid“, written by V. K. Rangan, M. Chu, and D. Petkoski, gives us an introduction into the different segments at the base of the pyramid, and how to earn sustainable profits without taking advantage of the affected inhabitants. The poorest 4 billion people in the world who live on less than 3 to 5 USD per day define the base of the pyramid. In today’s global economy, the Bottom of the Pyramid is the largest segment in terms of affiliated people.
In order to conduct business properly at the base, you need to segment it by living standards and by its value-creating roles. You can distinguish between low income, subsistence, and extreme poverty. The low-income segment lives on 3 to 5 USD a day and typically has a couple of years of secondary education and the skills needed to enter the job market. They have reasonable hope that they will achieve a modestly higher living standard. Next comes the subsistence segment with 1 to 3 USD a day. They are poorly educated and low skilled. They have only irregular earnings and their nutrition is often substandard. They conduct transactions only in informal markets. The last segment is called extreme poverty. Those 1 billion people lack basic necessities as sufficient food, clean water, and adequate shelter.
In order to find the most suitable market strategy for each segment, you need to understand what kind of roles these people play in a relationship with your company. The first ones are the consumers. Companies can provide values by directly addressing their needs for services. You need to introduce innovations that enable people to devote fewer resources to basic activities and more to other pursuits. The role of consumers is most appropriate in the low-income segment, where individuals have the greatest resources for making purchases. In the subsistence segment, companies should…...

Similar Documents

Premium Essay

Marketing Plan

...The target market for Grooming by Nisha consist of single and married working households living in the Katy/Richmond area, but not limited to these areas. These households will have at least one dog or cat. According to the U.S. Census Bureau Katy/Richmond, TX’s 2010 population totals equaled 24,037 people. There would be approximately 14,902 dog owners living in Katy/Richmond, TX if estimating off of the APPA’s 62% of households owns a pet. This is a great consumer base to increase my grooming clientele. 3.2 SWOT Analysis The following SWOT analysis will showcase the key opportunities and threats for Grooming by Nisha. Strengths * Home away from home grooming experience * Customer service and high quality attention to dogs and cats * Pick-up and Delivery services * No cage environments Weaknesses * Not enough employees during start up * Weekend hours only * Referral based only * Lack of sponsors and community resources * Space limitations within home base Opportunities * Social networking with the Katy/Richmond community * Relationship building with veterinarians, pet stores, and dog parks * Further expansion to leased commercial facility Threats * Resistance from HOA * Established competitors in nearby Houston county 3.3 Competitors There are several direct competitors within the Katy/Richmond area, one within 5 miles from the new location for Grooming by Nisha, namely Petsmart. There are...

Words: 3739 - Pages: 15

Premium Essay

Fundamental of Marketing

...educated and more white labour workers. 2. Economic Environment • • • Includes factors that affect consumer buying power and spending patterns. Changes in income, dual career couples, easy credit. Change in consumer spending patterns-Engels laws: as income increase less proportion spent on food. 3. Natural Environment- be aware about trends re: • • • Forces that create new products and market opportunities. Change rapidly Makes products obsolete 5. Technology Environment 5 Marketing I (Fundamentals) • • • Refers to laws govt agencies, and pressure groups that influence organisations and individuals in a society. Free –market economies work best with some regulation Most marketing activities are subject to some laws e.g. bans of pyramid selling, and certain forms of sales promotions in Norway, ceiling prices on necessities. Increased emphasis on ethics and socially responsible actions-societal marketing concept,danger of oil spill,toxic dumps. • 6. Cultural Environment • • • • Institution and other forces that affect society’s basic values, perceptions, preferences and behaviour. Core beliefs and values have a high degree of persistence and are reinforced by schools, churches, mosques, business and government. Secondary beliefs and values are more open to change –e.g. should get married in life Shift in secondary cultural values-marketers look for new opportunities or threats-changes in hair styles, clothings,health consciousness, saving for the future.......

Words: 2491 - Pages: 10

Premium Essay

Down Town Disaster

... Demographic segmentation is the second method of segmenting the market. This argument is supported by Klein and Dawar (2004: 209) who posit that the market can be divided by the age, income, gender, occupation, or religion of the consumers. Behavioral segmentation is also an appropriate method of segmenting consumers. In this method, consumers are divided into groups based on their knowledge of the company’s products or services, attitudes towards the company’s products and services and rate of usage of different products and services. They are also grouped according to purchasing behavior. Bekaert, Harvey, and Ng. (2005) have discussed lifestyle segmentation in detail and state that it is also a way of grouping consumers. Often this method looks at the psychographics of the consumers of the company’s products and services. Their argument is supported by Ferrell and Hartline (2010: 143) who state that when using lifestyle to segment the market, the company looks at personal activities such as external influence to which the consumers respond such as mass media or word of mouth marketing, or other aspects such as purchase decisions and attitude towards tailored products and services. Verhoef et al. (2010) also contributes to the issue of customer segmentation and states that customer or market segmentation is important in businesses for ensuring proper strategies to ensure customer retention. After segmenting customers or markets, the company can be able to......

Words: 4036 - Pages: 17

Premium Essay

D'Bamboo Home and Garden Shop

...operations led to snap judgments regarding location. Looking at the issues surrounding the location as an isolated problem rather than part of a synergistic marketing plan. Constraints and Opportunity Constraints ❖ Limited financial resources ❖ Risk averse nature of owner ❖ Uncertainty as to who is the ‘real’ target market and how to position for growth ❖ Relocation can severely cut customer base ❖ Icarus Paradox Constraints and Opportunities (con’t) Supplemental constraints (as per SWOT analysis) ➢ Inability to diversify offerings to capture a greater market share ➢ Limited allocation of resources for marketing to increase awareness and positioning. ➢ Limited space to properly cultivate organic agricultural offerings. ➢ A risk averse approach to making certain strategic decisions. ➢ Limited visibility of the business by vehicular travellers Constraints and Opportunities (con’t) Opportunities ❖ Expanding community ❖ Government investment and agricultural revival efforts ❖ Latent landscaping market ❖ Diversification (seedlings, rental, rudimentary agriculture) ❖ Greater consumer base and variety via relocation Alternatives Engage in market research (value creation) ❖ Segment→ Target→Position ❖ Not just who….but what!! Increase Price ❖ Greater cash flow ❖ Present ‘high’ price with little resistance ❖ Specialty product/services must be in sync with price Engage in Market Research- engaging in market research serves as a giving assumption to this......

Words: 5191 - Pages: 21

Premium Essay

Cooporate

...& Bilou, N. (2007). Serving the world’s poor: innovation at the base of the economic pyramid. Journal of Business Strategy, 28 (2), 14-21. Banerjee, A.V., & Duflo, E. (2007).The economic lives of the poor. The Journal of Economic Perspectives, 21 (1), 141-68. Enea Consulting & Care (2011). The big companies and the BOP. Paris. pp.1 Hammond, A.L., Kramer, W.J., Katz, R.S., Tran, J.T. & Walker, C. (2007). The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid. World Resources Institute/International Finance Corporation Karnani, A. (2006).Misfortune at the bottom of the pyramid. Greener Management International, (51), 99-110. Kashyap, P & Raut. (2005). Rural Marketing Book New Delhi. Biztantra Publication. Rangan, V., Chu, M., & Petkoski, D. (2011). Segmenting the base of pyramid. Harvard Business Review. Kirchgeorg, M., & Winn, M.I. (2006). Sustainability marketing for the poorest of the poor. Business Strategy and the Environment, 15 (3), 171-84. Martinez, J.., & Carbonell, M. (2007). Value at the bottom of the pyramid. Business Strategy Review, 18 (3), 50-55. Nezakati, H., Liana Aby, M., & Toh, C. (2011). Exploring hierarchy situation of 4A marketing mix on Malaysia’s Fast Food Restaurants. World Applied Sciences Journal, 15, 1157-1165. Pitta, D.A., Guesalaga, R., & Marshall, P. (2008). The quest to the fortune at the bottom of the pyramid: potential and challenges. Journal of consumer marketing, 25......

Words: 4559 - Pages: 19

Premium Essay

It Marketing

...of Contents A. Executive Summary 3 B. Situation Analysis 4 1. Market Summary 4 a) Market Demographics 4 b) Market Needs 4 c) Trends 4 d) Growth 5 e) SWOT Analysis 5 2. Competition 6 3. Services 6 4. Keys to Success 6 5. Critical Issues 6 C. Marketing Strategies 7 1. Mission 7 2. Marketing Objectives 7 3. Financial Objectives: 7 4. Target Market 7 5. Positioning 7 6. Value Proposition 7 7. Strategy pyramid 7 8. Marketing Mix 8 9. Marketing Research 10 D. Financials, Budgets and Forecasts 11 References: 14 A. Executive Summary This document details the marketing plan to be followed by our team for providing software solutions to clients belonging to BFSI domain. After being an established solution provider to other large banks, the products and services of the company now mainly aim at providing right kind of solutions to the small and medium financial institutions (cooperative and retail banking). The entire strategy for marketing plan starts from segmenting the market for the kind of services we will be providing, understanding customers' needs, customizing solutions according to them and providing them with the solutions. It contains projected revenue figures, desired market share and approximate investments to be made by us to achieve the forecasted sales and in turn, the profits. It also talks briefly about the marketing campaign that we will be developing for selling our services to our clients......

Words: 2708 - Pages: 11

Premium Essay

My Research

...corrections that are made or called for through markets, government actions and civil society to respond to the negative impacts uncovered through our analysis. Originality/value – The analysis in this paper contributes to the theoretical ethical literature with a very specific application to an emerging concern in the field of microfinance. It also offers prescriptive scenarios for industry and public policy makers. It challenges the ethics underlying businesses that wish to target the full spectrum of Base of Pyramid participants. Keywords Microfinance, Base of pyramid, Poverty, Ethical philosophies, Ethical dilemma, Ethics Paper type Conceptual paper 82 Received 17 April 2012 Revised 30 September 2012 24 October 2012 9 November 2012 13 November 2012 Accepted 14 November 2012 South Asian Journal of Global Business Research Vol. 2 No. 1, 2013 pp. 82-103 r Emerald Group Publishing Limited 2045-4457 DOI 10.1108/20454451311303301 Introduction Success in base of pyramid (BOP) markets often means linking the optimization of shareholder wealth with public value creation and the well-being of the local communities (Rangan et al., 2011; Yunus et al., 2010). Microfinance has been one effective response to the needs of those in BOP markets. Many microfinance success stories have been touted in the literature (see, e.g. Akula, 2008; Morduch, 1999), but there have also been reports of abuses that raise concerns over the ethics of microfinance (Lewis, 2008; Karnani, 2011),......

Words: 11409 - Pages: 46

Premium Essay

Market Segment

...Chapter 09 Segmenting, Positioning, and Forecasting Markets Multiple Choice 1. The affluent Asian adult survey by Synovate __________ individuals according to their different attitudes, media exposures and habits, and product consumption patterns. a) categorizes b) ranks c) isolates d) distinguishes e) promote Ans: a Feedback: The individuals are categorized according to their different attitudes, media exposures and habits, and product consumption patterns. Page: 241 Learning Objective: 1 2. What can be concluded about the affluent Asian adults from the survey? a) Marketers should focus their marketing efforts on all groups b) Marketers may use different messages to sell the same products to same group c) Affluent adults in Asia are a homogenous group d) Marketers will not seek to reach out to them in the same way e) All of the above can be concluded from the survey Ans: d Feedback: Marketers will not treat them as one group, and will not seek to reach out to them in the same way. Page: 242 Learning Objective: 1 3. Which of the following statements about the affluent Asian adult is true? a) “Luxury Loyalists” tend to purchase more of the digital products such as laptops and MP3 players. b) “Executive Warriors” have the highest penetration for the Internet and usage of e-mail and instant messaging c) The “HUMmers,” hungry, urban, and mobile individuals, make up the largest group of affluent Asian adults d) The “Gimmes,” younger adults between...

Words: 21403 - Pages: 86

Premium Essay

Perceptual Marketing Plan

...needs and characteristics of specific groups of target customers within the broader market may see new, breakthrough opportunities. But it’s not always obvious how to identify the real needs of a target market—or the marketing mix that those customers will see as different from, and better than, what is available from a competitor. This chapter covers concepts and approaches that will help you to succeed in the search for those opportunities. When you finish this chapter, you should be able to: 1 know about defining generic markets and product-markets. 2 know what market segmentation is and how to segment productmarkets into submarkets. 3 know three approaches to market-oriented strategy planning. 4 know dimensions that may be useful for segmenting markets. 5 know a seven-step approach to market segmentation that you can do yourself. 6 know what positioning is and why it is useful. 7 understand the important new terms (shown in red). SEARCH FOR OPPORTUNITIES CAN BEGIN BY UNDERSTANDING MARKETS Strategy planning is a narrowing-down process In Chapter 2 we provided a framework for a logical marketing strategy planning process. It involves careful evaluation of the market opportunities available before narrowing down to focus on the most attractive target market and marketing mix. In Chapter 3, we focused on approaches for analyzing how competitors and the external market environment shape the evaluation of opportunities. In this chapter we discuss concepts that can guide......

Words: 15092 - Pages: 61

Premium Essay

School Papers

...satisfy a need at each different level of the pyramid. 6. Define perception. How does selective perception affect consumer behavior? 7. Define behavioral learning and cognitive learning. Give examples of each. 8. Define attitudes. Describe how your attitude toward a specific product has influenced your purchase of that product. 9. What are sociocultural influences on consumer behavior? Give examples. 10. What is consumer socialization? Identify a way that you have adopted your parents’ marketplace behavior. 11. What is the family life cycle? In which stage would you characterize your family? 12. Identify a membership, an aspirational and a dissociative reference group for you. 13. What is the difference between culture and subculture? Describe a subculture that you personally belong to. List a product or service you buy as a result of subcultural influences. 14. What are situational influences on consumer behavior? Assignment #6 – Market Segmentation and Target Marketing Read chapter 9. Be prepared to answer the following questions if called on. 1. Define the following: market, market segment, and target market. How do they differ from one another? 2. Why do business firms segment markets and subsequently concentrate on satisfying the needs of specific segments? 3. What is market segmentation? 4. What are the primary bases for segmenting consumer markets? 5. Identify a product......

Words: 2337 - Pages: 10

Free Essay

Abcd

...shift within the scooters segment as well. Trends show that consumer preference is moving away from the traditional metal-bodied models to the sleeker scooterettes. In 1994-95, a little over 96,000 scooterettes were sold, whereas in 1999-2000, the number rose to 258,000. Bajaj Auto's highly-profitable 3-wheeler business is expected to stagnate in FY01. In the year 2001 many of the Japanese companies are expected to enter the Indian market with their own fully owned subsidiaries in the two wheelers market. Honda Corporation of Japan is expected to commence its production of scooters in August 2001, which may pose a big threat to Bajaj. Bajaj has technical collaboration with Kawasaki Japan which is planning to use Bajaj Auto's manufacturing base for 40% of its global supplies which would enhance the product range of Bajaj and improve its exports. From Follower to Market Leader: Strategic Recommendations for Bajaj Auto Ltd. Faculty Contributor: Murali Patibandla, Professor Student Contributors: Prasoon Agrawal, Deepak Chourasiya, Ranjit Deka, Sourav Kumar, Ravi Sonthalia In a competitive environment, a substantial amount of the management’s focus is directed at establishing their companies as the market leaders. In a concentrated industry where 3-4 major players enjoy a large market share, such a problem becomes even more important. This article attempts to identify the right strategy that competitors should adopt to become market leaders, by taking the case of......

Words: 4933 - Pages: 20

Premium Essay

Tata Ace Case Study

...Ace overcame all the problems of existing 3W or less than 1 Ton LCV segment n the following ways: * Unlike other commercial vehicles, the Ace, with its compact size and shorter turning radius, could maneuver through India’s narrow urban streets and cost-effectively transport small loads to villages and towns in rural areas. * Ace costs 50% less than any other four-wheeled commercial vehicle in India and was significantly cheaper than pickup trucks with similar payload capacities found in international markets. * The Ace was created keeping ‘feel good’ factor as an important parameter. Thus Ace created Indian transportation entrepreneurs and also motivated people to enter the workforce. 5. How did Tata Motors went about segmenting the marketing LCV by using both Functional and Customer Segmentation and which segments they were planning to target for Tata Ace? Functional Market Segmentation The transportation market can be segmented based on the functional needs of different customers. * Vehicles carrying high load - This segment typically consisted of vehicles such as pickup trucks that transported loads of 2500 kilograms travelling 300 kilometers * Vacant Segment - This segment consisted of Ace’s core market which were the customers looking to transport 750 to 1000 kilograms over a distance of 100 to 200 kilometers * Vehicles carrying low load - This segment consisted of Manual rickshaws and carts that transported loads weighing less than 175......

Words: 3116 - Pages: 13

Free Essay

Marketing Plan

...product initiatives (Wiggy) had benefited the sales of Packet One. 3.5 Segmentations, Targeting and Positioning Segmentation is “a process of separating customers into groups with different characteristics, behavior and needs” (Chin, 2002). There are many types of buyers with different needs and wants thus it’s easier to build a profile by segmenting them. Some of the bases for segmentations for consumer markets are geographic, psychological, socio-cultural, user related, psychographic, benefit and hybrid segmentations. For the purpose of identifying in relation to the Wiggy, three main segmentation bases will be used. In order to get accurate information on the current broadband users in the market, a survey had been conducted. A total of six hundred and fourteen (614) respondents had been participated from many areas such as Sunway, Subang Jaya, Shah Alam, Ampang, Klang, Damansara, Kepong, Gombak, Puchong, and other Kuala Lumpur areas. All respondents are chosen based on their most basic knowledge of WiMAX technology. The survey results are summarized below: Demographic factors is said to be the most popular bases for segmenting customer groups because it helps locate the target market and customers needs and wants differ closely with the variables demographic offers (Kotler, 2007) The first variable that will be analyzed of the demographic segmentation will be age. Age is an important criterion as this determines what type of product or services that are purchase.......

Words: 13383 - Pages: 54

Premium Essay

Marketing

...Sergio Zyman writes that the purpose of marketing is to sell more stuff to more people more often for more money in order to make more profit. Of late, this has been happening in case of some Credit Cards in our country. Generally, “hard sell” is often seen in case of products or services that people buy without giving much thought to the matter, such as non-essential goods, and tend to postpone such purchases. With ever intensifying competition, products becoming more standardised without any meaningful differentiation i.e., commoditization, heavy promotional efforts in all possible manners are bound to remain the practice, in order to grab more share of the customers’ purse. The consequences of “hard sell” might harm the customer base to the extent that, in some cases, they might even bad-mouth the product if the product fails to match up to their expectations. An Introduction to Marketing Management m o .c rs 1.2.3 The Marketing Concept e e After World War II, the variety of products increased, people had more discretionary income, and could afford to be selective and buy only those products that more precisely met their changing needs and wants. However, these needs were not immediately obvious. Sometime during the mid-1950s, there was growing recognition among American business people that merely efficient production and extensive promotion, including hard selling, did not guarantee that customers would buy products. With the passage......

Words: 7410 - Pages: 30

Premium Essay

Marketing

...Know It, Sergio Zyman writes that the purpose of marketing is to sell more stuff to more people more often for more money in order to make more profit. Of late, this has been happening in case of some Credit Cards in our country. Generally, “hard sell” is often seen in case of products or services that people buy without giving much thought to the matter, such as non-essential goods, and tend to postpone such purchases. With ever intensifying competition, products becoming more standardised without any meaningful differentiation i.e., commoditization, heavy promotional efforts in all possible manners are bound to remain the practice, in order to grab more share of the customers’ purse. The consequences of “hard sell” might harm the customer base to the extent that, in some cases, they might even bad-mouth the product if the product fails to match up to their expectations. An Introduction to Marketing Management 1.2.3 The Marketing Concept After World War II, the variety of products increased, people had more discretionary income, and could afford to be selective and buy only those products that more precisely met their changing needs and wants. However, these needs were not immediately obvious. Sometime during the mid-1950s, there was growing recognition among American business people that merely efficient production and extensive promotion, including hard selling, did not guarantee that customers would buy products. With the passage of time, more knowledge, and......

Words: 7116 - Pages: 29