Success at the Bottom of the Pyramid?

Unilever & P&G Show It's Possible

Consumer behavior is influenced by internal and external factors. One external factor that
sets real boundaries for consumers is their level of income. Some marketers refer to
strategies directed at different income tiers as targeting certain levels of a pyramid.
Marketing to the "bottom of the pyramid." focusing on consumers with very limited financial
means, became well-known in 2004 when C. K. Prahalad wrote the book The Fortune at the
Bottom of the Pyramid. He envisioned companies marketing affordable products to the
billions of consumers around the world with limited income and unmet needs. He believed
that companies could help consumers and be profitable at the same time.

The number of potential bottom of the pyramid (BOP) customers worldwide is huge,
currently estimated at four billion and projected to grow to six billion over the next 40 years.
Since these consumers earn less than US$2 per day, successful BOP strategies are usually
focused on offering low cost/low price products in smaller sizes. The strategies may also
include innovative distribution or financing, and may involve educating consumers on the
use of the product.

India has been a major target for BOP marketers. When Prahalad's book was published in
2004, there were over 1.1 billion residents there. As recently as 2013, the World Bank
estimated that 30 percent of the population was under the $1.90 a day BOP level.

Unilever, maker of Dove soap, has been one of the leaders in BOP marketing in India. It sold
the company's Wheel detergent as a "sachet" – a single-use package offered at a low price
and packaged in a way that was consistent with the shopping habits of Indian consumers who
often shop daily for necessities. To spread the world about Wheel, Unilever used an
unorthodox sales force: 70,000 Shakti women to go into 165,000 rural villages to sell the
product. Shakti means "strength" or "power" in Hindi and these village women provided the
power of existing relationships and an intimate knowledge of communication styles and the
geography, helping sales of the packets to reach a quantity of 27 billion per year. Another
Unilever program sold small sizes of its Lifebuoy soap and involved educating 300 million
consumers about the health benefits of washing hands.

One of Unilever's chief rivals, P&G, took notice of Unilever's success in India and worked to
find ways to capture market share in a category in which they were the global market leader:
razors and blades. They felt that there was a significant opportunity to meet the shaving
needs of Indian men at the bottom of the pyramid. Unfortunately, early efforts, like its Vector
razor, were undermined by a misunderstanding of the shaving process for men in India,
many of whom did not have access to running water. More recently, P&G introduced the
Gillette Guard. This razor was developed based on 3,000 hours of research over 18 months,
some of it conducted in the homes of low-income Indian men. They asked the men about their
shaving rituals and observed them in the process of shaving. What P&G found is that they
typically shave sitting on the floors of their huts with no electricity, using a bowl of water and
no mirror. Their primary objective is to avoid cutting themselves. This research proved to be
invaluable in the development of a new razor.

The Gillette Guard was the result of what Alberto Carvalho, Vice President, Global Gillette,
described as a focus on not only producing a razor that would meet consumer needs, but also
doing it at "ruthless cost." This meant designing a stripped down single blade razor with only
four components versus the 25 found in more sophisticated razors. Jim Keighley, associate
director for product engineering, says "I can remember talking about changes to this product
that were worth a thousandth, or two thousandths of a cent." In the end they were able to
produce a razor that cost one third of the previously introduced Vector and sold for 15
rupees (34 cents) with razor blades priced at 5 rupees (12 cents).

As a result of its painstaking research and attention to the needs of this unique target
audience, P&G's market share of razors and blades has grown significantly in India and at a
faster rate than any other P&G brand in India. Despite the challenges they encountered it
appears that the Gillette Guard can be considered a bottom of the pyramid success story.

However, bottom of the pyramid strategies are not always as workable as companies would
have imagined. Some companies missed the mark because of low margins that would not
support the higher costs of doing business in a BOP market, such as distribution and the
need for “high- touch" sales and marketing. In some instances the only way to make the BOP
marketer's business model work over the long term was to partner with a nongovernmental
organization (NGO) that could help them gain access to consumers through established
connections within countries.

The level of poverty in India is dramatically different today than it was when companies like
Unilever and P&G first began marketing there, with the most recent World Bank estimate of
the BOP population at just a little percent. That still represents over 71 million people, and
other countries have percentages as high as 85 percent. The worldwide need and opportunity
for low cost products, companies will likely continue to pursue innovative strategies to reach
consumers at the bottom of the pyramid.

Summary

Consumer behavior is influenced by internal and external factors. One external factor
that sets real boundaries for consumers is their level of income. Marketing to the
"bottom of the pyramid." focusing on consumers with very limited financial means,
became well-known in 2004 when C. K. Prahalad wrote the book The Fortune at the
Bottom of the Pyramid. The number of potential bottom of the pyramid (BOP)
customers worldwide is huge. Since these consumers earn less than US$2 per day,
successful BOP strategies are usually focused on offering low cost/low price products
in smaller sizes. India has been a major target for BOP marketers. Unilever, maker of
Dove soap, has been one of the leaders in BOP marketing in India. It sold the
company's Wheel detergent as a "sachet". To spread the world about Wheel, Unilever
used an unorthodox sales force: 70,000 Shakti women to go into 165,000 rural
villages to sell the product. These village women provided the power of existing
relationships and an intimate knowledge of communication styles and the geography,
helping sales of the packets to reach a quantity of 27 billion per year. Another
Unilever program sold small sizes of its Lifebuoy soap and involved educating 300
million consumers about the health benefits of washing hands. One of Unilever's chief
rivals, P&G, took notice of Unilever's success in India and worked to find ways to
capture market share in a category in which they were the global market leader: razors
and blades. Unfortunately, early efforts, like its Vector razor, were undermined by a
misunderstanding of the shaving process for men in India, many of whom did not
have access to running water. More recently, P&G introduced the Gillette Guard. This
razor was developed based on 3,000 hours of research over 18 months. They asked the
low-income Indian men about their shaving rituals and observed them in the process
of shaving. The Gillette Guard was the result of what Alberto Carvalho, Vice
President, Global Gillette, described as a focus on not only producing a razor that
would meet consumer needs, but also doing it at "ruthless cost." A razor that cost one
third of the previously introduced Vector and sold for 34 cents with razor blades
priced at 12 cents. P&G's market share of razors and blades has grown significantly in
India and at a faster rate than any other P&G brand in India. Gillette Guard can be
considered a bottom of the pyramid success story.
Question 1: Using the "4A's" framework in Figure 12.1, analyze
the considerations that went into the development of the Gillette
Guard razor for the Indian market.

 Awareness: This was not a problem since the brand name was almost a generic
term for shaving needs in India having been in the market for hundred years or
more.
 Acceptability: In a country where running water is a luxury, the entire shaving
process had to be investigated based on 3,000 hours of research over 18
months.
 Affordability: Designing a stripped down single blade razor with only four
components versus the 25 found in more sophisticated razors. They were able
to produce a razor that cost one third of the previously introduced Vector and
sold for 15 rupees (34 cents) with razor blades priced at 5 rupees (12 cents).
 Availability: The marketer was marketing its other toiletries and other personal
care products to the low-income market. Hence making this product available
 through the same channels and supply chain was just a matter of adding on
more to the mix.

Question 2: Are companies targeting the bottom of the pyramid

I think the idea that companies targeting the bottom of the pyramid are exploiting
vulnerable and sensitive customers is not true in all cases. Because of the fierce
competition in the current market, low-cost and low-quality products will be rejected
quickly and are particularly referred to in India's consumer market. Most companies
will be responsible for their products as the companies mentioned in the above case,
as they spend their time researching and producing products that are both cheap and
quality with functionality optimized for consumers in India. As P&G has researched
3,000 hours over 18 months to create an optimal, quality product for low-income men.
It is, therefore, no problem to take advantage of the vulnerability of low-income
earners.

Question 3: More than half of U.S. workers earn less than $30,000
a year, barely above the poverty line for family of five. What
would you recommend to a company looking to target bottom of
the pyramid consumers in the United States?

There are cheaper goods coming from China with questionable quality. It would be
like P&G selling regular razors to casual users and GG for the low-income market.
The company's success is dictated by the final profit and no one CEO will receive a
bonus for the suggestion of providing the bottom of the pyramid market. Usually,
cheap products from China and Latin America will be offered to this market. So there
is no company in America that does that.