Fortune at the Bottom of the Pyramid – Marketing Strategies

Economically speaking, the “Bottom of the Pyramid” is the largest and also the poorest socio-economic class of people across economies. This consumer segment consists of 2.5 billion people who live on less than 2.50 dollar per day. The phrase “bottom of the pyramid” is used in particular by people developing new models of doing business that deliberately target that demographic, often using new technology. This segment of consumers have also been referred to as the “Base of the Pyramid” or more commonly the “BoP”.  This consumer segment has drawn the attention of the biggest marketing firms due to the sheer earning potentials from volumes of sales with low margins.

The consumers at the bottom of the pyramid have a very distinct buying behavior as opposed to the other consumers. While the rest of the consumer segment derive value from products through 3 sources, namely attribute based satisfaction, consequence based satisfaction and finally, goal based satisfaction,  it is our belief that the consumers at the BoP derive value / satisfaction mostly from the innermost ring or the first level/source of satisfaction. Because of their spending ability, this class of consumers tend to be very conscious about the core benefits obtained from the purchase of any product or services.The probability is high for success of products which fulfill the attributes of the lower bases of the consumer need model provided below.

While every the most profitable consumer segment in current economic times is the youth within the age gap of 20 – 30, commonly called the twentysumthing, the sheer volume of possible purchases in this consumer segment has become a focus for marketers. While every product offers benefits to its consumers not only from its core attributes, but also from its fringe attributes (benefits from outer levels), this class predominantly derives maximum satisfaction from the core attributes of products only. Product extensions and ego-based attributes have little impact on the consumption and buying behavior of this consumer segment, who would in fact, perceive the extra benefits as being something, they are having to shell out quite a bit extra, even if the marketing firm does not charge for them. While “extras” in the product marketing mix may consist of other value adding product extensions, care needs to be taken while deciding on the basket of goods for such consumers. Thus the probability is high for success of products which fulfill the attributes of the lower bases of the consumer need model provided below, namely which fulfill the physiological need and the security needs the most.

Pricing strategies also play a major role for the success of marketing strategies in such a consumer segment. While place and promotion offer very meager sources of value or utility, a low pricing of products is often a mantra for easy acceptance on a new product introduction. Price premiums are not easily tolerable in this highly sensitive value-sensitive consumer segment. Thus it has been seen that companies rage low-price war to capture the market of this segment, and many success stories which have been glorified are that of Nirma cake soap, Tata Namak, and other brands which churned billions of dollar by targeting this segment.

Follow me

Arpan Kar

Professor at Indian Institute of Management
Dr. Kar is a Professor in Information Systems Management in Indian Institute of Management (IIM), one of the top institutions in Business Management education globally. He has extensive experience in teaching, training, consultancy and research. He has over 35 high impact publications. Prior to joining academia, he has rich experience in Cognizant Business Consulting and IBM Research Laboratory. He is the Editor of Business Fundas.
Follow me