Discriminant Analysis Dr. Satyendra Singh Professor and Director University of Winnipeg, Canada
Welcome to class of Bottom of the Pyramid by Dr. Satyendra Singh University of Winnipeg Canada.
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Transcript of Welcome to class of Bottom of the Pyramid by Dr. Satyendra Singh University of Winnipeg Canada.
Welcome to class of
Bottom of the Pyramid
byDr. Satyendra Singh
University of WinnipegCanada
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 marketso Developing countrieso 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 3rd 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 smallCreate 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 $5mMost complicated watch
X 2 Ferrari’s price!
TATA Nano: $3,000
30
Sources of Growth
Hermés Birkinnamed 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: $23,000Where 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, June83
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, MauritiusRwanda, Seychelles, Sudan, SwazilandUganda, Zambia, Zimbabwe
• HO: Lusaka, Zambia• Branding: Buy 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