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How Unilever Succeeded in Marketing to the Underserved BOP Market

BOP Marketing Strategy: Reaching the Underserved Market

Imagine a world where almost 4 billion people live in poverty, and a significant chunk of them doesn’t have access to basic needs such as clean water, housing, and medical care. These low-income consumers are commonly referred to as the “Bottom of the Pyramid” (BOP).

At first glance, this demographic may not seem lucrative to businesses because of the low purchasing power and volume. However, an increasing number of companies are beginning to see the untapped potential of the BOP market and are now strategizing to cater to these consumers’ needs.

In this article, we will explore the Bottom of the Pyramid strategy, its marketing aspects, and Unilever’s success in catering to the BOP market.

BOP Marketing Strategy

The BOP strategy, originally introduced by C.K. Prahalad and Stuart Hart in 2002, advocates that serving the needs of low-income consumers is not only morally right but also a profitable venture. The primary goal of BOP is to create new consumer products and services that meet the unique needs of low-income consumers.

Market Expansion Strategy

Companies use the market expansion strategy to target the BOP market by creating an attractive low-price model. The idea is to develop products and services that are affordable for consumers with low purchasing power.

For instance, Unilever’s “Wheel Detergent” is a low-priced product that caters to the Indian BOP market and is hugely popular because of its affordability.

Low-Margin Approach

The BOP marketing strategy typically involves a low-margin approach where products are sold at a lower cost, and margins are smaller than those offered in other segments of the market. However, the strategy is not much of a risk as the volume of products sold in the BOP market is significantly higher than other market segments.

Consequently, companies that get it right can capture a sizable market share. Why Low Margins and Prices Don’t Always Work

A low-margin approach coupled with low pricing models may seem like an excellent marketing strategy, but it does not always work.

Companies must consider the cost structures surrounding the development, distribution, and supply chain of BOP products. When the cost of creating, distributing, and selling the product exceeds the product’s selling price, the marketing strategy becomes unsustainable.

Companies then risk making losses in the BOP market, eating away at their overall profits. Example of

BOP Marketing Strategy

Many companies have successfully implemented marketing strategies in the BOP market.

A good example is Proctor & Gamble’s (P&G) PUR product, a low-cost water purification system for emerging markets. UNILEVER’s “Wheel Detergent” is also an example of a successful BOP strategy.

In Pakistan, Unilever developed a customer-centric approach, whereby products are packaged and distributed in small volumes tailor-made to best meet consumer needs. Unilever’s Success in

BOP Marketing Strategy

Unilever has a long-standing commitment to develop and deliver brands that cater to the BOP market.

The company’s success can be attributed to the following factors:

Well Established Retail Network

Unilever has a well-established retail network in many BOP markets, particularly in rural areas. Distribution is the key to a successful BOP market penetration strategy.

Unilever’s strong retail network enables them to reach the remotest of rural areas.

Incremental Cost

Unilever focuses on incremental cost when it comes to BOP products. The company quickly realized that new products could be expensive, so it introduced a system of incremental cost.

This system allows the company to create low-cost products by identifying and reducing the cost of each process involved in production.

Not a New Product Category

Another secret to Unilever’s success lies in its marketing strategy. When promoting BOP products, Unilever does not target the products as a new category.

Instead, the company markets the products as solutions to existing challenges faced by low-income families. For example, Unilever markets its Wheel Detergent as a solution to consumers’ cleaning problems, and not as a new brand or product.

Conclusion

The BOP marketing strategy is an emerging trend that companies can leverage to achieve growth while catering to low-income families’ needs worldwide. Unilever’s success in serving the BOP market offers valuable insights for companies looking to tap into the lucrative BOP market.

By creating affordable products, reducing the cost of production, and developing distribution networks in BOP areas, companies can increase sales while impacting society positively. Challenges and Solutions in

BOP Marketing Strategy

The Bottom of the Pyramid (BOP) market represents about 4 billion people living in poverty worldwide, which creates a huge untapped potential for businesses.

However, the BOP market is a unique market that comes with its challenges. These challenges vary by region and culture, making it difficult to develop an effective marketing strategy.

In this section, we will outline some of the significant challenges of the BOP market and suggest solutions that can aid businesses in overcoming them.

Village Scale is Optimal but Funds-demanding

Small rural communities are a significant market opportunity for BOP-oriented companies. They represent a market that is easy to capture and understand, and margins can be higher than in urban markets.

However, expansion in small rural communities comes at a cost. Solae, a joint venture between DuPont and soy processor Bunge Limited, found it difficult to expand its soy processing plant in Ghana because it required a considerable investment to build a village-scale manufacturing plant.

As such, businesses looking to expand into rural areas must develop practical solutions that take into consideration the marginal costs of expanding in those regions.

Margin-Boosting Solutions

Businesses can implement margin-boosting strategies to improve their BOP marketing strategy. For starters, companies can develop localized base products and services that cater to the specific needs of the communities they target, instead of mass-producing generic products.

By doing so, companies can establish strong relationships with customers that will enable cross-selling and up-selling to lead to sustainable and meaningful transactions. A customer peer group is also an effective margin-boosting solution.

By leveraging the power of community, businesses can encourage customer loyalty and retention. A business that focuses on building a peer-to-peer community around its products and services is better positioned to build the brand’s loyalty and penetrate more niche markets with higher margins.

Enabling service is an extension of the customer peer group model. Enabling service can be a valuable strategy for a business that aims to provide after-sales services geared towards supporting and educating customers on their products.

Through enabling services like training on the usage, maintenance, and care for products, businesses can increase their customer retention rates.

Final Thoughts

Despite the potential growth opportunities that the BOP market presents, one cannot ignore the challenges associated with entering and sustaining business operations within this market. An unsustainable model, high prices, and unrealistic expectations are some of the significant hurdles that companies will inevitably face.

It’s important for businesses to understand that implementing a successful BOP marketing strategy requires flexibility and adaptability. Companies must continuously monitor their goals and pivot when necessary to support the sustainability of their business.

Lessons for Companies in

BOP Marketing Strategy

The BOP strategy presents significant opportunities for companies when executed effectively. However, businesses looking to penetrate the BOP market must first understand the challenges associated with this market to execute a successful marketing campaign.

In this section, we will explore some of the key lessons that businesses can learn to execute a successful BOP marketing strategy.

Importance of Soft Skills to the Efficacy of the Sales Team

Soft skills like empathy, active listening, and relationship building skills are essential in BOP marketing strategy. Sales representatives operating in these markets must understand the unique customer needs, cultural nuances, and purchasing behaviors of low-income families.

Empathy and relationship-building skills are essential when it comes to engaging customers and building trust between the brand and the consumer.

Businesses Created on the Basis of Unrealistic Expectations Will Eventually Fail

To succeed in the BOP market, businesses must develop realistic expectations concerning the size, potential profitability, and reasons behind the need to penetrate this market. Unrealistic expectations concerning a business’s mission and tenets may result in a failure to achieve optimum business results, even in niche low-income markets.

Companies Must Embrace the Truth that High Price Points and Margins are not Just a Top-of-the-Pyramid Miracle

The BOP market offers significant growth opportunities, but it comes at a cost. Companies must embrace the reality that low-income families have limited disposable income.

Thus, the typically high-margin business model will not work in this market. For success, businesses must focus on deriving significant value through lower contribution per transaction.

Conclusion

In conclusion, the BOP market offers a significant growth opportunity for businesses that employ the right tactics, strategies, and techniques. However, penetrating the BOP market requires the right mix of flexibility, agility, and sound judgment to navigate and execute strategies effectively.

By taking into consideration the challenges and solutions outlined above, businesses can develop effective BOP marketing strategies that lead to sustainable growth and success in this market. In conclusion, BOP marketing strategy provides significant opportunities for businesses to tap into a market of low-income consumers.

However, such enterprises must deal with several challenges when penetrating this market, including high cost structures, unrealistic expectations, and affordability. Solutions to these problems include developing localized and enabling service, attracting small customer peer groups, and promoting the importance of empathy, active listening, and relationship-building skills for sales representatives servicing the BOP market.

By taking these lessons and strategies into consideration, businesses can develop effective BOP marketing strategies that will put them ahead of the curve in gaining ground in this market.

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