The Marketer's Dilemma

by Ronald Hill, Jun 30, 2011, 8:00 AM

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The concentration by global marketers on consumption of goods and services by the top 15% of the world's markets has left 85% of the population underserved or completely ignored.

This has begun to change with the attention to the "Bottom of the Pyramid" (BOP) by marketers in multinational firms enticed by the fact that billions of potential consumers have yet to make brand preferences or establish a Western-style mode of consumption. The question is: Are they similar to or different from more affluent consumers?

However, statistics on worldwide poverty are not encouraging. Chief Marketing Officers for these companies should be warned that at the very bottom of the pyramid are almost two billion people on bare subsistence living who can't afford to buy most branded products.

What is more encouraging is that below the top 15% of global consumers, who are saturated with marketing messages, there are the emerging middle classes of the BRIC countries that have enough disposable income beyond the tipping point of "consumption adequacy." This potential market is approximately another 15% of the world population.

These consumers have reached the ability to meet basic needs and are now ready to participate more fully in the marketplace of goods and services, similar to people in developed nations.

In new research with Prof. Kelly D. Martin at Colorado State University that is forthcoming in the Journal of Consumer Research, we used data from more than 77,000 consumers across 51 developing countries and juxtaposed that data with multidimensional poverty data from 104 countries, with a combined population of 5.2 billion (78% of the world total).

Our research showed that marketers who seek to exploit traditional selling opportunities by interacting with the bottom-of-the pyramid consumers are bound to be disappointed since the needs and desires of such individuals are not geared toward the types of consumption typical of sophisticated markets.

Instead, firms should look to the next level of affluence across nations and modify their offerings in ways that make them affordable and available. For the true BOP consumer, their goal should be one of economic development through job creation that may eventually lead to rising levels of standard of living.

For "Very High Human Development Countries" like the U.S., Norway, Japan, France, 14.79% represent the over-exploited consumer world. For "High Human Development Countries" such as Argentina, Kuwait, Chile, and Romania, 13.77% represent the greatest potential to inherit the needs and desires of High Development Countries and join the consumer world.

"Medium Human Development Countries" including China, the Philippines, Egypt and Guyana, there is a 65.67% split between nations that are above and below the consumption adequacy threshold and represent some possibilities for marketers.

And after considerable modifications to their product offerings, "Low Human Development Countries" such as Kenya, Yemen, Nepal, and Nigeria, 5.77% represent subsistence living and little market expansion possibilities without considerable economic development.

In the final analysis, global business cannot continue to grow on the backs of wealthy or impoverished consumers. Instead, the overarching goal should be to expand opportunities around the world that inspire consumers to seek and fulfill important needs and desires.

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