Welcome to Marketing to the Bottom of the Pyramid. In this segment we'll talk about a special type of marketing in Asia. But it's not limited to just Asia. It can be applied to other developing countries, such as in Africa. Okay, so why is it called the bottom of the pyramid? Well, it's because, as we can see in this diagram, it looks like a pyramid. And it speaks of the income disparity, the incredible income disparity, that exists in the global economy where you have just a limited percentage of countries that have high per capita income. Then you have this other vast number of countries that are in the exact opposite situation, that a majority actually dwell at a subsistence level. Therefore, what this implies is that when you're marketing to developing countries and to maybe a majority of that population, your Noon Nopi has to be lowered to a very, very low level. But, as we can see from the famous book, there may lie a fortune at the bottom of that pyramid. Okay, so, the key word here, I think is adjusting our Noon Nopi or perspective of how to market to these countries. And so even though the diagram that we just saw had five tiers, let me compare and contrast the top one, the Tier 1. And I assume that many of my viewers will be viewers in these Tier 1 countries, but let's contrast that with consumers in the Tier 5 countries. And we can do that from all four P standpoints, from the product, from the price, from the place, and from the promotional standpoint. And so these might be some of the key question that we need to ask ourselves, not only as a students, but especially as marketers. For example, from a product stand point, what are we selling? What are we selling? And we learned when we talked about marketing myopia that it's not just the product that we're selling, it has to be much more based on the customer need. What is he buying? In terms of price, we have to take into account that many consumers can't buy on credit, and, therefore, everything may be transacted with cash. So that could be a hurdle that we have to overcome. A big, big problem for many bottom of the pyramid countries is that we can't assume that you have for existing infrastructure, especially in terms of distribution. And, lastly, in terms of promotion, we have to know that how we establish trust and the kind of media that's used to do that may differ when compared to developing countries. Okay so, this is just sort of a summary of the kinds of things that we have to be on the lookout for. That in Tier 5 countries, as we saw with my reference to an abacus, that inter-category competition may be quite significant. So in terms of framing the problem, in terms of what need is being satisfied and the competition that satisfied them, other substitutes, that evoked set may be much broader than it is in our Tier 5 frame of reference, which may be very limited. So take, for example, appliances. Appliances may be, again, framed in that very narrow domain, but in these Tier 5 countries you have other substitutes, and the big reason for that is because they don't have energy. And so in our interview with LG, a critical point of discussion is how a company like LG that sells electronics that requires power, how they deal with consumers who don't have access to power. Service may be another product issue where we assume that service is needed and that consumers are willing to pay for that augmented product. Whereas, in Tier 5 countries, where the cost of labor is low, that assumption may be very misplaced. In terms of price, again, cash on delivery is much more of an accepted practice. And so the payment system in a country is a critical issue, whether people can buy on credit. And this is where, again, to the extent that you can help people by establishing, maybe, debit systems, or through, maybe, smartphones, which have higher penetration, as we saw with Flipkart, and may actually supersede the Internet. And Square may be helping consumers pay through their use of their smartphones, may be a game changer in terms of giving them much more ability to pay for their products. Distribution is a critical issue. And, again, this is where we can't assume that our familiar kind of distribution systems will be in place. And that's why distribution in these bottom of the pyramid countries may not only be very difficult, but end up being very costly. Lastly, in terms of promotion, promotion can be about what kind of information people need, what kind of media can be used. And in the case of developing countries, the information may be, especially when we're talking about a trust, may be just much more defined in a very personal way. And maybe they don't have access to conventional media. And that is where, again, we have to be very resourceful in terms of the thinking in terms of what kind of media can be used.
