World's largest untapped consumer segment
With a monthly income varing from $63 and $700, many of them use "branded shampoos and detergents regularly, and they sometimes indulge in a bar of chocolate or bottle of perfume. A good number own televisions, refrigerators, and DVD players."
Known as the "next billion," these consumers - who spend over $1 trillion a year - can't "afford to make mistakes" and will "carefully compare [products] functional, technical, and emotional benefits."
BCG has five tips for companies on how to reach this group:
Design and develop products with functions and prices that compensate for small living spaces, unreliable utilities, limited budgets and other constraints
- Leverage "ubiquitous distributions" by partnering with existing networks, such as the postal service, to ensure broad coverage, low cost, and reasonable control
- Design educational marketing programs that explain the importance of a product’s benefits and that foster new demand […]
- Unleash the organization: establish clear accountability for serving the next b8illion, encourage growth over short-term profitability, foster innovation, and embed low-cost processes
- Collaborate with companies from other industries (even with competitors, on occasion) to enhance consumer programs (such as easy financing) and improve scale economics (for example, by sharing distribution costs)
Comments (4)
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One of the really interesting questions here is whether these new consumers will make similar choices to those that American and Europeans are making in regards to fair trade and social responsibility. Could be a major challenge for the MNCs if they don't get with the picture. The link in my profile has a bit more on this idea...
Posted by: dan k | Dec 19, 2007 12:35:40 PM
To add to this list, the 6th tip I would suggest would be to bear in mind the needs of consumers with disabilities. The World Health Organization says that people with disabilities form about 10 percent of the population so they should be accounted for in any case. But stigma and discrimination toward disability can lead to poverty, and the conditions of poverty can cause disability. Because of this, disabled people form as much as 15 to 20 percent of the poorest people in the world. Exclude them and you exclude a large segment of this population.
So for example, products should not depend exclusively on consumer's ability to hear; or to see; or to operate two hands with all 10 digits; etc. Or else they may be inaccessible to deaf consumers, or blind consumers, or consumers with certain types of mobility-related impairments. In order to achieve a product with as close to universal accessibility as feasible, people with disabilities need to be closely consulted from the concept (pre-design) stage and at every stage of product development, production, and dissemination thereafter.
Posted by: Andrea Shettle, MSW | Dec 20, 2007 11:30:29 AM
In general the report proejcts a good picture of the next billion. However the principles for serving these costumers seems too simplistic. This consumer segment in Brazil would be much different compared to India. The socio-cultural aspects even within a country would change so much that a very robust model needs to be adopted by the companies to effective serve these consumers.
Posted by: Kirti Mishra | Dec 25, 2007 8:36:01 AM
I am visiting this blog first time. It really sounds good...
Posted by: James | Jun 25, 2008 8:01:16 AM