Global Consumer-Products Companies Target Low-Income Consumers “Frugal engi...
Global Consumer-Products Companies Target Low-Income Consumers“Frugal engineering.” “Indovation.” “Reverse innovation.” These are some of the terms that marketers at GE, Procter & Gamble, Siemens, and Unilever are using to describe efforts to penetrate more deeply into emerging markets (see Exhibit 11-7). As growth in mature markets slows, executives and managers at many global companies are realizing that the ability to serve the needs of the world’s poorest consumers will be a critical source of competitive advantage in the decades to come. Procter & Gamble CEO Robert McDonaldstatic/image/hrline/5.gif
Answer 1: The Bottom of the pyramid refers to Maslow's Hierarchy of Needs. The bottom of the pyramid explains the fact that the most basic human needs are food, water, medicine, sleep, etc., and how to choose to meet these needs more than others.Consumers at this level often fall under the category of low earners. When companies identify this level of the pyramid, they often produce cheaper products, usually food, and other basic necessities. In this way, they target low-paying customers and how their products can meet their basic needs.So companies such as Siemens, GE, Nestle, and Procter & Gamble point to the “bottom of the pyramid” to meet the basic needs of customers.Answer 2: Characteristics of Innovations:
There are five factors that affect the rate of adoption:
[*]Relative advantage: How a new product compares to existing products or methods. Advertisers will be able to compare their new products with their existing ones
[*]Compatibility: How similar the product is to the available prices and previous information. These guides retailers as it is difficult to understand and use a new product.
[*]Complexity: How difficult it is to understand and apply a new product. This shows how much the product complies with existing prices and prior information
[*]Divisibility: How easy it is to try a product on a limited basis without much cost. This directs advertisers to the idea that a new product may be tempting
[*]Communicability. How well discussed the value or benefits of a product are. This helps the advertisers to guide the customers on how to try a new product or method.
By analyzing the above five factors that affect the level of acceptance of new products, all five of these factors will need to be considered in-depth, especially the complex one in one person’s perspective.Answer 3: In emerging markets, word-of-mouth / social media will probably work best for a product like P&G's PUR. Consumers need to be open to new ways of doing things and based on traditions and values, this may be difficult to do. Using local resources to assist in marketing efforts will also help a little.Personal marketing and sampling, I think, could be the kind of marketing or promotional communication that might be needed in that situation. Because many rural areas in developing countries are powerless, media advertising (television, radio, and the Internet) does not work in these markets. Personal marketing, where retailers go from house to house to promote the product to potential customers and explain how it works and the benefits it offers, is a better option.Additionally, businesses can provide consumers with samples to try the product themselves and make an informed decision. Customers should be willing to try new and unusual products. They should be willing to try a new product that will help them and improve their health. Advertisers need to be careful about how they advertise their products in order to achieve this. They should emphasize the benefits of the user and ensure that the message is clear and simple so that information can be passed on effectively.Answer 4: It comes to mind when it comes to standing up for yourself in the face of adversity in global advertising. Nestle decided that in order to be successful, they needed to be willing to adapt their products to suit local markets. In global advertising, the problem of balance against customization comes to mind. Nestle realized that in order to be successful, they needed to accept the localization of their products.
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