Just came across this article in the Business Standard – “The New Holy Grail” – a long rambling incoherent report on a recent presentation by The Boston Consulting Group on the ‘The Next Billion‘ (PDF) customers. One wonders if its simply the way the article is written that seems to imply the incoherency of thoughts or is it based accurately on BCG’s presentation?
Snarks aside, lets take a look at what they’re saying here according to the article,
Clearly, companies doing business in the next-billion market need to rethink their strategies if they are to serve this consumer group profitably. They will need to design cost-efficient products that match consumers’ expectations, create distribution networks that reach the farthest corners of the country and devise marketing and communication programmes that educate the consumer, while prompting him to buy.
Over the past year or so, BCG has studied over 9,000 people across India to understand the needs and behaviour of the next-billion market in the country, especially in three fast-growing and critical areas — financial services, telecom and consumer products. Take a look at its recommendations.
The recommendations are tactical for the most part and examples used are specific to particular brands and their successes. Nokia, Tata and Unilever, all have an extensive history of success in BoP markets around the emerging economies of the developing world. But what more do all three have in common? The article mentions ‘trust’ – as in a ‘trusted’ brand. But its not as simple as that, since the conditions in the BoP create a mindset that has a very sensitive bullshit meter, trust is intimately linked to proof of performance. Trust in this context means that by ‘investing’ in this brand, I will minimize my risk and maximize my ROI. That is, it will give me what I am paying for.
The analysis falls short, imho, by looking at the successful tactics used by each of these brands, and others, rather than identifying the core values that influence buyer behaviour and purchase decision making criteria.
- Low cost products designed to meet user’s needs won’t help if they fall apart after a year of use because their expectations from a durable product were not wholly understood in the first place;
- Distribution networks, while imperative, cannot help if the buyer assumes the product is not meant for him or he is unable to evaluate its relevance or role in his lifestyle;
- And no amount of money spent on marketing and communication programmes that educate the consumer will do any good if they are unable to connect to the real issues of concern that influence the purchasing decisions of the BoP consumer.
- If irregular and unpredictable incomes are the norm and so business models must be redesigned, what are the design criteria or constraints required for business models to be successful?
For the most part, strategies are based on assumptions that this market is motivated in the same way as the better studied consumer segments in the creamy layer.
The biggest differences between the first billion customers and next billion are in attitude –
- “Wait and see” rather than “Try and buy” —-> “Minimize risk, maximize ROI”
- “Repair rather than replace”
- “Tried and true” rather than “Shiny and New”
Next, what are the expectations held by the next billion customers?