Bottom of the pyramid , management homework help

User Generated

wnpx1992

Business Finance

Description

Please read this article and answer the questions at the end of the article. At least 500 words for this assignments.

Unformatted Attachment Preview

Indians Spurn Snacks, Shampoo to Load Their Smartphones Most Indians struggle to make ends meet, and increased spending in one area means cutbacks elsewhere ENLARGE Many cellular companies sponsor signage on local mom-andpop shops like Anup Kapoor's in New Delhi. PHOTO: PREETIKA RANA/THE WALL STREET JOURNAL By PREETIKA RANA Updated Aug. 15, 2016 1:19 a.m. ET 15 COMMENTS NEW DELHI—A new wave of affordable smartphones has brought hundreds of millions of Indians online for the first time, giving them access to better education, jobs and entertainment. But there is one sector that isn’t thrilled with this development: consumer-goods companies. Nestlé SA, Coca-Cola Co. and others selling consumer products to India’s 1.2 billion people say that as their poorest customers start spending on smartphone data, they have fewer pennies left over for snacks, sodas and shampoo. Most Indians still struggle to make ends meet, and increased spending in one area inevitably means cutbacks elsewhere, they say. “The growing consumption of mobile data and impressive growth in the number of mobile users … has resulted in consumers increasing their spends on phones rather than on fast-moving consumer products,” said Sanjay Khajuria, a spokesman for Nestlé in India. The evidence for this trend is largely circumstantial. Mobile-data consumption is accelerating rapidly, while at the same time sales growth at some of India’s largest consumer companies has slipped to a two-year low. “We are competing for the consumer’s wallet not just with beverages and other impulse categories, but also with data services on smartphones,” said Venkatesh Kini, the president of Coca-Cola in India and Southwest Asia. ENLARGE Indians generally can’t afford monthly data plans, and only get online when they have some spare change. For a quick peek at Google or Facebook, for example, Vodafone GroupPLC offers data plans for as little as 15 cents at a time, roughly the same price consumers pay for a bag of salted chips. People buy these mini-data plans at the same mom-and-pop stores where they buy their snacks. “There was a time when kids would come here and blow their pocket money on chips and chocolate,” said Anup Kapoor, who runs a mom-and-pop grocery shop in New Delhi. These days, “they spend every last rupee on a data recharge instead.” Mr. Kapoor initially resisted the lure of data, even as rival grocers doubled up as recharge centers. But the business became so lucrative in recent years that he eventually gave in. Now, data and voice plans make for some 70% of his daily sales. The battle for limited space in India’s tiny storefronts is fierce. Cellular companies sponsor signage to make sure customers know their local mom-and-pop offers more than just a cola or candy. A Vodafone-branded billboard hangs over Mr. Kapoor’s shop, while posters from three other cellphone providers are plastered across racks of PepsiCo Inc.’s Frito-Lay chips and crates of Coca-Cola’s Thumbs Up cola. Some shoppers outside the store said they had cut down on impulse purchases to finance more time online. After buying her first smartphone last year, Lakshmi Kumari stopped spending money on hairconditioner sachets. “It was an added expense. Shampoo works just fine,” said Ms. Kumari, who earns $100 a month washing kitchenware in rich homes. “I can do without conditioner. But I can’t do anything without my phone. I can’t hear songs, I can’t surf the net, and I can’t chat with friends.” For consumer-product companies, the spending shift toward data is another dose of bad news. They were already grappling with a two-year drought that sapped the limited spending power of farmers in this largely agriculture-dependent economy. Making matters worse, these companies had counted on emerging markets such as India to make up for slower growth in the West. But while smartphones are one source of their troubles, they can also be part of the solution. Godrej Consumer Products Ltd., an Indian company that sells everything from mosquito repellents to hair color, this year began giving consumers beauty and hair-coloring tips on prerecorded mobile calls. In return, it said, consumers who answered and listened to these calls the most would stand a chance to win a free smartphone. Unilever PLC, the maker of Ben & Jerry’s ice cream and Axe deodorant, hopes to leverage the explosion of phones in India to market its ever-expanding portfolio of personal-care products. For the poor Indian who owns a phone but hasn’t upgraded to data, the company invented a free mobile radio station that that lets callers dial in to hear popular Bollywood tracks. Breaks between songs are interspersed with ads for Lux soap and Brooke Bond tea, among other Unilever products. Last year, it began encouraging aspirational middle-class Indians, who own phones and consume data in small spurts, to sign up for a program that delivers free tips on topics including how to speak better English and dressing for an interview. The tips are delivered by the mascots for its Rin detergent, and can be downloaded over a smartphone. Like other consumer companies, the Anglo-Dutch giant is battling weak demand and anemic sales growth in India. Sales from its Indian unit—India’s largest consumer-products company— grew just 3% in the quarter ended June 30, compared with 10% in the corresponding quarter two years ago, about the time that cheap smartphones began flooding the market. By comparison, Bharti Airtel Ltd.—India’s largest cellular company—said data consumption by its customers tripled over the same period, fueling a 45% increase in average consumer spending even as data plans have become less expensive. Smartphones are “now the new direction in which consumers are moving,” Hindustan Unilever Ltd. Chief Executive Sanjiv Mehta told shareholders last month. “The opportunity for us is to ensure that we are winning in this world, this new connected world.” Write to Preetika Rana at preetika.rana@wsj.com QUESTIONS: 1. What is the bottom of the pyramid? What are some of the strategies employed by consumer goods companies for the bottom of the pyramid in India? 2. How do the data plans of companies like Vodaphone in India likewise epitomize a bottom-of-the-pyramid strategy? Why does this strategy work for data? 3. How successful has the strategy of sachets proven to be for multinational consumer goods corporations up until recently? Why is this strategy now running into problems? Why are Indians spending on data rather than sachets? 4. What would you advise companies like Nestlé to do now? Are these kinds of problems only going to be temporary? Will most Indian households eventually spend less on data? Or is this problem only going to get worse for consumer goods corporations?
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

please find the attached file. i look forward to working with you again. good bye
please find the attached file. i look forward to working with you again. good bye

Running head: BOTTOM OF THE PYRAMD

1

Bottom of the pyramid
Name
Institution
Course
Tutor
Date

2

Bottom of the pyramid
Bottom of the pyramid can refer to the largest but also the poorest social economic
group who live on less than just $2.5 a day (Karnani 2007). Bottom of the pyramid is mostly
used by people or organizations developing new models of handling business that
intentionally target people who use new technology. One strategy that consumer companies
in India have used is the use of pre-recorded calls when advertising their products. Godrej
Consumer Products gave a chance to i...


Anonymous
I was stuck on this subject and a friend recommended Studypool. I'm so glad I checked it out!

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags