Soﬁe Van den waeyenberg
Department of Business Economics and Strategic Management, Vrije Universiteit Brussel, Brussels, Belgium, and
Department of Business Economics and Strategic Management, Vesalius College and Vrije Universiteit Brussel, Brussels, Belgium
Abstract Purpose – The purpose of this study is to examine which changescompanies need to implement in their transactional marketing strategy to sell to the poor when launching a product innovation in low-income countries. Design/methodology/approach – The paper confronts the literature on the “bottom of the pyramid” with the diffusion of innovations theory in order to identify the country characteristics that call for marketing changes when entering low-incomemarkets. The authors investigate for one case (the Tata Nano) whether – and how – the company implements changes to respond to these conceptually identiﬁed challenges. The case study is systematically analysed and structured according to Kotler’s four Ps. Findings – The case shows that companies can create products with functionality and cost advantage for the poor without compromising on safety andcomfort. Creating an innovative distribution system pushes costs and builds trust between the company and the customer. Research limitations/implications – The study examines one case from the automobile industry. Marketers would beneﬁt from multiple case studies. Originality/value – The study’s originality springs from the confrontation between the bottom of the pyramid and the diffusion ofinnovations theories. The study is valuable to marketers targeting the bottom of the pyramid. The case study is interesting because the industry (automobile) surprisingly targets a poorer non-traditional customer base (the upper bottom of the pyramid). Keywords Marketing strategy, Poverty, Product innovation, Disadvantaged groups, Automotive industry Paper type Case study
An executive summary formanagers and executive readers can be found at the end of this issue.
Since Prahalad and Hart (2002) coined the term “bottom of the pyramid”, the poor living in low- and middle-income countries have received increasing attention from multinationals and academics. The bottom of the pyramid attracts multinationals because of its large population with a pending demand, low consumerexpectations, slight competition, and the possibility to leapfrog to the newest technology. Hart and Christensen (2002) propose that companies bring disruptive product innovation to the marketplace at the bottom of the income pyramid ﬁrst, that is, before launching the product in high-income countries. This idea is supported by Prahalad and Hart (2002) and Prahalad and Hammond (2002). They arguethat companies can increase their proﬁts and at the same time contribute to sustainable development by selling their products and services to the four billion poorest people in the world, the majority of whom live in lowThe current issue and full text archive of this journal is available at www.emeraldinsight.com/0736-3761.htm
Journal of Consumer Marketing 25/7 (2008) 439– 445 q Emerald GroupPublishing Limited [ISSN 0736-3761] [DOI 10.1108/07363760810915653]
and middle-income countries and are not targeted by multinationals. Until the 1980s low- and middle-income countries served as suppliers of labour and raw materials; gradually they themselves became markets, mainly for existing, often obsolete products. Recently, companies have been paying more attention to low- and middle-incomecountries as markets for products adapted to local needs and preferences. Most companies, however, still consider high-income countries as the primary market to introduce a new product (Arnold and Quelch, 1998; Hart, 2005; Prahalad and Lieberthal, 1998). Market entries into the developing world have been largely neglected. Considering the cultural and economic difference between developed and...