Articles

14.2.2011 Brands ignoring huge audience

Marketers could gain major benefits from creating innovative products for the "forgotten" shoppers with low levels of disposable income across the globe, a report has argued. According toconsultancy Booz & Co, over 1bn people earn between $2.50 and $7.50 a day, but this audience is often neglected in favour of the $15 to $75-per-day middle classes. "The segment includes more than 1.5bn people and represents a new and surprising opportunity for companies bold enough to innovate to meet their basic needs and smart enough to execute profitably," it said. "This opportunity is not right for all companies. Eighty percent of companies will have little to do with this segment." More than 60% of Indian households, and over 50% of their Chinese counterparts fit this profile, Booz suggested.  However, it has been estimated the 286m poorest residences in China boast combined annual earnings of $691bn. The 171m Indian homes sharing the same status accrue $378bn a year, and Brazil's 25m least well-off households claim $73bn.

Low-income shoppers are generally "oblivious" to the goods sold by multinationals, as they sit considerably beyond a realistic pricing tier. The group might use tooth powder rather than toothpaste and substitute homemade clothes for branded apparel, while having limited or no access to cars, washing machines and TV. Food group Danone sells 50-gram pouches of its drinkable yoghurt for 10 cents in Senegal, and offers cups of water for 15 cents in Mexico. The organisation has increased the proportion of sales attributable to emerging nations from 6% a decade ago to over 40% at present.  Hindustan Unilever has a similar strategy for India, where around 30% of personal care goods are purchased in single-use sachets costing roughly 2 cents each.  Similarly, Procter & Gamble is now targeting what it calls the "$2 a day" customer base, for example by developing shampoo and body wash that deliver the desired results despite a lack of hot water.

B.L. 14.2.2011