Intermediaries Were Bypassed And ITC Gained Direct Contact

Intermediaries Were Bypassed And Itc Gained A Direct Contact With Th

Intermediaries were bypassed, and ITC gained a direct contact with the farmers, thus improving the efficiency of ITC’s soybean acquisition. To achieve this goal, it had to do much more than just distribute PCs. It had to provide equipment for managing power outages, solar panels for extra electricity, and a satellite-based telephone hookup, and it had to train farmers to use the PCs. Without these steps, the PCs would never have worked. The complex solution serves ITC very well.

Now more than 10,000 villages and more than 1 million farmers are covered by its system. ITC is able to pay more to farmers and at the same time cut its costs because it has dramatically reduced the inefficiencies in logistics. The vast market for cell phones among those at the Bottom of the Pyramid (BOP) is not for phones costing $200 or even $100 but for phones costing less than $50. Such a phone cannot simply be a cut-down version of an existing handset. It must be very reliable and have lots of battery capacity, as it will be used by people who do not have reliable access to electricity.

Motorola went through four redesigns to develop a low-cost cell phone with battery life as long as 500 hours for villagers without regular electricity and an extra-loud volume for use in noisy markets. Motorola’s low-cost phone, a no-frills cell phone priced at $40, has a standby time of two weeks and conforms to local languages and customs. The cell-phone manufacturer expects to sell 6 million cell phones in six months in markets including China, India, and Turkey. Marketing to the BOP requires creative financing.

There is also demand for personal computers but again, at very low prices. To meet the needs of this market, Advanced Micro Devices markets a $185 Personal Internet Communicator—a basic computer for developing countries—and a Taiwan company offers a similar device costing just $100.

For most products, demand depends on the customer having sufficient purchasing power. Companies have to devise creative ways to assist those at the BOP to finance larger purchases. For example, Cemex, the world’s third-largest cement company, recognized an opportunity for profit by enabling lower-income Mexicans to build their own homes. The company’s Patrimonio Hoy Programme, a combination builder’s “club” and financing plan that targets homeowners who make less than $5 a day, markets building kits using its premium-grade cement. It recruited 510 promoters to persuade new customers to commit to building additions to their homes.

The customers paid Cemex $11.50 a week and received building materials every 10 weeks until the room was finished—about 70 weeks—customers were on their own for the actual building. Despite their poverty, 99.6 percent of the 150,000 Patrimonio Hoy participants have paid their bills in full. Patrimonio Hoy attracted 42,000 new customers and is expected to turn a $1.5 million profit next year.

Paper For Above instruction

Marketing to the Bottom of the Pyramid (BOP) involves unique challenges and opportunities that require innovative strategies, technological adaptations, and social responsibility considerations. Historically, companies have focused on affluent markets, neglecting the vast potential in serving the world's poorest populations. This approach, however, is shifting as evidence accumulates that targeted BOP marketing can be both profitable and socially impactful, fostering economic development and improving quality of life.

The strategic importance of direct engagement

One notable example is ITC’s initiative to bypass traditional intermediaries in its soybean supply chain. By establishing direct contact with farmers through technological solutions such as PC kiosks equipped with satellite communication, ITC dramatically improved the efficiency and pricing mechanisms for farmers while reducing logistical inefficiencies. This direct approach not only benefits the company by lowering costs but also empowers farmers with timely market information, enabling them to achieve better prices. Such strategic engagement exemplifies how technology can bridge gaps in rural market systems, transforming it into a win-win situation for both corporate and community stakeholders.

Innovation in affordable technology for the BOP

Developing affordable yet functional technology remains a cornerstone of successful BOP marketing. Motorola’s redesign of low-cost cell phones demonstrates a product tailored to rural needs—long battery life, durability, and affordability—making modern communication accessible to those without reliable electricity. These devices serve as vital links to information, health, and economic opportunities, illustrating how technological ingenuity can unlock new markets among underserved populations. Similar innovations in personal computers, like the AMD Personal Internet Communicator, highlight the growing importance of low-cost units designed specifically for low-income consumers, expanding digital access globally.

Creative financing mechanisms

Financial inclusion emerges as another critical factor. With many BOP consumers lacking substantial disposable income, companies innovate by designing payment schemes that allow installments and microcredit. Cemex’s Patrimonio Hoy program exemplifies this by offering building kits through weekly payments, enabling low-income families to improve their housing conditions sustainably. Such models demonstrate that creative financing not only stimulates demand but also fosters financial literacy and stability. Microfinance initiatives, like ICICI’s self-help groups in India, extend small loans with manageable interest rates, further enhanced by community-based savings and lending practices.

Distribution networks of the poor

Distribution strategies tailored to dispersed and low-income populations are vital. Unilever’s network of women entrepreneurs—Shakti Ammas—shows how micro-entrepreneurship can serve as an effective distribution channel. These women leverage social bonds and local knowledge to reach remote villages, making products accessible and affordable. Similar models utilizing local entrepreneurs or floating distributors, as seen with Lifebuoy soap in Vietnam, demonstrate the importance of decentralized, community-based distribution systems to achieve wide coverage and market penetration in rural areas.

Packaging and health benefits as marketing tools

Affordable, single-serve packaging is essential, recognizing that BOP consumers prefer smaller, convenient units that fit their cash flow. Nestlé’s focus on small, affordable ice cream packs and soap sachets illustrates how packaging tailored to local purchasing patterns can increase sales. Additionally, marketing campaigns promoting health benefits, such as handwashing with soap, carry socio-economic value by contributing to disease prevention. WHO’s initiatives with Lifebuoy show how health-oriented marketing can drive product uptake while delivering public health benefits, aligning commercial interests with social responsibility.

Social responsibility and ethical considerations

Nevertheless, marketing to the poor raises ethical questions about exploitation and the fairness of profit margins in such vulnerable markets. Critics argue that charging high interest rates or selling essential products at inflated prices constitutes exploitation, especially when consumers have limited alternatives. Conversely, proponents contend that providing affordable products and credit fosters economic empowerment and development. Therefore, companies must balance profitability with social responsibility, ensuring that their initiatives do not exploit but genuinely serve the needs of low-income populations.

Conclusion and guidelines for BOP market strategies

Successful marketing to the BOP demands a thoughtful combination of technological innovation, tailored financial solutions, community-based distribution, responsible packaging, and health promotion. Companies should assess local conditions, infrastructure, cultural norms, and consumer needs carefully. A comprehensive set of questions—evaluating product relevance, affordability, delivery mechanisms, and social impact—can guide the development of ethical and effective market strategies. Ultimately, embracing social responsibility while pursuing profit can lead to sustainable growth, unlocking enormous potential in the world's poorest populations.

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