Consumer behavior is influenced by internal and external factors. One of the external factors that
sets real boundaries for marketing affordable products to the millions of consumers around the
world with limited income and unmet needs. He believed that companies could help consumers
and be profitable at the same time.
A number of companies have attempted to make this model work. Puriet, an in-home water
purification system manufactured by Hindustan Unilever Limited, was developed for low-
income consumers and has found success by offering a 6-month installment plan to make the $25
price more manageable. The Nokia 105, introduced by Microsoft, is a $25 basic cell phone with
an alarm clock, flashlight, and FM radio. It was priced specifically for low-income consumers
and has sold millions of phones since its introduction in 2013.
However, bottom of the pyramid strategies are not always as workable as companies would have
imagined. The Nokia 5 has struggled to be financially sustainable and has faced challenges as
low-income consumers gravitate toward smart phones that are decreasing in cost. Other
companies missed the mark because of a lack of research, discovering in the end that consumers
could not afford their product or could opt for a cheaper, more local offering. Some companies
have been pushed by investors to show profitability in the short-term with their low-income
market initiatives, which has been difficult to accomplish. In some instances, the only way to
make their business model work over the long term is to partner with a nongovernmental
organization (NGO) which could help them to gain access to consumers through their established
connections within countries.
Let’s consider the possibilities in India, a country with considerable bottom of the pyramid
potential. World Bank 2013 data show India’s population at 1.24 billion people and per capita
income at $125 a month. The McKinsey Global Institute estimates that 78 percent of the that
population fall into the bottom of the pyramid category, with the majority living in rural India.
They predict that this market may be worth $1.5 trillion by 2020. The sheer numbers of
consumers and the overall potential make this market appealing to marketers, but still the low
level of income poses considerable challenges.
For years Procter & Gamble (P&G) has worked to find ways to capture market share of the
men’s razor market in India. They felt that there was a significant opportunity to meet the
shaving needs of Indian men at the bottom of the pyramid. Unfortunately, early efforts, like their
Vector razor, were undermined by a misunderstanding of the shaving process for men in India,
many of whom did not have access to running water. More recently, P&G introduced the Gillette
Guard. This razor was developed based on 3,000 hours of research over 18 months, some of it
conducted in the homes of low-income Indian men. They asked the men about their shaving
rituals and observed them in the process of shaving. What P&G found is that they typically shave
on the floors of their huts with no electricity, using a bowl of water and no mirror. Their primary
objective is to avoid cutting themselves. This research proved to be invaluable in the
development of the new razor.
The Gillette Guard was the result of what Alberto Carvalho, vice president, global Gillette,
described as a focus on not only producing a razor that would meet the needs of these consumers,
but doing it at "ruthless cost." This meant paying attention to the smallest details, designing a
stripped-down single blade razor with only four components versus the 25 found in more
sophisticated razors. Jim Keighley, associate director for product engineering, says "I can
remember talking about changes to this product that were worth a thousandth, or two
thousandths of a cent." In the end they were able to produce a razor that cost one third of the
previously introduced Vector. Selling price for the Gillette Guard ended up at 15 rupees (34
cents) and razor blades at 5 rupees (12 cents).
As a result of their painstaking research and attention to the needs of this unique target audience,
P&G’s market share for razors and blades has grown significantly in India and at a faster rate
than any other P&G brand in India. Despite the challenges they encountered it appears that the
Gillette Guard can be considered a bottom of the pyramid success story.
DISCUSSION QUESTIONS
Q1. Using the "4A’s" framework in, analyze the considerations that went into the development
of the Gillette Guard razor for the Indian market.
Q2. Are companies targeting the bottom of the pyramid taking advantage of vulnerable
consumers with limited resources?
Q3. More than half of U.S. workers earn less than $30,000 a year, barely above the poverty line
for a family of five. What would you recommend to a company looking to target the bottom of
the pyramid consumers in the United States?