Pondering media trends in “Bottom of the Pyramid”

I’m seeing an interesting trend in the news about “Bottom of the Pyramid” markets. Even as we noticed yesterday, that the absolute numbers of those living on $2/day were on a downward trend, there’s hints that the informal economy has arrived in the OECD nations (or erstwhile First World, I suppose).

Grupo Electra’s Ricardo Salinas, in BusinessWeek:

“What we would like to do is have the same model we have in all our other eight countries, a bank especially for people at the bottom of the pyramid,” Salinas said today in an interview in Washington. “It’s a question of regulation, a question of convincing the right authorities that this is something that’s needed. We’re working on it.”
“The bottom of the pyramid exists, even in the U.S.,” he said today after a speech at the U.S. Chamber of Commerce. “It’s amazing the number of families that have been excluded from the traditional financial system in the States. And with this economic crisis even more families are in that situation.” 

That would be an untapped market and whole new business opportunity for retail banking but even more interesting is the news from Unilever a couple of months ago:

Anglo-Dutch food to detergents group Unilever expects poverty to return to Europe and is adapting its strategy accordingly, European chief Jan Zijderveld told the Financial Times Deutschland on Monday. Unilever is introducing smaller packaging for its cleaning, detergent and hygiene products which sell at a lower price than in the usual larger packets and containers.

‘If a Spanish shopper has €17 for the shopping, I cannot sell him a detergent that costs half his budget,’ Zijderveld told the paper.

The new strategy is based on one Unilever has been successfully using in Asia where, for instance, they sell individual amounts of shampoo for one wash at 2 or 3 cents. ‘We still make money, but we’ve forgotten how to do this in Europe,’ said Zijderveld.

Global markets for sachets. This explains the availability of my 3-in-1 Nescafe sachet in packs of 10 in The Netherlands and in single units in Estonia. Yeah, I can afford 17 eurocents for a cup of coffee. Visiting Tallinn and Barcelona all the while thinking about the prepaid economy and kadogo pay as you go affordability was truly fascinating. I honestly cannot say what the economic impact of Spain’s problems has been in the streets and hustling life I saw in old Barcelona. What an affordable holiday location, though the weather is better than the even cheaper Tallinn.

The Scandinavian lifestyle and social support network is an extreme that the middle income economies cannot consider, not as long as the positive value of having some informality in the bazaar means that there are still opportunities for growing a sustainable enterprise from scratch. As a newly admitted MBA student from ESCADE said to us at dinner,

“This is Spain, we still think of good food, though the economy is hurting.”

Who was it who told me that growth alone wasn’t enough of a goal for an economic ecosystem that spans the globe? It seems to be the consensus of most of the people I’ve been meeting across Europe these past few weeks.

This entry was posted in Base of the Pyramid, Consumer Behaviour, Frugality, Innovation Planning, Perspective, Prepaid Economy & Informal Sector, Strategy. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

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