Harvinder Singh: “Key to changing people’s life is knowing what exactly they need”
The inherent potential in emerging markets is largely untapped because of radically different dynamics of these markets. A large proportion of people in these markets comprise of what is commonly termed as ‘Bottom of the Pyramid’. Companies fall to appreciate the differences in consumer/market dynamics and design their market offering and marketing strategies in isolation of realities of the marketplace. By carefully designing their offers, companies not only make profits but also social impact by improving people’s quality life. This is the main point focus of the seminar ‘Making a social impact at the Bottom of the Pyramid through Marketing’ held in the EADA’s International Week. This course was conducted by Ph.D. Harvinder Singh, professor in Marketing with IMT Ghaziabad (India) and IMT Dubai (UAE).
First of all, what is your impression about your seminar at EADA?
I would highlight the class environment which was absolutely amazing. There were 23 students representing 15 nationalities. It is unlike most business schools in India where there is a majority of Indian students with some foreign students under the exchange program. In Dubai, there are more nationalities but most of them are from Asia. In my EADA class, all the nationalities had a balanced representation.
What are the main focus points of your course in the EADA’s International Week?
My course focused on the significance and potential of markets at the bottom of income pyramid in the world. More than 5 billion people at the bottom of the pyramid are often ignored by the companies, assuming them to be unprofitable. However, the companies don’t realise that they are collectively a profitable segment.
What are the keys to making a social impact at the Bottom of the Pyramid through Marketing?
For making an impact on people’s lives at the Bottom of the Pyramid (BoP) companies must provide them quality products at the right price. While doing so they should also earn reasonable profits otherwise the business would not remain sustainable. If the business model is not sustainable companies would not be able to improve people’s love on a long-term basis. In my class I discussed cases of rural healthcare models like Narayana Hridayalaya and e-Healthpoint wherein companies have serviced people at the bottom of the pyramid by providing health services at par with the first world at the price of third world countries.
What is the biggest difference between the top and the Bottom of the Pyramid?
Consumers at the top of the pyramid are global citizens who might be living in New York, London, Barcelona or Mumbai. These people have a similar lifestyle characterized by high income, refined tastes, international mobility, and a global mindset. They end up buying the same products and brands. Interestingly people living at the bottom of the pyramid are also similar whether they live in India, Perú, Mexico or Kenya. Their life is characterised by meager income, low or no education, poor healthcare, non-existent infrastructure and lack of opportunities. They end up buying similar products and brands.
Why is it important for companies to make a social impact at the Bottom of the Pyramid?
Improving people’s quality of life is a very important reason for the companies to serve the BoP. However, the companies also have a selfish reason to pursue these markets. Most developed markets are near saturation levels. Companies are fighting hard to maintain their foothold in these markets. It makes sense for them to invest in BoP markets where competition among companies is missing. The sheer size of this market is huge. Moreover, a significant number of BoP consumers will under social mobility and climb up in near future to the next income segment. The pioneering companies will have a competitive edge over others in such cases.
Why do you think companies are unable to tap into the emerging market´s potential?
Most companies make the mistake of looking at the individual potential of a BoP individual or family. It must be understood that potential of BoP markets is inherent in their size and synergies arising out of this. Companies can still make similar or more money out of these markets by selling a large number of units to a large population at a smaller margin. The aggregate potential of these markets makes these attractive and profitable.
So, there’s a big market in poor countries, isn’t it?
Key to changing people’s life is knowing what exactly they need. BoP consumers do not need second-hand urban products. Their needs and context are specific. Companies must design and manufacture relevant products to the consumers at (BoP). For doing this the companies need to examine the BoP consumer more closely and frequently. It is like living with them for a considerable time. Also, they should be careful how to communicate with the BoP consumers, not hurting the sentiments of these consumers.
At the end of the course, what course reflections could participants apply to any organization?
Do not show mercy to BoP people. Give them attention and respect as you do to consumers from any other market. There is nothing wrong with them; they are a bit different.
Why do you think private companies are more creative than governments?
Most governments have to work within the boundaries defined by the regulatory and administrative framework. Consequently, they cannot respond to sudden changes/developments in the marketplace at the desired pace. Private companies, on the other hand, are very swift in decision-making. The sense the market changes early, adjust their operations accordingly and successfully outmaneuver the challenges. In many countries, governments work under the compulsions of multi-party alliances and pressure from the opposition parties.
In what sense manufacturing in countries like India o China doesn’t impact negatively on the brand company?
Today, country of Origin is not a simple concept. It also includes ‘Country of Design’ and ‘Country of Manufacturing’. Brands like ‘Apple’ have successfully established that country of manufacturing (China) has absolutely no impact on a brand’s prestige if the country of design (USA) credentials are impeccable. Moreover, the so-called inferior manufacturing locations are also establishing themselves as destinations for quality manufacturing. Going forward, manufacturing in countries like China and India will not negatively impact the image of a brand.