The New Rules of BoP Marketing
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Image: Amit Verma
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THE HEART WANTS MORE Manu Anand, head of Pepsi India, at a kirana shop in a village near Gurgaon
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antosh Nagar is almost a city within a city. Inside this sprawling slum in Mumbai’s north-western suburbs are rows of houses that sit cheek by jowl with each other. Over 20,000 residents run businesses from tailoring to soap making in its narrow, labyrinthine bylanes. There are almost half a dozen schools and hawkers selling everything from brooms to insurance policies. Not to forget the ubiquitous kirana store, one every 15 metres, serving a growing demand for everyday household items, from mosquito coils to popular detergent, from lanterns to shampoo sachets.
Ravi Maurya, whose tuck shop lies amid this hustle-bustle, has been doing brisk business in this urban slum for a quarter of a century. Maurya wouldn’t think of moving out of Santosh Nagar. This is where he’s always lived — and earned his livelihood, serving countless customers, many of whom transact no more than Rs. 5 at a time. Maurya’s merchandise is also tailored accordingly — small pack sizes, lower priced products and lesser known brands. The national brands that get advertised on television don’t always make it to Maurya’s shop shelf, unless he decides to go to the local wholesaler and buy his supplies. The large company distributors shun stores like his situated inside the slum, preferring to restrict themselves to the larger outlets, about a kilometre or two away. “They just didn’t care about us,” says Maurya.
So about a year ago, Maurya was pleasantly surprised when a PepsiCo distributor salesman turned up at his door, offering to book orders, supply ready stock and even offer him a week’s credit. As a result, today PepsiCo’s Lehar range of namkeens and wafers hang from shop fronts in his store — and across most of Santosh Nagar — aggressively competing with locally made brands like Diamond and Balaji.
Lehar’s arrival inside the bylanes of large urban slums like Santosh Nagar represents just one part of the $60 billion (global net revenue) PepsiCo’s larger push to build a significant business catering to the consumers at the bottom-of-the-pyramid (BoP) in India. About three years ago, PepsiCo drew up a new blueprint for long-term growth in India. It spoke of the need for significantly widening reach, aiming for the new consuming class across urban and rural India — and more importantly, creating a whole new set of locally developed products for the masses.
Till then, PepsiCo’s attempts to push deeper into the Indian heartland had entailed introducing smaller pack sizes of its wafers and smaller glass bottles of Pepsi cola priced at Rs. 5. But somehow, that didn’t help widen the consumer base for wafers and beverages. It realised it needed a completely different approach to serve BoP consumers. It discovered two routes: Its joint venture with Tata Global Beverages to launch affordable health drinks and also completely reworking the Lehar business model to connect with a wider consumer base.
Starting a year-and-a-half ago, under its chairman Sanjeev Chadha’s leadership in India, it began a series of experiments with product concepts that were tailored for BoP consumers. At least two such concepts have already been successfully tested. One of them is Lehar Iron Chusti, a range of iron fortified biscuits and puffs, targeted at adolescent girls, priced at Rs. 2. It was tested in Guntur in Andhra Pradesh. And across rural Maharashtra and Gujarat, through its joint venture with Tata GlucoPlus, a lemon drink, priced at about Rs. 6, with isotonic salts and rehydration capabilities being marketed to urban labourers and rural agricultural workers.
Around the time Manu Anand took over from Chadha as the new chairman a year ago, these pilots were being rolled out. Both turned out to be successful. So the real issue now was how to take them to the market and build a profitable business that also had scale. Anand, who’s been with PepsiCo for 18 years, was among the first employees in the fledgling foods division in India. He was witness to two failed attempts at building a foods business in the past. The foods division had to literally fight for attention and resources with a much larger beverage business. “I had a boss in Thailand who had difficulty understanding what I was doing,” Anand says, pointing to the fact that selling foods in India is an entirely different ball game.
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Samar Srivastava
Dear Sir,
As it is rightly said by you if we can identify from the article this approach by PepsiCo India is more COMPETITION FOCUSED STRATEGY rather than CUSTOMER FOCUSED STRATEGY.
