LinkedIn Twitter Facebook RSS Feed

The Bottom of the Economic Pyramid: What do the Poor Buy?

Article by: Nancy Tobler
March 31, 2014

In one of my graduate courses we discussed the purchase patterns of those who live in poverty. I remember my professor talking about canoeing down a jungle river and encountering indigenous men in tribal clothing (penis gourds) and western suit ties with Coke symbols on them. I remembered thinking, how nice of them to dress up in both their traditional clothing and in what they considered to be the western world idea of dressed up. Official dress was not the point of my marketing professor; rather, he wanted us to see that brand and product recognition exist in all locations of the world.

The direct selling industry knows that product recognition happens in all spheres of society, and continues to reach out and recruit to sell to all levels of the economic ladder. One of my favorite photos is of an Avon lady demonstrating deodorant to Tembe Indians in Brazil’s Amazon region (Hammond & Prahalad, 2004). Hammond and Prahalad make a good argument that although many companies have moved into emerging economies, few of those companies identify the needs of the poor and share products with them. Direct selling companies have the unique opportunity to identify needs (product need and innovation) and overcome barriers of traditional brick and mortar companies (low cost entry and distribution systems).

Direct selling companies start or expand into emerging markets as need or the opportunity arises. One example is an Indian company, Modicare (https://www.modicare.com/kkmodi-message.aspx) which expanded into direct selling in 1996. Because the company grew up in India, the founders had unique insights into how people at all economic levels approached purchasing. Product amounts may need to be smaller for some buyers; they may also need to be cheaper, and may even need to be lower quality to provide the poorest an opportunity to change their economic situation.

Another reason direct selling companies have been successful around the world is their ability to innovate. One such company is Hindustan Unilever Limited. The World Health Organization states that, “Iodine deficiency is one of the main causes of impaired cognitive development in children. HUL recognized this need and designed a way to stabilize and transport iodized salt.

We often forget that many products (aloe vera, herbal supplements, magnet therapy) we find on our supermarket or pharmacy shelves began in the direct selling arena. The direct selling industry has been evolving to fit the technology of a higher class economy; to solve the problems of selling to a lower level the industry can apply older principles.

The traditional barriers for traditional selling have not been a big problem for direct selling. Most of us who grew up in the middle-class do not understand that poverty has a wide range. When addressing the poorest of the poor, the complex process of the cycle of poverty presents unique challenges both in terms of product development and designing a business opportunity. Many times women and children suffer the most from the bounds of poverty. If I don’t have money to purchase products, how can I possibly have enough money to start a business? If I am so poor that I don’t have enough resources for food and basic hygiene, how can I take resources to help improve my situation? If I spend 18 hours a day obtaining food, clothing and shelter, how can I add a couple hours a day to devote to a business opportunity. As usual, there are no easy or short term solutions. However, providing products that are low cost and in smaller amounts as well as providing education on how to improve hygiene and more wisely spend the money that one has are all steps that direct selling companies can and do provide.

In 2013, emerging markets accounted for 50% of the world GDP (http://www.economist.com/news/briefing/21582257-most-dramatic-and-disruptive-period-emerging-market-growth-world-has-ever-seen). Most of the increase in buying power has occurred in India, Brazil, Russia and China; however, all emerging markets have potential for direct selling companies to innovate, distribute and provide income for a wide range of economic levels.

Hammond, A.L., & Prahalad, C.K. (May-June, 2004). Selling to the poor. Foreign Policy, 142. 30-37. http://www.foreignpolicy.com/articles/2004/05/01/selling_to_the_poor

Read more About

All Articles

Nancy Tobler

Nancy Tobler has a PhD in communication from the University of Utah. She specializes in research on how organizations change,...

Read more Articles by Nancy Tobler

Share Article

Be the first to Comment