The Indian Economy Blog

March 15, 2006

Selling to BOP markets in Rural India

Filed under: Business — Naveen @ 7:05 am

Read Building Wealth by the Penny for a snapshot of Hindustan Lever’s efforts in rural India. It will be engaging to see which rural parts of India emerge the most viable ones for companies targeting BOP segments. More importantly, the sequence of businesses that develop profitably in these markets will hold lessons for policy-makers in terms of infrastructure focus. Even a basic infrastructure in these areas can hugely bring down transaction costs for consumers, companies and civil society efforts.

6 Comments »

  1. Kadem now covers four villages, traveling by bus or three-wheeled motor-taxi. She earns about $26 a month, almost as much as her husband brings home as a machine operator at an explosives factory, she said. The extra money covers installments on a new television set and means that the family can afford to send both children to private English-language schools.

    “We should not distinguish between male and female,” said Kadem, who hopes her daughter will become a doctor. “I want my children to be better than me.”

    That’s the most important thing to get from the article. Not only has the family’s living standards marginally improved, but they have established a strong foundation so that their children will never worry about poverty again.

    Comment by ak — March 15, 2006 @ 10:01 am

  2. Another classic case for being successful in the huge BOP market is that of ICICI. Within a short time (less than two decades), they have captured the hearts and wallets of the indian consumer. Using technology as an instrument of strategic change, they have spread far and wide, and have made available advanced banking services (such as the ATM) to remote towns and cities. They are oft-quoted in NextBillion and multitudes of case studies in B-Schools.

    Comment by Raghu — March 16, 2006 @ 11:38 pm

  3. Help! What does BOP stand for?

    Comment by Sarat Dayal — March 18, 2006 @ 5:30 am

  4. Bottom-of-the-Pyramid

    http://www.cs.berkeley.edu/~brewer/ict4b/Fortune-BoP.pdf

    Comment by Naveen — March 18, 2006 @ 8:18 am

  5. Ah! As in C. K. Prahalad? Here is my 2¢ on BOP.

    BOP’s economic power is to be measured not merely by aggregating the purchasing power of a billion low-income people. The BOP “segment” is about bringing the vast majority of a nation into the mainstream economy and giving a nation a sustainable growth. BOP’s rise happened in the US after WWII, and there was an emergence of the largest middle class in the western world. This country’s economic might is still being fueled by that single, post-war phenomenon of the Fifties.

    Comment by Sarat Dayal — March 18, 2006 @ 9:05 pm

  6. i think greatest proof about truth of BOP is thriving moneylender class in rural and semi urban India.They thrive simply becoz people are able to pay interest rates of 10 15 % but not more than that but if we see the credit deposit ration of all majoer banks rural areas are neglected. Most of the cooperatives have been eaten by politicians as managing trustee while state level finance corporations have been milked by big businessmen and left to die.At least in northern states this is the scenario.
    I think innovative lending practices by banks can only bring rural India out of its quagmire of poverty as capital is the main problem there.In urban areas for the time beiing all economic activity includind the investment in equity is being largely driven by homeloans acquired at low interest rates.Though they are not being used for stated purpose but even then it is win win situation for banks, customer and economy as a whole.

    Comment by Anshul — March 22, 2006 @ 8:25 pm

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