Crossing the bridge to poverty,
with low-cost cars
Sofie Van den waeyenberg
Department of Business Economics and Strategic Management, Vrije Universiteit Brussel, Brussels, Belgium, and
Luc Hens
Department of Business Economics and Strategic Management, Vesalius College and Vrije Universiteit Brussel, Brussels, Belgium
Abstract
Purpose – The purpose of this study is to examine which changes companies need to implement in their transactional marketing strategy to sell to the
poor when launching a product innovation in low-income countries.
Design/methodology/approach – The paper confronts the literature on the “bottom of the pyramid” with the diffusion of innovations theory in
order to identify the country characteristics that call for marketing changes when entering low-income markets. The authors investigate for one case
(the Tata Nano) whether – and how – the company implements changes to respond to these conceptually identified challenges. The case study is
systematically analysed and structured according to Kotler’s four Ps.
Findings – The case shows that companies can create products with functionality and cost advantage for the poor without compromising on safety
and comfort. Creating an innovative distribution system pushes costs and builds trust between the company and the customer.
Research limitations/implications – The study examines one case from the automobile industry. Marketers would benefit from multiple case
studies.
Originality/value – The study’s originality springs from the confrontation between the bottom of the pyramid and the diffusion of innovations
theories. The study is valuable to marketers targeting the bottom of the pyramid. The case study is interesting because the industry (automobile)
surprisingly targets a poorer non-traditional customer base (the upper bottom of the pyramid).
Keywords Marketing strategy, Poverty, Product innovation, Disadvantaged groups, Automotive industry
Paper type Case study
An executive summary for managers and executive
readers can be found at the end of this issue.
1. Introduction
Since Prahalad and Hart (2002) coined the term “bottom of
the pyramid”, the poor living in low- and middle-income
countries have received increasing attention from
multinationals and academics. The bottom of the pyramid
attracts multinationals because of its large population with a
pending demand, low consumer expectations, slight
competition, and the possibility to leapfrog to the newest
technology.
Hart and Christensen (2002) propose that companies bring
disruptive product innovation to the marketplace at the
bottom of the income pyramid first, that is, before launching
the product in high-income countries. This idea is supported
by Prahalad and Hart (2002) and Prahalad and Hammond
(2002). They argue that companies can increase their profits
and at the same time contribute to sustainable development
by selling their products and services to the four billion
poorest people in the world, the majority of whom live in low-
and middle-income countries and are not targeted by
multinationals.
Until the 1980s low- and middle-income countries served
as suppliers of labour and raw materials; gradually they
themselves became markets, mainly for existing, often
obsolete products. Recently, companies have been paying
more attention to low- and middle-income countries as
markets for products adapted to local needs and preferences.
Most companies, however, still consider high-income
countries as the primary market to introduce a new product
(Arnold and Quelch, 1998; Hart, 2005; Prahalad and
Lieberthal, 1998). Market entries into the developing world
have been largely neglected. Considering the cultural and
economic difference between developed and developing
countries, we believe that conclusions from previous
research on market entry in developed countries cannot be
generalized to developing countries. This study contributes to
filling that void.
A company from a high-income country that enters the
market in other high-income countries usually does not need
to worry about economic distance; a company from a high-
income country that wants to enter the market in developing
countries, especially the markets at the bottom of the
pyramid, does.
Companies that introduce new products in new markets
know that they have to adapt product design, pricing,
promotion, and distribution (Kotler’s four P’s). The purpose
of this paper is to examine which marketing strategy
companies need to implement to sell to the poor. Our
research entails a qualitative case study, namely the market
introduction of a low-cost car, the Tata Nano, by Tata Motors
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0736-3761.htm
Journal of Consumer Marketing
25/7 (2008) 439 –445
q Emerald Group Publishing Limited [ISSN 0736-3761]
[DOI 10.1108/07363760810915653]
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