The article in the url link below presents a case study concerning a multi-national’s attempts to move into a new market. In particular, it describes P&G’s efforts to work in developing economies to build a business model to appeal to “Bottom of the Pyramid” consumers (Issues: Profit, p200):
“[P&G] has a goal of increasing total sales by 5% to 7% annually over the next three years. As part of that mission, it is looking to tap roughly one billion additional consumers -- most of them very poor women who live in developing countries.”
The article describes in detail the different challenges a firm like P&G faces and the extent to which it needs to adapt to the new cultural and economic environment—from single portion packaging, to small retail outlets, to different shopping habits (daily, rather than weekly, for example):
“Reaching these customers isn't easy. In emerging markets, P&G estimates that 80% of people buy their wares from mom-and-pop stores no bigger than a closet. … Rather than stock up on full-size goods, which cost more per item, they buy small portions of soap, laundry detergent, and single diapers as they need them -- even though the smaller sizes are usually sold at a premium. … P&G calls such locally owned bodegas, stalls and kiosks "high-frequency stores," because of the multiple times shoppers visit them during a single day or week.”
The article is clear that it is the business model that is driving P&G’s expansion in Mexico, although it is through similar efforts that economic and social progress is also made:
“For P&G the stakes are high. Sales of P&G products in developing markets currently total $20 billion, up from $8 billion five years ago. In recent years, emerging markets have contributed about 40% of the company's "organic" sales growth, which excludes gains from acquisitions. The company still lags other consumer-product rivals. Last year P&G derived 26% of sales in these regions -- a far cry from Unilever and Colgate-Palmolive Co., which manage to snag about 40% of their business in developing markets.”
Take care
Dave
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther
Emerging Ambitions -- P&G's Global Target: Shelves of Tiny Stores --- It Woos Poor Women Buying Single Portions; Mexico's 'Hot Zones'
By Ellen Byron
2229 words
16 July 2007
The Wall Street Journal
A1
http://online.wsj.com/article/SB118454911342967244.html
A freely accessible version of this article can be found at:
http://marketdrivengrowth.blogspot.com/2007/08/p-global-target-shelves-of-tiny-stores.html
