Executive summary of “The influence of marketing on consumption behavior at the bottom of the pyramid”

Citation

(2015), "Executive summary of “The influence of marketing on consumption behavior at the bottom of the pyramid”", Journal of Consumer Marketing, Vol. 32 No. 2. https://doi.org/10.1108/JCM-01-2015-1299

Executive summary of “The influence of marketing on consumption behavior at the bottom of the pyramid”

Article Type: Executive summary and implications for managers and executives From: Journal of Consumer Marketing, Volume 32, Issue 2

This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered, may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present.

Massive opportunity exists for marketers to increase their focus on bottom-of-pyramid (BOP) segment. Such consumers are typically thought to earn around US$2 per day at most. Developing these markets should be driven mainly by private sector operators, analysts believe.

Marketing to poor consumers like BOP remains subject to ongoing debate. Advocates of private sector involvement argue that these segments can accrue various benefits including:

• better access to different products and services; and

• more varied consumption experiences.

In their view, overall quality of life will improve as a result. Consumption allegedly provides a means to alleviate poverty by increasing the amount of disposable income available to BOP households as a result of cheaper products and services. Finance can furthermore leave poorer consumers less vulnerable to approaches from moneylenders and the lack of access to legal services. Allowing the BOP segment freedom of choice and greater control of their own destiny are other factors in the argument.

Contrary opinion is equally resolute. Those holding this view believe that a free-market approach to addressing poverty issues would be misguided. A more appropriate solution involves government-led initiatives backed by appropriate social systems. They likewise assert that BOP consumers:

• would often misuse their scant resources on heavily promoted goods deemed non-essential or even luxury. Products like shampoo, deodorant, various cosmetics and tobacco are among items included in this definition. Such purchases would inevitably come at the expense of goods providing nutrition, health, education and other basic needs; and

• lack the education, literacy and access to information needed to make rational decisions about their consumption behavior. Limited knowledge of marketing practices leaves BOP consumers susceptible to exploitation from advertising and other promotional strategies.

Research claims that aggressive marketing to the poor can be a violation of “consumption adequacy”. Continuous access to goods deemed necessary for such as survival, health and dignity forms the premise for this concept. One proposal is that firms targeting the BOP should become aware of this market segment’s main priorities.

Transformative consumer research is being increasingly deployed to explore consumption behavior among poor consumers. Improvement to collective and individual well-being by prioritizing “health, happiness, and prosperity” is core to this approach. Issues are addressed that impact most on consumption such as poverty, debt, addiction and the state of the environment. Greater understanding of poverty can facilitate “material, social, and cultural conditions of the poor”, it is claimed.

Jaiswal and Gupta believe that better insight into BOP consumption activities can be obtained by using the following theories:

• Compensatory consumption: This behavior shares some similarities with addiction, although differs markedly by being essentially reactive in nature. More specifically, it refers to consumption in response to needs someone believes are lacking in their life. A similar view holds that this consumption behavior has symbolic value. Products are purchased to compensate for deficiencies in such as self-esteem, self-worth, self-confidence and power. Other scholars purport that consumption helps individuals alleviate negative feelings associated with the void between their actual and ideal self-concepts. In the case of the BOP, spending on non-essentials is perceived to help enhance status.

• Consumer resistance: Various definitions of this concept have emerged but all generally focus on how people respond to persuasive marketing tactics. Studies refer to conflicts between temptation in the face of “consumption stimulants” and the need for self-control. Striking the balance is perceived to be much easier for people in Western markets compared to those in BOP contexts. The latter are not equipped with the marketplace knowledge needed to ascertain appropriate consumption models. Having aspirations toward lifestyles enjoyed by more affluent consumers makes it even harder to resist forceful marketing approaches. Thus, consumption choices whereby basic needs become subordinate to fulfillment of higher-order desires indicate that consumer resistance is lacking.

These issues are examined further in an explorative study of BOP consumers in India, a context chosen for its prominence in such research and the size of its BOP markets. Qualitative research in the shape of lengthy interviews was deemed the best approach. The sample consisted of 32 urban BOP women, mostly of limited education. Questioning techniques aimed to minimize any “social desirability bias” anticipated by the researchers.

High awareness of BOP marketing was evident among all respondents and analysis revealed five key themes:

1. Use of international brands and purchasing non-essentials: Such brands are widely advertised and help meet “aspirational needs” and typically involve various beauty products. Subjects acknowledged that overspending on such products is common and inhibits ability to buy necessities. Some claimed to exercise greater control of spending, partly in adherence to the social norms of a collectivist culture.

2. Susceptibility to sales promotions: This was strongly apparent, reflected in such as taking up “buy one get one free” offers even if one of the products offered did not interest them and would not subsequently get used. Saving money motivated interest in these offers, but overspending was often the outcome.

3. Need to look and feel good: Physical appearance is important and certain products are marketed to aid these goals. Creams to satisfy female desire to lighten their skin color are used extensively for this purpose. The Fair & Lovely brand marketed by the Indian subsidiary of Unilever was identified as the most popular by participants.

4. Responsiveness to advertisements and celebrity endorsement: Informants reported being highly influenced by both marketing strategies. Highlighting the void between actual and ideal self is a major consequence and serves to increase indulgent consumption that helps fulfill aspirations pertaining to appearance, success and emulation of public figures. More highly educated subjects indicated skepticism toward advertising claims, including those associated with Fair & Lovely. Knowledge meant that these individuals were better positioned to resist aggressive marketing tactics.

5. Influence of store personnel: Advice from this source was generally well regarded, although some suspicion of credibility and motive was stated. Trusting the opinions of other females in the family or neighborhood was the norm, although subjects eventually felt confident in their own ability to evaluate available options.

Jaiswal and Gupta conclude that BOP consumers mirror their more affluent counterparts in being susceptible to “seductive marketing”. However, poor decisions have more damaging consequences for this segment. The authors question the ethics of firms targeting the BOP, referencing huge advertising expenditure to illustrate the point.

Marketers are urged to develop a different model of market exchange to address the imbalance that exists when interacting with the BOP. Working with consumers, policymakers and other stakeholder groups toward this goal is recommended. To avoid manipulative practices, Jaiswal and Gupta propose a framework incorporating various conditions addressing fulfillment of essential needs, educational marketing messages, relevance of products and packaging size, development of employment opportunities and creation of social value.

Greater government input is called for, with new legislation to regulate marketers and to better protect poorer consumers. The authors additionally suggest dividing the BOP market into “extreme deprived” and “deprived” segments, respectively, targeting them with corporate social responsibility and market-oriented approaches.

Additional research focusing on BOP markets in other countries is advised, along with comparison of urban and rural BOP consumers. Another possibility is examining the so-called “poverty penalty” whereby poorer consumers pay considerably more than wealthier people for the same products.

To read the full article enter 10.1108/JCM-05-2014-0996 into your search engine.

(A précis of the article “The influence of marketing on consumption behavior at the bottom of the pyramid”. Supplied by Marketing Consultants for Emerald.)