1. Myths and Realities of Low-income
Markets
Notes from Brazil
July /2010

2. CONTENTS
1. Social mobility in Brazil
2. Behaviour of BoP population
3. The movement of companies
4. What about classes DE?

3. Context
Overall
Moment of huge social mobility, with reduction
of DE families and increase of class C families

4. Social Mobility
Class Differences in Brazil
CLASS REGIONAL AGE GROUPS
Differences Differences Differences
In the last 5 years...
Children
High growth of C group in Brazil
(0 to 9 yrs)
It is not possible to
Group C went from 13 to 19
think of a strategy
million families
for the Northeast
A large proportion of increase in without considering
national income is in class C the significant
participation of DE 1 AB 10,6 CDE
+ Us154 billion dollars of classes: Young adults
purchase power of groups BC (20 to 39 yrs)
72% of
+ 23 billion dollars of households
purchase power of groups DE
1 AB 5,8 CDE
PlanoCDE Study (from the consolidation of IBGE data, PNAD 2002 and 2008)
* Deflated by IPCA Jul./2008 values. MW in 2002 indexed by IPCA (51,7%)

5. Context
Overall
Each specific segment whithin the BoP requires
consideration; each has different needs and
undergoes distinct consumption moments

6. Social Mobility
The way the BoP population defines themselves may be
very different from the parameters used by companies
of other social classes
• No social class identifies themselves as poor
• For classes DE, poverty is a condition, a
circumstance in life
Only 21% of the population
• Oscilation in the social scale is due to:
of Recife and São Paulo
– Greater presence of informal work
– Vulnerability (diseases, job loss) define themselves as poor,
• Increase in purchase baskets of class C,
and these are poorer and
had less formal education.
which include services:
– Low cost private schools PlanoCDE research published in
Valor Econômico
– School transport
– Interest in closed condos
– Health services
Fonte: Narayan, Ptrichett and Kaapor. Moving out of poverty. Palgrave MacMillan and World Bank 2009.

7. Social Mobility
Different experiences and realities generate
different consumption logics
Focus on the concept Focus on the concept
of DIFFERENTIATION of INCREASE of
personalization consumption and
COMFORT
A
Focus on the concept
B of ACCESS to
opportunities and
C services
D
Focus on the concept
E of INCLUSION in the
consumption
Social classes universe(basic)

8. Context
Overall
Far from having circumscribed and linear
practices, consumption within the BoP
population is social and modern and operates
within the logic of social networks

9. Types of assets and capital
Economic relations are embedded in social networks
Types of assets relevant to BOP:
• Physical capital: housing, building materials,
durable goods
• Financial/ productive capital: safety at work
(type of work), productive goods (car, sewing The social capital may have
machine, etc), income from rents and other a greater weight than the
sources. financial capital
• Human capital: education: higher degree of
schooling increases chances of access to other
forms of capital
• Social capital: at home and in the community –
the capacity to mobilize these networks of
relationships to their help
Source: Moser, C. (1998) The asset vulnerability framework: reassessing urban poverty reduction strategies. In: World
Development, vol 26, No 1, pp 1-19.

10. Social networks
BoP Practices Brazil
nó
rede
Family network Community network Virtual networks
• Multinucleated families • 60% socialize purchase • 170 million mobile phones:
opportunities 85% are prepaid
• 42% have relatives living in the
• The network ‘knots’ have a • 18 million Internet users in
same neighbourhood strategic role: circulation of class C
• Consumption units information inside and • 48% of users connected in
outside the community 100 thousand Internet cafes:
• Require specific consideration for
• Network knots, who are 82% in classes DE
using products and services:
they:
telecom, cards and financial
– Door-to-door salespeople
services
– Small retailers
– Tour organizers
– Hairdressers, manicures,
etc.
Sources: McCann Erickson, CDI Lan, CEBRAP .

11. Example
Aline Benavente
Resident in Vila Carrão, Zona Leste
Avon Rep
With the help of social medias such as Blog in the company’s portal and Twitter
• Her income per campaign was doubled
“I used to sell R$400,00 per campaign and, last month, I sold R$1,000”
• Increased the clients’ portfolio: Other cities
•New Selling Strategy:
Blog: promotions and campaigns.
Twitter: new arrivals or new promotions.
Avon website: access to electronic catalogue
E-mail: place an order
Has 150 followers in Twitter, all clients.
• Payment: awaits the voucher and then posts the order
Source: O Estado de São Paulo/ Sept 2009

12. Context
Overall
Moment of great experimentation where
companies are testing different strategies
in the BoP market

13. Different
ways:
1. Strategy Migration of business models CD to the top of
Bottom up: the pyramid
2. Strategy Adaptation of business models AB to the base
Top down:
of the pyramid
a. Emergent Companies that have always operated on the
base of the pyramid without formalizing a
Strategy specific project for the BOP
b. Deliberate Companies that have decided to formally
position themselves to the BOP
Strategy (Brazil: especially class C)

14. 1. Strategy From BOP
Bottom up: toTOP
From the BOP to the Top of the pyramid
New services and products for the BOP
• Network of beauty saloons (9) located
in BOP neighbourhoods in RJ and ES
• 43,000 clients served/ month
• Development of products directed to
women with curly / afro hair
• Information and focus on women’s
self esteem
Baixada Fluminense Ipanema

15. 2. Strategy Shop
Top down:
positioning in
BoP
neighborhood
a. Emergent Strategy
• Shop in Paraisópolis
• Branch in Heliópolis

16. 2. Strategy
Top down:
b. Deliberate Strategy
Emphasis on the product: Emphasis on the product:
sub brands new brands
• Ideal Powder Milk
• Dolca
• Low cost and adapted to BoP taste and
habits
• Developed exclusively for the North and
Northeast
• Provides whiteness, perfume and
economy at an acessible price.
• Ala Tablete version (bar soap) providing
abundant consistent foam to meet the
needs of CD women
• OMO Tanquinho

17. 2. Strategy
Top down:
b. Deliberate Strategy
Emphasis on the channel
Community Marketing: using social networks
• Door-to-door • Training for young people: Retail lessons
• Product tasting • Partnering with local small retailers:
• Information about nutrition business plan and managing
• Micro credit
• Digital inclusion

18. 2. Strategy
Top down:
b. Deliberate Strategy
Emphasis on the channel
Community Marketing: using social networks
a flooring manufacturer, developed a business Project Shakti uses innovative distribution
model to reach the low-income population, in methods that allow products to reach rural
partnership with social organizations. consumers in remote country regions.
partnering with a social entrepreneur,
uses a network of 27,000 entrepreneurs
Colceramica was able to link with and is currently is present in 82.000 villages
community leaders in India.
community participation helped the company connects self-help groups with business
recruit sales people, gain valuable marketing opportunities
insights and generate consumer acceptance creates income-generating for BoP women
for its product by providing a sustainable micro-enterprise
usage of existing networks in the community opportunity.
ability to reconcile the world of conventional supported by micro-credit
business with BoP informal reality
easy financing

19. In
Synthesis
To operate in the DE markets requires reinvention
of the business model in greater depth
• Generate actions of approximation with the
community
• Rethink the value chain
• Educate the consumer
This means not only to do business, but
to contribute to social inclusion

20. www.planocde.com.br
11 3037.7781