case study

1. Marketing to the
Poor…

2. INTRODUCTION
 Founded by Sameul Klein in 1958.
 Largest retail chain in Brazil.
 Deals in electronics, furniture and
appliances.
 Company own more than 500 stores
across the country.
 Employs around 60000 people and
serve more than 31 million customers.
 Annual revenues of 13 billion real(us$
7 billion).

3. Retail Industry - Brazil
Organized Retail
45% Unorganized Retail
55%

4. Sales Structure
5%
25%
Home Appliances
Furniture
Miscellaneous
70%
•Miscellaneous goods such as clothing and bicycles

5. Revenue Structure
10%
Credit
Cash/Credit Cards
90%

6. Number of Stores
Year 1957 1964 1972 1981 1983 1988 1990 1992 1996 2002 2009
No. of 1st 2 15 30 43 56 100 90 250 340 565
Stores

7. Market Share
10%
21%
Casas Bahia
18% Ponto Frio
Marabras
19% Lojas Cem
15% Magazines Luiza
Others
17%

8. 4P’s of Casas Bahia
Product Place Price Promotion
Durable items like Own Retail stores Competitive pricing Television
furniture, home advertisement.
appliances etc… , Word-of-
mouth, Cross selling

9. Features Of Casas Business
Model
Credit Rating
90% of revenues came from credit sales.
Customers were required to submit
themselves to an SPS credit check.
Transaction would be undertaken based on
SPS records.
For customers with negative SPC score,no
transaction was made.

10. Contd.
For customers with negative SPC
score,no transaction was made.
For customer with positive SPS score:
a) Purchase of less than 600$-no proof of
income was required
b) Purchase of more than 600$-CB has
developed a proprietary system to evaluate.

11. Contd.
Credit Analyst
Client was sent to credit analyst in case of
failure in scoreing test.
Credit analyst asked a no. of questions to
assess client’s credit worthiness.
Terms of finance and number of instalments
was conveyed to the client in case of positive
evaluation.

12. Contd.
 Customer Information
 Was centralized
 Was made availabe to all the stores.
 CB maintained records on the personality traits
for future reference.
 Carne –the passbook
 Through this passbook clients paid small amounts
for their purchases.
 Informal Way Of Treating Customers

13. Reasons
Focused on untapped market
Sales on installment basis.
Cross selling-attractive display of latest
Changing finance terms.
 Timely promotions.
Company’s low default rate
Ads on Television- singers, actors and television
personalities.
Clients portrayed emotional bonds
 Strategic location of stores

14.  Strong relationships
 Area specific
 Target - lower income group
 Visual Merchandising
 Credit financing
 Aggressive Marketing
 CB’s Yellow Card (automatic credit,
symbol of status among working
class)
 Identified the desire of luxury brands
among the poor
 Pardoned debts of million customers
 Introduced “unemployment Insurance”
(forgo first six installments)

15. Against Casas Bahia???
Critics say:
• Exploiting the poor by selling
the branded products
• CB was luring Brazil’s poor
towards luxury items
• Playing with poor people’s
psychology
• Prices of goods are being
inflated
• Interest- free programmers
were business tactics
• Squeezed money by hiking
actual price of goods

16. Casas Bahia and India
• According to C.K.Prahlad who is one the
most influential management gurus in the
contemporary world :
In India we cannot follow the same model
- High Interest Rate
- Low Literacy Rate
- Fear of Defaulters

17. BoP Market
• Bottom Of the Pyramid (BOP) customers are the
poorest section of the society.
• According to the World Bank, about 2.8 billion
(which is about 50%) of the World’s total
population has an income lesser than or equal to
$2 per day.
• With stagnant growth in the developed market,
companies are eyeing on the bottom of the
pyramid consumers.

18. Importance of MNC s in BoP
markets
 Multinationals are now focusing on designing products to
cater to the needs and ability of the BOP customers.
 They have realized that this segment is a highly profitable
one and worth considering due to their high purchasing
power.
 Multinationals followed all such methods to woe the BOP
consumers. Companies have continually carried market
research to comprehend the gap between spending
pattern, needs and requirements of this segment.

19. Contd.
 These companies are designing new price
schemes, packaging schemes and others on the
existing brands and products.
 This is to retain the brand equity of the existing product.
 The strategies are mainly applied in providing a low cost
product with high quality. Also bottom of the pyramid
marketers aims at raising the standards of living of the
consumer.

20. Contd.
The growth of micro finance industry is the indicative
of the fact that newer schemes and offerings are
being designed now-a-days to suit the requisition of
the BOP customers.

21. Presently…
Operations: 10 States of Brazil
Invoicing Foreseen for the year of
2007: R$ 12.5 billion of Real.
Amount of store in the city of São Paulo: 94 stores.
 Biggest store area (Super Casas Bahia): 151600
square meters in the Anhembi (São Paulo).
- Net profits: R$ 250 million of Real.
- Amount of employees: 57518 employees, being
16800 salesmen.
- Amount of customers registered in the system
of Casas Bahia: 26.3 million.

22. Presented by
Atul
Neha
Vivek
Naresh
Navdeep