Management Innovation at the Bottom of the Pyramid
Many managers intuitively believe that a premium product is the ideal route to drive revenues. However, as the Danimal case proves, substantial revenues can also be generated in tier 5 communities in which the target market has little disposable income. Tier 5 markets can be defined as those who have income that falls below one thousand five hundred dollars annually. Despite the fact that average purchasing power in this market is comparatively low, the population of this segment is the largest of the markets; therefore the collective purchasing power is extremely high and, for the most part, competition is not as intense as found in other markets.
However, to be successful in this market it requires innovation at every level. There are many challenges that must be overcome to enter such a market. One of the primary challenges results from the lack of infrastructure that can be found in these areas. There is little opportunity to build modern distribution channels to bring the products to market. Danimal overcame the infrastructure challenges in South Africa with an innovative solution. They provided the Daniladies with their own mobile retail operations that consisted of a cart, cooler box, umbrellas, and even promotional materials such as leaflets...
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