Friday, September 5, 2008

BoP consumer behavior

Do the BoP spend in the same way that upper and middle classes do?? (photo courtesy: matthew winterburn)

I recently read an excellent article on BoP entrepreneurialism by Niti Bhan and Dave Tait talks about "Design for the Next Billion Customers." It highlights consumer patterns of the BoP in Sub Saharan Africa. I've been following Niti's excellent blog for sometime now, where she talks about research of the BoP with regard to the wireless market. She has extensive insight into the consumer patterns of the BoP.

A couple of years back, I did an extensive case-study analysis of two entrepreneurs in India working in the lighting sector (not published). The entrepreneurs who did well in BoP areas (regardless of whether they were BoP themselves or not) understood their customer consumption behavior well. What few people understand is that the BoP is almost exactly like the middle or upper classes in their desires, but because they have limited capital, they spend differently. Understanding their consumer behavior is key to success in the field. What I found interesting (yet probably not so surprising) is that African BoP consumers are similar to Indian BoP consumers, which means that there is greater uniformity than I had previously thought. It also means that simply by studying their behavior, they can reach and tap into larger markets easier...allowing them to be better innovators and entrepreneurs.

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