Updated: October 19, 2010 11:45 IST

Human insights for global hyper-markets

D. Murali
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‘The world is poor, and the meek shall inherit the mall,’ is the instructive title of a chapter in ‘Brand New World’ by Max Lenderman ( Emerging markets such as India, and the emergent consumers from rural and non-urban areas stoking the growth in these markets, are blazing new and unique ways in the world of goods and services, the author notes.

Water wisdom

An example he mentions is of Manila Water, which serves 5.1 million residents. It offers three options, viz. one meter per household, one meter for three or four households, or a bulk meter for 40 or 50 households. When households coalesce, the connection fee can fall by as much as 60 per cent, depending on the number of customers who shoulder the cost of pipes, the meter, and installation, Lenderman describes.

“Sub-meters measure water usage in each household, and everyone in the group takes responsibility for paying the bill. This, in effect, gives Manila Water and its consumers a form of group insurance coverage on payment.” A McKinsey study of the utility has shown that about 30 per cent of the urban poor serviced by Manila Water pool their bills, and that the company collects 100 per cent of the money it is owed.

Passbook system

Another story in the chapter is one about Brazil’s Casas Bahia, a massive appliance, electronics, and furniture retailer catering to the aspirational needs of millions of poor Brazilians such as day labourers and low-level underemployed workers. To ‘fulfil the dreams of its customers,’ Casas Bahia has developed the now famous ‘carne,’ or passbook, which allows the payment to happen in small instalments, over more than a year. The financed sales represent 90 per cent of all sales volume while 6 per cent are cash purchases and 4 per cent are credit card sales, one learns.

Empathising with the high income volatility of its customers, Casas Bahia has developed a recurring promotion that offers ‘unemployment insurance,’ whereby if a customer loses his or her job, the company will ‘swallow the first six instalment payments’! Sales at Casas Bahia are predicated on personal transactions, translating as lower default rate of about 4.5 per cent (compared to 16 per cent in the industry), and repeat purchases (from 77 per cent of customers who open an account), the author observes.

‘Mobile’ models

Of value to telecom marketers is the case study of Globe Telecom. When it found the selling of prepaid mobile service cards for 300 and 500 pesos too ineffective to reach the massive block of low-income Filipinos, it switched to OTA (over-the-air) reloading.

“The consumer takes a mobile phone to a local village stall or roadside sari-sari store and gives the clerk the money. The store clerk then uses a mobile phone to transfer the credit to the customer’s phone… Through this simple scheme, Globe Telecom has invented an entire small-entrepreneur economy of OTA shops and empowered millions of consumers.”

A different ‘mobile’ story is about how Ugandans routinely use the ‘shared village phone’ as a banking centre and microfinance hub, through ‘sente,’ an innovative way to use prepaid airtime as a way of transferring money from place to place.

Marketing in the future

The author calls on the West to learn from the way marketing and consuming is conducted in the hyper-developing nations such as India and China, Brazil and Russia. In the global hyper-market of the BRIC countries, human insights trump cultural ones, he avers.

“To stay relevant within our own society and marketplace, marketers must become bolder and more inclusive. Our insights must be more empathetic; our tactics should be more innovative. Brands will need to unequivocally become virtuous forces in the marketplace.”

Marketing in the future, Lenderman foresees, will be personal, rather than targeted or customised; something that is shared between people rather than directed at them. “And it will be a force for the global good, an industry that, rather than annoys, inspires.”

Emphatic arguments.


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