Thursday, November 17, 2005

Sachet-marketing for the poor!

If I am poor, I would buy as many wholesale products as possible because that way, I can get more for less. But if I am really poor and cannot afford even the threshold money for affording wholesale products, what do I do?

I was not too surprised to know that there are shampoo sachets in the villages of India where there is no water available (atleast frequently enough). Arguably, it seems so because of the private sector involvement on one hand and the government on the other. But the interesting fact is the emphasis of the companies on developing these small products. Obviously because the poor do not have enough money to buy a BIG shampoo bottle, though BIG does work out to be more cost effective in the long run. But American-poverty (for reasons of clear identification) enables one to buy wholesale goods much more-you won't find Walmarts near rich localities.

Add to that a tipping factor of good transportation facilities. Walmart would not have been possible (and succesful) without the transportation facilities (roads and vehicles) that enable its fantastic supply chain management. That makes it possible to have a strategy of warehouses. Contrast that with conditions like India where the only retailing possibility is the ubiquitous paanwala in rural India or the small self-employed kirana shop.

So what does this imply?

The private sector will endeavour more and more to make these sachet products for the poor, because of the sheer scale of returns. Read about Procter and Gamble's business model shift here! Developing markets for ultra-low cost products might be the next big "unseen" thing coming in a scenario where online markets seem to take all the attention from us. Policy implications? One, better and more roads and two, allow more business of manufacturing and selling. This would allow more Walmarts for the urban middle-class/poor and sachet-shops for the rural poor. Sachet-marketing may probably do more for the poor than all the ration-shops of the government, in terms of access, cost, quality and target audience.

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