MAKE CONSUMER A PART OF THE VALUE CHAIN-HUL VP

Make consumer a part of the value chain: HUL VP

The market segment at the bottom of the pyramid provides a huge opportunity for business, said Hindustan Unilever Ltd Vice-President (Home Care) Sudhanshu Vats. He was speaking at the session on 'The stressful economic challenge of the Bottom of the Pyramid' at the Ninth CII Marketing Summit here today.

Mr Vats offered insights into the stressful economic challenges posed by the bottom of the pyramid segment by first dividing the segment into two broad sections, urban and rural. He defined the urban bottom of pyramid consumer as one " who lives mostly in slums in one-room houses." He said that this urban consumer is "efficient, thrifty and smart as also optimistic and balanced in his approach." Educating his children is an important consideration for him, Mr Vats added.

"The rural consumer has little more space than his urban counterpart," he said, "but has less amenities." The rural consumer too has education for his children high on his priority, Mr Vats pointed out saying that there is a visible change in opportunities for him in the last two decades.

Mr Vats then enumerated what he called three As and an R to reach the segment at the bottom of the pyramid - Awareness about products; Access to the products; Affordability of the product; and lastly, Relevance of the product. He stressed on looking at the segment from the consumer's perspective: "We must think as they do and not as we do."

"The way at looking at pricing for products targeted to this segment needs to be different," he said. "Here pricing means," Mr Vats said, "target price minus margins is equal to costs." He said that there is no room for slackness while reaching out to this market segment. "The product has to be efficient as well as affordable at the same time," Mr Vats pointed out. He said superior technology is needed to reach the bottom of the pyramid, more so than the other segments of the market. For this, he said, even the market leader needs to have a challenger's mindset.

Mr. Vats said that the way of moving to the market is important with regards to keeping a check on pricing. "The same goes for distribution networks," he said adding that geographical and specific needs of the consumer have to be kept in mind for this. "As this is a high volume-low margin market, it is necessary to have marketing innovations," Mr Vats stressed.

He cited experiences of his company to illustrate his point that consumer is not only a customer but can also be a part of the company's value chain. This involves the consumer with company's products and this helps in reaching out to more people.

Mr. Vats stresses upon looking at the Public Private Partnership model, whose time, he said has come. Looking outside the organization is important, he said, and interdependence on outside agencies is useful to unlock value for the company and welfare of the people. "Do well by doing good," Mr Vats said was the mantra that needs to be followed.