Marketing To The BOP Essay
– Is it exploitation for a company to profit from selling soaps, shampoo, personal computers, and ice cream, etc., to people with little disposable income?
It is not supposed to be considered as exploitation for a company to profit from selling such commodities as shampoo, ice cream, soaps and personal computers to the poor people, especially when the company takes some appropriate steps. These commodities need to be affordable to the people with little income and be obtained by this group of people in a most convenient way possible. Suitable illustrations of these can be seen in the casepresented. For instance, in order for a commodity as shampoo to be affordable to the poor, , the company requires having effective distribution such that the poor people can be reached even in the villages. Such a company as Unilever has been able to do this. Soaps like Lifebuoy and shampoo are sold in small packets that are cost-effective to the poor (“Marketing to the BOP”, n.d). Moreover, the cost cuts to the poor are realized through using effective packaging for these products. It cannot be termed as being exploitation to sell such products as soap to the poor because this contributes towards a healthy society as the soap helps in preventing spreading of diseases. In addition, selling such products as personal computers to the poor is not supposed to be considered as exploitation, especially when it is considered that we are now living in an era of advanced technology and these people need to access information in order to improve their living standards. However, the selling company has to ensure that the PC is affordable. It can allow these buyers to pay in monthly instalments. The BOP market includes small scale farmers and the PCs may help them to access market information and sell their products profitably and access cheaper inputs. This will eventually improve their lives, like in case of the Indian conglomerate, ITC, presented in the case study (“Marketing to the BOP”, n.d).
– Can making loans to customers whose income is less than $100 monthly at interest rates of 20 percent to purchase TVs, cell phones, and other consumer durables be justified?
Making loans to people earning less than one hundred dollars per month at 20% interest for them to buy cell phones and TVs among other durables is justifiable. The lending institutions should make affordable loans available to the poor. An example is given of the Singer sewing machines company fashioning a scheme to make consumption of their product affordable to the poor by allowing the clients to make a payment of five dollars per month instead of a one payment of one hundred dollars (“Marketing to the BOP”, n.d). Such a product as TV can be helpful to the poor people as it enables them to receive vital information such as information regarding the available useful products on the market and health issues among other information. In the current day, such a device as the cell phone is no longer a luxury but a vital one (Davis, 2013). Enabling people to have cell phones can make it possible for them to effectively engage in carrying out business activities by communicating with other people from different regions, and this eventually improves their lives and lifts them out of their poverty (Hassan, 2009).
The idea of giving loans to people who earn less than a hundred dollars per month at the interest rate of 20 percent to purchase cell phones and TVs can actually be justified. Since this group of people need information in order to find ways of getting out of poverty and cannot easily afford cell phones and TVs, it can only be fair for them to be able to receive affordable loans from the financial institutions to purchase them.
– One authority argues that squeezing profits from people with little disposable income – and often not enough to eat – is not capitalist exploitation, but rather that it stimulates economic growth.
I agree that obtaining profits from people who have a little disposable income stimulates economic growth and is not capitalist exploitation and this is mostly true in the case where the profits are obtained while the people are also benefiting. Examples have been given in the case study, indicating that by companies obtaining profits from the poor does not actually amount to exploitation. For instance, the financial institutions provide credit to the low income earners and the companies subsequently make profits (“Marketing to the BOP”, n.d). What results is a win-win situation. This is for the reason that the poor people are able to obtain finances that they can use to invest in small business which also enable them to obtain some profits (Hulme, 2000). People are encouraged to form self-help groups and are given loans which they are able to pay back conveniently without hardships. The lending institutions have also been taking initiatives to train these people about investing and saving and also how to run small businesses. Such activities eventually lead to economic growth within a country and people are able to increase their disposal income and get out of their poverty.
Moreover, by companies providing low income earners with some commodities such as shampoos and soap through making them affordable leads to economic growth. Companies employ people to distribute such commodities even to villages. Employing these people enable them to receive some income in order to improve their lives. Moreover, making such commodities as soap to be affordable to the poor enables them to avoid spreading of diseases and this will lead to having a healthy working nation. Distributing commodities to even villages increases the companies’ sales and subsequently, the companies’ profits. This is also a win-win situation and it is not capitalist exploitation.
In the actual sense, in order to realize economic growth and improve the lives of the poor people in any nation, companies have to expand their operations to reach the poor people, who are then empowered. They are able to obtain essential commodities and finances that can enable them to work effectively to improve their standards of living.
Davis, H. (2013). Cell phones are a necessity of life. Retrieved from, http://www.streetdirectory.com/travel_guide/134158/cell_phones/cell_phones_are_a_necessity_of_life.html
Hassan, A. K. (2009). Role of information and communication technologies in enhancing livelihood of the rural poor. TAK Policy Brief series, N. 02/2009.
Hulme, D. (2000). Is micro-debt good for poor people? Small enterprise Development, 11(1), 26 -28.
Marketing to the BOP, (n.d). Retrieved from, http://highered.mcgraw-hill.com/sites/007352994x/student_view0/cases.html