GSK, Coca-Cola focus on low-income consumers

12 January 2010

NEW DELHI: GlaxoSmithKline (GSK) and Coca-Cola are among the firms targeting bottom-of-pyramid (BOP) consumers in India with new products, rather than cheaper, smaller-volume versions of existing brands.

The food and pharmaceuticals giant recently unveiled Asha - a milk-based drink which retails at Rs 4 ($0.09; €0.06), 40% less than domestic prices for the firm's Horlick's brand - in the Andhra Pradesh region, while Coca-Cola also launched Vitingo, a beverage costing Rs 2.50 ($0.06; €0.04) per sachet, in a pilot scheme in Sambalpur, Orissa last year.

The product launches have been partly inspired by demographic changes, with around 40m Indian families transferring from outright poverty to BOP each year.

Around 350m Indians, one in three of the population, is currently thought to be part of the socio-economic group.

"We are building a robust go-to-market model to ensure the products reach the right consumers because it's not enough just to have the right products," Zubair Ahmed, a managing director at GSK, said.

A Coca-Cola India spokesman added: "Buoyed by the success of the pilot project for Vitingo in Sambalpur ... the project is now being scaled up to 30 districts of Orissa."

Other firms developing the specialist products include Nestle, which has already introduced a range of noodle snacks for the demographic, Pepsi, Hindustan Unilever, cosmetics maker Marico and Dabur, a manufacturer of Ayurvedic medicine.

In 2004, CK Prahalad, a corporate strategist, predicted in his book The Fortune at the Bottom of the Pyramid that BOP consumers could be profitably targeted by marketers and manufacturers.

Rajesh Shukla, senior fellow at the National Council for Applied Economic Research, said: "The potential at the bottom of the pyramid is immense, but companies will need to understand consumer spending patterns carefully."

Data sourced from Economic Times; additional content by Warc staff