Lessons for successful BOP marketing from Caracas' slums

Purpose - The purpose of this paper is to explain how leading firms can profitably serve poor consumers by targeting the urban bottom of the pyramid (BOP) with appropriate marketing practices.Design methodology approach - The approach taken is an integrative analysis of existing literature and new cases.Findings - The urban BOP market is more profitable for large firms than the rural BOP due to its density of wealth, proximity, homogeneity and modernity. While recommended tactics for BOP marketing like rock bottom pricing, innovative products and sachets never produced market leaders, multilevel channels and inclusive pricing led to dramatic BOP sales growth for respected middle-class products.Research limitations implications - Theoretically, this research demonstrates that the urban-rural divide is a good starting point for the development of context-contingent strategies because successful urban BOP marketing practices were very different to those recommended for the rural BOP. It also makes a useful contribution to the question, "Do the poor pay more?" by demonstrating that the answer varies both with the category and the shopping occasion. Moreover, transaction cost theory prevailed: the key success factor for firms with leading products and brands was to find or develop appropriate intermediaries.Practical implications - Firms with successful middle-class products and brands should target the urban BOP. Others need not apply. Inclusive pricing and appropriate channels, especially multilevel marketing, can multiply sales and margins.Originality value - Recent criticism of the BOP proposition leads managers to believe that they must either serve the rural BOP at a loss or abandon the BOP altogether. This research demonstrates that firms can serve the very poor very profitably by targeting the urban BOP.