Finally, this study is dedicated to all the poor individuals living in poverty. Evaluative Criteria Used by BOP Consumers for Decision Making 146 7.1 Summary analysis of the South African BOP Consumers'.
INTRODUCTION
BACKGROUND OF THE STUDY
Prahalad and Hart (2002) argue that companies should develop a commercial infrastructure that is suitable for the needs and challenges of the BOP market. The reason for not including the urban poor in this study is to determine whether or not the distribution of goods and services to rural areas is a barrier to multinationals adopting the BOP proposal.
MOTIVATION FOR THE STUDY
This study focuses on the BOP market in South Africa, defined for the purposes of this investigation as those living in relative poverty, particularly in rural areas of South Africa. In addition, the study intends to examine the affordability of the products by BOP consumers residing in rural areas of South Africa.
OBJECTIVES OF THE STUDY The objectives of this study are to
Determine the willingness of BOP consumers to work in collaboration with MNCs to facilitate distribution and/or marketing of products and services to consumers in inaccessible areas. Articulate creative strategies (based on the findings of the opportunity and feasibility analysis above), as part of a model for active engagement and competitive advantage that creates a win-win engagement between the MNCs and the BOP consumers in South Africa will make possible.
RESEARCH QUESTIONS
Examine the evaluation criteria (eg, quality, quantity, price, and packaging) used by BOP consumers when making the decision to purchase the products they do. What are the creative strategies that can be incorporated into a model of active engagement and competitive advantage that will enable a win-win engagement between the MNCs and the BOP consumers in South Africa.
HYPOTHESES OF THE STUDY
There is a significant relationship between the evaluative criteria and each of the biographical variables (age, highest educational qualification, monthly income and number of people living in a household, gender and race), respectively. There is a significant relationship between the ability to repay debt and each of the biographical variables (age, highest educational qualification, monthly income and number of people living in a household, gender and race) respectively.
LIMITATIONS OF THE STUDY
Several field workers reported to the researcher that some elements of the population (mainly illiterate) were very reluctant to participate in the study due to the lack of trust and the misconception that the signing of the Letter of Informed Consent was somehow related engaged in a fraudulent scam. The research was conducted in rural regions of South Africa. Therefore, the results (regarding BOP consumers living in rural areas) cannot be generalized to BOP consumers living in urban areas in South Africa.
SUMMARY OUTLINE PER CHAPTER
The background of the study as well as the objectives are contextualized in this chapter. The emphasis of this chapter is on data analysis, interpretation and study findings.
CONCLUSION
Variables not investigated in this study may form the basis for future research in this field.
INTRODUCTION
MEASURING THE EXTENT OF POVERTY
It is the minimum standard by which an individual will not be able to 'make ends meet' and is the absolute minimum income or expenditure required to meet basic needs (Araar, Bibi, Duclos & Younger, 2010). A tremendous amount of controversy exists as to whether the absolute, relative or subjective approach is the best estimate for a poverty threshold (International Development Research Centre, undated) and very often the choice is not clear (Oosthuizen, 2007).
GLOBAL POVERTY
China was primarily responsible for the significant decline in overall poverty rates in the developing world by reducing the number of people living below the $1.25 per day poverty line by approximately 662 million since 1981 (Chen & Ravallion, 2012). According to the United Nations Millennium Development Goals Report (2014), the proportion of people living on less than US$1.25 a day has decreased from 1990 to 2010 in most of the developing regions with the highest prevalence of BOP consumers (Figure 2.5) .
THE CURRENT EXTENT OF POVERTY IN SOUTH AFRICA
The province with the highest proportion of South Africans living in relative poverty is KwaZulu-Natal (45.3%). The lowest prevalence of South Africans living in relative poverty is in the Western Cape (26.7%) and Gauteng (25.7%).
CONCLUSION
INTRODUCTION
INTEGRATED MARKETING MIX
- PRODUCT
- PRICE
- PLACE
- PROMOTION
The core product level comprises the perceived or actual main benefits of a product or service that motivate consumers to purchase (Dibb et al., 2012). According to Dibb et al. 2012), direct marketing involves the use of Internet or television sales to create consumer awareness of products and services.
CONSUMER BEHAVIOUR
THE CONSUMER DECISION MAKING PROCESS
According to Hult et al. 2013) problem recognition occurs when it becomes clear to the consumer that there is a difference between his/her desired state and actual state. The purchase stage is the result of the evaluation of alternatives and is characterized by the actual purchase of the desired product or its closest alternative, in case the product with the highest ranking is not available (Dibb et al., 2012).
- SITUATIONAL INFLUENCES
- PSYCHOLOGICAL INFLUENCES
- SOCIAL INFLUENCES
Physiological needs (for food, water, shelter and clothing) are the basic needs that are essential for survival and therefore must be met (Hult et al., 2013). Children have a tendency to observe and maintain the brand preferences and purchasing practices of the family unit (Hult et al., 2013).
INTRODUCTION
However, recent literature and success stories regarding the BOP proposition suggest that this market can be harnessed by profit-seeking organizations to generate profit for themselves by establishing a relationship of trust with BOP consumers and shifting the focus of the highest possible profit margins. to the highest possible volume of sales (Anderson & Billou, 2007;. The underlying rationale in serving the needs of the BOP consumers is for MNCs to reduce the per-unit cost of products through the effects of economies of scale, modest profit margins to make their products affordable and diligently increase their volume sales by leveraging previously 'unattainable'.
THE NATURE OF THE BOP MARKET
- THE SIZE OF THE BOP MARKET
- ACCESS TO BOP MARKETS
- THE BOP MARKETS ARE BRAND-CONSCIOUS
- BOP CONSUMERS READILY ACCEPT ADVANCED TECHNOLOGY
According to Prahalad and Hart (2002), multinationals need to change their perception of BOP markets to appreciate their true vibrant market potential. The BOP proposal indicates that there is significant untapped purchasing power at the bottom of the pyramid and that there is great potential for BOP markets to deliver rising profit margins for multinationals.
CONSUMER BEHAVIOUR AT THE BOTTOM OF THE PYRAMID
- INCOME GENERATION BY BOP CONSUMERS
- SPENDING AND CONSUMPTION PATTERNS OF BOP CONSUMERS
- THE EVALUATIVE CRITERIA USED BY BOP CONSUMERS IN THEIR PURCHASE DECISIONS
- ACCESS TO CREDIT AND SAVINGS POTENTIAL OF BOP CONSUMERS Formal commercial credit was unavailable to BOP consumers up until the mid-1970s when
Hamilton (2003) found that BOP consumers have a strong preference for leading brands, but the inability to purchase them leads to frustration. Increase affordability for BOP consumers and attract middle and high income consumers to purchase these smaller pack sizes in certain circumstances such as for travel purposes;.
CRITICISMS OF THE BOP PROPOSITION
Overestimated size of the BOP market: According to Prahalad (2005), the BOP market consists of approx. 4 billion people with an income per per capita of less than $2 per day at purchasing power parity (PPP) and estimates the size of the BOP market to be around $13 trillion. Karnani (2009) is of the view that the BOP proposal will cause a distraction by correcting the government's inability to deliver these crucial services.
CHALLENGES IN SERVICING THE NEEDS OF BOP CONSUMERS
IMPLEMENTATION OF THE BOP PROPOSITION
Under the company's Project Bharat, vans have been deployed to villages to sell small packets consisting of various toiletries to BOP consumers. The BOP proposal advocates the use of smaller-unit packages to create affordability, encourage consumption, and provide greater variety of choices to BOP consumers.
CONCLUSION
Prahalad (2005) is convinced that these 12 principles of innovation will help shape the creative strategies for active engagement at the bottom of the pyramid and lead to profitability for multinational companies and satisfaction of BOP consumer needs.
INTRODUCTION
PROBLEM STATEMENT
OBJECTIVES OF THE STUDY The objectives of this study are to
SAMPLING TECHNIQUE AND DESCRIPTION OF THE SAMPLE
SOURCES OF DATA
According to Blumberg, Cooper and Schindler (2008), secondary data includes information that has previously been collected and recorded by other people for other research purposes. However, Blumberg, Cooper and Schindler (2008) argue that the main disadvantage of relying on secondary data is that data can be insufficient, inaccurate and out of date.
QUESTIONNAIRES
A team of field workers from the four selected provinces (Eastern Cape, Western Cape, Limpopo and KwaZulu-Natal) were recruited and trained by the researcher regarding the requirements of the data collection process. The researcher chose not to use open-ended questions in the research instrument due to the lengthy time and excessive costs involved in translating the responses into English.
DATA ANALYSIS
DESCRIPTIVE STATISTICS
The mean or average is a measure of central tendency that provides an overall view of the data (Sekaran & Bougie, 2010). In a graphical representation of the data distribution, the mode is always the highest point of the distribution graph (Cooper & Schindler, 2008; Sekaran & Bougie, 2010; Zikmund, 2000).
INFERENTIAL STATISTICS
Additionally, Spearman's rank-order correlation will be used to examine the relationship between evaluation criteria (price/affordability, quality, appearance/acceptability, packaging/quantity, accessibility/availability, brand preference, suitability of existing products, functionality/performance and advertising/awareness) that is relied upon to make purchase decisions and each of the biographical variables (age, highest educational qualification, monthly income and number of people living in a household, gender and race), respectively. The Mann-Whitney U-test will also be used in analyzing the differences in the perceptions of male and female BOP consumers regarding key dimensions (branding, savings potential/ability to repay debt, price/affordability, quality, appearance/acceptability, suitability of existing products, functionality/performance, packaging/quantity, advertising/awareness, accessibility/availability and partnership with MNC) of the study, respectively.
STATISTICAL ANALYSIS OF THE QUESTIONNAIRE
The reliability of the questionnaire is determined by testing for both stability and consistency. Cronbach's Coefficient Alpha is calculated in terms of the average intercorrelations between the items measuring the concept.
CONCLUSION
It is important to ensure that all respondents are aware of the researcher's purpose of the study, which includes understanding the current behavioral and consumption patterns of South African BOP consumers residing in rural areas. Cronbach's alpha coefficient is a popular reliability test used for the purpose of establishing the internal consistency of the questionnaire and indicates how well the items in a group are positively related to each other.
INTRODUCTION
PRESENTATION OF RESULTS
DESCRIPTIVE STATISTICS
- BRAND TRIAL AND BRAND SWITCHING
- ABILITY TO PAY OFF DEBT
- SPENDING PATTERNS AND BUYING BEHAVIOUR OF BOP CONSUMERS
- LUXURY PURCHASES AND ASPIRING FOR BETTER LIFESTYLES An investigation into whether or not BOP consumers purchase products considered to be
When the prices of products that are usually purchased increase, 42.5% of BOP consumers agree and a further 15.5%. The results of the study show that 34.1% of BOP consumers disagree and a further 16.5% strongly disagree that they are inclined to buy.
INFERENTIAL STATISTICS
- BOP CONSUMERS’ PERCEPTIONS OF THE KEY DIMENSION OF THE STUDY
- KEY DIMENSIONS OF THE STUDY AND BIOGRAPHICAL VARIABLES
Additionally, there is a significant but inverse relationship between brand and price/affordability at the 5% significance level. Furthermore, Table 6.8 also reflects that there is a significant relationship between submission/acceptability and partnering with MNCs at the 5% level of significance.
BOP consumers with a monthly income of less than R500 do not view savings as favorably as BOP consumers from the other monthly income categories. The BOP consumers, who are in households consisting of 1-3 people, view purchase decisions based on quality more favorably than the BOP consumers of the other household size categories.
- EVALUATIVE CRITERIA AND BIOGRAPHICAL VARIABLES
- SPENDING OF BOP CONSUMERS AND BIOGRAPHICAL VARIABLES
- ABILITY TO PAY OFF DEBT AND BIOGRAPHICAL VARIABLES Hypothesis 6
- STATISTICAL ANALYSIS OF THE QUESTIONNAIRE
There is a significant relationship between the evaluative criteria and each of the biographical variables (age, highest educational qualification, monthly income and number of people living in a household, gender and race) respectively (Table 6.27). There is a significant relationship between the ability to repay debt and each of the biographical variables (age, highest educational qualification, monthly income and number of people living in a household, gender and race) respectively (Table 6.29).
