Effect of Bottom of the Pyramid Strategies on Market Performance of Fast Moving Consumer Goods Companies in Kenya

Abstract

Bottom of the pyramid market segment has gained a lot of attention as a field of study due to its promise that it can be the next engine of growth for the global economy in this 21st century. This is because two thirds of the world population that is, more than five billion people are in this segment and hence the believe that there is a huge market potential for goods and services if commercial organizations invested in this market segment. There is however, no agreement in literature and among scholars as to whether this market is economically viable or not, due to the low incomes of approximately $2 per day earned by this group of people. The general objective of the study was to establish the effect of bottom of the pyramid strategies, which are, affordability, availability, acceptability and awareness strategies on the market performance of fast moving consumer goods companies in Kenya. The study adopted exploratory survey research design and the research philosophy was positivism. The study population was 176 fast moving consumers’ goods companies operating in Kenya, where Nairobi County with 118 companies was selected. There was a second minor population of BOP consumers whose objective was only to validate and correlate the findings of the FMCG company findings. Data was collected through the administration of questionnaires from senior commercial managers of the selected FMCG companies. The study findings from FMCG respondents showed that affordability strategies have a significant effect on market performance of fast moving consumers’ goods companies in Kenya. Availability strategies were positively related to market performance of FMCG companies operating in Kenya. Acceptability strategies were also found to have a positive and significant effect on the market performance of FMCG companies operating in Kenya. Awareness strategies likewise were found to have a strong and significant effect on the market performance of FMCG companies operating in Kenya and indeed, they had the greatest effect among the four strategies. Based on the findings a conclusion was made that the bottom of the pyramid strategies that is affordability, availability, awareness and acceptability are effective in increasing the market performance of FMCG companies operating in Kenya. The study therefore, recommends that FMCG management should consider implementing the 4As strategies in their broad strategic plans as they strive to improve the market performance of their organizations. Affordability and awareness strategies came out as the most effective strategies to use in BOP market performance and hence a recommendation that they should be given the first priority when FMCG companies plan to improve their market performance. The study recommends that affordability and awareness strategies be given first priority when FMCG companies are strategizing on how to expand their market share and increase their sales revenues. Findings showed that the three-wheeler (Tuk Tuks) and the motor bikes are now the emerging most effective, accessible tools of distribution to the BOP market segment, and hence a recommendation to FMCGs companies to consider putting more investment in these two tools of distribution. The study confirmed that social media is an upcoming and an affordable awareness channel and hence a recommendation to FMCG to invest more in social media platforms and hence improve awareness of the products targeted to the bottom of the pyramid market segment.