Adopting strategies to approach a low income market derives reputation which garners more success for the involved organization. BAN, an organization involved with distribution of natural gas collaborated with NGOs to deriver its commodities to low income neighborhoods. Its involvement in low income reduction of poverty level presents both bottom of the pyramid, BOP strategy as well responsibility towards the society. Therefore, BAN’s success dwells on the ethical considerations related to penetration in the diverse low income earners market.
In addressing the low income earners market, Gas Natural BAN incorporated various strategies in form of ethical concerns in the Bottom of the Pyramid segment. First, the concerned approach towards offering fair prices for the consumers since the affordability levels vary, to those of the high and middle income earners. Prahalad (2006) notes that the key to successful performance of any organization relates to the affordability of products or services introduced to that market. More so, these commodities should not compromise quality as well as the quantity, on basis of offering fair prices. In reference to the case study, BAN incorporated fair pricing concern in the strategy. The company used fair prices from certified installers to natural gas connections in respective homes. Consequently, the extent of offering fair prices affected the performance of the company with low returns evident hence low trust among creditors.
The pattern of distribution is also incorporated in consideration of penetrating bottom of the pyramid segment. This involves considering location of the poor in terms of easy accessibility to the products (Prahalad, 2006). In the case study it is evident that the distribution of the natural gas was a consideration. First, the company partnered with local governments to develop approaches to gas distribution. Secondly, it fostered partnership with NGOs such as FPVS. This NGO focused on alleviating level of poverty in sectors inhabited by low income earners. In addition, BAN followed up on all the networking of its connections in poor neighborhood, with motive of engaging with the consumers. Consequently, the distribution of natural piped gas would displace the previous retailers with reference to the bottled packaging. On the other hand, engaging in distribution of natural gas to poor neighborhoods, it added up to the corporate responsibility in social aspects.
According to (Prahalad, 2006), products that are focused on elevating the level of poverty, have consider incorporation of local constituents. This means that, the corporate social responsibility strategies in BOP have to consider the civil society’s involvement. Therefore, to what extent are the beneficiaries involved? This presents gap for any organization service to the people against its profitability. Therefore, BAN consideration of fortune repatriation is evident in the involvement of local governments to act as mediators to the low income consumers.
Another ethical concern in BOP market dwells on the appropriateness of the products introduced to these consumers. This purports that the products have to add value to their lives as well as contribute to the reduction of poverty (Prahalad, 2006). Further, this concern dwells on the utility of the products with consideration of the benefits that will be realized by these consumers. More so, their spending has to be reduced and not increased. Therefore, BAN has considered this ethical concern with it distribution of natural gas to the low level consumers. Additionally, the appropriateness of the products can be aligned to the change that is incurred by these consumers once they move from bottled packaging of gas to piped natural gas. Also, BAN, contributes to environmental concerns as a crucial factor in corporate responsibility evident in distribution of natural gas hence sustainable development.
In accordance to the factors addressed by BAN, it is evident that, the mandate to serve the society was relevant as portrayed in the case study. Some issues in the strategy approach to BOP were not fruitful; they did not meet the corporate mandate. Prahalad (2006) identifies that, the bottom of the pyramid market is very profitable once the right strategies are formulated and implemented. Based on that, the situation presented by Ban, proves otherwise as the company incurred inconsistency on profits alternating with liabilities since it had no control of gas utility. Therefore, this led to failure of available creditors to assist the company realize its mandate as well as develop is revenue in a consistent upward motion.
BAN’s BOP strategy
Initially, Ban had not developed a strategy form its own initiative. The company’s involvement in distribution of natural gas to low income consumers was a brainstorm of FPVS. The Gas Natural BAN’s Strategy to low income earners is a BOP strategy. This can be attributed to several well aligned elements in the strategy. First, strategies utilized to deliver its products are not confined within the traditions. Evidently, stakeholders involvement in delivery of its products focuses on partnership with NGO; FPVS, which focuses on reducing poverty in low income area. Further, the local government liaising with BAN to facilitate the relationship with the low income earners presents another delivery strategy.
The company’s mandate aligned to those of the NGOs focused on reducing the level of poverty in low income neighborhoods with accessibility of natural gas just like their high and middle neighborhoods counterparts. Therefore, it can be considered that this strategy impacted towards the consumers of its products with regulated consumption. Furthermore, facilitating educational programs on ways to reduce spending power against the income generated. Prahalad (2006) affirms that, the corporate responsibilities towards the community are centered on improving their lives with advocating for practices enhancing saving. BAN’s mandate to impact on poverty is evident since they educated their consumers on benefits of incorporating natural in their homes based on environmental factor as well as standardized spending. In addition, (Prahalad, 2006) maintains that, sustainable responsibility adopted by a company adds up to the BOP strategy.
Though the strategy was not utterly profitable it has deliverables connected to its initiation to the low income market. This initiative however has to be developed in terms of realigning its strategies towards competitive performance of the company holistically, as well as benefits realized to the consumers in this market. The initiate can be aligned to the awareness created with reference to the products offered by the company towards the low income earners as well, as the environment. Therefore, interrelationships between BAN’s corporate responsibilities in focus to low income market, delivers its BOP strategy, as evident in Cuartel success, educational initiatives and many more.
In conclusion, the considerations of areas of concern in relation to a market addressing the BOP, derivers the performance of the company’s strategy. Therefore, the success aligned to BAN, dwells on incorporating ethical concerns in its strategies.
Prahalad, C.K. (2006). Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits. Wharton School Publishing: Pennsylvania