Sachet Marketing: small sizes in large volumes
If roughly two-thirds of the world's population makes USD 1,500 or less per year, why try to sell them expensive, bulky goods and services originally designed for consumers who easily make twenty times as much in North America, Western Europe or Japan?
To the rescue come innovative micro-selling methods, aimed at new consumers in developing mega-economies like China, India, The Philippines, Mexico and Brazil. It's all about serving up your products, services and loans in affordable portions, sachets or sizes, so that consumers get to know and like your brand. A new trend is born: sachet marketing. The manufacturer or service provider still makes good profit from sheer overall volume. The profit margin is smaller but the markets are bigger.
Consider the following examples highlighting the Sachet Marketing trend:
In Brazil, fast moving consumer goods giant Unilever sells Ala, a brand detergent created specifically to meet the needs of low-income consumers who want an affordable yet effective product for laundry that is often washed by hand in river water. In India, Unilever successfully markets Sunsil and Lux shampoo sachets sold in units of 2-4 dollar cents; Clinic All Clear anti-dandruff shampoo sachets at 2.5 rupees each; and 16 cent Rexona deodorant sticks. In Tanzania, Key soap is sold in small units for a few dollar cents.
Filipino telco Smart has turned its customers into salespeople: the Smart Buddy System allows cell phone customers to resell their unused credits, which not only eases the strain on cash flow, but earns them money as well! For each 1,000 pesos sold, the 'merchant' receives a 150 pesos commission.
Mexican Banco Azteca, which launched in December 2002, is gearing a 'less is more' approach towards 16 million Mexican households who make too little (from USD 250-1300 a month) to attract the interest from established financial institutions. These Mexican consumers, even those without a bank account or solid proof of income, can now apply for a savings account, wire transfers, mortgages, or small one-year loans (sometimes purely based on their personal possessions). The force behind Banco Azteca is Grupo Elektra, Mexico's largest appliance retailer. Their 800+ appliance stores double as bank branches, and quite often bank clients are loyal Grupo Elektra customers as well, giving them a partial credit history.
GrameenPhone, Bangladesh's leading cell phone operator, is offering a special low-priced package to so-called 'phone ladies' in small villages, where fixed telephone lines are non-existent. The phone ladies share their cell phones with other villagers at a few taka a call.
In a surprising twist, microfinance, which has blossomed in emerging economies in Asia, Africa and Latin America, is now also catching on in mature economies. The practice, which involves lenders granting small business loans to entrepreneurs with low incomes or poor credit histories, is now tax deductible in the US and the UK. In the UK alone, more than 20 microfinance banks (like WEETU for women and Prime for entrepreneurs over the age of 50) qualify for the tax program. Another 40 are on the way, waiting to be accredited. Participating UK businesses usually have fewer than five employees, and require unsecured loans of between EUR 1,500 and 15,000. (Source: WSJ.)
Whirlpool is cashing in on its line of inexpensive yet stylish washing machines in Brazil, India and China. Both price and looks have received a Sachet Marketing makeover: machines cost USD 150 - 200 (about half of the US average) and are customized to local tastes. For example, in Brazil, customers wanted to see the machine operate, so Whirlpool made a transparent acrylic lid, that also happens to be cheaper than glass. Machines also have a smaller capacity, because lower income Brazilians do laundry more frequently. In China, where washers are considered status symbols and are often placed in living rooms due to lack of space, extra attention was paid to sleek looks. Wash cycles were named on a by-country basis (in India, the delicate cycle is called the 'sari' cycle). And like microfinance, Whirlpool is already exploring the possibility of bringing these 'people's washers' to Europe and North America. (Source: WSJ.)
Opportunities
Thinking small in large volumes -- the essence of Sachet Marketing-- yet never losing brand focus, could open up entirely new markets for many of the worlds B2C and B2B manufacturers and service providers. If your customers are willing but cash strapped, think micro loans, think mini-sizes, think leasing, think bundling, think reselling! It will make you money, AND lay the foundation for brand awareness with future affluent customers. And as the microfinance and Whirlpool examples show, some of the thinking may eventually translate in innovative products for mature markets as well. Small IS 'Sundara'!
Source: www.trendwatching.com
