Support Consumer Collectives for the Poor

If your target markets include economically disadvantaged shoppers, recognize the advantages of selling to consumer collectives—groups of shoppers who have joined together to make purchases. And if consumer collectives aren’t currently available to the poorer people in your service areas, support the formation of this variety of group buying.
     University of Nebraska-Lincoln and City University of Hong Kong researchers analyzed consumer collectives at multiple sites over a two-year span. They found that the main payoffs for retailers were reductions in selling costs and increased store awareness. For the customers, the main payoffs were improved bargaining clout in the short term, feelings of empowerment and dignity in the longer term, and enhanced understanding of how to get the best from purchased merchandise and services.
     Those payoffs also showed up in a different set of studies which were headquartered at Cornell University. Those studies make reference to a groundbreaking concept in economics—retailers profiting by selling large numbers of items to consumers with limited resources at prices those consumers can afford. Implementation of this “Bottom of the Pyramid” (BoP) approach led to a 2006 Nobel Peace Prize for Bangladeshi banker Muhammad Yunus.
     For BoP retailing to work, you must sell substantial quantities. Products specially selected to meet the needs of the particular group can do that. Better yet, the Cornell researchers say, are bundles such as, perhaps, a body care kit containing small size packages of soap, shampoo, and toothpaste or a disease prevention kit that includes pest control, pet care, and household cleaning items.
     Even then, a barrier to full realization of the benefits of BoP retailing has been inadequate knowledge among the consumers about how to use the items. That’s where the consumer collectives come in, confirming what the Nebraska/Hong Kong researchers found: Small peer groups of consumers of limited resources can be taught and then coach each other about not only how to select, purchase, and dispose of items, but also how to make best of the items.
     Yet another strand of research, this at University of Strathclyde in Glasgow, yields another tip for helping members of BoP consumer collectives build dignity: Carry healthy merchandise for children. It’s hard for low income consumers to deny their kids’ requests. Among the items you carry should be ones that parents can feel good about buying and that the children will appreciate, even if the items aren't the children's favorites.

For your profitability: Sell Well: What Really Moves Your Shoppers

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