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Summary:

There is a whole new movement around “making a fortune at the bottom of the pyramid.” Which essentially is a euphemism of how to make money off people who don’t have much money. California-based Hop-On which is aiming for a whopping 2% of the global cell […]

There is a whole new movement around “making a fortune at the bottom of the pyramid.” Which essentially is a euphemism of how to make money off people who don’t have much money. California-based Hop-On which is aiming for a whopping 2% of the global cell phone market share, feels that its sub-$50 phones are the way to go. Strategically it all makes a lot of sense. People in India, China and African continent cannot afford expensive phones, but want to use mobile services. Ergo, super affordable phone. Motorola and Nokia, they all want to build that gizmo. Maybe they will – but their cost structures are going to make it tough. What about Hop-On? I just saw two of their new phones including 1813, made specially for the Indian market. Both are butt ugly, and I can promise you will fail to take off.

The fortune hunting at the bottom of the pyramid makes people overlook one simple aspect of our highly connected lives. Satellite TV! Poor folks and poor countries, thanks to TV can now make brand associations. They feel like children of a lesser god if someone tries to sell them an off-brand product. It is something no one seems to take into account. When I was back in India last year, the market was flooded with $35 Ningbo Bird and other cheap Chinese phones. Yet people – who clearly could not afford a $100 phone were buying Nokia and Samsung phones.

A good lesson would be Nokia 1100. It had a B&W screen, good battery life, easy texting and was skimpy on features. But it never felt that way. It felt like any other Nokia phone. It sold in huge numbers in India at about $85 a pop. Other parts of the world loved it as well, and now is one of the most common phones given away as a “pre paid device” in the US. You can pick those up at any 7-11 store. It shows creative thinking in terms of finding gold in them Thar hills!

  1. Jesse Kopelman Wednesday, April 20, 2005

    That 1813 looks ok to me. Looks like a Siemens, in fact. Looks wise, I’d take it over a Nokia 1100 (which is one of Nokia’s uglier phones). Still, your point about branding is valid. It’s the Air Jordan effect.

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  2. If you read “The fortune at the bottom of the pyramid” book, it does mention that poor people also like to own and associate with brands. They also dont like cheapo/crappy stuff. Although they might not have the same purchasing power parity, they still like to own high-end stuff (or even low cost products, but having the same brand resonance as the original high priced ones).

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  3. well that’s the point i was trying to make – people just read half the story and then react. they don’t take into long term implications -

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  4. I would take it a bit further. People in these markets, who can afford it less, are ‘more’ conscious of having the right brand association ! Especially for certain ‘key’ products which are, sort of, status judgment criteria in their society ! And the list of these key items varies in different regions/societies/cultures.

    Therefore Nokia is more popular in India. Ofcourse the fact that people have less money, remains. So Nokia has to bring down its prices for that market, but are still costlier than most other brands.

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