Marketing Project for BOP at Peru - Assembled Shoes

Marianna Pardi

Juliana Cabal

Sugita Yoshitaka

Raul Manrique

Pablo Narvaez

Joao Rendon

BOP Marketing Plan for

“Latea Peru”

Marketing at theBOP final project

Agenda

The opportunity

Our proposal

Expected outcomes

The

opportunity

BOP at Perú

PERU

30,4 MM people

NO BOP

22,6 MM

Extreme Poverty

1,9 MM

BOP “consumer”

5,9 MM BOP

7,8 MM

By province….

Lima 24,1%

Piura 8,6%

Cajamarca 8,2%

La Libertad 7,4%

Puno 5,4%

Loreto 4,9%

Ayacucho 4,4%

Ancash 4,1%

Lambayeque 4,1%

Junin 4,0%

Cusco 3,6%

Huánuco 3,4%

San Martin 3,3%

Huancavelica 3,0%

Apurimac 2,6%

Amazonas 2,2%

Arequipa 2,2%

Pasco 1,5%

Ica 1,0%

Ucayali 1,0%

Average household size: 4,6 people

Average $ contributors: 1,6 members

Most common jobs

* Constr worker

* Watchman

* Janitor

* Messenger

------------------------

* Electrician

* Mechanic

* Plumber

------------------------

* Taxi / bus driver

Most common jobs

* Street vendor

* Maid

Average years of education: 8,4 (High School)

Average monthly

household income:

S/. 960

$ 343

€ 255

Aprox: € 1.85 m/day

% of food in monthly

expenditure: 67%

BOP at Lima

(1,4MM people)

BOP house Roof material:

Calamine – corrugated iron (70%)

Wall material:

Triplay – wood (48%)

Brick and cement (34%)

Carton – rush mat (6%)

Floor material:

SOIL (55%)

Pavement – side walk

NONE (77%)

Track

NONE (72%)

LIMA NORTH (23,9%)

•Carabayllo

•Comas

•Independencia

•Puente Piedra

•San Martín de Porres

LIMA EAST (25,9%)

•Ate – Vitarte

•El Agustino

•San Juan de Lurigancho

•Santa Anita

Lima SOUTH (27,5%)

•Pachacamac

•San Juan de Miraflores

•Santa María del Mar

•Villa El Salvador

•Villa María del Triunfo

CALLAO (9,5%)

Callao

Ventanilla

LIMA DOWNTOWN (2,9%)

Rímac

BOP at Lima

(1,4MM people)

LIMA NORTH (23,9%)

•Carabayllo

•Comas

•Independencia

•Puente Piedra

•San Martín de Porres

LIMA EAST (25,9%)

•Ate – Vitarte

•El Agustino

•San Juan de Lurigancho

•Santa Anita

Lima SOUTH (27,5%)

•Pachacamac

•San Juan de Miraflores

•Santa María del Mar

•Villa El Salvador

•Villa María del Triunfo

CALLAO (9,5%)

Callao

Ventanilla

LIMA DOWNTOWN (2,9%)

Rímac

BOP at Lima

(1,4MM people)

Most of them live at the

periphery / outskirts; in

sand or hill /mountain

environments.

BOP environments

BOP environments

Unmet Need

Household Average Monthly Spending in shoes….

Segment Total

(a+b+c)

Adult Shoes

(a)

Kids Shoes

(b)

Repairing

(c)

BOP € 8,2 € 6,1 € 1,9 € 0,2

No BOP € 10,5 € 8,5 € 1,6 € 0,4

Average Monthly

Household

income

BOP: € 255

NO BOP: € 606

% of shoes in monthly

expenditure

BOP: 3,23 % !!! (8,2/255)

NO BOP: 1,55% (10,5/606)

Unmet Need

Household Average Monthly Spending in shoes….

Segment Total

(a+b+c)

Adult Shoes

(a)

Kids Shoes

(b)

Repairing

(c)

BOP € 8,24 € 6,11 € 1,86 € 0,27

No BOP € 10,52 € 8,50 € 1,59 € 0,43

Average Monthly

Household

income

BOP: € 255

NO BOP: € 606

% of shoes in

monthly

expenditure

BOP: 3,23 % !!!

NO BOP: 1,55%

The reason:

Intensive

use

+

Tougher

ground

conditions

Our

proposal

Assembled,

sole resistant,

confortable

and affordable

shoes adapted

to ground

characteristics

* Local Partners -D2D

* Deportive centers /

Zonal Park

Consumers

I. Men

- Adult

- Kid /School

II. Women

- Adult

- Kid / School

* Manrique

Shoes Group

* Milk Glass

& Popular

Dining Room

Associations

* Local majors

* Product * Storage

* Sales * Distribution

* Marketing * Administrative

* Shoe design

* Sales Force

Training

* D2D sales

* Sales force

(B2C)

* Though

sales force.

and promo

activities

* Shoes selling

• Lightweight

• Anti fatigue propierties

• Good cushioning, resistance and grip.

• Enhanced blood circulation & knee – kidney protection.

SOLE + INSOLE * Material: Expanded virgin pvc with nitrile dust + 2mm polyurethane foam

* Footprint without cavities

* Density: 0,5 – 0,65 gr / cm3

* With eyelets for shoelace attachement

• More resistance

• Impermeability

UPPER * Material: Plastified canvas

* Assembling shoelaces: # 18 nylon

* Different designs & colors for future replacement

Product Two Component Assembled Shoes

PRODUCT CHARACTERISTICS

BENEFITS (FROM BOP PoV)

Product Proxy Reference: Armo Shoes (Chile)

“Inclusivo” fair trade project

http://ralonso.com/?portfolio=armo

Resistant sole + different upper colors / designs Product

Association with key partner “Manrique Group”

Specialized in security shoes now looking x diversification opportunities

http://www.grupomanrique.com/

Place

Local Partners

D2D Sales

* Products on consignment + catalog

* Mostly women

* High capilarity

* Most personal channel. / high level

of persuasion.

* Only for main campaigns: School - Christmas

* Sponsored by majors

* BOPs in “buying mood”

* Opportunity to develop “experience” with BTL activations.

Zonal Parks

Sports Camps

LP

CL CL CL CL

Our BOP company Training,

Promotion

incentive

Shoes

Promotion/

Selling

Our warehouses

Shoes

Supply

1) Our BOP Company

- Trains Local Partners (LP)

(mainly unemployed females)

2) Local Partners (LP)

- Acquire products from our warehouses

- Promote our products to their neighbors

- Explain the benefits of the shoes with

catalog

3) Clients (CL)

- Buy shoes

4) Our BOP Company

- Analyze local needs and develop new

products by collaborating with LPs

(in the future)

Local Partner Model

Products

Purchase

1

2.

3.

4. Customer

feedback

Promotion

Events at Sports Camps / Zonal Parks

POP

Advertisement

Feeling represented by promotor.

One2One promotion

Where? BOP highest frequency channel

Price

VARIABLE

COSTS

(x pair of

shoes) (**)

SOLE UPPER

Adult: € 2.65

Kid: € 2.20

+ =

Adult: € 2.26

Kid: € 1.88

COGS x BOP

company

Adult: € 4.91

Kid: € 4.08

Price x distributor

Adult: € 5.69

Kid: € 4.76 Adult: +39%

Kid: +39%

Price x BOPs

Adult: € 9.26 Kid: € 7.94

Adult: +14%

Kid: +14%

Margins were set based on learnings pointed in “Mrktg Innovative Devices x BOP”

Hystra, March 2013

YTD Benchs

Adult:

€ 10.58 - € 13.23

Kid:

€ 7.41 - € 10.05

(**) To make it simple we just use variable costs and not fully allocated ones

(+ administrative, marketing, sales training, distribution)

Expected

outcomes

Marketing & Financials

* Awareness >= 40% of HH.

* Penetration (Trial) >= 17% of HH.

* Market share >= 1,37%.

* Break even point: 48,2M pairs

(40,5M kids & 7,8M adults or other combinations)

To have green numbers we would need…

It´s a real Challenge. To get scale we rely on our local partners, and

that´s why we need to ensure attractive margins x them.

OUR SOCIAL IMPACT…

FUNCTIONAL (Quality)

ASPIRATIONAL

EMPLOYMENT (Social Integration)

Thanks a

lot!!

Back up

information

BOP shoes market size

X € 291M households

= € 99 yearly spending

in shoes x HH

€ 28.7MM LIM

A

PE

RU

€ 122.7MM

YTD Habit: Channels were BOP interact the most

47% 39% 5% 3%

YTD Habit: Channels were BOP buy shoes

46% 31% 3% 3%

Distribution model trade - offs

Franchise

D2D

PR

OS

C

ON

S

* No shoes at YTD

* Highest interaction

* High bond channel

* Opportunity x trade mrktg

– POS activation

* 2nd channel in current habit.

* High interaction

* High bond channel

* Opportunity x trade mrktg

– POS activation

* 1st channel in current

habit.

* Easier to serve POS

number (50 x district)

* Most personal channel.

* High level of

persuasion.

* Added complexity

(28.2M POS / 2.8M x district)

* Not fit with current habit

* POS willingness to buy

* Added complexity

(22.8M POS / 2.3M x district)

* Margin orientation

* Conflict vs own

retailer brands

* Added complexity

(291M households)

* Sales force training

and management.

* Security / fraud issues

YTD Habit: Means of transportation (most used)

50% 32% 13% 2%

YTD Alternative Channels Impact (% bought what they´ve seen at…)

58% 57% 51%

Daily time spent at public

transportation: > 1,5h

Information Sources

i) BOP at Perú

* Informe Técnico Pobreza en Perú 2012. INEI

* Encuesta Nacional de Hogares 2012 - Modulo Vestido y Calzado. INEI

* Niveles Socioeconómicos de la Gran Lima 2012, Ipsos.

* Perfiles Zonales de la Gran Lima 2009, Ipsos

* Hábitos y Actitudes hacia Canales Alternativos 2012, Ipsos.

http://www.youtube.com/watch?v=VjFuiKeoJAI

http://www.youtube.com/watch?v=v7mkLORH3RY

ii) Propuesta de Marketing

* Producto armable

Proyecto Inclusivo de Comercio Justo en Chile desarrollado por Rodrigo Alonso.

http://ralonso.com/?portfolio=armo

* Márgenes para el distribuidor

-The base of pyramid distribution challenge. XIFMR Research, 2011. Centre for

Development Finance.

- Marketing Innovative Devices for the BOP. Hystra, March 2013.