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Why affordability is not enough in attracting poorer customers


People at the ‘Bottom of the Pyramid’ seek products and services that are ‘aspirational’ and not only low-cost, says article in Stanford Social Innovation Review co-authored by Professor Jaideep Prabhu of Cambridge Judge.

Girl stands outside a clothes shop and looks at the outfits through the window.
Jaideep Prabhu.
Professor Jaideep Prabhu

Firms seeking customers in the Base of the Pyramid (those earning less than $1,500 per year per capita) need to make goods and services aspirational and not only affordable, says a new article in Stanford Social Innovation Review co-authored by Jaideep Prabhu, Professor of Marketing at Cambridge Judge Business School.

Half the world’s population sits in the Base of the Pyramid (BoP), and “it is now increasingly clear that BoP consumers’ decisions are not purely driven by low-cost considerations,” says the article.

Tata’s low-cost car didn’t meet the aspirational test

India-based manufacturing giant Tata, for example, failed in effectively marketing the Tata Nano low-cost and eco-friendly car (which ceased production) because the firm did not appreciate these aspirations. The company’s low-income targets “did not want to purchase products that reinforced the perception they were poor,” says the article.

“Evidence from various emerging markets suggests that using positive narratives encourages BoP consumers to buy frugal solutions that improve their status or self-esteem. Creating such a narrative will show them the emotional and social benefits they can get by using your solution.”

India-born co-author Jaideep Prabhu is a global leader in research on frugal or “jugaad” innovation, and has authored two books on the subject focusing on doing more with less in both developing and developed countries.

Design is key in reaching aspirational Bottom of the Pyramid customers

Research has shown that design is a powerful tool for increasing aspirational adoption.

The Ben & Frank company, for example, makes affordable yet attractive eyeglasses, telling consumers that “you deserve the best”. The firm has seen fast growth in Mexico and is expanding into other Latin American countries. The article says companies serving the Bottom of the Pyramid should bear in mind two key questions: what “kinds of emotions do people want to feel?” when adopting specific products or services, and how do people “desire to be seen by their community when using specific solutions?” – and then adjust the design and narrative to meet these aspirations.

The study

The article in Stanford Social Innovation Review – entitled “Making the Affordable Aspirational: Increasing the Adoption of Frugal Innovation at the Base of the Pyramid” – is co-authored by Cristian Granados, Professor of Innovation at EGADE Business School in Monterrey, Mexico, and Jaideep Prabhu, Professor of Marketing and Jawaharlal Nehru Professor of Indian Business & Enterprise at Cambridge Judge Business School.