Expectations concerning retail: a study of clothing and shoe consumers at the bottom of the social pyramid.
| Autor | Antoni, Verner Luis |
1 Introduction
Low-income consumers at the bottom of the social pyramid have enormous consumption potential thanks to the large part of the population facing the possibility of gradual economic and social inclusion (Prahalad, 2010). This phenomenon was accentuated in face of economic stability in developing countries, arousing academic and business interest concerning this segment of consumers (Hemais, Borelli, Casotti, & Dias, 2014). To Prahalad (2010), consumption at the bottom of the pyramid opens the path to improving the lives of the poor and eradicate world poverty, and, at the same time, it generates profits for companies, which run through the production and consumption focused on the bottom the pyramid.
Over the years, consumers at the bottom of the pyramid have begun to be recognized as individuals who are less dependent on society and governments, with their own expectations and consumption patterns, and thus have become an opportunity for businesses to expand their markets (Prahalad & Hammond, 2002; Prahalad & Hart, 2002; Prahalad, 2010). Specifically, these consumers have come to be understood in a different manner from the traditional economic and marketing point of view, raising the prospect that serving this class leads to a more inclusive practice of capitalism (Barros & Rocha, 2009; Hemais et ah, 2014). According to Prahalad (2010), the inclusion of these consumers in the consumer market causes the creation of new ways of offering and supplying the products created, since these consumers have characteristics and behaviors that can determine different choice patterns and purchasing decisions compared to wealthier consumers.
Limeira (2008) points out that South Africa, Argentina, Australia, Brazil, China, India, Mexico, Russia and Turkey are the countries that have the largest number of emerging consumers, which account for a $12.5 trillion consumption potential market, greater than the sum of the markets of the major world powers of Germany, Italy, France, Japan and the UK. Observing this market, the reason why these countries and emerging markets attract investments from multinational companies is clear. Over the last decade, there was an increase in the low-income consumer market in Brazil (Costa & Motta, 2015) and this national reality led to the production of various theoretical and empirical studies, with the most varied approaches regarding the "bottom of the pyramid or low-income" topic.
While studies advance, we see the need for a greater understanding of this sector and its relationship to consumption experiences, as well as the strategies and practices of companies producing goods and services aimed to this consumer group (Hemais et ah, 2014). For companies operating in consumer markets, among which those that offer retail services, this consumer is an opportunity, but also a challenge, because according to Aguiar, Torres and Meirelles (2008), this segment presents behaviors, habits and aspirations that are different from higherincome consumers'. It is important to understand and investigate the cultural codes of low-income consumers, which fall on matters related to their hierarchy of spending and the meanings of brands for this group living within a specific cultural context (Barros & Rocha, 2009).
Studies developed with the aim of broadening literature and understanding the development of strategies in low-income retail in emerging markets are still restricted, given the speed of change and sociocultural requirements of this consumer segment (Miotto & Parente, 2015; Parente & Barki, 2008). Studies have recognized and clustered retailers' strategies into groups regarding the format in which they offer their retail mix to low-income consumers. However, for Miotto and Parente (2015), these studies have only addressed suppliers' perspectives, and it is equally important to understand the specific perceptions and satisfactions of consumers in relation to strategies and retail formats offered to them, thus modernizing their sociocultural characteristics. Furthermore, these studies in the Brazilian context treat the bottom of the pyramid as a single class, however, it is believed that in such a vast class of consumers, different subgroups of consumers can be identified according to their preferences towards retail as a whole.
In this context, this study aims to identify the subgroups of consumers at the bottom of the Brazilian pyramid according to their expectations related to retail as a whole and clarify how such a compound is related to the average spending of the purchases made. Additionally, this phenomenon is analyzed based on the relationship with the limited budget, low status and self-esteem embedded in the act of buying, characteristics of the low-income consumption culture that have an impact on the choices and decisions of this group of consumers.
2 Literature review
2.1 Market and consumer culture characteristics at the bottom of the social pyramid
Prahalad and Hammond (2002), Prahalad and Hart (2002) and Prahalad (2010) demonstrate the economic importance of the bottom of the social pyramid at a global level, and the need for organizations to understand their potential and especially, the characteristics of the consumers in this segment, to effectively serve them, since they differ from those located at the top of the pyramid.
Consumption oriented towards the bottom of the pyramid should be approached differently from the consumption directed to the upper classes, since an effective approach to these consumers goes through an innovative vision, without the repetition of old and worn solutions used in traditional markets. Moreover, universal or homogeneous solutions are not the best way to address these low-income markets, since each country in which this phenomenon occurs has its own cultural characteristics. Therefore, solutions must be segment-specific to the various segments at the bottom of the pyramid (Prahalad, 2010).
Prahalad and Hammond (2002) point to this segment as a great market opportunity, however, the authors highlight that large multinational companies should re-evaluate the relationship between the price and performance offered by their products and services, and promote radical technological innovations in their business models to meet these demands, generating local and not global solutions, which are offered to the high-income markets.
When Prahalad discusses a new perspective of low-income individuals in his studies, these individuals are seen as consumers, with desires to consume products of various kinds, bringing to light the gap left so far by marketing and economic thinking regarding low-income consumer (Hemais et ah, 2014). In this sense, consumption becomes a form of social inclusion, not only by meeting needs and desires, in a utilitarian plan, but also by giving access to a symbolic universe in which belonging and identity rituals occurs (Rocha & Silva, 2009). According to Hemais et al. (2014), consumers at the bottom of the pyramid have begun to be understood, both by consumption researchers as well as by the market, as individuals who combine skills regarding consumer choices, such as the capability for analyzing and making the decision of where to buy, what to buy and how much they will spend; thus, these consumers are recognized as being aware of their actions and limits regarding consumption.
These consumers, according to Chauvel and Mattos (2008), co-exist in consumptionformation decisions with two rationales: one, material, which originates from the lack of resources, and imposes a strict rationalization of expenditures, and the other, symbolic, anchored in cultural elements and more specifically, in the relational and hierarchical dimensions of the Brazilian society.
Low-income consumers, on one hand, have the striking feature of the pursuit of economic rationality prevalent in their decisions, predominantly in their choices, since they face tough budgetary and financial constraints, and on the other hand, they express greater consumption desires, demonstrated through the possession of goods and services as alternatives for a better life. These higher levels of consumption desires are reflected in terms of quantity, quality and status associated with the goods consumed (Castilhos & Rossi, 2009; Chauvel & Mattos, 2008; Hemais et ah, 2014). Following this thought, Pfeiffer and Maffezzolli (2011) found that the main reasons for purchase dissatisfaction of low-income consumers are faults or defects in the products and not the high price, which proves that low-income consumers do not care, necessarily, only about low prices, but also about the quality of products. Nevertheless, affordable prices also received great perceived importance in the study.
Furthermore, it should be understood that because these consumers have low incomes, they have low self-esteem, feel inferior and perceive that they are considered second-class citizens, which is worsened by the intense and camouflaged racial prejudice. This can be intensified and become a common strategic mistake when companies sell only second-line products, with low prices and restricted services, resembling a sense of consumer devaluation and promoting company's brand rejection (Parente & Barki, 2008). In a study of low-income consumers who work as maids, Barros and Rocha (2009) found that, besides working, consuming is also a possibility for escaping poverty; being a consumer who buys "brands" emeregs as a much-desired alternative which provides these consumers with strong visibility in the social environment studied.
To organizations that serve low-income consumers, repeating strategies and actions that have been successful with higher-income individuals is a mistake, since decision-making regarding this public implies in understanding its characteristics, highlighting the need to demonstrate real concern towards this issue. Thus developing a standardized relationship is not...
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