Business Matters

Targeting the bottom of the pyramid


The increasing role of social enterprises and the focus on inclusive growth make it important to understand the consumer behavior of the lower-income households in the Philippines. The Metro Manila Mothers Survey conducted by the SEED Institute from Dec. 19, 2011, to Jan. 17, 2012, came out with very valuable information about consumer behavior among the C, D, and E income households. The findings provide significant guides to consumer companies targeting the “bottom of the pyramid” and social entrepreneurs developing products and services that are priority needs of the more than 80 percent of the population that belong to these income groups.

The research was conducted in three phases: (1) Census of mothers (Dec. 9 to 23, 2011) with 575 respondents from different parts of Metro Manila, the objective of which was to establish demographic tendencies; (2) Free tracking study (Jan. 7 to 10, 2012); and (3) Second tracking study (Jan. 14 to 17, 2012). Two tracking studies were conducted to accommodate questions common to both tracks and some questions unique to each study. Both tracking studies had a representative sample base of 600 from all barangays of Metro Manila. The specified respondent was the mother handling the family budget in each household. Socioeconomic distribution was roughly 25 percent class C, 50 percent class D, and 25 percent class E.

The diversity of consumer items reported by the respondent-mothers confirms the hypothesis that by sheer numbers, low-income households in the Philippines constitute a sufficiently large domestic market for all types of consumer goods that are designed to fit their respective cash flow positions. No wonder some of the largest businesses in the country cater to the mass market in such sectors as beverages; processed food products; fast food franchises; power, water and telecom utilities; and pharmaceutical and health products and services.

Some innovative business organizations are perfecting the educational models developed by such large private universities as the University of the East and the Far Eastern University in offering postsecondary-degree programs that enable the graduates to land a job at the least cost possible. An outstanding example is the Phinma Group that has acquired private universities in key regions outside of Metro Manila. In the area of health services, a group to watch is the Metro Pacific group that is purchasing hospitals in key cities both within and outside the National Capital Region.

Another valuable piece of information that resulted from the Metro Manila Mothers Survey is the answer to the question about the top three wishes each mother would like to direct to the government to help improve their standard of living. This is a perfect application of the social principle called subsidiarity. The households have done everything in their power and capacity to provide for their basic necessities through their own enterprise and hard work. Now, they want the government to supplement their own efforts in areas that go beyond their individual capacities. This is where the State is subsidiary to the primary responsibility of private individuals to provide for themselves.

Among the top wishes of the mothers are the provision of regular jobs, microcredit and microenterprise support, scholarship support for their children, socialized housing, subsidized prices for primary food items, free hospitalization, medicines and vitamins for their children, Cash Transfer Account, subsidized rates for electricity and water, free business seminars, and lower costs of gasoline and transport.

A smaller number of mothers mentioned the following wishes directed at the government: cheap mobile clinics with X-rays and CT scans for pregnant women; free food in schools for students; more rolling stores with cheaper rice, sugar, coffee, soap, and snack food items; inexpensive herbal medicines; more open parks and other recreational facilities for free; improved roads; and legalized “jueteng.”

What is very striking is that there was no mention in the wish list of having access to free condoms and other contraceptives. This is especially meaningful considering that the purchase of these items is part of the expenditures of a small percentage of these low-income households, and that all the respondents were mothers, who logically should be the ones most concerned about avoiding unwanted pregnancies. These social classes are obviously aware of the existence and uses of contraceptives. The fact that they do not include them in their “wish list” for the government is an indication that in their opinion, the very limited budget of the government is better spent on many more priority needs than on contraceptives.

Those interested in obtaining primary data from the Manila Mothers Survey of SEED Institute may e-mail joelcaballa@gmail.com.

Bernardo M. Villegas is senior vice president of the University of Asia and the Pacific. For comments, e-mail bernardo.villegas@uap.asia.

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Tags: bernardo m. villegas , column , consumer behavior , social entrepreneurs , ‘bottom of the pyramid’

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