From individual to household decision-making: A practical perspective on the base of the pyramid consumer

Abstract

This paper proposes a new household decision-making model for base of pyramid (BoP) consumers. Many decision-making models focus on general consumer behaviour theory, with few focusing on the resource constraints experienced at the BoP. By focusing on the dynamics of household decisions, the data collected bring a unique perspective to BoP consumer behaviour and extend recent work in the BoP domain. The study comprised qualitative interviews with 61 household representatives (representing 233 household members) to explore decision-making, loyalty, budgeting, shopping and category trade-offs. The study proposes a household-focused decision-making framework, which is far more characteristic of BoP consumer behaviour (as opposed to isolated individual decisions). The proposed framework reveals the impact of situations and financial constraints on BoP household decision-making and how most households operate in both the formal and informal economy. Family obligation was observed to be a key factor, as well as how functional illiteracy drives brand loyalty but also creates embarrassment. Word of mouth trumps all other sources of information and, due to household complexities, there is significant decision-maker ambiguity, making it hard to define a target audience with a communication strategy. Brands are important, but fundamental value is still key and there is inexorable monthly variation in finances, making category trade-offs commonplace.