Featured Case: NextBillion Case Competition Winner – The Sweetest Business of Nestle Venezuela: El Dulce Negocio

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Nestle Venezuela marketed a portfolio of products, including powdered milk, sweetened condensed milk and milk cream.  The company wanted to strengthen its bond with Bottom of Pyramid (BoP) consumers, both because they felt a social responsibility to do so and because they believed this segment held the greatest potential for penetration,  growth, and expanded consumption in their dairy business.  A large portion of the Venezuelan BoP consumers, those in socioeconomic segments D and E, lived in difficult-to-access parts of the country, with a high crime rate, little social class mobility, and few employment opportunities for housewives. From 2002 to 2010, many changes occurred in the Venezuelan economy, yet most residents still lived in relative poverty.  Price controls affected some of Nestle’s products, including powdered milk, but not sweetened condensed milk.  As a result of analyzing various forms of market research, Nestle felt that sweetened condensed milk posed the best growth opportunity among the BoP segment.

This case was prepared by Deborah Mendez under the supervision of Professor Steve Koch of C.T. Bauer College of Business, University of Houston.

In Part One of the case, Nestle Venezuela marketing executives contemplated how to accomplish their objective to blend a progressive sense for social responsibility with sound business goals.  They considered the unique challenges of product distribution and encouragement of expanded consumption in a positive, responsible way while enhancing the lives of those in the BoP segments.

This part of the case offers several options for deep discussion, including a BoP 2.0 discussion with a focus on co-venturing at the micro-enterprise level. The teaching note – available to Registered Educators – expands on this.

In Part Two of the case, Nestle’s El Dulce Negocio and TAT (Tienda a Tienda, which means Store to Store in Spanish) distribution initiatives are outlined as the solutions they pursued, with results for each. The case then explores the need to scale the initiative in a cost-efficient manner if the efforts are to have a measurable positive impact on the lives of BoP consumers and the long-term financial performance of Nestle Venezuela.

This case is a fantastic example of what is possible when grat organizations collaborate with professors and students to deliver Business Knowledge for Emerging Economies.

Click here to view and purchase the case study.

Community:
Bringing the BoP into the Classroom

 

Until recently, business and poverty alleviation were considered in isolation. Rarely did business schools incorporate poverty alleviation into their course offerings, other than as a component in a session on corporate social responsibility.Growing interest in this topic by business school students, however, has lead a number of business schools, including the University of Michigan, the University of Illinois, Harvard University, Cornell University, and others, to explicitly include this topic in their cirriculum. Now, an increasing number of faculty are interested in learning how best to teach this material to their students.

To learn more about teaching the BoP topic from other business school professors or to contribute your thoughts and experiences, join Globalen’s community forum by clicking here.

Courses:
Business Strategies for the BoP

Ted London is a leading expert on the role and impact of market-based strategies on poverty alleviation. He is a Senior Research Fellow at the William Davidson Institute (WDI) and on the faculty at the University of Michigan’s Ross School of Business. At Ross, Dr. London teaches the popular MBA course, Business Strategies for the Base of the Pyramid.Prior to coming to the University of Michigan, Dr. London was on the faculty at the University of North Carolina, where he was also Director of the Base of the Pyramid Learning Lab. He teaches and lectures in the areas of strategic management, international business and poverty alleviation, and cross-sector partnerships.

To read Dr. London’s syllabus, click here.