Empirical Study of Heterogeneous Behavior at the Base of the Pyramid: The Influence of Demographic and Psychographic Factors

Abstract

ABSTRACTThis paper aims to empirically investigate heterogeneous consumer behavior at the base of the pyramid (BoP) and to examine how this heterogeneity can be explained by individual characteristics. Using quantitative data collected from the urban BoP in Indonesia, the authors categorize households into several segments and subsequently link segment membership with demographic and psychographic variables. The results indicate four BoP segments characterized by different living, consumption, and buying behaviors. It is shown that the differences can be explicated not only by income but also by other demographic and psychographic variables. The study suggests that not all BoP segments are potentially profitable target for BoP businesses, but only that with considerable market size whose members have moderate purchasing power, are motivated to have better livelihoods, and engage in aspirational consumptions.