Frugal Innovation/Jugaad #5: Reebok goes Frugal

Check this out. Reebok plans to roll out a $1 shoe for the "bottom of the pyramid":

Reebok Cobbles a Plan for India's Rural Poor

Still in the planning stages, but is already being described as a "win-win situation for the poor." and  "the move is likely to be viewed as a social initiative that could positively influence the company's brand."

What would be interesting is to see if India's poor will really covet a $1 shoe or would shoes continue to be an aspirational purchase for which they are ready to save and pay more to flaunt their favorite brand. Maybe that's why it is being positioned for the "rural" poor rather than the urban poor. Urbanites I guess are more likely to equate lower price with lower status.

Tata has discovered the fickle mindedness of those at the bottom of the pyramid when to their surprise and chagrin the $2000 Nano car was not "flying off the shelf" at the pace they thought it would.

Also, the $1 shoe will be going head-to-head (or will it be feet-to-feet) against a tough competitor - the $0 shoe ("bare feet").

While on the topic of shoes, attended an Entrepreneurship themed conference where a panelist, local self-made entrepreneur I.C. Shah recounted the old shoe company salesmen story in his own inimitable style. Here's the gist of it:

Multinational shoe corporation sends 3 hot-shot salesmen to India (in the 1950s) to scout the market and report back. The first one wires back " Nobody here wears shoes, No market opportunity". He was promptly called back and fired. He now mans the shoe sale counter at a departmental store. The second wired back "Nobody here wears shoes, immense market potential". The person retired as Head of the International Business Division for the corporation. The third wired back "Nobody here wears shoes. I have tied up with someone here to make them and can supply some back to the corporation at a fraction of the current purchase cost". The third one now has vacation homes in Bali, Aspen, Jamaica and St. Tropez. He has people making shoes for him in India, Vietnam, Bangladesh, China.......  He's the "Entrepreneur"