The Next 4 Billion
Market Size and Business Strategy
at the Base of the Pyramid
“Business With Four Billion” Conference
Ann Arbor, MI September 9, 2007
Allen L. Hammond
World Resources Institute

About World Resources Institute
• Worldwide reach
– we work on global environment and development
issues, on the ground in over 80 countries
• Extensive experience with entrepreneurs
- a portfolio of 150 companies…in Brazil, China,
India, Indonesia, and Mexico
• Extensive local partnerships
- that build capacity and co-create opportunity with
Ngos, community leaders, local governments, local
small and medium businesses
• MNC partnerships
– With selected companies (Intel, Microsoft, Vodafone,
Citigroup…)

Why The Next 4 Billion Report?

Defining low-income communities as
a market: The Next 4 Billion report
• To move from anecdotes to hard data for the
“poverty” market—the base of the pyramid
• Based on official data from national household
surveys in 110 countries —1st time publicly
available
• Documents business strategies that create value
for companies—and for BOP producers and
consumers

4 billion people
72% of world population
Poor by any measure
<$3000/y PPP
Poorly served
unmet needs
informality trap
BOP penalty
UNCOMPETITIVE MARKETS

Why $3000?

Data Tutorial
BOP = 72% of 5.575 billion people measured with
surveys = 4 billion people
$3000 PPP is <USD $3.35/day in Brazil
$2.11/day in China
$1.89/day in Ghana
$1.56/day in India
Poor by any definition
Market size: $5 trillion PPP; $1.3 trillion USD

Data Tutorial (2)
By comparison...
Mid-market segment (MOP)
• 1.4 billion people
• Income: $3000-$20,000 PPP
• Market size: $12.5 trillion PPP

Sample Country Comparisons
India Brazil China
Surveyed 2004 2002 2002
% Pop. 95% 70% 80%
(total) (924 mil.) (124 mil.) (1046 mil.)
% Rural 78% 22% n/a
% Total Inc. 85% 34% 55%
($ PPP) ($1.2 tril.) (182 bill.) (1.6 tril.)

A $5 trillion BOP market

By region…

By country…

By urban/rural…

By sector…

By household, sector, and
income segment…

Surprising patterns
— showing latent demand

By business strategy…
• BOP focus and innovation
creation
• Localizing value creation
• Enabling access
• Unconventional partnering

The message for business
• Significant underserved markets
• Can be served profitably
—this report documents the BOP
willingness to pay for quality service and
products
• Market opportunity. Both for entrepreneurs,
large corporations, and investors

The message for
investors and funders
• Huge unmet human need in various sectors
• Opportunity to develop a pipeline of investor-
worthy deals through expanded enterprise
incubation/development activities
• The bottleneck is not investment $, but
enterprise development capacity
• Only market-based approaches can scale to
meet the needs of 4 billion consumers

WRI’s BOP Strategy
Market Research
Identify transformative sector strategies
Scale enterprise development
Engage capital markets

A sector analysis--Health

A “Last Mile” model for the health
sector: Mi Farmacita

HealthStore and Medicine Shoppe

A sector analysis—Information
and Communications Technology
$8 billion

The missing rural market…

A New Model for Rural
Connectivity--Vietnam Pilot
• Advanced WiFi mesh + VOIP + WiFi-
enabled phone
• New Intel-backed WiFi backhaul
• Voice-accessible applications in local
languages
• Radically lower capex: < $3/person

Quang Ngai Pilot, Vietnam
• 1 million people, 159 rural communes, 3%
phone ownership, very poor province.
• Radically lower cost—replacing a $100,000+ cell
tower with a $20,000 WiFi infrastructure
• Local phone calling and Internet access costs:
<$1/household/year—extremely affordable
• Cost of WiFi-enabled mobile phones: +$5 per
phone in volume
• A model for mobile network rural extension in
many countries?

Quang Ngai, Vietnam, Pilot

Changing People’s Lives

For more information:
Download or order The Next 4 Billion report
http://www.nextbillion.net
Thank you