Falcon Invoice Discounting: Empowering Your Business Growth
Fortune at the bottom of Pyramid
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7. BOP latent 4-5 billion consumer opportunity Politicians, public policy establishments Aid Agencies NGOs, civil society organizations Private sector, including MNCs
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Editor's Notes
If we stop thinking of the poor as victims or as a burden & start recognizing them as resilient & creative entrepreneurs & value conscious consumers , a whole new world of opportunity will open up . They all can be the engine of the next round of global trade & prosperity . It can be a source of innovation . The market for goods and services at the bottom of the pyramid is enormous and under utilized. Market development at the BOP will create millions of new entrepreneurs at the grass roots level . Any company could make a bigger profit by focusing on the market share consisting of people who earn less than $2 per day . One of the example quoted is Dharavi , an area in Mumbai whose claim to fame is that it is the largest single slum area in Asia. Its dwellers, not being property owners, do not spend a lot of money improving their living quarters. But they do spend money on luxury items-85 percent of households in this village own a television set, 75 percent own a pressure cooker and blender, 56 percent a gas stove, and 21 percent have telephones.
1)University of Michigan Business School professor C.K. Prahalad challenges business's common beliefs about the world's impoverished and introduces readers to the Bottom of the Pyramid (BOP), an untapped market of more than four billion people, many of whom are seen as “poor” in the public eye. This is the market companies should be paying attention to, he says, even more so than the few rarified consumers at the high-profit pinnacle, or even the growing middle markets. 2) According to the author, we need to find new and innovative approaches to rise to the challenge of this fast growing population. One of the assumptions that he makes is that the poor need to seen as a market, but one different from the conventional perception of a market. This assumption has some immediate consequences - all of the traditional business concepts are applicable but each and every one of those concepts needs to be applied from a distinct perspective. What results is a practical example of the application of innovative thinking and innovation to an intractable problem – How to cater to the more than 4-billion humans who do not form part of the target market of the organizations that are driven by conventional assumptions about products, services, value and needs.
The distribution of wealth & the capacity to generate incomes in the world can be captured in the form of an economic Pyramid . At the top of the Pyramid are the wealthy people who have numerous opportunities for generating high levels of Income . Their population is 75 -100 million & their PPP is >$20,000 & they come in Tier 1 . After that there are middle class persons who have the opportunities to generate income but less than that of Tier 1 people. They come in Tier 2-3. Their total population is 1500 – 1750 Million & their PPP is $1,500 - $ 20,000 . After that those come who are poor and are in tier 4 & 5.They consist of a major part of the total population . They must be targeted as they are untapped & can create a large amount of opportunities .
All of us are prisoners of our own perception , ideology ,experiences & established mgmt. practices. Each one of the groups that is focusing on poverty alleviation – the world bank , rich countries providing aid , charitable organizations , national govt. & the Private sector is conditioned by its own dominant logic.
The opportunities at the BOP can’t be unlocked if large & small firms , govt. , civil society organizations , development agencies and the poor themselves do not work together with a shared agenda .
1)Poor in Bangladesh spend as much as 7% of their income on connectivity. 2)HLL created direct distribution network in hard to reach locales i.e. markets without distribution coverage thru traditional distributors & dealers 3)Experience of CASAS BAHIA in Brazil & Eleckra in Mexico, two of the largest retailers of consumer durables suggests that the BOP markets are very brand conscious. 4)Use of Grameen phone in Bangladesh & Telefonica in Brazil by the large no. of poors 5)ITC e-choupal & the case of Kerala fisherman who sell their catch to higher bidders by using their cell phones to contact multiple possible landing sites along the Kerala coast.
2) Amul has introduced a good quality of ice cream affordable by all the BOP which is very popular.also planning to launch other products. Casas Bahia has introduced a line of good quality furnitures oriented towards BOP market. 4)BIMBO is the largest bakery in Mexico & its trucks have become symbols of trust between BOP consumers & the firm. Also the CASAs bahia trucks move freely around without worry
However to participate in these markets , the private sector must learn to innovate. Traditional products , services and mgmt. processes will not work.
A skeptic might question the rationality of Prahalad’s vision and goals. The truth is, as the author readily admits, that we have “a long way to go before the social transformation of inequalities around the world will be accomplished”. But being a long way from reaching that goal should not be a deterrent in working towards it. Indeed, if what is happening in the hi-tech industry is anything to go by, companies have no way but to find unique ways of servicing the BOP if they are to compensate for the trend of slowing growth in over-consumed developed markets. This book may not be superbly written but all the same, it is reeks of the indomitable force of detail and meticulous research. It challenges so many conventional theories about the poor and economically deprived, that it is sure to not only create a ripple in the world of finance but also generate some controversy. Yet, the ramifications of this book are just beginning. Globally, this is a movement in the making that will affect each and every human being in the broad sense. The book’s content is a challenge to the way in which we approach the world. And the responses to the challenges are illustrated by powerful and convincing examples. It is only a very obdurate mind that will not receive an dose of ground-breaking thinking and zeal for the opportunities that can be created by adopting an altered and innovative approach with respect to one’s business activities concerning the bottom or for that matter even the top of the pyramid. After all, what entrepreneur wouldn’t want to “save the world”, get famous and make some money while he is at it?
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