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3 Bottom of the Pyramid


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3 Bottom of the Pyramid

  1. 1. Fortune at the Bottom of the Pyramid (BoP) <ul><li>4 billion people who live in poverty at the bottom of the economic pyramid (2$ / day) </li></ul><ul><li>Enormous market potential </li></ul><ul><li>The poor: a non-market </li></ul><ul><li>Profit in volume, not in unit margins </li></ul>
  2. 2. Division of labour <ul><li>Low-income markets present an untapped opportunity </li></ul><ul><li>Markets for the rich have been served by the corporate sector, while governments and NGOs protect the poor and the environment. </li></ul><ul><li>A huge opportunity lies in breaking this division of labour. </li></ul>
  3. 3. C.K. Prahalad <ul><li>The poor have been seen as a problem (for government and aid agencies), not a business opportunity </li></ul><ul><li>“ If we stop thinking of the poor as victims and start recognizing them as entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up” </li></ul>
  4. 4. Serving the poor <ul><li>The poor can be the engine of the next round of global prosperity </li></ul><ul><li>Serving BoP customers requires MNCs to work in collaboration with local governments and civil society organizations </li></ul>
  5. 5. Creating partnerships <ul><li>Private enterprises </li></ul><ul><li>Development aid agencies </li></ul><ul><li>Local entrepreneurs </li></ul><ul><li>Civil society organizations </li></ul><ul><li>Local governments </li></ul>
  6. 6. Strengths of BoP markets <ul><li>There is money at the BoP </li></ul><ul><li>Access to BoP markets is not difficult </li></ul><ul><li>The poor are brand conscious </li></ul><ul><li>BoP markets have been connected (mobile phones, TV, internet) </li></ul><ul><li>BoP consumers are open towards advanced technology </li></ul>
  7. 7. Assumptions <ul><li>The poor can participate in the benefits of globalization </li></ul><ul><li>MNCs have scale, reach and resources to bring poor communities into the market </li></ul><ul><li>ICTs can facilitate MNC participation in BoP markets </li></ul>
  8. 8. The Business Case <ul><li>The poor live in very high-cost economies </li></ul><ul><li>Many BoP markets are highly concentrated </li></ul><ul><li>Growth (rapid expansion, high volume, low-margin) </li></ul>
  9. 9. The Business Case <ul><li>Low-cost structures are present </li></ul><ul><li>Can translate efficiencies into know-how for other established markets (source of innovation) </li></ul><ul><li>Single serve revolution </li></ul><ul><li>Pay per use (access, not ownership) </li></ul>
  10. 10. Management issues <ul><li>We need to change management perspectives </li></ul><ul><li>MNC managers often times do not see the opportunities at the BoP </li></ul><ul><li>Send executives to spend time in these markets </li></ul><ul><li>Raise awareness, gain know-how </li></ul><ul><li>Products and people must work in harsh conditions: noise, dust, unsanitary conditions, electric blackouts, abuse, water pollution… </li></ul>
  11. 11. C. K. Prahalad <ul><li>C.K. Prahalad talks about &quot;The Fortune at the Bottom of the Pyramid&quot; </li></ul><ul><li>Eradicating Poverty Through Profits </li></ul>