Bottom of pyramid


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Bottom of pyramid

  2. 2. What is Bottom of Pyramid?.....  In economics, the bottom of the pyramid is the largest, but poorest socio-economic group  It is also often referred to as the "Base of the Pyramid" or just the "BoP"  Current usage refers to the” billions people living on less than $2 per day” -As defined by Professors C.K. Prahalad and Stuart L. Hart (in 1998 )
  3. 3. ERADICATING POVERTY THROUGH PROFITS :  The Bottom of the Pyramid (BOP) has emerged as a dominant concept in business, -Propelled by C.K Prahalad‟s (2005)  Has the potential to impact the world‟s billions of poor people – by the managerial practices of multinational corporations.  Important to analyze how large corporations can serve low- income customers profitably.
  4. 4. The Economic Pyramid Tier 1 Tier 2-3 Tier 4 Tier 5<$1500 4000 $1500 $1500-$2000 >$20000 75-100 1500-1750
  5. 5. An insight into Base of the pyramid  An insight into Base of the pyramid Bottom of the pyramid consumers are ready to accept the new products.  But the question arises? How the marketers go about to meet the need profitably?  Therefore here the challenge for the marketers lies in not providing cheap products but also in providing value for money products.  The solution to the above stand lies in the 4 „I‟s: Introduction, Infrastructure, Innovation, and Improvement
  6. 6. THE POWER OF DOMINANT LOGIC :  Exploitation of poor people by Private sector.  Rural population was primarily poor & urban population was relatively rich.  Private sector businesses , especially MNCs logic about BOP.
  7. 7. ECONOMIC DEVELOPMENT AND SOCIAL TRANSFORMATION APPROACH Economic development andA social transformatio n Private enterprise Developm ent and aid agencies BOP Consumers and Enterprenu ers Civil Social Organisati on and local Governme nt
  8. 8. THE NATURE OF BOP MARKET  There is money at BOP.  Access to BOP markets.  The BOP markets are Brand – Conscious.  The BOP market is connected  BOP consumers accept advanced technology readily
  9. 9. MARKET DEVELOPMENT IMPERATIVE  Create the capacity to consume  The need for new goods and services  Dignity and choice  Trust is a Prerequisite
  10. 10. BENEFITS TO THE PRIVATE SECTOR  Huge market potential with 4 to 5 billion underserved people and economy of more than $ 13 trillion PPP  The needs of the poor are many.  Thus, the case for growth opportunity in the BOP markets is easy to make.
  11. 11. PRODUCTS AND SERVICES FOR THE BOP  A philosophy for developing products & services for the BOP - small unit packages - low margin per unit - high volume - high return on capital employed
  12. 12. Principles of BOP :  Price Performance  Innovation: Hybrids  Scale of Operations  Sustainable Development: Eco-Friendly  Identifying Functionality  Process Innovation
  13. 13. Contd….  Deskilling of work  Education of Customers  Designing for Hostile Infrastructure  Interfaces  Distribution: Accessing the Customer  BOP Markets essentially allows us to challenge the conventional wisdom in delivery of Product
  14. 14. BOP : A Global Opportunity  BOP : A Global Opportunity Some BOP markets are very large and attractive  Local innovations can be leveraged across other BOP markets  Some innovations from the BOP markets will find applications in developed markets  Lessons from the BOP markets can influence the management practices of global firms
  15. 15. ENGAGING THE BOP Developing a unique approach to BOP markets and learning from the experience Fine-tuning the traditional approach Learning from the BOP Fine tuning the traditional approach
  16. 16. Two innovative models to serve the BOP : The Direct Access, Bank-led Model - Catalyzed by the merger with Bank of Madura. - Utilizes its power to promote and grow SHGs. - Indirect Channels Partnership Model - Looks to leverage current infrastructure and relationships of MFIs and NGOs.
  17. 17. ICICI Bank: Innovations in Finance “I think we have to recognize that a whole lot of potential is going to come out of the bottom of the pyramid” _ By Chanda Kochhar, Executive Director Retail Banking, ICICI Bank
  18. 18. Three-tier System 6 Promoters Formation of new SHG’ 6 coordinators Formation of new SHG’s Monitor the action of promoters Project Manager Approve loan applications Helps with the development of SHG’s
  19. 19. SHGs : Self Help Groups -15 to 20 members - from same village - married - between the ages of 20 and 50 - existing below poverty line
  20. 20. How it Works?  Each member contributes Rs 50 to a joint savings account  Leader responsible for collection and opening up of savings account in the bank.  The savings are converted into fund.  Used for emergency lending to an individual within the group.  Eligible for loan after one year of formation.
  21. 21. Results  Number of SHGs increased from 1500 in 2001 to 8000 in 2003.  ICICI has utilized its financial expertise to fashion a model that is economically viable. ICICI has positioned itself as socially conscious corporate citizen.  Helps ICICI‟s bargaining power with the RBI and other government institutions.
  22. 22. Jaipur Rugs
  23. 23. Introduction  Founder : Mr. Nand Kishore Chaudhary  Founded in 1978  Manufactures a range of handmade carpets  Winner of the Ernst & Young 2010 Indian Entrepreneur of the Year  Award.  Eradicating Poverty Through Profits.  Labour intensive industry.
  24. 24.  Involves 60 processes for each final product.  All processes accomplished by grassroots level people developed and trained by jaipur rugs foundation.  Working for upliftment of poverty struck people in the most remote areas.  By not compromising with the quality of the product they offer.
  25. 25.  By far has helped 52,000 jobless people become artisans.  Target : 1,00,000 till 2016  Annual turnover ₹ 82crore .  Every artisan is an entrepreneur.  Provides direct employment opportunity for needy villagers earlier dependent on shrewd middlemen.
  26. 26.  Give more and better facilities to weavers which resulted in better outputs and loyal employees.  Happier and satisfied the workers, more the productivity.  Understand your employees as well as your customers to grow business.
  27. 27. “Finding yourself through using yourself, the more I use myself the more I find myself.”
  28. 28. Challenges  Maintaining large workforce.  Providing International level working conditions.  Evaluating global market scenario.
  29. 29. Case: HLL
  30. 30. Conclusion  Add any video