Bottom of the Pyramid

Topics: Poverty, Marketing, Household income in the United States Pages: 33 (9081 words) Published: November 29, 2012
The quest for the fortune at the bottom of the
pyramid: potential and challenges
Dennis A. Pitta
The University of Baltimore, Baltimore, Maryland, USA, and

Rodrigo Guesalaga and Pablo Marshall
Pontificia Universidad Catolica de Chile, Santiago, Chile
Purpose – The purpose of this article is to examine the bottom of the pyramid (BOP) proposition, where private companies can both be profitable and help alleviate poverty by attending low-income consumers.

Design/methodology/approach – The literature on BOP was reviewed and some key elements of the BOP approach were proposed and examined. Findings – There is no agreement in the literature about the potential benefits of the BOP approach for both private companies and low-income consumers. However, further research on characterizing the BOP segment and finding the appropriate business model for attending the BOP can provide some answers to this issue.

Practical implications – The article provides some guidelines to managers as to how they need to adapt their marketing strategies to sell to the BOP market, and what type of partnerships they need to build in order to succeed. Originality/value – The article presents a thorough analysis of the key elements involved in the BOP initiative: companies’ motivations, characterization of the BOP consumers, and the business model to attend the BOP. Keywords Private sector organizations, Emerging markets, Consumers, Poverty, Disadvantaged groups Paper type Research paper

underpin the concept, and refutes its basic premises. Instead of a market of untapped potential, this literature stream sees a financial desert that BOP principles may harm more than
help. The BOP may be a less a source of significant profits than a source of serious losses. Karnani’s analysis posits that the poor may want the same products as the rich do but by
virtue of being poor, they cannot afford them. The poor
spend most of their income on food, clothing, and fuel. For
the poor, the mathematics are clear: buying a branded
product reduces the funds they must devote to survival. In
contrast, Karnani suggests that raising income will alleviate their poverty, provide cost effective products to other
consumers, and allow the formerly poor to consume more.
Raising their incomes may require that they become
producers with stable jobs and wages.
Both viewpoints concentrate on the poor but draw different
conclusions about how to alleviate their poverty. The two
positions also differ in the nature and proper role of industry and government. In light of the differences, the argument
would benefit from empirical data that tests the underlying premises of each viewpoint. Verifying the premises would
allow further logical analysis of implications and applications of the concept. In fact, the need for clarification is recognized. In the next section, the authors provide some foundations
for the most traditional and still dominant approach to
market, i.e. the focus on the “top of the pyramid” (TOP). The rest of the article focuses on the “bottom of the pyramid” (BOP); it explores Prahalad’s proposition and the opposing viewpoint, reviews key aspects of the BOP initiative –

companies’ motivation; the BOP business model; the role of microfinance; and the key participants – and proposes some implications and challenges for marketing theory and
practice, and finally some implications for marketers.

An executive summary for managers and executive
readers can be found at the end of this issue.

The bottom of the pyramid (BOP) approach to earning
corporate profits has gained considerable attention in the
marketing literature. It has awakened managers to the
potential of serving an unserved market and alleviating the
level of global poverty while still earning a profit. However, the BOP proposition, while clear, appealing, and enlightening has not been accepted in an unqualified manner. One branch
of the BOP literature puts forth the...
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