case 3 3 Marketing to the Bottom of the Pyramid
CASE 33 Marketing to the Bottom of the Pyramid
Professor C. K. Prahalad’s seminal publication, The Fortune at the Bottom of the Pyramid, suggests an enormous market at the
“bottom of the pyramid” (BOP)—a group of some 4 billion people who subsist on less than $2 a day. By some estimates, these
“aspirational poor,” who make up three-fourths of the world’s population, represent $14 trillion in purchasing power, more than
Germany, the United Kingdom, Italy, France, and Japan put together. Demographically, it is young and growing at 6 percent a year or more.
Traditionally, the poor have not been considered an important market segment. “The poor can’t afford most products”; “they will not accept new technologies”; and “except for the most basic products, they have little or no use for most products sold to higher income market segments”—these are some of the assumptions that have, until recently, caused most multinational firms to pay little or no attention to those at the bottom of the pyramid. Typical market analysis is limited to urban areas, thereby ignoring rural villages where, in markets like India, the majority of the population lives.
However, as major markets become more competitive and in some cases saturated—with the resulting ever-thinning profit margins— marketing to the bottom of the pyramid may have real potential and be worthy of exploration.
One researcher suggested that American and European businesses should go back and look at their own roots. Sears, Roebuck was created to serve the lower-income, sparsely settled rural market. Singer sewing machines fashioned a scheme to make consumption possible by allowing customers to pay $5 a month instead of $100 at once. The world’s largest company today, Walmart, was created to serve the lower-income market. Here are a few examples of multinational company efforts to overcome the challenges in marketing to the BOP.
Designing products for the BOP is not about making cheap stuff but about making
Professor C. K. Prahalad’s seminal publication, The Fortune at the Bottom of the Pyramid, suggests an enormous market at the
“bottom of the pyramid” (BOP)—a group of some 4 billion people who subsist on less than $2 a day. By some estimates, these
“aspirational poor,” who make up three-fourths of the world’s population, represent $14 trillion in purchasing power, more than
Germany, the United Kingdom, Italy, France, and Japan put together. Demographically, it is young and growing at 6 percent a year or more.
Traditionally, the poor have not been considered an important market segment. “The poor can’t afford most products”; “they will not accept new technologies”; and “except for the most basic products, they have little or no use for most products sold to higher income market segments”—these are some of the assumptions that have, until recently, caused most multinational firms to pay little or no attention to those at the bottom of the pyramid. Typical market analysis is limited to urban areas, thereby ignoring rural villages where, in markets like India, the majority of the population lives.
However, as major markets become more competitive and in some cases saturated—with the resulting ever-thinning profit margins— marketing to the bottom of the pyramid may have real potential and be worthy of exploration.
One researcher suggested that American and European businesses should go back and look at their own roots. Sears, Roebuck was created to serve the lower-income, sparsely settled rural market. Singer sewing machines fashioned a scheme to make consumption possible by allowing customers to pay $5 a month instead of $100 at once. The world’s largest company today, Walmart, was created to serve the lower-income market. Here are a few examples of multinational company efforts to overcome the challenges in marketing to the BOP.
Designing products for the BOP is not about making cheap stuff but about making