PGP – 1(B) Group 2
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Sunwinder Pal Singh Mohan Kumar RR Naveen Kumar S Asim Ayaz Sunny Teotia
Introduction Bottom of the Pyramid: An Illustration The nature of the BOP market Twelve Principles of innovation for BOP Markets Impediments to this process A few successful ventures ITC e-Choupal HUL Shakti Amma Development as social transformation A real life case study on BOP The Aravind Eye Care System: Delivering the most precious gift References
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The population inhabiting the world today is a mosaic comprising of people belonging to various strata. This provides a healthy mix of consumers with varied tastes and preferences to whom a marketer can cater to. Contemporarily modern society can be classified on many parameters viz. income, education, gender, health statistics, region, preferences, tastes etc. Through this paper we would like to bring to fore about the section of the society which is least catered to and hitherto was understood to be of little relevance, i.e., the ones lying at the bottom. The Bottom of Pyramid (BOP) has emerged as one of the dominant ideas in business. Even with the most reserved estimates it is a multi trillion-dollar market.
According to World Bank projections, the population at the bottom of the pyramid could swell to more than 6 billion people over the next 40 years, because the bulk of the world’s population growth occurs there. In its core meaning, the BOP refers to the largest but the poorest socio-economic group. Though it has the numbers at its side but it is devoid of the resources, financially or otherwise to attain its true potential. Through this paper we would present an analysis of the opportunities which it possesses and how it has emerged to be one of the most focussed group, what is its true potential and how it can be empowered to not only increase the quality of its consumption pattern but to assist it in moving out of this segment and rising to the one above it. A snapshot of the bottom of the pyramid in world context 3
Bottom of Pyramid: An illustration
Four billion people and still counting at the base of the economic pyramid (BOP) need basic products and services to escape poverty and build sustainable lives. The needs are evident and even though a range of potential solutions already exist, they seldom reach the potential end users and markets in developing countries. Though at the top of the pyramid people enjoy prosperity and have many options to acquire income, the BOP lives at less than 2 dollars a day.
The expression “Bottom of the pyramid” was already used in 1932 by Franklin D. Roosevelt, in that period, president of the USA. The more current usage refers to the billions of people living on less than $2 per day, as first defined in 1998 by Professors C.K. Prahalad and Stuart L. Hart. It was subsequently expanded upon by both in their book The Fortune at the Bottom of the Pyramid. It proposes that businesses, governments, and donor agencies stop thinking of the poor as victims and instead start seeing them as resilient and creative entrepreneurs as well as value-demanding consumers.
Many factors make it unrealistic for the private sector to participate in economic development in most LDCs. Among them are inefficient regulation, widespread corruption, lack of basic infrastructure, extreme poverty, and the underdeveloped financial and banking structure. In these countries, people’s most basic needs must be fulfilled before anyone can look at them as profitable BOP markets. The success stories of MNCs serving poor customers cited in the BOP literature are predominantly in fastgrowing economies such as India, 4
The Economic Pyramid
where the GDP per capita remains low, as well as in countries like Brazil and Mexico with higher per-capita income.
The nature of the BOP market
The nature of the BOP...