The Fortune at the Bottom of Pyramid

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Lessons from the Field:

Sales at the Bottom of the Pyramid
By Heidi Krauel and Joel Montgomery, 2009 Acumen Fund Fellows April 2010

Summary
Enterprises serving bottom of the pyramid (BoP) markets have tremendous opportunity to create commercial and social impact, but are often illequipped to do so. A particular question that needs to be studied is: how can we sell more effectively to BoP consumers? In this piece, Acumen Fund Fellows Heidi Krauel and Joel Montgomery draw on their field experiences and research to explain how we can build more effective sales organizations to serve the BoP.

Contents
Summary Introduction The Survey + Profile of Companies + Overview of Findings + Performance Rating Methodology Step One: Recruit Ambassadors Step Two: Realize Potential Step Three: Reinforce Training + Data Collection + Compensation Conclusion References About the Authors 1 1 2 2 2 3 4 5 6 7 7 8 8 9

Introduction
The business world has heard about "The Fortune at the Bottom of the Pyramid" for some time. In his seminal work, CK Prahalad asserts that multinational corporations (MNCs) can stimulate commerce at the bottom of the economic pyramid to improve the lives of the four billion people in the world living in poverty and turn a healthy profit along the way.i This assertion is supported by various case studies, suggesting that the bottom of the pyramid (BoP) is a source of untapped profits for corporations that target local people as both producers and consumers and inspire innovation for new technologies and commercial activities.ii A 2008 empirical study by Rodrigo Guesalaga and Pablo Marshall compares the buying power index (BPI) of the BoP market relative to the BPI of middle and high-income market segments and finds that “relative to the total market, the BoP sector accounts, on average, for more than 50 percent of the purchasing power in developing countries.iii” Large groups of poor consumers have the power to reject or accept what an MNC wants to sell, thereby forcing MNCs to overcome BoP market constraints and revise antiquated business models.iv Since the BoP term was first coined, several MNCs and start-ups have introduced new products and services to the world’s poorest customers with mixed success. One leader in this movement is Acumen Fund, which invests in start-up social enterprises that employ market-based solutions to providing the poor with basic goods and services—water, healthcare, energy, agriculture, and housing. An underlying principle of Acumen’s work is that when poor consumers are given the dignity of choice, they are transformed from passive recipients of aid into customers with powerful voices that the business community cannot afford to ignore. Addressing this voice in a sustainable, scalable way is no easy matter, especially for resource-constrained young businesses.

Krauel & Montgomery, April 2010 · Copyright © 2010 Acumen Fund

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Lessons from the Field: Sales at the Bottom of the Pyramid

The tools that traditional companies in more affluent markets utilize to understand and reach customers–studies, mailing lists, online campaigns, chambers of commerce, YellowPages, mass media channels— don’t exist or can’t easily be applied in developing countries. BoP-facing companies grapple with language and cultural barriers, infrastructure challenges, and capital constraints, regardless of whether they are an established multi-national corporation or a start-up trying to build a brand from scratch. While literature detailing the benefits of social enterprises is widespread, little attention is paid to the personnel management and organization building of small- and mediumsized enterprises trying to operate in these markets. After a ten-month field placement with two sales-focused Acumen Fund investees in India and Pakistan, Heidi Krauel

and Joel Montgomery (2009 Acumen Fellows) were interested in exploring and uncovering common practices among small-and medium-sized enterprises...
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