Marketing at the bottom of the pyramid
Akshay Garg (001)
Akshay Mishra (007)
Keerthi N. (028)
Mreegasha Mondal (034)
Background and Motivation
The Bottom of the Pyramid (BOP) has emerged as one of the dominant ideas in business lately. The phrase “bottom of the pyramid” was used by U.S. president Franklin D. Roosevelt in April 7, 1932. In economics, the bottom of the pyramid is the largest, but poorest socio-economic group. According to the author of the book-‘Fortune at the bottom of the pyramid’ and the famous management Guru C.K Prahalad, almost two-third of the world population which earns less than US$2 per day comprises of the bottom of the pyramid population.
The world economic pyramid
Historically, businesses around the world have been focusing on traditional markets with good spending power. However with increased saturation in this market and in order to sustain growth, the companies started seeking to penetrate into the largely untapped rural markets with new marketing techniques. The proposition of inclusive capitalism thus arose—involving and mobilizing the resources, managerial know-how and technology of the large FMCG firms to co-create solutions to the problems at the bottom of the pyramid—those people that live on less than $2 a day. This way, the firms contribute to poverty eradication and upliftment of the marginalized; in return, they would get fantastic business opportunities like cheaper and easier procurement of inputs and a wider customer base. This creates a win-win situation for both. Hence subsistence markets, when entered and explored correctly, are becoming a constant source of revenue for businesses. Hindustan Lever Limited (HLL), as HUL was known back then, experimented as early as in 1995 in the refined salt market. Firstly, they aimed at upgrading the 75 per cent unrefined market (BOP consumers) to Annapurna and secondly of converting branded consumers to Annapurna. In 1999, HLL launched Project Shakti. It identified promising opportunities like confectionaries and healthcare products for the bottom-of-the-pyramid consumers. Amul started its DISK project which comprised of computerization of more than 70,000 village societies and automation of milk collection process. It adopted a 3 tier structure involving farmers, village societies and district milk federations, doing away with the middlemen. ITC’s e-Choupal program was launched in 2000. The motive was to make Indian agriculture self-sufficient by leveraging digital technology and customized extension services to empower farmers and raise rural incomes through better crops, yield and practices. The initiative began while procuring soya from rural India. The effort illustrates the social impact of bringing global resources and farm and business practices to the Indian farmer as well as the opportunities to garner revenue by ITC.
The major objectives of our study and research are:
1.) Analyze and understand BoP approach and its significance. 2.) Study how Indian companies are identifying opportunities and entering into the unexplored markets present at BoP 3.) Analyze the inclusive approach of ITC e-choupal and HUL Shakti in terms of reach to Bottom of Pyramid.
The Bottom of Pyramid constitutes the market made up by the world’s poorest people who lives on less than $2 per day. The idea behind BOP suggests that the best way to meet the needs of the poor is through a profit driven market – based approach. Most companies have not considered people at the base of the economic pyramid as potential consumers due to the low level of their individual incomes. The common belief that the poor have no significant purchasing power ignores the volume of the market. The bottom of the economic pyramid in India representing the masses is an over $1.2-trillion market, making up the biggest chunk of the global $5-trillion BOP market excluding China, says a study by IFC and...
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