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Bottom of the Pyramid

Bottom of the Pyramid

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Published by Ritu Nandy

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Published by: Ritu Nandy on Mar 31, 2012
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Bottom of the pyramid

In economics, the bottom of the pyramid is the largest, but poorest socioeconomic group. In global terms, this is the 2.5 billion people who live on less than $2.50 per day.[1] The phrase “bottom of the pyramid” is used in particular by people developing new models of doing business that deliberately target that demographic, often using new technology. This field is also often referred to as the "Base of the Pyramid" or just the "BoP". Several books and journal articles have been written on the potential market by members of business schools offering consultancy on the burgeoning market. They include The Fortune at the Bottom of the Pyramid by C.K. Prahalad of the University of Michigan, Capitalism at the Crossroads by Stuart L. Hart of Cornell University and the first empirical article, Reinventing strategies for emerging markets: Beyond the transnational model, by Ted London of the University of Michigan and Hart. London has also developed a working paper, commissioned by the United Nations Development Programme, that explores the contributions of the BoP literature to the poverty alleviation domain.

Prahalad 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. He proposes that there are tremendous benefits to multi-national companies who choose to serve these markets in ways responsive to their needs. After all the poor of today are the middle-class of tomorrow. There are also poverty reducing benefits if multinationals work with civil society organizations and local governments to create new local business models.

The world's most exciting, fastest-growing new market is where you least expect it: at the bottom of the pyramid. Collectively, the world's billions of poor people have immense untapped buying power. They represent an enormous opportunity for companies who learn how to serve them. Not only

Prahalad's global bestseller "The Fortune at the Bottom of the Pyramid. Peru. Mexico. " "shows why you can't afford to ignore "Bottom of the Pyramid" (BOP) markets." now available in paperback.com Video Success Stories Casas Bahia CEMEX Annapurna Salt Hindustan Lever Jaipur Foot Aravind Eye Care ICICI Bank ITC e-Choupal EID Parry Voxiva E+Co/Tecnosol Andhra Pradesh Full Success Case Stories in pdf format The Market at the Bottom of the Pyramid Known Problems and Known Solutions: What Is the Missing Link? Known Problems and Unique Solutions Known Problems and Systemwide Reform Scaling Innovations Creating Enabling Conditions for the Development of the Private Sector The EID Parry Story Biographies of the Researchers/Writers of the Success Case Stories from "The Fortune at the Bottom of the Pyramid" 247 About the Video Success . C. What's more. and Venezuela--ranging from salt to soap. These stories are backed by more detailed case studies and 10 hours of digital videos on whartonsp.com. reducing poverty.K. healthcare to housing. this book is about making a revolution: building profitable "bottom of the pyramid" markets." This new paperback edition includes eleven concise. Brazil. they're helping millions of the world's poorest people escape poverty. it is being done--very profitably.can it be done. companies aren't just making money: by serving these markets." Preface xi About the Author xix Part I: The Fortune at the Bottom of the Pyramid 1 Chapter 1: The Market at the Bottom of the Pyramid 3 Chapter 2: Products and Services for the BOP 23 Chapter 3: BOP: A Global Opportunity? 47 Chapter 4: The Ecosystem for Wealth Creation 63 Chapter 5: Reducing Corruption: Transaction Governance Capacity 77 Chapter 6: Development as Social Transformation 99 Part II: Business Success Stories from the Bottom of the Pyramid 113 Financing the Poor 115 Aravind Eye Care-The Most Precious Gift 131 Energy for Everyone 137 Agricultural Advances for the Poor-The EID Parry Story 149 Retail for the Poor 159 Information Technology to the Poor 169 The Jaipur Foot Story 187 Health Alerts for All 191 Transparent Government 201 The Annapurna Salt Story 213 Homes for the Poor-The CEMEX Story 221 From Hand to Mouth-The HHL Soap Story 235 Part III: On the Web at Whartonsp. Now available in paperback. fast-paced success stories from India. it offers a blueprint for driving the radical innovation you'll need to profit in emerging markets--and using those innovations to become more competitive "everywhere. and creating an inclusive capitalism that works for "everyone. Simply put. banking to cellphones.

Mexico. Germany. Prahalad challenges business's common beliefs about the world's impoverished and introduces readers to the Bottom of the Pyramid (BOP). Brazil.K. while telling you why what you know about BOP markets is wrong. This is the market companies should be paying attention to. This assumption has some immediate consequences ." That "simple proposition" begins a controversial new management book that is poised to become essential reading not just for the financial world but also in government offices. and investment capacity.collectively have a GDP of $12. The man at the BOP is a consumer too University of Michigan Business School professor C. this book shows you why you can't afford to ignore "Bottom of the Pyramid" (BOP). the bottom of the pyramid. France. we need to find new and innovative approaches to rise to the challenge of this fast growing population. services. an area in Mumbai.Did you know that your company could make a bigger profit by focusing on the market share consisting of people who earn less than $2 per day? Have you realized that the world’s fastest growing market is at the bottom and not the top of the fortune pyramid? Did you know that nine countries-China. a whole new world of opportunity will open up. an untapped market of more than four billion people. for a refreshing change. What results is a practical example of the application of innovative thinking and innovation to an intractable problem – How to cater to the more than 4-billion humans who do not form part of the target market of the organizations that are driven by conventional assumptions about products. even more so than the few rarified consumers at the high-profit pinnacle. Prahalad demonstrates that the process of making products more affordable to the world's poor can provide substantial returns to create real partnerships and innovations for established companies. managerial know-how. This is definitely a book which makes you sit up and think from the very beginning. Constant innovation is the need of the hour According to the author. but BOP. Indonesia. Russia. India. “Why is it that with all our technology. India whose claim to . but is centered around the idea that "If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers. we are unable to make even a minor contribution to the problem of pervasive global poverty and disenfranchisement?” This profound question hits you only to leave you answerless. One such example quoted is Dharavi.5 trillion. or even the growing middle markets. South Africa. Whether you're a business leader or an anti-poverty activist. but one different from the conventional perception of a market. and the UK combined? What is it all about? The Fortune at The Bottom of The Pyramid provides you with these facts. many of whom are seen as “poor” in the public eye. Turkey. Italy.all of the traditional business concepts are applicable but each and every one of those concepts needs to be applied from a distinct perspective. he says. Pralahad’s vision “is not about philanthropy and corporate social responsibility”. the real source of market promise. is not about BPO. In short. and Thailand . value and needs. larger than the GDP of Japan. This book. One of the assumptions that he makes is that the poor need to seen as a market.

Do the poor care about brand names? And if you thought that brand names are not a factor to members of this group. not being property owners.000 lose their limbs each year due to disease. Prahalad points out that companies who want to invest in BOP markets must make it part of their core business. 75 percent own a pressure cooker and blender.K. The truth is. and not make the mistake of considering it a corporate social responsibility initiative. continues to reap the financial rewards? + Blindness affects 12 million people in India. How did Dr. and resources.5 million amputees in India. this is real investment that takes attention. but he does present well-researched case studies and compelling reasoning for why the BOP is a market worthy of attention. The book brims with interesting facts and statistics. yet continue to be highly profitable? These are four examples of the provocative 12 in-depth case stories from India. In India alone there are 70 million people who have IDD and another 200 million are at risk. do not spend a lot of money improving their living quarters. How could the Aravind eye care system serve more than a million patients and do it mostly for free. companies that have actually bothered to try are flourishing. But they do spend money on luxury items-85 percent of households in this village own a television set. the author's research shows that brand consciousness among the poor is universal. and perhaps most lucrative market. that we have “a long way to go before the social transformation of . planning. accidents or other hazards. On the contrary. In fact. P. An additional 25. Most of these people live well below the poverty line and can afford neither a prosthetic limb (average cost = $7000) nor the subsequent replacements and hospital visits. How did this change so that the Mexicans could build affordable housing for themselves while the third largest cement manufacturer in the world. Mexico.fame is that it is the largest single slum area in Asia. Some interesting cases + There are 5. hence they have been unable to get access to credit. Peru. as the author readily admits. Sethi along with craftsman Ram Chandra develop an effective prosthesis (cost = $30) that even enabled a professional dancer to further her career on stage? + The world’s leading cause of mental disorders and retardation is Iodine Deficiency Disorder (IDD). How did Hindustan Lever Ltd. Prahalad concedes that change will not be easy. Cemex. 56 percent a gas stove. as Prahalad demonstrates. It may seem improbable that companies can make money by selling to people who have limited purchasing power. but. solve the problem and make a profit at the same time? + More than 24 million Mexicans earn less than $5 a day. a branch of a multinational company. Its dwellers. Brazil and Nicaragua that illustrate the world’s most exciting. Is it as easy as he makes it sound? A skeptic might question the rationality of Prahalad’s vision and goals. and 21 percent have telephones. then think again.

But being a long way from reaching that goal should not be a deterrent in working towards it. After all. companies have no way but to find unique ways of servicing the BOP if they are to compensate for the trend of slowing growth in overconsumed developed markets. And the responses to the challenges are illustrated by powerful and convincing examples. this is a movement in the making that will affect each and every human being in the broad sense. if what is happening in the hitech industry is anything to go by. Globally. what entrepreneur wouldn’t want to “save the world”. Yet. get famous and make some money while he is at it? . it is reeks of the indomitable force of detail and meticulous research.inequalities around the world will be accomplished”. Indeed. It challenges so many conventional theories about the poor and economically deprived. It is only a very obdurate mind that will not receive an dose of ground-breaking thinking and zeal for the opportunities that can be created by adopting an altered and innovative approach with respect to one’s business activities concerning the bottom or for that matter even the top of the pyramid. The book’s content is a challenge to the way in which we approach the world. the ramifications of this book are just beginning. that it is sure to not only create a ripple in the world of finance but also generate some controversy. This book may not be superbly written but all the same.

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