P A P E R P R E S E N T A T Ì O N

Ìn creating products and services for
the Bottom of the Pyramids



























Paper presented by

Tolasi Adi Bala Krishna,
Marketing Manager,
Merena Multimedia & Technologies,
Madanapalle.

CeII : +91 9989851311
E-maiI : balu.quasar@gmail.com

Abstract

Corporates are now inclining towards the 'Bottom of the Pyramid' Market
theory that holds that the multinational companies can simultaneously profit and help
reduce global poverty. This paper throws light to assess the needs of bottom and
primarily focuses on creating products and services that are for the Bottom of the
Pyramids. As we stepped into a brand-shift era, the hypersonic point of the pyramids
are being captured by the business entities very easily, hence it's a time to re-engineer
its corporate strategies with modern paradigm shifts and incline towards the large
portion of the pyramids at the bottom, which remained uncaptured markets for
expanding and diversifying corporates wide range of business operations, further which
leads to social empowerment and entrepreneur development. This in turn leads to the
increase in countries capabilities and capacities for more business ventures and future
endeavors.

Introduction

The DNA of business enterprises have gone through various mutations,
which completely changed the traditional practices to the latest, innovative modernized
practices that yields greater profits, with heavy cost cuts. Ìt always remains amazed how
brands work in Ìndia. A major objective of the confederation of Ìndian Ìndustry (CÌÌ)
Mission for Ìnnovation in Manufacturing is to sensitize the business community to look
at the bottom of the pyramid; this is being practically made possible through some
corporate companies.

The introductions of the jargon Micro Enterprise have and had a great
impact over the country like Ìndia, this term influenced not only the rural but also urban
to Himalayan extents. The principal objective of any micro enterprising is to increase the
product reach to the customer who is even in the remote section. The fact is that there
is market among both rural and urban poor is getting to be common knowledge. The
entire world should be changed and structured to bottom up, to still enhance the
business markets,

Chemistry of the business enterprises is constantly searching for new
invasions, but markets are less when looked up in the pyramids, hence the only way is
to rightly concentrate on the huge blocks of pyramids which acts as the basements, and
which even steep points are once a part of baseline. New innovative products and
services are to be created to capture the bottom of the pyramids.

Statistically saying, the bottom of the (economic) pyramid consists of the 4
billion people living on less than minimum existence standards. For more than 50 years,
the World Bank, donor nations, various aid agencies, national governments, and, lately,
civil society organizations have all done their best, but they was no result in eradicating
the poverty. This great frustrating fact is to believed, if we continue to think this bottom
of the pyramid as sin to society, we loose a gigantic opportunity, we need to start and
recognize them as resilient creative entrepreneurs and value conscious customers, a
whole new treasure of business can be explored.

As statistically said 4 billion people, this huge uncaptured market can be
reoccupied with the tentacles of corporates in the future trade and commerce with
prosperity and can be source of creative innovations and inventions. Besides this
grassroots of business gets firmly fixed into pyramids at bottom. Hence serving such
huge bottom of the pyramids requires crystallization of corporates with social
organizations and local governments.

This mass class of bottom of the pyramids can be captured only when
special products and services are created. Creating this type of products always needs
efficient planning and effective implantations. As popularly elucidated by the professor .
C.K.Prahalad, in view of solving the problem of poverty, we need to go with co-creation
solution towards economic development and social transformation.

Bottom of the Pyramid Framework






















The framework of BOP provides an impetus for a more active involvement
of private and corporate sector in building the market dynamics for transforming the
Bottom of the Pyramid. This framework allows to restructure and change long held blind
beliefs, assumptions and ideologies. BOP frameworks triggers and provides excellent
clues in developing products and services for the Bottom of the Pyramids.

The Indian BOP scenario

According to the National Council of Applied Economic Research
(NCEAR), there are almost 400 million people in Ìndia who belong to the BOP (below
table), another research agency KSA Technopak in its report states that 26.5 % of the
income of the rural consumers is spent on purchasing groceries. This directly reflects
that remaining percentage of 3/4
th
is spent on items that are not required for their
subsistence needs, which is excellent opportunity for the entrepreneurs.

Anatomy of the RuraI Markets
CIass AnnuaI Income No. Of peopIe
The Very Rich > 2,15,000 4
The Consuming Class 45,000 ÷ 2,15,000 115
The Climbers 22,000 ÷ 45,000 331
The Aspirants 16,000 ÷ 22,000 170
The Destitute < 16,000 124

Ìt's really astounding that the poor Ìndian consumers fulfilled all the needs
from nearby town few selected households consumed branded goods. ÌCT should be
primarily highlighted in revolutionizing consumers in rural areas in not only increasingly
becoming literate but also aware of the various products that are on offer the market
place. Today the concentration laid on rural areas is as crucial as urban localities. BOP
market is emerging as a large market for a number of goods and services. According to
the KSA Technopak, rural Ìndian accounts for 55 % of total private spending in the
country, which is much grater than the total private spending on the urban markets,
which stands at only 45 %. This great fact is ignored till recent past, but when the
potential of the Bottom of the Pyramid is understood and unearthed by Corporates,
every company in the world is eying a share of pie.

In creating products and services

Ìn creating the products and services for the bottom of the pyramids the
most important aspect that should be remembered is price pointing performance,
Quantum Jumps, because of their low-income levels, the most crucial aspect in
capturing the bottom of the pyramids is always influenced by the fluctuations in the
prices. Hence the products and services that are created should be always with lowest
and reasonable prices. Below given diagram clearly represents the framework of the
Bottom of the Pyramid with world-class quality.

The second most important factor that mainly to be laid impact is the
Hybrid SoIutions, Hybrid cIoned products, this throws the light in manufacturing the
products with the blend of old and new technologies, that helps the entrepreneurs to go
for cost cuts. When traditional and modernized technologies meet together its definitely
an artistic intelligence with excellence, hence hybrid solutions are to be concentrated
and improved in creating the products and services for the Bottom of the Pyramids.

Ìn innovating the products and services for the Bottom of the Pyramids,
the next most dominant aspect to be considered is its reach to the BOP consumers, the
manufactured should be scalable and transportable across the different lines of the
countries, cultures, castes and languages. Thus produced products will always have
wide access of operations, the vicinity of value of the products should be at a mass
scale. Even innovation should meet the exact demands of the BOP. Levels of innovative
degree should also incline towards the products and services liked by the BOP. Thus
products pioneered should always be eco-friendly, exactly saying the resource intensity
should be reduced to the extent of micro granules.

Products propounded should always be of home technology; simple
changes in the existing other nations products may not be suited for BOP standards.
Radical changes are to be brought up in progressing the products and services,
redesigning the products from basic levels of hair roots would allow to improve the BOP
consumers. Developing a need based products and services would eventually lead to
the success.

Ìn creating the products and services of the BOP markets, all the models
like rational model, non-profit model and MNC model. Should be considered in piercing
the products. The three sources of competitive advantage for BPO marketing should be
pioneered, which includes source of revenue growth, greater efficiency and access to
innovation.

Greater prominence should be focused on the logistics and manufacturing
infrastructure so as to make the product reach at time, at place, with out disturbing the
qualitative and quantitative aspects of the products and services, integrative
infrastructure like installations should be laid apex importance. The primary proximity to
reach each and every individual in the Bottom of the Pyramid should be taken into
consideration and time tasks are to be completed in scheduled programs.

Primary process should be re-modified and re-engineered so that the
products should be as simple as paper boats, this primarily creates awareness about
the products (educate), speaking on grounds of reality most of the BOP the pyramid are
semi-literates, these semi-literates should be provided complete details of the products
so that they get clear and coherent details of using the products. Benefits of using the
products should be clearly communicated even before the product is tasted.

Products should always be environmental independent, in the sense the
products should be able to work in hostile environments, products should be in a
position to work in the worst conditions prevailing, products should always invade
spooks, noise, dust, abuse, electric blackouts, water pollution and environmental
disorders. The various blocks of the BOP should not influence products usage. Products
should be adjusted to the heterogeneous consumers basis in terms of integrative
process we can term it as adaptable user interface.

The channels of the distribution and modes of distribution should be
creatively designed such that they should reach the dispersed rural markets and highly
dense urban markets. All the modes of distributions such as direct mode (O-level), Ì-
level, ÌÌ-level, ÌÌÌ-level should be highly concentrated and laid importance. Distribution
directions should be clearly laid off, should be planned implemented so as to reach the
potential BOP markets.

VitaIity and potentiaIity of the BOP

The largish strengths of the Bottom of the Pyramids can be understood
only when we go for market segregation and clustering through segmentation. Broadly
this can be understood by the below lighted points.

There is huge money at the Bottom of the Pyramids; it's a vital and viable market.
Access to the Bottom of the Pyramid markets is not necessarily difficult.
The poor are very brand-conscious
The concept of global village has been connected by the existing technology, TV's,
mobiles, Ìnternet etc.

BOP consumers are very much open towards the advanced technology.
Majority of the portion of the markets of BOP are not captured, yet a business
opportunity to spread the wings.
Little awareness is enough to semi-literates to make use of the products.

Innovative dynamics in the 4Ps for the Bottom of the Pyramids

Amazing alignment should be done in BOP marketing to capture the
hidden market with altering modern 4P's in village vicinity.








Product
Ìn case of product, products should be manufacture keeping in mind their
habits and environment, packing materials can give them value for money and at times
of some value even after the consumption of the product like reusability. Products
specially related to the agriculture can develop BOP people. These can be latest
innovative methods in agriculture.

Price
Offering the products at attractive and affordable prices, charging slight
goodwill premium for well known brands, to satisfy the self-esteem needs of the youth,
providing the micro-financing facility where every possible.

Promotion
Using exclusive vehicle advertising, which is used by the BOP, will attract
most of the consumers. Ìnnovative modes of mass communication like radio, television
based on voice and videos. Kiosk marketing is also a good means to club products,
distribution along with creative promotion. Ìmpact should be laid on village kartha's who
have local name and fame, this is a traditional means of passing a message at fast
pace with credibility, giving a wide reach which is other wise not possible and feasible
even to a large MNC due to low margins and wide geographical spread.

PIace
The places where the companies need to distribute the products are not
end users, but should maintain various distribution modes, village folks can be
empowered with the temporary employment with the commissions. Company can make
up a group of aspirants as a reference group for its products usage and feedback. This
will serve with the two-tier benefits likes' distribution of its products and promotion of its
products.

The innovative initiatives foIIowed by private corporates

The fact is that the market viability exists at both the ends of urban and
rural sectors. The following are the innovative initiatives followed by corporates

The poor live in very high cost economies. For most products and services, they end up
shelling more money for most products that they buy. Costs to the poor can dramatically
be reduced if they could benefit from the scope, scale and supply chain organization of
larger enterprises, as do their middle class counterparts.

Many interventions end up exploiting the poor rather than do them good in the long run.
The poor have a purchasing power
The poor welcome new technologies

Competitiveness is important object for a nation's prosperity. While global business
models cannot be replicated, the use of local strengths has been thought as a way of
making themselves more competitive. Cases of different interventions initiated in Ìndia
by corporates are getting common place.

Reversing the pyramid of Bottom

Ìt's tragic that the society we have implicitly assumed that the rich would
be served by MNCs and governments will protect the poor and environment. A huge
opportunity lies in breaking and reversing the pyramid by dividing the poor and rich
across the world in a seamless market organized around the concept of sustainable
growth and development.

Strategies for the Bottom of the Pyramid

Ìt always remains a strategic challenge post for every active entrepreneur
to visualize active markets. Just like it takes imagination, dream, good engineering and
sound financial plan to create aura apartments, the same we need to capture
unorganized sector.

Ìn creating the products and services to the Bottom of the Pyramid, at
minimum managers, have to lay their emphasis on the following challenges.

Create mechanisms that shift the poor from unorganized to organized sector.
Educate latent customers to make choices among more sustainable products and
services.
Create access to credit on commercial basis
Create a low cost, high quality distribution system.



Firms attempting to develop such Bottom markets should be able to create
loyalty to their products and services through education and reliable service, with out
excessive government interventions. Ìn order to serve this section of pyramid the
managers first needs to develop a commercial plan tailored to the needs and challenges
of Bottom of the Pyramids. A creative infrastructure composition of various multiple
players like local governmental authorities, non-governmental organizations, local
communities, financial institutions, infrastructure builders and others

This element of infrastructure can be built by the following strategies,
Creating Buying Power,
Shaping Aspirations,
Ìmproving Access and
Growing Healthy Markets,

BuiIding MNCs in creating products and services to Bottom of the Pyramid

Every MNC have to build an organizational infrastructure before they are
ready for introducing their products and services to BOP. These critical factors of
organizational infrastructure are to be built on local base of support, reorient R&D
towards both global and local issues, form new alliances, increase labour and
technological intensity and reinvent cost structure.











These five elements are clearly interrelated and mutually reinforcing which
greatly influences the creation of products and services for the Bottom of the Pyramids.











ConcIusion

As the business world has grownup challenged its inner and outer limits,
exceeding the outerspace in creating business opportunities. The Bottom of the
Pyramids should also be considered as a great viable opportunity in generating the
future revenues for business expansion.

The RNA another most important aspect of business is, every business
should follow some ethical means. Corporates can re-structure all the bottoms to come
up and they can completely remove the word poverty from Ìndia, This is possible
because this is a potent market where any one with social entrepreneurial habits can
strive to achieve it.

Now it remains a big question before all the corporates whether their
vibrations meet at a point so that every Bottom can be uplifted to Top.





References

C.K. Prahalad and K. Lieberthal, the end of corporate imperialism, Harvard Business
Review, July-August 1998

Presentation of Mr. John Reply, Sr. Vice President, Unilever to the Academy of
Management meetings, August 10
th
1998

A Book on Micro-credit Revolution initiated by Grameen Bank

Based upon the Data from NCAER (National Council of Applied Economic Research)

"The Fortune at the Bottom of the Pyramid¨ Research Paper

Reference from Business & Economy and Business Today Magazines

Business Management Websites


























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