Presentation on:-

Bottom Of Pyramid

Presented by- Joel

Johnson
Presented to- Dr Om Prakash
Ashtankar
 What is BoP?

In economics, the bottom of the pyramid is

the 4 billion people who live on less than $2
per day.
 “Bottom of the Pyramid” (BoP) was first used
by U.S. President Franklin D.Roosevelt in 1932.

 The phrase “Bottom of the Pyramid” is used in

particular by people developing new models
of doing business that deliberately target the
poorest regions.
 THE WORLD PYRAMID AND BOP

75~100 million people

More than $20,000
Tier 1

•
$ 1500~ $20,000
Tier2 1,500~1750 million people

$ 1500~ $20,000
Tier 3

4,000 million people

Less than $1,500
Tier 4

Less than $1,500

Tier 5
MANY COMPANIES ARE BEGINNING TO
EXPERIMENT WITH THE BOP
Nutristar, Nutridelight (nutritional drink), Pur (water
purifier)

Hindustan Lever (detergent for the poor in India and

Brazil), Annapurna (iodized-Salt for the poor)

Making solar power affordable (India)

Banco Real, microcredit in Brazil

Vodacom community services in South Africa, joint

venture between Vodafone and Telkom SA
Solar powered digital camera in India and
community information systems

Program in South Africa to help

entrepreneurs enter the supply chain and
profit from new business ventures.

Water for all program to periurban areas in

Brazil
 Role of MNCs

An important element of the BOP proposition

is that MNCs should take the lead role in the
BOP initiative to sell to the poor.
 BoP from MNCs’ perspective

Why the BOP economic potential may be

underestimated?
 BOP FROM MNCS’ PERSPECTIVE

BoP economic potential may be underestimated because of

four main misperceptions of poverty :

1) Income is too low

2) MNC’s can’t make reasonable profit
3) The poor don’t waste money on luxury products
4) Lack of skills for the use of advanced technology
KEY TO SUCCESS:
Innovation, new business
methods and a great
understanding of BoP
customers are the key to
success.
1)Innovation: Innovation in BOP markets is a
continuous process of learning and refinement.
2) Margin versus volume
3) Target aggregated customers
Fortune of Bottom of Pyramid:
 STRATEGIES FOR THE BOTTOM OF THE PYRAMID
At a minimum, managers have to focus
on the following challenges:
 Create mechanisms that shift the poor
from unorganized to an organized
sector
 Transition from barter to transactions
primarily mediated by money.
 Create access to credit on a
commercial basis
 Create a low cost, high
quality distribution system.
Educate latent consumers to make choices
among more sustainable products and
services.
 NEW STRATEGIES
FOR BOP
Price performance View of quality
 Product development
 Manufacturing  New delivery formats
 Distributing

Sustainability Profitability
 Reduction in resource intensity  Investment intensity
 Recyclability  Margins
 Renewable energy  Volume
 4 POINT TO
NOTICE
 There is much untapped purchasing power at the
bottom of the pyramid.
 Private companies can make significant profits by
selling to the poor.
 By selling to the poor, private companies can bring
prosperity to the poor, and thus can help eradicate
poverty.
 Large multinational companies (MNCs) should play the
leading role in this process of selling to the poor.
MOST FAMOUS EXAMPLE
The single most mentioned example in the BOP
literature is shampoo sold in sachets to the poor.
CONCLUS
ION
the poor
 Contrary to popular assumptions
 Can be a very profitable market
 Reasonable price according to the market
 Managers who innovate and focus on
economic profit will be rewarded
 LIMITATI
ONS
 For global firms, active
participation in BOP
markets is not an option.
Just as Nokia, Unilever,
Nestle, and others have
discovered, these
markets are critical for
their sustained
and profitable growth.
LIMITATIO
NS
The private sector can help alleviate poverty by focusing
on the poor as producers. One way to do this is to make
markets more efficient such that the poor capture more
of the value of their outputs.