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Bottom of the Pyramid Markets

September 5, 2016 07:42 AM 1
Total Posts: 24
Join Date: June 8, 2009
Rank: Executive
Post Date: January 1, 1970
Posts: 24
Location: India

Bottom of the Pyramid Markets

Dear colleagues,
“What is needed is a better approach to help the poor, an approach that involves partnering with them to innovate and achieve sustainable win– win scenarios where the poor are actively engaged and, at the same time, the companies providing products and services to them are profitable.”- Prof. C.K. Prahalad
“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, a whole new world of opportunity will open up.”
That “simple proposition” begins a controversial new management book that seems destined to be read not just in boardrooms but also in government offices. “The Fortune at the Bottom of the Pyramid. Eradicating Poverty Through Profits” (Wharton School Publishing), is essentially a rallying cry for big business to put serving the world's 5 billion or so poorest people at the heart of their profit-making strategies. It has already been praised by everyone from Bill Gates—“ a blueprint for fighting poverty ”—to a former American secretary of state, Madeleine Albright if you are looking for fresh thinking about emerging markets, your search is ended.”
By focusing on the BOP consumers' capacity to consume, private-sector businesses can create a new market. The critical requirement is the ability to invent ways that take into account the variability in the cash flows of BOP consumers that makes it difficult for them to access the traditional market for goods and services oriented toward the top of the pyramid.
•Assumption 1: The poor are not our target consumers because with our current cost structures, we cannot profitably compete for that market.
•Assumption 2: The poor cannot afford and have no use for the products and services sold in developed markets.
•Assumption 3: Only developed markets appreciate and will pay for new technology. The poor can use the previous generation of technology.
•Assumption 4: The bottom of the pyramid is not important to the long-term viability of our business. We can leave Tier 4 to governments and nonprofits.
•Assumption 5: Managers are not excited by business challenges that have a humanitarian dimension.
•Assumption 6: Intellectual excitement is in developed markets. It is hard to find talented managers who want to work at the bottom of the pyramid.
The Goal of this path breaking book to challenge these assumptions & provide counterparts.
Prof C. K. Prahalad provides the following building blocks for creating products and services for Bottom of the Pyramid markets.
12 Principles of Innovation for Bottom of the Pyramid Markets
1.                Focus on (quantum jumps in) price performance.
2.                Hybrid solutions, blending old and new technology.
3.                Scaleable and transportable operations across countries, cultures and languages.
4.                Reduced resource intensity: eco-friendly products.
5.                Radical product redesign from the beginning: marginal changes to existing Western products will not work.
6.                Build logistical and manufacturing infrastructure.
7.                Deskill (services) work.
8.                Educate (semiliterate) customers in product usage.
9.                Products must work in hostile environments: noise, dust, unsanitary conditions, abuse, electric blackouts, water pollution.
10.            Adaptable user interface to heterogeneous consumer bases.
11.            Distribution methods should be designed to reach both highly dispersed rural markets and highly dense urban markets.
12.            Focus on broad architecture, enabling quick and easy incorporation of new features. 

‘Helping people improve their lives by producing and distributing products and services in culturally sensitive, environmentally sustainable and economically profitable ways’- Prof. C.K. Prahalad (author : Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits)