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SUMMARY
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JOURNAL BY AGNIHOTRI ARPITA ON BASE OF
PYRAMID
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2/12/2019

STUDENT NAME

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Contents
Introduction to the base of pyramid concept ................................................................................................. 3
Summary of article........................................................................................................................................ 3
Case studies............................................................................................................................................... 4
Challenges of doing business explored through case study: ......................................................................... 4
Opportunities through case study:............................................................................................................. 5
Innovation can help reach this class:......................................................................................................... 5
Recommendations ..................................................................................................................................... 6
Discussion/Analysis ...................................................................................................................................... 7
References ..................................................................................................................................................... 8
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Introduction to the base of pyramid concept

The concept of bottom/base of the pyramid is discussed and explored in this journal article. This

concept is such a concept which is very useful and interesting if discussed in business terms but

profitability is very less and less work has been done on this. The bottom of pyramids is always

very wide in literal terms however the meaning of this in business is representation of all those

people who are poorest in socioeconomic class, they are in majority than any other class. There

are 2.7 billion people are living under poor socio economic status and their per day income is not

even $2.50. CK Prahald popularized this idea of bottom of the pyramid. There are upper and

lower layers of the bottom which are always debated in this pyramid that the pyramid base is

how much wide and what is the actual bottom. This is seen in various businesses cases that doing

business for such people who are poor is always expensive and there are high costs involved

such as the case in India when Procter and gamble wanted to apply pure water purification power

plant for the poorest class but it could not managed because of very high costs involved. This is

very important to ensure suitable business at the bottom of strategy because most of the firms

could not manage their profits while dealing with that group. There are several advisory

companies who have modeled businesses in such a way that economies of scale can be achieved

(Zuleta, 2006).

Summary of article

The article doing good and doing business at the bottom of the pyramid is written by Agnihotri

(2013) has tried to investigate that if bottom of pyramid business have some fortune of profit or

not. The mini cases are utilized in this study to provide that fortune cases are present and there

are profits that can be earned from this business market but good fortune is still not achieved.

The paper has also provided with some solution that how good fortune can be made in this
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business and the recommendations given by author are involving the buyers of this income group

as workers such as co owners, suppliers, employers or distributors. This will result not only in

increasing profits for firms but also in eradicating poverty at grassroots national level. There are

so many cost effects utilitarianism goods which must be the stage products of this business.

The sad facets of this business are also explored and reasons of poverty in this income group are

also explored in introduction part as people may give installments to buy a TV rather than saving

it for little investments. The idea of selling goods to poor people is not only about firms but it is

about poor people as well that how they can contribute in the purchasing process. Author has

given examples to validate his argument that profit fortune can be brought to the Bop business by

citing example of shree renuka sugars in India, this was the firm which was started by a poor

man by taking loan from bank and he hired farmers for 1000 rupees each however when the

sugar firm started gaining profits the farmers participation and income also increased. The sugar

price fluctuate due to weather conditions and less or more supply. The farmers who invested in it

got so much of return that they bought cars, and lands for their own cultivations.

Case studies

There is lot of case studies discussed in the paper to see both sides of the argument. The author

has presented such cases which brightens up the darkens side of doing business for poor people

however he also quoted such examples which re successful cases.

Challenges of doing business explored through case study:

There are some adaptability traps present, this is a general observation and case studies also

prove that products are widely accepted and sold in middle and upper classes however lower

classes are less adaptable. This happened with Shokti Doi firm of Bangladesh which tried to sell
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yogurt at less amount to poor people because of increased diarrhea rate among this group.

However the ladies hired to sell these products could not meet the targets and firm did not

receive the unsold products back. This caused firm to sell 80 percent of its products to middle

and upper class whereas only 20 percent to BoPs. The two challenges were lack of efficient

message of selling ladies that this is homemade curd and the other challenge was cold storage.

Bangladesh lacks proper infrastructure thus cold storage was not possible at plenty of places.

Opportunities through case study:

Essilor is one of the lens manufacturer firm and it made mobile van visits in rural areas, it with

helps of technicians and optometrists sold standardized glasses with eye frames for people

having eyesight issues. This standard size was made after making checkup up visits. The prices

were very less due to standardized glasses however the firm does manage to earn profits but

selling’s in huge amounts.

Innovation can help reach this class:

There are two of villages in which there is no proper electivity, innovation can help firms to

reduce prices of products and make effective products which may last longer for such villages

and poor people who have that particular kind of infrastructure. Chotukool refrigerator is such a

fridge producing firm which earned a lot from Indian villages as the villages mostly have short of

electricity but these chotukool fridge’s are cheap because these are cheap in size and they are

innovative as they can performance good even if there is no electivity. Cellular phones are the

similar idea in which innovation produces quality products, sewing machines is another example.

Singer sewing machines are gaining a lot from this lower income group and its philosophy of

business does apply to base of pyramid.

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Recommendations

The recommendations are provided both to poor people and companies to find a fortune while

doing business with BoPs. The recommendations for poor people are that:

 They must act as employees as well, if they work in firm as salesman they can make their

earnings by selling more goods and this will benefit the firm as well which is trying to

reach to poor people.

 Poor people as customer need to become wiser. The companies are producing small

beauty product sachets which are brought by poor people as a luxury however they must

have spent this amount on buying vegetables and fruits and save the rest.

 Government needs to introduce such premiums which benefit the social class of country

for example disease rate is more in poor people such as diarrhea like cases are very

mostly occurring in this income group due to poor living conditions however whenever

they buy medicines and products they pay taxes there must be a poor premium in which

one time tax must be paid. Social institutions like social hospitals must be involved in

this.

 There must be some bans on companies who target poor people for hedonic purchases.

There are no utilitarianism purposes of products such as chocolates, and perfumes. The

purchasing desires are irrespective of living status of person, emotions of buying an elite

product may be present in any heart. Customers do buy products based on cognitive

decisions; targeting poor people for such products which do not service basic

utilitarianism purpose are unethical. Women of any living status may buy fair and lovely

because every women wants to look young and beautiful beyond her living status and

income group.
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Discussion/Analysis

There are numerous examples of BoP business such as microcredit in developing countries. In

Bangladesh this concept is very popular as this is very poor country and many of population

living below poverty line, people are investing in small amounts of money by lending this to

people. Finical organizations are also doing it, and this is microcredit which targets the poorest

income group. There are poorer entrepreneurs as well who manage businesses at very low profit

level and they are the actual customers of microcredit. There are market specific products as well

such as very small packing of shampoos is made for that income group which is at the base of

pyramid and the upfront costs of such products are always lesser. Unilever is producing plenty of

such products (Rufin, 2016).

Regarding innovation there are different views present that if BoP wants to adopts innovation

faster or not, the traditional view was that this lower income group does not want to adopt

innovation faster however the modern view is opposite to traditional view. Mobile marketing is

very much liked in that group however complex innovations are probably not adopted eagerly.

The innovation development for this market must be according to complexity level (Goyal, Sergi

and Kapoor, 2014).

The other attribute of BoP is that they are not brand conscious. However CK Prahald who has

done the most work on BoP claims that this wide group is affected by brand consciousness in

one way or another because brand influences on “product adoption”. The large people of lower

income group will want to adopt such products which are inspired by brand or closely linked to

branded products (Schrader, Freimann and Seuring, 2011).

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References

Agnihotri, A., (2013). Doing good and doing business at the bottom of the pyramid . business

horizons. 56. 591-599.

Goyal, S., Sergi, B. and Kapoor, A. (2014). Significant Understanding the Key Characteristics of

an Embedded Business Model for the Base of the Pyramid Markets. ECONOMICS &

SOCIOLOGY, 7(4), pp.26-40.

Rufin, C. (2016). Bridging Institutional Voids at the Urban Base of the Pyramid. SSRN

Electronic Journal.

Schrader, C., Freimann, J. and Seuring, S. (2011). Business Strategy at the Base of the

Pyramid. Business Strategy and the Environment, 21(5), pp.281-298.

Zuleta, H. (2006). Poor People and Risky Business. SSRN Electronic Journal.