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What are bottom of the pyramid markets and why do they matter?

Article  in  Marketing Theory · August 2013

DOI: 10.1177/1470593113489193

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Commentary
Marketing Theory
13(3) 401–404
What are bottom of the ª The Author(s) 2013
Reprints and permission:
sagepub.co.uk/journalsPermissions.nav
pyramid markets and why DOI: 10.1177/1470593113489193
mtq.sagepub.com
do they matter?

Katy Mason
Lancaster University, UK

Ronika Chakrabarti
Lancaster University, UK

Ramendra Singh
Indian Institute of Management, India

Abstract
There are thousands of journal articles that concern themselves with markets at the bottom of the
pyramid (BoP).1 What is there to say that hasn’t been said already? In 2002, an article published in the
Harvard Business Review (Prahalad and Hammond, 2002) brought to the forefront of business and
academic attention a ‘missing market’ that was claimed to be lying dormant, ignored by international
and multination corporations yet worthy of attention for its potential to contribute to both eco-
nomic and social prosperity. The notion of markets at the BoP is concerned with providing the ‘poor’
in developing and emergent economies with access to markets. Prahalad and Hammond (2002)
champion the needs of the ‘invisible poor’ to the marketing efforts of multinational corporations.
Prahalad and Hammond’s (2002) assert that the poor as ‘consumers’ constituted a sizeable market
opportunity but this view has been criticised. In this essay, we explore how BoP markets might be
reconceptualising to better shape interventions that relieve poverty.

Keywords
Market practices, bottom of the pyramid, subsistence markets

Prahalad maintains that ‘The Fortune at the Bottom of the Pyramid (2006) offered significant
market opportunities for multinational enterprises (MNEs) at a time when market stagnation across
the developed world is widespread (see also Brugmann and Prahalad, 2007). However, Karnani
(2007) argues that such markets are a ‘harmless illusion’ and a ‘mirage’, claiming an exaggeration

Corresponding author:
Katy Mason, Marketing and Management, Lancaster University, Lancaster, UK.
Email: k.j.mason@lancs.ac.uk

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402 Marketing Theory 13(3)

of actual size and opportunities for business at bottom of the pyramid (BoP). For Prahalad, the
BoP market consists of ‘consumers’ with substantial buying potentials. In contrast, Karnani
argues that ‘this is a intellectually and morally problematic position’ that may encourage MNEs
to exploit the market with unnecessary goods and services that do not serve the real needs of the
very poor, who’s actual purchasing power is negligible. Karnani (2007) claims that Prahalad was
‘falsely advertising’ a market for profit potential and argues that people at BoP should be viewed
as ‘producers’ arguing that the role of job creation is pertinent for economic development. This
suggests that we need to view people at the BoP in a more holistic way; not simply in their roles
as either consumers or producers but as both, enrolled in complex systems of production and
consumption.
Other critiques claim that the Prahalad–Karnani debates are both inadequate as these ‘mental
models’ perpetuate a ‘one size fits all’ solution template for BoP related problems (Werhane et al.,
2010). These notions not only bias conceptualisation of the BoP but also constrain possibilities being
realised. Landrum (2007) observes that limited empirical research exists in favour of or against
Prahalad’s theoretical principles and their transferability into ‘other’ markets. The most critical
challenges put forward by Landrum include the size of the BoP market, the suitability of multi-
national corporations (MNCs) for BoP market segments, the role of marketing to the BoP (in terms of
higher unit price and improving distribution channels), the link between BoP and poverty eradica-
tion, environmental sustainability, the skewed focus on the ‘economic’ and the role of western
orientation and ethnocentrism. Perhaps, it is time to take a step-back and reflect on what BoP is. What
does BoP look like? How might we recognize BoP markets and what might we do to create good
markets at the BoP?
In 2010, the Journal of Business Research published a Special Issue on subsistence markets.
The history of this Special Issue is of note, coming out of a series of workshops where inter-
disciplinary scholars shared ideas about BoP markets. Subsistence was interpreted as being a sit-
uation where individuals and groups have barely enough resources for the day-to-day but are in a
position for ‘the possibility for abundance in other areas of life’, for example, community relation-
ships, ingenuity or resourcefulness (see, e.g. Viswanathan et al., 2010; Viswanathan and Rosa,
2010; Weidner et al., 2010). The group adopted a ‘bottom-up approach’ to studying marketplaces.
This is a distinctive yet complimentary slant to the mid-level approaches to strategy that has pre-
viously characterized research in this field (Viswanathan and Rosa, 2007). The group’s micro-level
focus (on issues such as familial, sociological and economic) was devised with the intention to
inform business policy and decision making. This group sets out to generate research that provided
a better understanding of the lives of the poor. Perhaps for the first time in the field of marketing
and management, BoP markets were being presented as sophisticated markets and drivers of
learning.
Despite these valuable contributions, we found limited explanation of the role of theory, or how
theoretical development might develop more nuanced insights to frame and further explore
practices within subsistence markets. Similarly, there has been no explication of the differences or
similarities between BoP markets and Subsistence markets. Interestingly, the term ‘bottom of the
pyramid’ can be traced back to 1932 when president Roosevelt made a radio address in the midst of
‘the great depression’. Roosevelt’s broadcast titled ‘The Forgotten Man’ explained,

These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the
indispensable units of economic power . . . that build from the bottom up and not from the top down,
that put their faith once more in the forgotten man at the bottom of the economic pyramid.

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Mason et al. 403

In the 1930s, it was the developed countries that were considered to have many people at the
BoP. This raises an important point about the notion of the poor and disenfranchised.
The last decade has seen a growing body of research into vulnerable consumer segments in
developed countries (see Baker et al., 2005 for a review). Building on early work in consumer studies
around consumer disadvantage in the marketplace (Andreasen, 1975; Caplovitz, 1963), Baker et al.
(2005: 7) propose a model that places emphasis on consumers’ experiences of vulnerability in the
marketplace, and how they are dependent on individual characteristics (psychosocial and biophy-
sical) and states (e.g. motivations, moods and transitions) alongside external conditions (e.g. dis-
tribution of resources and logistical elements). Central to Baker et al.’s (2005) definition is not only
the lack of control and power experienced by some groups of consumers but also the experience of
vulnerability that is often heightened due to circumstances beyond the individual’s control (e.g. how
other people respond to him/her). This has lead to a stream of literature around the concept of ‘social
marketing’. Here social marketing is understood as the need for developing good markets. Good
markets work in ways that support the types of social world we want to live in. Thus, social mar-
keting needs to build an understanding of what happens through the practices of everyday life. We
argue that there may well be more commonalities between markets for the ‘disenfranchised’ than
initially the BoP literature suggests and that searching out such commonalities and differences may
go some way to helping us understand how to build good markets for the people that matter so much,
at the BoP.

Note
1. A quick search on Google Scholar shows 17,900 articles specifically mentioning ‘bottom of the pyramid’
and a further 18,700 articles discussing ‘base of the pyramid’ markets.

References
Andreasen, A.R. (1975) The Disadvantaged Consumer. New York, NY: The Free Press.
Baker, S.M., Gentry, J.W. and Rittenburg, T.L. (2005) ‘Building Understanding of the Domain of Consumer
Vulnerability’, Journal of Macromarketing 25(2): 128–39.
Brugmann, J. and Prahalad, C. K. (2007) ‘Cocreating Business’s New Social Contract’, Harvard Business
Review 85(2): 80–90.
Caplovitz, D. (1963) The Poor Pay More: Consumer Practices of Low-income Families. New York: Free
Press of Glencoe.
Karnani, A. (2007). ‘Doing Well by Doing Good Case Study: ‘Fair & Lovely’ Whitening Cream’, Strategic
Management Journal 28(13): 1351–57.
Landrum, N.E. (2007) ‘Advancing the Base of the Pyramid Debate’, Strategic Management Review 1(1):
1–12.
Prahalad, C.K. (2006) The Fortune at the Bottom of the Pyramid Eradicating Poverty through Profits.
New Jersey: Prentice Hall.
Prahalad, C.K. and Hammond, A. (2002) ‘Serving the World’s Poor, Profitably’, Harvard Business Review
80(9): 48–57.
Viswanathan, M. and Rosa, J.A. (2007) ‘Product and Market Development for Subsistence Marketplaces:
Consumption and Entrepreneurship Beyond Literacy and Resource Barriers’, Advances in International
Management 20: 1–17.
Viswanathan, M. and Rosa, J.A. (2010) ‘Understanding Subsistence Market Places: Toward Sustainable
Consumption and Commerce for a Better World’ Journal of Business Research 63(6): 535–37.
Viswanathan, M., Rosa, J.A. and Ruth, J.A. (2010) ‘Exchanges in Marketing Systems: The Case of
Subsistence Consumer–Merchants in Chennai, India’, Journal of Marketing 74(3): 1–17.

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404 Marketing Theory 13(3)

Weidner, K.L., Rosa, J.A. and Viswanathan, M. (2010) ‘Marketing to Subsistence Consumers: Lessons from
Practice’, Journal of Business Research 63(6): 559–569.
Werhane, P.H., Kelley, S.P., Hartman, L.P. and Moberg, D.J. (2010) Alleviating Poverty through Profitable
Partnerships: Globalization, Markets and Economic Well-Being. New York, NY: Routledge.

Katy Mason is a Reader in Marketing and Management at Lancaster University Management School, UK.
Katy’s research focuses on how managers make and shape markets, and the market devices they use to enrol
and create boundaries with others. Her interest in bottom of the pyramid (BoP) comes from understanding
how people organize at the BoP. Katy’s work has been published in Journal Management Studies, Manage-
ment Learning, Industrial Marketing Management, Long Range Planning, European Journal of Marketing
and Journal of Marketing Management. Address: Department of Marketing, Lancaster University Manage-
ment School, Lancaster, UK. [email: k.j.mason@lancs.ac.u]

Ronika Chakrabarti is a Lecturer in Marketing and Management, Department of Marketing, Lancaster Uni-
versity Management School, Lancaster, UK. Ronika’s research interests in bottom of the pyramid (BoP) are
situated within the understanding of how these markets are being made and performed. She is interested in
how interventions in ‘unstable’ BoP landscapes allow for markets to be unearthed, contested and translated.
Her other areas of interest focus on network dynamics and change. Ronika has published in Industrial
Marketing Management, Journal of Advertising Research and Production Planning and Control. Address:
Lancaster University, UK. [email: r.chakrabarti@lancs.ac.uk]

Ramendra Singh is Assistant Professor of Marketing at Indian Institute of Management (IIM), Calcutta,
Kolkata, West Bengal, India. He obtained his PhD form IIM, Ahmedabad, Gujarat, India, and also completed
MBA from Xavier Labour Relations Institute, Jamshedpur, Jharkhand, India, and B.Tech from Indian Insti-
tute of Technology (IIT-BHU), Varanasi, Uttar Pradesh. His research has been published in reputed interna-
tional journals such as Industrial Marketing Management, Journal of Business and Industrial Marketing and
Marketing Intelligence and Planning. He has worked for several years in sales and marketing positions
in several companies such as Indian Oil Corporation, Exxon Mobil, SRF Limited and ICICI Bank. He has
also undertaken consulting and training programs for leading corporations such as Indian Oil Corporation,
Indian Railways, Power Finance Corporation, among others. One of his recent interests is in teaching and
research on marketing to bottom of the pyramid. Address: Indian Institute of Management, India. [email:
ramendra@iimcal.ac.in]

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