THE

FORTUNE
AT THE BOTTOM
OF THE
PYRAMID
ERADICATING POVERTY THROUGH

PROFITS

What is BOP?

In economics, the bottom of the pyramid is the largest but poorest socioeconomic group.
Current usage pronounces >4 billion population across the world living on
<$2 per day.

Prevailing Global Myth: BOP

The poor are not our target consumers because with our current
cost structures, we can not profitably compete for that market.
The poor cannot afford and have no use for products and services
sold in developed markets
Only developed markets will appreciate and pay for the new
technology. The poor can use the previous generation of
technology
The bottom of the pyramid is not important to the long-term
viability of our business. We can leave tier 4 to govt. & NGOs.
Managers are not excited by the business challenges that have a
humanitarian dimension
Intellectual excitement is in developed markets. It is hard to find
talent managers who want to work at the bottom of the pyramid

Risks & Challenges

Operating Environment

Economics

Exposure to new political and

economic risks

Market size nuclear: estimates range

from $0.3 trillion to $13 trillion
Mr. Prahalad uses purchasing power
parity and assumes 4 billion BOP
spending $4/day

Resources, capabilities and

knowledge of the complexities
and subtleties of sustainable
development are required.
Consumers cant afford
differentiated products
Competing with local business
can threaten the existing
power structure.

Low Margin: High Fixed costs

Distribution challenges
High price sensitivity and per unit
transaction costs

Opportunities
BOP consumers suffer a
poverty penalty

Lack of access to
competitively and
efficiently-provided
goods and services.
Higher prices for some
goods and services (i.e.
manufactured goods,
credit).
Poorer quality goods and
services

At the same time, BOP

consumers

Are Brand-conscious
Have well connected
communities(word of
mouth)
Readily accept advanced
technology
Collectively have
purchasing power
Are always trying to
upgrade from their existing
condition

HUL(formerly known as HLL) &

Nirma:Case Study
HLL has been a pioneer among MNCs exploring markets at the BOP for
over 50 years
In the 1990s Nirma Ltd. began offering detergent products for poor
consumers under a business system that included a new product
formulation, wide distribution network, special packaging for daily
purchasing and value pricing

In 1995 HLLs new detergent called wheel was formulated to substantially

reduce the ration of oil to water in the product, knowing that poors often
wash their cloths in rivers or other public water systems

4 keys to unlock BOP markets to

MNC products

Bangladesh Grameen Bank: Case Study

One of the first in the world to apply micro lending model in commercial bank
Grameen Bank pioneered lending service for the poor that has inspired
thousands of micro lenders
Program has been designed to extend credit to lowest income customers also
have challenges like-lack of collateral, high credit risk, contractual enforcement

Arvind Mills: Case Study

Arvind mills, the worlds 5th largest denim
manufacturer Indian Denim sales limited due to $ 40
to $60 a pair was unaffordable to masses
Arvind mills introduced ready to make kit of jeans
under the brand Ruf & Tuf at about $6
Kits were distributed through a network of thousands
of local tailors, many in small rural towns & villages
Ruf & Tuf Jeans are now largest selling jeans in
India surpassing Levis

Conclusion: For those combating poverty

IF corporations can
without causing the very poor to divert income from
pressing needs
sell products that make people more productive
that are produced in a way that create local jobs and
increase local human capital
without driving out local industries
and reinvest locally instead of repatriating profits
THEN, they can be an important part of the solution to
poverty, which is an excellent CSR

Conclusion: For MNCs Interested in

venturing BOP Market
IF corporations can
create low price, quality products
that can be scaled across many BOP markets and achieve
high volume
while creating means for the capital constrained poor to buy
and building relationships and infrastructure that allow
them to reach poor consumers
and finally, follow the directives on the previous slide (at
least enough to avoid becoming a publicized bad
example)
THEN, they can serve BOP markets profitably.

Thank You