...____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ : Bottom of the Pyramid INTRODUCTION: Global poverty exists today at a startling scale; while the exact numbers are debated, some estimate that four billion people worldwide live on less than two dollars a day.1 According to C.K. Prahalad and Stuart Hart, both Aspen Institute Faculty Pioneer Award recipients, companies should not ignore these traditionally overlooked people, collectively dubbed the “Bottom of the Pyramid,” because of their considerable combined purchasing power.2 Thus, if companies are innovative enough to create or tailor their products to the economic realities and life needs of these people, a significant profit can be won. At the same time, this group’s entry into the market would hopefully better their quality of life and aid in regional economic development. Three well-publicized examples will help illustrate the base-of-the-pyramid concept. First, Grameen Bank was started by Nobel Prize laureate Muhammed Yunus in Bangladesh to offer mini-loans to entrepreneurs who wouldn’t qualify for traditional bank loans based on collateral.3 As of May 2007, over seven million people have borrowed from the Bank with incredibly high levels of repayment.4 Second...
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...ESSAY ONE MAKING CONNECTIONS DRAFT Bottom of the pyramid (BOP) refers to refers to the poorest yet largest economic group in the world as it shows on figure 1. This was a term introduced by http://recyclewashington.files.wordpress.com/2010/05/graphic-world-economic-pyramid-web1.gif?w=510 http://recyclewashington.wordpress.com/category/economics/ These income values are based on the purchasing power in US dollar, and the BOP represents the tier 4 which earns less than $1,500 a year per head. This economic group however represents 4 Billion people which is larger than all other groups combined. Countries that can be referred to as BOPs include countries like Niger which has a GNI per capita of $701 http://hdrstats.undp.org/en/countries/profiles/NER.html or Afghanistan with a GNI per capita of $1000 http://hdrstats.undp.org/en/countries/profiles/AFG.html. There is a high correlation between countries with low GNIs http://hdrstats.undp.org/en/indicators/103606.html and Third world countries http://www.nationsonline.org/oneworld/third_world.htm therefore we are able to identify similarities amongst them whether cultural, environmental or economic. The Bottom of the pyramid strategy is a modern strategy introduced by Coimbatore Krishnarao Prahalad. He believes that that multinational companies not only can make money selling to the world’s poorest, but also that undertaking such efforts is necessary as a way to close the growing gap between rich and poor countries. Key...
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...(18027991) Email: jennilyn_phan@hotmail.com The Fortune at the bottom of pyramid Procter & Gamble Company The Fortune at the bottom of pyramid Procter & Gamble Company According to Pervez, Maritz and Waal (2013), recently when poverty continues to be one of the global key issues and also one of the biggest challenges facing the society at large, the solutions to alleviate the continuing economic misery have become increasingly popular. The release of new theory called “Bottom of the Pyramid”, which is also known as “base of the pyramid”, by Prahalad and Hart has helped figure a new way of thinking about the intersection of business strategy and poverty alleviation (London & Anupindi, 2012). However, it does not seem like the business will always be profitable when doing the expansion to the low-income market, the challenges facing to the businesses also arise. This paper is to describe and discuss in-depth the Bottom of the Pyramid concept and also to go through the approach to the BoP venture that the selected company, Procter & Gamble, has undertaken in their business strategy in the Chinese market. Dinica & Motteau (2012) stated that: "The distribution of money in the world looks like a pyramid". The “bottom of the pyramid” concept mentions that not too many people could earn a lot at the top of the pyramid but a big amount of people who are poor at the bottom of the pyramid. It is estimated that approximately four billion people that make up...
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...strategy+business The Fortune at the Bottom of the Pyramid by C.K. Prahalad and Stuart L. Hart from strategy+business issue 26, first quarter 2002 © 2002 Booz Allen Hamilton Inc. All rights reserved. e-Doc The Fortune at the of the Bottom Pyramid by C.K. Prahalad and Stuart L. Hart SECURITY AND S T R AT E GY content strategy & competition Low-income markets present a prodigious opportunity for the world’s wealthiest companies — to seek their fortunes and bring prosperity to the aspiring poor. 1 With the end of the Cold War, the former Soviet Union and its allies, as well as China, India, and Latin America, opened their closed markets to foreign investment in a cascading fashion. Although this significant economic and social transformation has offered vast new growth opportunities for multinational corporations (MNCs), its promise has yet to be realized. First, the prospect of millions of “middle-class” consumers in developing countries, clamoring for products from MNCs, was wildly oversold. To make matters worse, the Asian and Latin American financial crises have greatly diminished the attractiveness of emerging markets. As a consequence, many MNCs worldwide slowed investments and began to rethink risk–reward structures for these markets. This retreat could become even more pronounced in the wake of the terrorist attacks in the United States last September. The lackluster nature of most MNCs’ emergingmarket strategies over the past decade...
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...strategy + business issue 26 The Fortune at the of the SECURITY AND S T R AT E GY Bottom Pyramid by C.K. Prahalad and Stuart L. Hart content strategy & competition Low-income markets present a prodigious opportunity for the world’s wealthiest companies — to seek their fortunes and bring prosperity to the aspiring poor. 2 With the end of the Cold War, the former Soviet Union and its allies, as well as China, India, and Latin America, opened their closed markets to foreign investment in a cascading fashion. Although this significant economic and social transformation has offered vast new growth opportunities for multinational corporations (MNCs), its promise has yet to be realized. First, the prospect of millions of “middle-class” consumers in developing countries, clamoring for products from MNCs, was wildly oversold. To make matters worse, the Asian and Latin American financial crises have greatly diminished the attractiveness of emerging markets. As a consequence, many MNCs worldwide slowed investments and began to rethink risk–reward structures for these markets. This retreat could become even more pronounced in the wake of the terrorist attacks in the United States last September. The lackluster nature of most MNCs’ emergingmarket strategies over the past decade does not change the magnitude of the opportunity, which is in reality much larger than previously thought. The real source of market promise is not the wealthy few in the developing world...
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...Companies can Make Fortune at the Bottom of the Pyramid Rajesh N. Kumar James Cook University Table of Contents Executive Summary 3 Background 4 Introduction 4 What is the BoP Strategy 6 What is the Driver for MNCs to Focus on BoP Market 9 Is There a Buying Potential at the BoP 9 Behavior of Consumers in Asian Market 10 Sector With Highest Potential of Business in BoP Market 11 Recommendation 12 How to Approach the BoP Community - Innovation 14 Implement Innovative Approach to tap BoP Market 15 References 16 Appendix A 17 Appendix B 18 Executive Summary This report explores published journals, blogs and books around The Bottom of the Pyramid (BoP) being the breakthrough in the Strategy for businesses across segment and analyse what steps would lead to success through the journey of business around the 4 billion population existing in the bottom of the pyramid layer. Methods of analysis include statistical and market trend, and ratios of performance. Main area of focus is Asian market through the report as they account to 3/4th of the population residing in the bottom of the Pyramid, given the uniqueness of this region around culture, market behavior, people mentality and social dynamics. Gaining that knowledge would become important to have a break through into this market and ensure it’s a sustainable business...
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...The Fortune at the of the SECURITY AND S T R AT E GY Bottom Pyramid by C.K. Prahalad and Stuart L. Hart content strategy & competition Low-income markets present a prodigious opportunity for the world’s wealthiest companies — to seek their fortunes and bring prosperity to the aspiring poor. 1 With the end of the Cold War, the former Soviet Union and its allies, as well as China, India, and Latin America, opened their closed markets to foreign investment in a cascading fashion. Although this significant economic and social transformation has offered vast new growth opportunities for multinational corporations (MNCs), its promise has yet to be realized. First, the prospect of millions of “middle-class” consumers in developing countries, clamoring for products from MNCs, was wildly oversold. To make matters worse, the Asian and Latin American financial crises have greatly diminished the attractiveness of emerging markets. As a consequence, many MNCs worldwide slowed investments and began to rethink risk–reward structures for these markets. This retreat could become even more pronounced in the wake of the terrorist attacks in the United States last September. The lackluster nature of most MNCs’ emergingmarket strategies over the past decade does not change the magnitude of the opportunity, which is in reality much larger than previously thought. The real source of market promise is not the wealthy few in the developing world, or even the emerging middle-income...
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...a better business, better relationships, and most importantly it is a practice of making a better life. For example, Apple, as well as for the betterment of the world in all its goods uses recyclable products. Plays an important role in the marketing of the firm. It is like a bridge between corporate responsibility and profitability. For example, a company that produces beverages fewer pesticides, chemicals unnecessary packaging and flavor instead uses natural ingredients that can design a product. To complete the product, the firm has to invest significant money. They will love their new product to consumers based on its new features and buy the product that the company will make the investment. It is also known as the triple bottom line (the customer, the environment and the benefits of Corporate) - this way, business analysts have to keep in mind about Basics of Marketing Marketing is a central building. Marketing and its elements are what every trader should have a clear knowledge. Some people have a promotion or advertising of products marketed as misunderstood. " Marketing, making pricing, delivery , and facilitate relationships with customers satisfactory exchange of goods , services and ideas to promote the process " Customer: what they need is to understand customers and their needs. Then how customer needs and to ensure that the product will buy it is to judge people. Product: The product is developed according to the customer that is the second...
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...and operating strategy for the organization I led at that time. I will expand further on this subject in today’s post . Abraham Maslow first proposed his hierarchy of needs in a 1943 paper titled “ A Theory of Human Motivation.” Usually depicted as a pyramid, the hierarchy basically describes the fact that, in order for humans to reach their maximum potential, which Maslow defines as “self actualization,” certain basic psychological and physical needs must be met. These build upon each other beginning at the bottom of the pyramid with physiological needs (These include the most basic needs that are vital to survival, such as the need for water, air, food and sleep), and culminate at the apex of the pyramid with self-actualization (self-awareness, concern with personal growth, less concern with the opinions of others and interested fulfilling their potential). If you are not familiar with the theory see thislink for a good overview. I have found that, in order for IT organizations to obtain the equivalent of self actualization, which I call “strategic innovation and partnership,’ certain basic “needs” must be met. Failure to do so will almost always prevent reaching the top of the pyramid. The overall concept is depicted in the accompanying graphic. As one moves from the bottom to the top of the pyramid, the capabilities describe move from mostly tactical to mostly strategic, from commodity services to industry/company specific ones. Those at the bottom, because they...
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...International Review, pp.7–15. Porter, M., 1990. The competitive advantage of nations. Harvard Business Review, 68(2), pp.73–93. 2 31.03.2016 Thursday Global value chain • Outsourcing vs offshoring • Global value chain • offshoring • outsourcing • Resource-based view • Transaction costs • Intellectual property infringement Case: Ecco – Global value chain management 1. Describe the competitive environment of ECCO and determine how well ECCO is positioned (vis-a-vis the competitors) to take advantage of changes in the industry. 2. Analyze ECCO's global value chain. How well does this configuration match the drivers in the industry? 3. ECCO has a fully integrated vertical value chain? What are the pros and cons of this strategy? That economic and strategic factors should be analyzed to answer this question?...
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...The article „segmenting the base of the pyramid“, written by V. K. Rangan, M. Chu, and D. Petkoski, gives us an introduction into the different segments at the base of the pyramid, and how to earn sustainable profits without taking advantage of the affected inhabitants. The poorest 4 billion people in the world who live on less than 3 to 5 USD per day define the base of the pyramid. In today’s global economy, the Bottom of the Pyramid is the largest segment in terms of affiliated people. In order to conduct business properly at the base, you need to segment it by living standards and by its value-creating roles. You can distinguish between low income, subsistence, and extreme poverty. The low-income segment lives on 3 to 5 USD a day and typically has a couple of years of secondary education and the skills needed to enter the job market. They have reasonable hope that they will achieve a modestly higher living standard. Next comes the subsistence segment with 1 to 3 USD a day. They are poorly educated and low skilled. They have only irregular earnings and their nutrition is often substandard. They conduct transactions only in informal markets. The last segment is called extreme poverty. Those 1 billion people lack basic necessities as sufficient food, clean water, and adequate shelter. In order to find the most suitable market strategy for each segment, you need to understand what kind of roles these people play in a relationship with your company. The first ones are the consumers...
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...| Case Study 03 Marketing to the Bottom of the Pyramid | MKT3120 International Marketing | Name : Andrea Manampulle Student Id : 10200729 / MAAMD81 Class : Monday 6 p.m. Due Date : 1st October 2010 Answers 1. In evaluating the potential of a BOP market segment there are certain factors that need to be analyzed in order to develop a marketing strategy. The following will be used as a guideline to establish possibility and viability of marketing to the BOP. Market opportunity Being the “poor sector” of the pyramid is there a marketing opportunity? Will people who struggle to survive buy convince goods? In analyzing the market opportunity of the BOP, as the case suggest with major markets being more competitive and profits margins per supplier reducing, organizations are now uncovering the potential of tapping the BOP. The BOP is a group that consists of over 4 billion people, that accounts for ¾ of world’s population. Given the size of the market, profitability is obtained by volume of sale rather than an individual sale. (Rafeek, 2009 March 16) For example the Indian BOP market with its vast size and demand, offers a huge opportunity for companies. Out of the 1.12 billion population, 70% live in rural areas, accounting to more than 700 million people at 6,27,000 villages. India’s rural population comprises of 12% of the world’s population presenting a huge market opportunity. As at 2008, this market has grown at an impressive rate of 25%....
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...The concept of the bottom of the pyramid (BoP) refers to the largest socio-economic group of individuals who are amongst the poorest in the world. Although those individuals living at the bottom live in severe poverty, the notion is that there is a fortune at the BoP for multinational organizations to exploit. There is a considerable amount of market potential that exists within these groups. An organization can make an effort to capitalize on this potential, changing or creating a sustainable business model for future operations. For a multinational organization to do so, there are various opportunities and challenges in which they must understand. Opportunities of reluctance from competitors, purchasing power of the BoP, progression of the BoP, and financial gain of the organization must be considered before investing. While challenges of ethical concerns involving the products produced and the vulnerability of the BoP market must be recognized as well. There have already been numerous multinational organizations that have invested their efforts into the BoP market and have attained immense success. The argument against tapping into this market is understandable, but with vast opportunities and avoidable challenges, it is apparent that a multinational organization can and should seek their fortune at the bottom of the pyramid (BoP). As the majority of the BoP market is untapped, there are various opportunities for a multinational organization to consider when determining...
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...MKS0119 Nokia’s Rural Marketing Strategies in India: Reaching Out to the Bottom of Pyramid “The rural consumer is discerning and the rural market is vibrant. At the current rate of growth, it will soon outstrip the urban market. The rural market is not sleeping any longer. We are.”1 – Adi Godrej, Chairman, Godrej Group of Industries To expand its presence, Nokia is planning to launch a new service ‘Nokia Life Tools’ that would provide information on market price, weather, etc., to information-starved farmers. While the idea is not new, the challenge in front of Nokia is to convert the 70 million rural mobile users in using its service, amidst competition from local input dealers and ITC e-Choupal that offers similar services. Rural Marketing in India: Demographics and Economics Out of India’s population of over 1 billion, 70% lives in rural India.2 India consists of 627,000 villages3 with 13% of them having a population of above 2000.4 For the people of rural India, agriculture is the main occupation. Agriculture contributes 17.8% to India’s GDP with about 60% of the workforce employed in the agriculture sector in 2008.5 Since independence, rural India went through a socio-economic transformation due to the various initiatives taken by the ministry of rural development.6 However, till 1990s, the gap between rural and urban development remained wide. With the implementation of minimum support price (the rate at which the government buys the farm produce to prevent farmers from...
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...Marketing to the Bottom of the Pyramid Central Issues The concept of the Bottom of the Pyramid (BOP) market was originally developed by C.K. Prahalad in “The Fortune at the Bottom of the Pyramid” to highlight a large potential market made up of a large segment of the world’s population that has, until recently, been an ignored market segment among multinational companies. In an age of increasing global competition and near-saturation for some products in more mature markets, this multi-cultural segment, made up of people from all parts of the world that earn less than two dollars a day, can generate significant revenues and be profitable for companies who have developed appropriate strategies for reaching this market segment. Among the issues related to BOPMs are establishing appropriate distribution channels, developing and pricing products that have value for those in these markets, and finding creative ways for financing. In terms of financing, this would include not only that related to the purchase of a product for those with relatively low incomes, but would also include strategies for financing business initiatives on the local level. Perspectives Stakeholder would include the local populations that make up the BOPMs. Cultural considerations must be a key component of product development and advertising. Care must be given that products will not harm those to whom they are marketed. Also, companies are stakeholders in that new strategies including BOPMs...
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