Reply What is BoP? In economics, the bottom of the pyramid is the 2. But corruption, illiteracy, currency fluctuations, inappropriate infrastructures and so on make MNCs skeptical they they can do business profitably. These factors and also the outdated representation of the poor hide the real potential of BoP markets.
Prahalad advocated for envisioning those at the bottom of the economic pyramid as producers and consumers of products, rather than merely as philanthropic beneficiaries. I analyzed several of these "base of the pyramid" business models — what we call "Building a Marketplace" — in Model Behavior: In the report, I showed that when companies deploy this model, they build new markets for their products in innovative and socially responsible ways.
Among other things, this can include delivering social programs, adapting to local markets and bundling with other services like microfinance and technical assistance. Improving healthcare in India The pharmaceutical company Novartis implemented the building a marketplace model through its Arogya Parivar initiative, a for-profit effort to improve health in poor, rural communities in India without access to affordable healthcare.
Using a "1 plus 1 education" strategy, Arogya Parivar employs health educators to instruct villagers on a variety of health topics, thereby creating greater confidence in medicine. Rather than solely focusing on selling products to a market, Novartis has taken on the challenge of empowering entire communities by educating potential customers — along with Life at the bottom of pyramid who assess health and provide medicine — about their community health needs.
Arogya Parivar started in as a pilot program in South India. Since then, it has spread to ten Indian states and now reaches more than 40 million people.
Novartis reports that the program broke even within 30 months. Recently, the company expanded it to Kenya and Vietnam, and plan to open in Indonesia.
The road to scale has not been easy, and Novartis has had to invest in an entirely new business ecosystem. However, by doing so, the company aims to earn trust, brand allegiance and revenue from a new group of consumers who might have increased spending power in the future.
Microfinance in Mexico On the other side of the world in Mexico, Cemex, a company in an entirely different industry, has taken a similar approach to building a new marketplace. Sixteen years ago, it established the Patrimonio Hoy program, which makes building materials like cement, concrete blocks and steel available to low-income urban and peri-urban communities at market rates.
Although its prices are often on par, or slightly higher, than those of its competitors, Patrimonio Hoy offers greater value. Through the program, customers are able to access microfinance loans that allow them to pay for the products over time.
Patrimonio Hoy also offers technical assistance and architectural guidance for customers, nearly all of whom construct their own homes. Key to the success of the model is its network of community-based promoters, usually women, who tell friends and family members about the company and its program.
Promoters are rewarded on a commission basis for every customer they bring in. The program has had an outsize impact in some communities, creating new jobs for local masons, increasing property values, and enabling the establishment of home-based businesses.
Selling insurance via mobile phones in Zambia MicroEnsure, a global insurance provider, is building marketplaces in a slightly different way, leaning on local partners to secure customers and market its products. Customers are reticent to buy a product that they might need in three years.
Rather than selling insurance directly to customers, MicroEnsure handles the product design, technology platform and call center for its products, but works with local insurance providers to shoulder the risk.
It also collaborates with mobile phone service providers, who have established relationships and brand recognition, to market its products. The mobile providers are willing to pay the cost of the premium to MicroEnsure because the insurance makes mobile customers less likely to switch providers and more likely to increase the amount they spend.
Together, with local partners, MicroEnsure is building an entirely new insurance marketplace. The model appears to be working: MicroEnsure currently serves seven million customers around the world and is growing monthly.
Building a successful, scalable marketplace is a long-term business plan and one that is not without challenges. Novartis, for example, must keep the greater good of the community in mind through intensive education initiatives rather than just marketing and selling, per business as usual.
Cemex team members have taken up residence in villages to truly understand the communities they are trying to reach.“Bottom of the Pyramid” (BoP) was first used by U.S.
P resident Franklin D. Roosevelt in while he was talking about «the forgotten man at the bottom of the economic pyramid». In economics, the bottom of the pyramid is the billion people who live on less than $ per day. The bottom of the pyramid is waiting for high-tech businesses such as financial services, cellular telecommunications, and low-end computers.
In fact, for many emerging disruptive technologies (e.g., fuel cells, photovoltaics, satellite-based telecommunications, biotechnology, thin-film microelectronics, and nanotechnology), the bottom of the pyramid may prove to be the most attractive early market.
The West's bottom-of-the-pyramid companies are an unglamorous bunch. Many rely on poorly educated shift workers. Some inhabit the nether world of loan sharks and bail bondsmen.
The Nation's Game - life at the bottom of the pyramid: Part 1, the grassroots question Across a seven-part series, The Independent will be exploring the deeply misunderstood and complex world of.
The bottom of the pyramid, bottom of the wealth pyramid or the bottom of the income pyramid is the largest, but poorest socio-economic group. In global terms, this is the billion people who live on less than $ a day. Most companies trying to do business with the 4 billion people who make up the world’s poor follow a formula long touted by bottom-of-the-pyramid experts: Offer products at extremely low prices.