Bottom of the Pyramid
(C.K. Prahalad)

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Alleviate world poverty. Do not treat the poor as victims or as a burden. Explanation of Bottom of the Pyramid of C.K. Prahalad. ('02, '05)

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  2. Forum
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  4. Expert Tips
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Bottom of the Pyramid

What is the Bottom of the Pyramid? Description

The bottom of the (economic) pyramid consists of the 4 billion people living on less than $2 per day. For more than 50 years, the World Bank, donor nations, various aid agencies, national governments, and, lately, civil society organizations have all done their best, but they were unable to eradicate poverty.


Aware of this frustrating fact, C.K. Prahalad begins his book: "The Fortune at the Bottom of the Pyramid" with a simple yet revolutionary proposition: If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up.

Prahalad suggests that four billion poor can be the engine of the next round of global trade and prosperity, and can be a source of innovations. Serving the Bottom of the Pyramid customers requires that large firms work collaboratively with civil society organizations and local governments. Furthermore, market development at the Bottom of the Pyramid will also create millions of new entrepreneurs at the grass roots level.
 

Prahalad presents his new view regarding solving the problem of poverty as a Co-Creation solution towards economic development and social transformation (figure), of which the parties involved are:

  • Private enterprises
  • Development and aid agencies
  • Bottom of the Pyramid consumers
  • Bottom of the Pyramid entrepreneurs
  • Civil society organizations and local government

12 Principles of Innovation for Bottom of the Pyramid Markets

Prahalad provides the following building blocks for creating products and services for Bottom of the Pyramid markets:

  1. Focus on (quantum jumps in) price performance.
  2. Hybrid solutions, blending old and new technology.
  3. Scaleable and transportable operations across countries, cultures and languages.
  4. Reduced resource intensity: eco-friendly products.
  5. Radical product redesign from the beginning: marginal changes to existing Western products will not work.
  6. Build logistical and manufacturing infrastructure.
  7. Deskill (services) work.
  8. Educate (semiliterate) customers in product usage.
  9. Products must work in hostile environments: noise, dust, unsanitary conditions, abuse, electric blackouts, water pollution.
  10. Adaptable user interface to heterogeneous consumer bases.
  11. Distribution methods should be designed to reach both highly dispersed rural markets and highly dense urban markets.
  12. Focus on broad architecture, enabling quick and easy incorporation of new features.

Origin of the Bottom of the Pyramid. History

Before his 2005 book, Prahalad published two articles regarding this framework about alleviating poverty:

  • Jan 2002: The Fortune at the Bottom of the Pyramid (Strategy+Business), with Stu Hart
  • Sep 2002: Serve the World's Poor, Profitable (Harvard Business Review), with Allen Hammond

Usage of the Bottom of the Pyramid. Applications

  • This framework provides an impetus for a more active involvement of the private sector in building the marketing ecosystems for transforming the Bottom of the Pyramid.
  • Helps to reconsider and change long held beliefs, assumptions and ideologies.
  • Provides clues on developing products and services for Bottom of the Pyramid consumers.

Strengths of Bottom of the Pyramid thinking. Benefits

The biggest strengths of the Bottom of the Pyramid approach by Prahalad is, that it helps to reconsider and change long held beliefs, assumptions, and ideologies, which are all based on and are supporting victim- and burden thinking:

  • There is money at the Bottom of the Pyramid: it is a viable market.
  • Access to Bottom of the Pyramid markets is not necessarily difficult. Unconventional approaches such as the Avon ladies approach may work.
  • The poor are very brand-conscious.
  • The Bottom of the Pyramid market has been connected (mobile phones, TV, Internet).
  • Bottom of the Pyramid consumers are very much open towards advanced technology.

Assumptions of the Bottom of the Pyramid. Conditions

  1. The poor can not participate in the benefits of globalization without an active involvement of the private sector and without access to products and services that represent global quality standards.
  2. The Bottom of the Pyramid market provides a new growth opportunity for the private sector and a forum for innovations. Old and tried solutions cannot create markets at the Bottom of the Pyramid.
  3. Bottom of the Pyramid markets must become an integral part of the work and of the core business of the private sector. Bottom of the Pyramid markets can not merely be left to the realm of Corporate Social Responsibility (CSR) initiatives.

Book: C.K. Prahalad - The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits -


Bottom of the Pyramid Forum Help
  Relations Between Informal & Formal Sector
Despite the fact that the definition of the informal economy is debatable, a lot of scholars focus on how an informal sector can be formalised. In particular these scholars research to w...
     
 
  Why Informal Economies can Become Larger than Illegal Economies
Over the last decades, the concept "informal economy" has been conceptualized in many ways (see here for detailed info); scholars often refer to it as economic activities that take place ...
     
 
  Definition of Informal Economy
People that belong to the bottom part of the economic pyramid are often unable to generate income from the so-called formal economy, and therefore they aim to sustain themselves via informal economic activities. But over the last 50 years, the defini...
     
 
  Community Marketing in Developing Countries
Due to the lack of well-functioning distribution networks in developing countries, potential buyers in those countries are hard to reach. In such economies/countries, organizations need to use unconventional marketing strategies to expand their mark...
     
 
  Problem with Bottom of Pyramid
No matter how liberal and open we project ourselves... It's easy to say we should improve the capabilities and position of those at the bottom of pyramid.
But when it comes to implementing it, it requires HUGE courage for the authorities. Becaus...
     
 
  Differences in Purchasing Decision Making and Consumer Behavior in BOP-markets
It is often assumed that the behavioral trends and practices of consumers in BOP-markets are the same as in developed markets (only buyers have less money to spend). The general description of BOP-markets is not inconsistent with this assumption. Tha...
     
 
  Ideas for Development Phase of Papua New Guinea
How can Papua New Guinea (PNG) improve the living standard and efficient use of resources to improve infrastructure and increase development?
What strategies can PNG use to improve lives in the resource boom teritory?...
     
 
  Best Practices in Extending Medical Facilities to the Poor
Has anyone experienced a successful business case that extends medical facilities to the poor? In a country like India about 42% of the population is below BPL (below poverty line). All these people cannot afford costly medical treatment.
A huge...
     
 
  Packaging at the Bottom of the Pyramid
Perhaps one can look at the BOP concept from the point of view that low income earners require to consume quality products as much as the individuals on the higher parts of the pyramid. Unfortunately those within BOP have limited budgets and they can...
     
 
  A Bottom of the Pyramid Solution Must Be High Tech, Low Cost and Mass Producible
Many present solutions to the developing countries are based on high tech and high cost. The problems of BOP countries is they need solutions of high tech but of low cost so they're applicable to a mass of population particularly...
     
 
  Lighting Up African Village Schools
Nigerian population: 150 million - Electricity: < 16bln KwH
South African population: 44 million - Electricity > 195bln KwH.
In a month, millions of Nigerian students in high schools will be writing their final exams.
I have requested ...
     
 
  Bottom of the Pyramid People and SMEs
The development of SME strategies to mobilize the financial resources of the BOP will help get the BOP out of the $2 per day zone....
     
 
  Bottom of the Pyramid and Technology
The assumption that only the developed world would appreciate and pay for new technology while previous technology are reserved for the poor, is a delusion. The poor equally appreciate new technology.
The world has become a global village - comm...
     
 
  Increase the Whole Pyramid
It is easy to imagine that if someone move up to the top another one will move in counter sense, that is, to bottom. It happens when the pyramid does not grow in its volume. Since space may be only occupied by an individual, if someone gains, another...
     
 
  Using House of Quality With Bottom of the Pyramid Framework
The Bottom of the Pyramid framework can be perceived as an idea that will make the poorest people in our society more creative and innovative. Whichever approach or policy is adopted to make this a reality can be achieved more effectively if the fol...
     
 
  The BOO Model, BOOM Model and BOOT Model. Implementation in BOP Countries
The financial models, such as BOO (Build Own Operate), Build Own Operate and Maintain (BOOM), BOOT (Build, Own, Operate, and Transfer), tailor-made for the mega-energy-products which were planned for the aid to the developing countries could see the ...
     
 
  Bottom of the Pyramid Concept by CK Prahalad is Profound
A profound concept. Aiming at a win-win solution for all.
As Mahatma Gandhi said something like this (I do not remember exact words) if you govern a state, think about whether your action brings a smile to the poorest person. As an acid test. Th...
     
 
  Enabling Bottom of the Pyramid (BOP) Entrepreneurs
Micro credit organizations such as KIVA are enabling access to credit. It's a good start. Education institutions (now often profit driven) need to make the access to trade education as well as other marketable skills available, possibly through
     
 
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Best Practices - Bottom of the Pyramid Premium
  The Role of Government in Bottom of the Pyramid Thinking
Africa is a place with extremities. There is abundance of arable land and sufficient amount of water sources for agriculture. On the other hand, the bulk of the population live in abject poverty hence hunger is a permanent resident in their household...
     
 
  Fighthing Corruption in Developing Countries. The Role of Leaders
I am looking for ideas to start a study on how to "eliminate" corruption in developing countries. Actually, most developing countries depend on rich countries and international organizations to run their internal affairs. On a leadership stand...
     
 
  Are the Bottom of the Pyramid (BOP) Brand Conscious Consumers?
The people at the Bottom of the Pyramid are referred to as brand conscious and at the same time they are price sensitive. How should these two factors go together?...
     
 

Expert Tips - Bottom of the Pyramid Premium
 

Organizing Large Corporations to Capture BOP Opportunities

To capture the gigantic opportunities and to deal with the immense complexities of the many emerging markets, C.K. Prahalad and Hrishikesh Bhattachary...
Usage (application): Organizational Development, Best Practices
 
 
 

Bottom of the Pyramid Pitfalls

According to Ashish Karamchandani, Mike Kubzansky, and Nishant Lalwani ("The Globe: Is the Bottom of the Pyramid Really for You?" in Harvard Business ...
Usage (application): Avoid these Problems when you're Building a BoP-Business
 
 
 

Is your Firm Ready to Enter into BoP Markets?

In a recent article titled "The Globe: Is the Bottom of the Pyramid Really for You?" by Ashish Karamchandani, Mike Kubzansky, and Nishant Lalwani (Har...
Usage (application): BOP Self-Questionnaire
 
 
 

Bottom of the Pyramid in Financial Services

A success story of a BOP approach in financial services is the case of India-based 250M$ SKS Microfinance. In HBR June 2008 (p53-57) CEO Vikram Akula ...
Usage (application): Microfinance Strategy
 
 
 

Organizational Infrastructure to Address the Bottom of the Pyramid

In order to address the opportunities at the “Bottom of the Pyramid”, companies have to build an organizational infrastructure based on following five...
Usage (application): OD, Organizational Development, Best Practices
 
 
 

Innovation Principles Behind Bottom of the Pyramid Strategies

The 12 principles of market innovation for the BOP are:
1. Focus on value, on delivering performance for the price
2. Innovate – Old ...
Usage (application): BOP Strategy Focus Points
 
 
 

Base of the Pyramid Strategic Innovation

In their article “Strategic Innovation at the Base of the Pyramid” (MIT Sloan Management Review, Fall 2007), Jamie Anderson and Costas Markides are of...
Usage (application): Strategic innovation in developing markets
 
 
 

Bottom of the Pyramid Commercial infrastructure

1. “Creating Buying Power”, through access to credit and rise in income level to help the world’s poor Tier 4 consumers elevate themselves from desper...
Usage (application): BOP Commercial Strategy
 
 
 

Going Global: Adaptation of Marketing Mix Components

As we all know, companies that conduct business internationally are often adapting their products to the markets served. Operating in international ma...
Usage (application): Marketing Strategy, Global Marketing, International Marketing, Marketing Mix, 4Ps
 
 
 

Differences in Purchasing Decision Making and Consumer Behavior in BOP-markets

It is often assumed that the behavioral trends and practices of consumers in BOP-markets are the same as in developed markets (only buyers have less m...
Usage (application): Bottom of the Pyramid, Consumer Behavior, Consumer Marketing
 
 
 

Marketing for the BOP market

The three steps to use for segmenting a BOP market are:
1. Create segments – Break down the largest group with an interest in your ...
Usage (application): Segmentation
 
 
 

Examples of Bottom of the Pyramid Strategies

- Micro-credit: An example of the “Bottom of the Pyramid” is the growing micro-credit market in South Asia, especially in India. With the computerizat...
Usage (application): Strategy, Marketing, Innovation
 
 
 

How BOP Countries Can Disrupt Western Markets

After the Second World War, Japan started to develop fast as a result of their disruptive innovation strategy. This disruptive innovation process init...
Usage (application): Disruptive Innovation, Bottom of the Pyramid, Country-level Strategy
 
 
 

BOP Success Cases

1. Small-scale distributed energy solutions using renewable alternative resources such as biofuels for generation of electricity, one of critical comm...
Usage (application): BOP Strategy
 
 

Resources - Bottom of the Pyramid Premium

BOP is at Best a Harmless Illusion and Potentially a Dangerous Delusion

Poor people – at the bottom of the pyramid (BOP) - represent a very attractive market opportunity. The 'BOP proposition' argues that selling to the po...
Usage (application): BOP Critics
 

Reverse Innovation

Professor Vijay Govindarajan, a leading expert on innovation strategy explains the concept of Reverse Innovation.
"Reverse innovation" is the opp...
Usage (application): Understanding Reverse Innovation, Innovation Strategy, Emerging Markets, BOP
 

Perspective: Biography Prahalad (1941-2010)

A short biography on C.K. Prahalad's career and ideas....
Usage (application): Developing a Broader Perspective towards the Ideas of Prahalad
 

Bottom of the Pyramid Diagram

Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use. Republishing in intranets, websites, books, ma...
Usage (application): Alleviating World Poverty by Involving the Prviate Sector
 

Risk Management in Agricultural Lending

Presentation about Risk Management, especially focused on the Risks in Agricultural Lending. The presentation includes the following sections:
1....
Usage (application): Agricultural Risk Management, Micro Finance, Bottom of the Pyramid, Agriculture Risk Management
 

Interview with Prahalad about Assumptions in Bottom of the Pyramid (BOP) Thinking

Interview with business guru C.K. Prahalad on "The Unexplored Last Market".
In this short video, Prahalad explains 3 wrong assumptions that compa...
Usage (application): Errors to Avoid in BOP Strategy
 
 

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Compare with the Bottom of the Pyramid:  Diamond Model  |  Cultural Dimensions  |  Strategic Intent  |  Co-Creation  |  Business Process Reengineering


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