Bottom of the Pyramid
(C.K. Prahalad)

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)

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:

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

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.
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.
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 (22)

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. All the grants and loans availed to the continents governments have not made any significant impact on the hunger situation. The banks on the continent require security for their loans, yet the rural people have no property other than their land which is communally owned.
I have the opinion that the continents governments can help solve this dilemma in the following way.
Governments in Africa have the agricultural extension staff charged with providing technical guidance to farmers. Given the size of land holding by a farmer, the type of agricultural activity that can be carried out on this holding and profitably so, can be determined. The farmers knowledge of the agricultural practices that can be economically carried out on the holding is then assessed and the extension officers provide back-up technical knowledge to help the farmer succeed.
The next issue is for the government to provide security to commercial banks for loans to be given to farmers for the undertaking. As for marketing the farm produce, government should set up marketing boards, and also government can help farmers to form cooperative entities to improve their bargaining power.
It is only then that this lovely continent will get rid of hunger and poverty which have become synonymous with the continent."

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 business potential exists in providing affordable medical facilities to this segment. Let's collect best practices here how this can be achieved. Many thanks."

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 only purchase the products in small quantities and less frequently.
To make the products accessible, the manufacturers have to find innovative ways of packaging the products. The smaller packs' may fetch less profit margins but this may be countered by the higher turnover. One can also envisage a situation where some of the smaller packs consumers today may migrate to be the bigger pack consumers tomorrow; particularly the youth, who will have been hooked to the particular brand."

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 in the areas of health care, education, poverty removal, urbanization, environment.
The solutions should evolve from BOP countries themselves with large financial inputs from World Bank and rich donor countries including technology for the outputs to be meaningful."

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 to make presentations to multinationals, government developmental agencies on the need to supply portable solar lighting lamps, which quality had been tested by the IFC Lighting Africa program to the students so they can read into the nights. No one bothered to respond. Yet, these are students we expect to succeed us tomorrow.
We know, without being sufficiently mentally evolved, they will fail and remain in the BOP, and the dynasty continues! Please, is there someone or organization out there to help?"

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 - communication and information usage has become important for all tiers of the economic pyramid. In the part of the world where I live, the very poor who engage in farming, fishing and petty trading, use mobile phones for business communication just as a business executive in Europe or America would do. The bottom of the pyramid consumers are aware of emerging technologies in developed countries and yearn to have such technologies at their disposal to enable them produce or provide services.
MNCs (MTN, Zain, Airtel etc.) who have ventured into the bottom of the pyramid market in the last decade can testify that the opportunities that abound in that market are enormous."

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 one loses. Therefore the narrowing of the pyramid's base is not enough. It needs more. Let's thus expand the whole pyramid in volume and we will really make that its 6 billion people enjoy wealth. So we must maintain welfare programmes supported by a strong education system and by infra-structural investments in order to organize economics and promote better incomes distribution. This seems a good starting point to generate real wealth and welfare for long and for all."

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 following House of Quality (House of TQM) elements are considered;
1: Foundations; includes ethics, integrity and trust.
2: Building bricks; includes training, teamwork and leadership.
3: Binding mortar entails effective and sound communication.
4: Roof is recognition."

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 light of the day but not as expected because of uncontrollable reasons.
People’s mindset, the cultural differences, the language and interpretation pose a constriction in adopting them. The developing countries need to transform the programs available to them by developing a country specific regulatory structure to a reasonable risk of implementation.
The tariff for sale of the products need to ensure the risk of foreign exchange is not completely passed to the end user, the variable component going into the product sale price is not exceeding the affordability of the purchaser, and so forth.
So the BOO / BOOT / BOOM Models should be further analyzed for easy access to BOP."

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. This is an extension to that philosophy."

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 standpoint, what could effective leaders do?
At a time rich countries start cutting their budget to overcome economic disasters, developing countries increase their expenses and their social projects. What could we do as leaders? I would like to have ideas from various sources across the world."

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 micro credit. In ones own company the contributions to micro credit organizations could be matched. Such a great task requires many innovative solutions. Consider the industrial revolution, how where skills developed to meet the needs?"

Rural Marketing - Rural (Tourism) Marketing
"How is rural tourism marketing different? How can rural tourism be used as an effective tool to remove unemployment of rural people?"

What is Jugaad? Meaning, Definitions and Examples
"What is the role of 'Jugaad' (Hindi term for innovative, improvising, lateral fixes and hacks using limited resources) within Bottom of the Pyramid thinking?"

Improving the Lot of People at Bottom of the Pyramid (BOP) Takes More
"I don't subscribe to the view that the lot of 4 billion people at the BOP can be changed by above measures and initiative alone. Unless their basic daily needs of food, shelter, literacy and health care are met with, it shall be unrealistic to assume that they can be lifted above poverty line and converted into consumers, entrepreneurs and engine of growth."

Bottom of Pyramid and Network Marketing Hybrid Plan
"Being an entrepreneur and having very practical knowledge of sales and marketing and of challenges faced by the middle & lower middle class in our society (i.e. how to increase income or how to get basic income to fulfill the daily needs), since 1 year I am in process to design a business model to promote small & creative entrepreneurs, unique and world class production from these entrepreneurs will be sold by distributors through our designed network marketing or mlm plan.
We will provide all resources to entrepreneurs, distributors. This is also to promote home based industries, arts & crafts, small industries and innovative ideas and products.
We will also form entrepreneurs community bank where we attract angel investors and venture capitalists to invest.
We will promote management / entrepreneurship studies & courses to develop entrepreneurial skills in mass public.
Our basic aim is to provide economic prosperity to individuals, region and nations. We are very near to BOP."

Bottom of Pyramid People?
"Which class of people come under BOP?"

Bottom of the Pyramid (BOP) and Communication
"If the bottom of the pyramid is not connected with communication tools and media, how can marketers position their product to the BOP consumers (keeping in mind crisis of resources for further investments)?"

Responsibility of International Corporations
"Large corporations such as Nestle and Exxon mobile have traditionally supplied raw materials with a low price from developing countries, but they have shown only little amount of co-operation with local associations and governments. The global economical downhill hits harder on people at BOP who just were able to taste luxury of westernization. As if in Dante´s play the poorest become more vulnerable while the richest hardly care anything else than environmental agreements and their own benefits. Large corporations and the European Union should carry more responsibility, minimize the export of cheap European food products to Africa and build networks with BOP organizations. We cannot talk about markets without real activity. Speculation and idealism do not make sense if we don't do anything by ourselves either."

Redesigned Water Lifting Device and Park Equipment
"I have redesigned traditional hand-pumps and park equipments to work together. The result is water lifting device which are twice as efficient as manual water pumps and have minimal operational costs. These instruments can save 2-3 hours from a villagers life and cut pollution substantially. Moreover, they will utilize rural youth and give them a way to contribute to village's economic growth. I would like to market and produce them in India (or any other market) Can you tell me the direction i should take now. Where would i be able to find investors? sincerely prachi"

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?"

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