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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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 (23 topics) Help
  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?...
     
  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...      
  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...
     
  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...      
  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      
  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...      
  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 ye...      
  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)?...      

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