Bottom of the Pyramid
(C.K. Prahalad)

Knowledge Center

What is the Bottom of the Pyramid?

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

Forum Start a new topic about the Bottom of the Pyramid Write here. Ask a question or explain something. Current forum discussions about the Bottom of the Pyramid: 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?... 47   6 comments 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 th... 25   95 comments 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... 19   5 comments 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?... 13   4 comments Increase the Whole Pyramid It is easy to imagine that if someone moves up to the top, another one will move in the opposite direction, that is down to the bottom. This happens when the pyramid does not grow in its volume. Since... 12   1 comments

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Expert Tips Advanced insights about the Bottom of the Pyramid. Here you will find professional advices by experts. Consultancy Tips Teaching Tips Practical Implementation Tips Organizing Large Corporations to Capture BOP Opportunities Organizational Development, Best Practices To capture the gigantic opportunities and to deal with the immense complexities of the many emerging markets, C.K. Praha... Bottom of the Pyramid Pitfalls Avoid these Problems when you're Building a BoP-Business According to Ashish Karamchandani, Mike Kubzansky, and Nishant Lalwani ("The Globe: Is the Bottom of the Pyramid Really ... Is your Firm Ready to Enter into BoP Markets? BOP Self-Questionnaire In a recent article titled "The Globe: Is the Bottom of the Pyramid Really for You?" by Ashish Karamchandani, Mike Kubza...

Information Sources Various sources of information regarding the Bottom of the Pyramid. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops. BOP is at Best a Harmless Illusion and Potentially a Dangerous Delusion BOP Critics Poor people – at the bottom of the pyramid (BOP) - represent a very attractive market opportunity. The 'BOP proposition'... Reverse Innovation Understanding Reverse Innovation, Innovation Strategy, Emerging Markets, BOP Professor Vijay Govindarajan, a leading expert on innovation strategy explains the concept of Reverse Innovation. "Reve... Perspective: Biography Prahalad (1941-2010) Developing a Broader Perspective towards the Ideas of Prahalad A short biography on C.K. Prahalad's career and ideas....

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