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)

Contents

  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
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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
  Effective Humanitairian Aid to BOP Countries: The Case of Haiti
Haiti has once again been hit hard, this time by a...
     
 
  Relations Between Informal & Formal Sector
Despite the fact that the  
   
 
  Why Informal Economies can Become Larger than Illegal Economies
Over the last decades, the concept "informal econo...
     
 
  Definition of Informal Economy
People that belong to the bottom part of the econo...
     
 
  Community Marketing in Developing Countries
Due to the lack of well-functioning distribution n...
     
 
  Problem with Bottom of Pyramid
No matter how liberal and open we project ourselve...
     
 
  Differences in Purchasing Decision Making and Consumer Behavior in BOP-markets
It is often assumed that the behavioral trends and...
     
 
  Ideas for Development Phase of Papua New Guinea
How can Papua New Guinea (PNG) improve the living ...
     
 
  Best Practices in Extending Medical Facilities to the Poor
Has anyone experienced a successful business case ...
     
 
  Packaging at the Bottom of the Pyramid
Perhaps one can look at the BOP concept from the p...
     
 
  A Bottom of the Pyramid Solution Must Be High Tech, Low Cost and Mass Producible
Many present solutions to the developing countries...
     
 
  Lighting Up African Village Schools
Nigerian population: 150 million - Electricity: < ...
     
 
  Bottom of the Pyramid People and SMEs
The development of SME strategies to mobilize the ...
     
 
  Bottom of the Pyramid and Technology
The assumption that only the developed world would...
     
 
  Increase the Whole Pyramid
It is easy to imagine that if someone move up to t...
     
 
  Using House of Quality With Bottom of the Pyramid Framework
The Bottom of the Pyramid framework can be perceiv...
     
 
  The BOO Model, BOOM Model and BOOT Model. Implementation in BOP Countries
The financial models, such as BOO (Build Own Opera...
     
 
  Bottom of the Pyramid Concept by CK Prahalad is Profound
A profound concept. Aiming at a win-win solution f...
     
 

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Bottom of the Pyramid Education & Events


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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 abund...
     
 
  Fighthing Corruption in Developing Countries. The Role of Leaders
I am looking for ideas to start a study on how ...
     
 
  Are the Bottom of the Pyramid (BOP) Brand Conscious Consumers?
The people at the Bottom of the Pyramid are referr...
     
 

Expert Tips - Bottom of the Pyramid Premium
 

Organizing Large Corporations to Capture BOP Opportunities

To capture the gigantic opportunities and to deal ...
Usage (application): Organizational Development, Best Practices
 
 
 

Bottom of the Pyramid Pitfalls

According to Ashish Karamchandani, Mike Kubzansky,...
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 Bott...
Usage (application): BOP Self-Questionnaire
 
 
 

Bottom of the Pyramid in Financial Services

A success story of a BOP approach in financial ser...
Usage (application): Microfinance Strategy
 
 
 

Organizational Infrastructure to Address the Bottom of the Pyramid

In order to address the opportunities at the “Bott...
Usage (application): OD, Organizational Development, Best Practices
 
 
 

Innovation Principles Behind Bottom of the Pyramid Strategies

The 12 principles of market innovation for the ...
Usage (application): BOP Strategy Focus Points
 
 
 

Base of the Pyramid Strategic Innovation

In their article “Strategic Innovation at the Base...
Usage (application): Strategic innovation in developing markets
 
 
 

Bottom of the Pyramid Commercial infrastructure

1. “Creating Buying Power”, through access to cred...
Usage (application): BOP Commercial Strategy
 
 
 

Going Global: Adaptation of Marketing Mix Components

As we all know, companies that conduct business in...
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...
Usage (application): Bottom of the Pyramid, Consumer Behavior, Consumer Marketing
 
 
 

Marketing for the BOP market

The three steps to use for segmenting a BOP mar...
Usage (application): Segmentation
 
 
 

Examples of Bottom of the Pyramid Strategies

- Micro-credit: An example of the “Bottom of the P...
Usage (application): Strategy, Marketing, Innovation
 
 
 

How BOP Countries Can Disrupt Western Markets

After the Second World War, Japan started to devel...
Usage (application): Disruptive Innovation, Bottom of the Pyramid, Country-level Strategy
 
 
 

BOP Success Cases

1. Small-scale distributed energy solutions using ...
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) -...
Usage (application): BOP Critics
 

Reverse Innovation

Professor Vijay Govindarajan, a leading expert on ...
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 id...
Usage (application): Developing a Broader Perspective towards the Ideas of Prahalad
 

Bottom of the Pyramid Diagram

Download and edit this 12manage PowerPoint graphic...
Usage (application): Alleviating World Poverty by Involving the Prviate Sector
 

Risk Management in Agricultural Lending

Presentation about Risk Management, especially foc...
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...
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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