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
- 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
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
- 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,
- Bottom of the Pyramid consumers are very much open towards advanced
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)
Book: C.K. Prahalad
- The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits
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Compare with the Bottom of the Pyramid:
Diamond Model |
Cultural Dimensions |
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