Bottom of the Pyramid
(C.K. Prahalad)

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Summary

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


Special Interest Group

Bottom of the Pyramid Special Interest Group.



Special Interest Group (845 members)

Forum

Forum about the Bottom of the Pyramid.


 

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
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....
11
 
1 comments
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 ...
10
 
1 comments
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 ...
10
 
1 comments
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....
10
 
2 comments
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 ...
9
 
1 comments
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 re...
8
 
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 l...
3
 
1 comments
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 m...
3
 
2 comments
Problems with Bottom of Pyramid
No matter how liberal and open we project ourselves... It's easy to say we should improve the capabilities and position of those at the bottom of pyramid.
But when it comes to implementing it, it...
3
 
1 comments
Why Informal Economies can Become Larger than Illegal Economies
Over the last decades, the concept "informal economy" has been conceptualized in many ways (see here for detailed info); scholars often refer to it as economic activities that take place outside a def...
3
 
Definition of Informal Economy
People that belong to the bottom part of the economic pyramid are often unable to generate income from the so-called formal economy, and therefore they aim to sustain themselves via informal economic ...
3
 
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?...
3
 
5 comments
🔥 NEW Effective Humanitairian Aid to BOP Countries: The Case of Haiti
Haiti has once again been hit hard, this time by a devastating hurricane named Matthew. The country – which is one of the poorest in the world – needs help from abroad, as their own chronic ineffectiv...
2
 
Relations Between Informal & Formal Sector
Despite the fact that the definition of the informal economy is debatable, a lot of scholars focus on how an informal sector can be formalised. In particular these scholars research to what extent th...
2
 
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 ca...
2
 
2 comments
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 ba...
2
 
4 comments
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 c...
1
 
2 comments
Community Marketing in Developing Countries
Due to the lack of well-functioning distribution networks in developing countries, potential buyers in those countries are hard to reach. In such economies/countries, organizations need to use unconv...
1
 
Differences in Purchasing Decision Making and Consumer Behavior in BOP-markets
It is often assumed that the behavioral trends and practices of consumers in BOP-markets are the same as in developed markets (only buyers have less money to spend). The general description of BOP-mar...
0
 
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 r...
0
 
Bottom of Pyramid People?
Which class of people come under BOP?...
-1
 
1 comments
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 investm...
-1
 

Best Practices

The best, top-rated topics about the Bottom of the Pyramid. Here you will find the most valuable ideas and practical suggestions.


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?...
48
 
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
 
94 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

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 ma...
11
 
3 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?...
10
 
4 comments

Developing and Exporting Ideas From BOP Countries
I have redesigned traditional hand-pumps and park equipments to work together. The result is a water lifting device which is twice as efficient as manual water pumps and has minimal operational costs....
7
 
3 comments

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...
7
 
5 comments

Expert Tips

Advanced insights about the Bottom of the Pyramid. Here you will find professional advices by experts.


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...

Bottom of the Pyramid in Financial Services

Microfinance Strategy
A success story of a BOP approach in financial services is the case of India-based 250M$ SKS Microfinance. In HBR June 2...

Organizational Infrastructure to Address the Bottom of the Pyramid

OD, Organizational Development, Best Practices
In order to address the opportunities at the “Bottom of the Pyramid”, companies have to build an organizational infrastr...

Innovation Principles Behind Bottom of the Pyramid Strategies

BOP Strategy Focus Points
The 12 principles of market innovation for the BOP are: 1. Focus on value, on delivering performance for the price 2. ...

Base of the Pyramid Strategic Innovation

Strategic innovation in developing markets
In their article “Strategic Innovation at the Base of the Pyramid” (MIT Sloan Management Review, Fall 2007), Jamie Ander...

Bottom of the Pyramid Commercial infrastructure

BOP Commercial Strategy
1. “Creating Buying Power”, through access to credit and rise in income level to help the world’s poor Tier 4 consumers ...

Going Global: Adaptation of Marketing Mix Components

Marketing Strategy, Global Marketing, International Marketing, Marketing Mix, 4Ps
As we all know, companies that conduct business internationally are often adapting their products to the markets served....

Differences in Purchasing Decision Making and Consumer Behavior in BOP-markets

Bottom of the Pyramid, Consumer Behavior, Consumer Marketing
It is often assumed that the behavioral trends and practices of consumers in BOP-markets are the same as in developed ma...

Marketing for the BOP market

Segmentation
The three steps to use for segmenting a BOP market are: 1. Create segments – Break down the largest group with an inter...

Examples of Bottom of the Pyramid Strategies

Strategy, Marketing, Innovation
- Micro-credit: An example of the “Bottom of the Pyramid” is the growing micro-credit market in South Asia, especially i...

How BOP Countries Can Disrupt Western Markets

Disruptive Innovation, Bottom of the Pyramid, Country-level Strategy
After the Second World War, Japan started to develop fast as a result of their disruptive innovation strategy. This disr...

BOP Success Cases

BOP Strategy
1. Small-scale distributed energy solutions using renewable alternative resources such as biofuels for generation of ele...
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....

Bottom of the Pyramid Diagram

Alleviating World Poverty by Involving the Prviate Sector
Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use. Republishing in ...

Risk Management in Agricultural Lending

Agricultural Risk Management, Micro Finance, Bottom of the Pyramid, Agriculture Risk Management
Presentation about Risk Management, especially focused on the Risks in Agricultural Lending. The presentation includes t...

Interview with Prahalad about Assumptions in Bottom of the Pyramid (BOP) Thinking

Errors to Avoid in BOP Strategy
Interview with business guru C.K. Prahalad on "The Unexplored Last Market". In this short video, Prahalad explains 3 wr...

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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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