1

Blue Ocean Strategy at

the Bottom of the Pyramid

Blue Ocean Strategy, W. Chan Kim/Renee Mauborgne, Harvard Business School Press,

2

Three Customer Tiers, Unexplored Case (Bottom of Pyramid)

Examples of penetrating the unexplored bottom of the pyramid markets.

World population

Most marketing attention in developing countries

Some attention in developing countries

No attention at all from major

business community

This emerging middle group (2.6 billion people, as of 2005) has discretionary income and spend on education, health, energy, transportation and personal care.

4 billion people live on less than US$2/day. Because of the number of people, they have US$5 trillion in purchasing power.

High

Off

eri

ng

Leve

l to

re

ach

an

d s

erv

ice

th

e B

OP

Above average

Average

Below average

Low

Non existent

Co

un

try,

cu

ltu

ral l

angu

age

, sk

ill le

vel d

iffe

ren

ces

Un

der

stan

din

g o

f p

rod

uct

u

se &

har

sh c

on

dit

ion

s

Go

od

Pri

ce

to u

tilit

y-

Qu

ick

pro

du

ct/s

erv

ice

mo

dif

icat

ion

Go

vern

men

t, N

GO

, lo

cal

com

mu

nit

y su

pp

ort

Pro

du

ct d

eski

llin

g

BOP market

Pro

du

ct t

rain

ing

“Value Curve”: For the Bottom of the Pyramid (BOP) (Guidelines)

3

Urban middle class market

Ru

ral d

istr

ibu

tio

n c

han

nel

Co

rru

pti

on

ex

po

sure

Was

te, w

ater

, p

ow

er u

sage

Wo

rd o

f m

ou

th

pro

mo

tio

n

Org

aniz

e se

lf-

dev

elo

pm

ent

gro

up

s

Dev

elo

p in

form

atio

n

syst

ems

for

illit

erat

e m

arke

t

Dev

elo

p le

nd

ing

&

cred

it s

yste

m

Above average

Average

Below average

Low

4

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Hindustan Unilever – Lifebuoy Soap in India)

High

Lifebuoy Urban Soap

Rural Soap

Diarrhea is the third-highest case of death in the world behind acute respiratory infections and AIDS. It is preventable with better hygiene.

Saves live, prevents illness

5

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Hindustan Unilever – Lifebuoy Soap)

Rural market

Above average

Average

Below average

Low

6

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Jaipur Rugs business model – Connecting Rural India to Global Markets)

High

Jaipur Rug Standard rug producer Reaching, training, empowering

rural entrepreneurship

7

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Jaipur Rugs business model – Connecting Rural India to Global Markets)

Rural operation

Above average

Average

Below average

Low

8

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Casas Bahia: Retail for the Poor in Brazil)

High

Casas Bahia Standard retailer

Credit for the poor

*Up to R$600 (US$390)

Above average

Average

Below average

Low

9

High

CEMEX strategy Standard cement

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Cement Sales, CEMEX: Mexico)

Homes, extra rooms for the poor

Above average

Average

Below average

Low

10

High

Annapurna Unbranded salt

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Iodized Salt, India-Hindustan Unilever “Annapurna”)

Reducing developmental & metal disorders from

lack of iodine in diet

Above average

Average

Below average

Low

11

High

Aravind approach Standard eye care

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Eye Care, India-Aravind Eye Care)

Reducing needless blindness worldwide

12

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Eye Care, India-Aravind Eye Care)

Reducing needless blindness worldwide

Above average

Average

Below average

Low

13

High

ICICI Standard Banking

Third Customer Tier, Unexplored Case (Bottom of Pyramid, ICICI: Financial Services to the Poor)

Getting credit to people who have none

Self-help

14

Third Customer Tier, Unexplored Case (Bottom of Pyramid, ICICI: Financial Services to the Poor)

Getting Credit to People who have none

Rural ATM Available

Self-help for credit & savings

Above average

Average

Below average

Low

15

High

Voxiva alert system Standard medical information

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Voxiva: Health Alerts to reduce disease crises & provide urgent care)

Saving lives with early warning & guidance Self-help

Third Customer Tier, Unexplored Case (Bottom of Pyramid, Voxiva: Health Alerts to reduce disease crises & provide urgent care)

Saving lives with early warning & guidance

Telephone information processing

16

Above average

Average

Below average

Low

17

High

E+Co solutions Standard energy sources

Third Customer Tier, Unexplored Case (Bottom of Pyramid, E+Co: Clean energy for rural regions

Supplying energy where there is none

Most rural areas in developing countries has poor source of energy, usually relying on firewood and dung for heat and cooking which is very dirty and unreliable.

Third Customer Tier, Unexplored Case (Bottom of Pyramid, E+Co: Clean energy for rural regions

18

19

Developing your own value curve far

reaching markets can be approached

Blue Ocean Strategy, W. Chan Kim/Renee Mauborgne, Harvard Business School Press,