Fortune at the Bottom of Pyramid 1220781282827573 9

7/31/2019 Fortune at the Bottom of Pyramid 1220781282827573 9

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THE

FORTUNE

AT THE BOTTOM

OF THE PYRAMID

ERADICATING POVERTY THROUGH PROFITS

C K PRAHALAD


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Ashutosh Yadav (04)Vineet Dubey (28)

Pritam Gayakwad (34)Ashish Kumar Jha (41)Anant Kawale (48)

(MMS-2007-09)


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At the bottom of thepyramid


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Consists of 4 billion people Living on less than $ 2 per day

400 million people in India constitutes thebottom of the pyramid


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Purchasing PowerParity in US dollars

> $20,000 Tier1

Tiers 2-3

Tier 4

Tier 5

$1,500 - $20,000

$1,500


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Exploitation of poor people by Private sector. Rural population was primarily poor & urban

population was relatively rich. Private sector businesses , especially MNCs

logic about BOP.


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BOP latent 4-5 billionconsumer opportunity

Politicians, publicpolicy

establishments

Aid Agencies

NGOs, civil societyorganizations

Private sector, including MNCs


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Economicdevelopment

and socialtransformation

PRIVATEENTERPRISE

Developmentand aid

agencies

BOPconsumers

BOPentrepreneurs

Civil societyorganizations

and localgovernment


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There is money at BOP. Access to BOP markets.

The BOP markets are Brand Conscious. The BOP market is connected BOP consumers accept advanced technology

readily


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Create the capacity to consume

The need for new goods and services Dignity and choice Trust is a Prerequisite


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Huge market potential 4 to 5 billion underserved people

Economy of more than $ 13 trillion PPP The needs of the poor are many

Thus, the case for growth opportunity in theBOP markets is easy to make.


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A philosophy for developing products &services for the BOP

- small unit packages- low margin per unit- high volume- high return on capital employed


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Price Performance Innovation : Hybrids Scale of Operations Sustainable Development : Eco-Friendly

Identifying Functionality : Is the BOP different fromDeveloped Markets? Process Innovation Deskilling Of Work Education Of Customers Designing for Hostile Infrastructure Interfaces Distribution : Accessing the Customer BOP markets essentially allow us to challenge the

Conventional Wisdom in Delivery of Products and Services


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Some BOP markets are very large andattractive

Local innovations can be leveraged acrossother BOP markets Some innovations from the BOP markets will

find applications in developed markets Lessons from the BOP markets can influence

the management practices of global firms


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Developing a

unique

approach to

BOP markets

and learning

from the

experience

Fine-tuning the

traditional

approach


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Micro encapsulation of iodine in salt in Indiahas found market in other BOP markets in

Africa especially in Ivory coast, Kenya &Tanzania. Launch of Wheel detergent by HLL. Micro-financing by Grameen Bank in

Bangladesh. Jaipur foot Aravinda Eye Care


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The Voxiva Story of Peru.


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Capital Intensity Sustainable Development

Innovations


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I think we have to recognize that a whole lot of

potential is going to come out of the bottomof the pyramid

Chanda Kochhar, Executive Director

Retail Banking, ICICI Bank


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to identify and support initiatives designedto improve the capacities of the poorest ofthe poor to participate in the largereconomy


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poor do pay for the services rendered to themand they ought to be viewed as consumersrather than passive beneficiaries


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The Direct Access, Bank-led Model- Catalyzed by the merger with Bank of

Madura.

- Utilizes its power to promote and grow

SHGs. Indirect Channels Partnership Model

-Looks to leverage current infrastructure andrelationships of MFIs and NGOs.


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6 Promoters

Formation of new SHGs

6 Coordinators

Formation of new SHGs Monitors the action of promoters

Project Manager

Approve loan applicationsHelps with the development of

SHGs


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Self Help Groups- 15 to 20 members

- from same village- married- between the ages of 20 and 50- existing below poverty line


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Number of SHGs increased from 1500 in 2001to 8000 in 2003.

ICICI has utilized its financial expertise tofashion a model that is economically viable. ICICI has positioned itself as socially

conscious corporate citizen. Helps ICICIs bargaining power with the RBI

and other government institutions.


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Information centers linked to the internet. Connects subsistence farmers with large

farms,current agricultural research and global

markets. Operated by local farmer called sanchalak. Information provided by samyojaks.

.


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Virtual integration of supply chain. Results in better yield through better

practices. Farmers benefit by realizing better prices


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Inbound

Logistics

Display andInspection

AuctionBagging and

weighingPayment

OutboundLogistics


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PricingInboundLogistics

Inspectionand

Grading

Weighingand

Payment

HubLogistics


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Better information content. Better information timing

Transportation cost Transaction duration Weighing accuracy Professionalism and dignity


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Disintermediation savings Freight costs

Quality control Risk management


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Largest retail chain in Brazil.- 330 stores

- 10 million customers- 20,000 employees Sells electronics, appliances and furniture.


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Individuals stratified into five basic economicclasses: A,B,C,D and E.

C,E and D considered to be the BOP 84% ofthe total population of Brazil. Represents significant purchasing power in

Brazils economy at 41% total spendingcapacity.

70% of Casas Bahias customers have noconsistent income.


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Carne or passbook system allows customersto make small installment payments for

merchandise. Payment schedules ranges from 1 to 15

months. Financed sales are responsible for 90% of all

sales volume. Credit score system for customers.


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Largest cement manufacturer in Mexico,second largest in USA, and the third largest in

the world. Manufactures and sells raw cement, ready-

mix concrete, aggregates and clinker. High level of commitment to customer

service and satisfaction.


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Means savings/property today Launched in 1998

Enables very poor to pay for services andbuilding materials to make and upgrade theirhomes.


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Provide poor families looking for betterquality of life through households by offering

good quality cement and raw materials atreasonable prices. Offer access to credit. Position Cemex as a responsible corporate

citizen.


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Is it as easy as he makes it sound?

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Fortune at the Bottom of Pyramid 1220781282827573 9