12 Principles for Tapping the BOP

Market
Price Performance Envelope
This is not about lowering prices. This calls for an ability to discard traditional approaches to
priceperformance improvements. These efforts can be justified only if the markets are very
large and global and the returns are more than commensurate with the risks. Example:
Monsoon Hungama Phone Case, Aravind Eye Care System, City Corp $25 Deposit Service.

Innovation: Hybrids
The BOP market can and must be addressed by the most advanced technologies creatively
combined with existing (and evolving) infrastructure. BOP consumer problems cannot be
solved with old technologies. Example: Annapurna Salt Story, Amul in Dairy Industry.

Scale of Operations
It is easy to succeed in a limited experiment, but this market is of 4 to 5 billion people and it
suggests that the experiments must be commercially scalable. NGOs and other socially
concerned groups are by far the lead experimenters in BOP markets. MNCs are also ideally
suited for this effort. MNCs will benefit from learning how to engage with NGOs and local
community-based organizations to co-create new products, services, and business. NGOs
will benefit from partnerships with MNCs, through which they can leverage MNC know-how
and systems to scale innovations broadly.

Sustainable Development: Eco-Friendly

The poor as a market are 5 billion strong. This means that solutions that we develop cannot
be based on the same patterns of resource use that we expect to use in developed
countries. Solutions must be sustainable and ecologically friendly. The question that BOP
markets will pose for us is this: Can we develop products that provide the same level of
functionality with no or minimal use of resources.

Example: Water Usage and Waste example.

Identifying Functionality
Functionality required in products or services in the BOP market is different from that
available in the developed markets. The needs of consumers in BOP markets might not be
obvious either to the firms or to the consumers. Certainly, the consumers might not know
what can be accomplished with new technology to improve their productivity. Managers
need to invest the necessary effort to gain a granular understanding of the dynamic needs
of these consumers. Example: The Jaipur Foot, TVS Electronics Point of Sale Systems.
Process Innovation to Suit Infrastructure
A significant opportunity for innovation in BOP markets centers around redefining the
process to suit the infrastructure. Process innovation is a critical step in making products and
services affordable for the poor. How to deliver is as important as what to deliver. The goal is
to maintain the local infrastructure of the villages and brought to them the most advanced
facilities in their respective fields, without disrupting the lives of the poor. Example: Aravind
Eye Care system, Amul.

Deskilling of Work
In most BOP markets there is a shortage of talent. Work must, therefore, be deskilled to suit
the untrained population available. Example: Vovixa in Peru to diagnose people, Patrimonio
Hoy in Mexico helping people build homes.

Education of Customers
Innovation in BOP markets requires significant investments in educating customers on the
appropriate use and the benefits of specific products and services. Given the poor
infrastructure for customer access, innovation in the educational process is vital. More than
40 percent of India is media-dark, so TV- and radio-based messages are inappropriate
methods to reach these consumers and educate them on product and service benefits. In
BOP markets, education is a prerequisite to market development. Example: Selling Health,
HLL.

Designing for Hostile Infrastructure

The BOP markets exist in a hostile infrastructure. Design of products and services must take
this into account. It is not just noise, dust, unsanitary conditions, and abuse that products
must endure. Products must also be developed to accommodate the low quality of the
infrastructure, such as electricity and water. Example: ITC-E Chaupal.

Interfaces
The design of the interface must be carefully thought through. Most of the customers in BOP
markets are first-time users of products and services and the learning curve cannot be long
or arduous. The heterogeneity of the consumer base in terms of language, culture, skill
level, and prior familiarity with the function or feature is a challenge to the innovation team.
Example: TVSs Point of Sale System.

Distribution: Accessing the Customer

Distribution systems that reach the BOP are critical for developing this market. Innovations
in distribution are as critical as product and process innovations. Innovations must reach the
consumer. Both the highly dispersed rural market and a highly dense urban market at the
BOP represent an opportunity to innovate in methods of distribution. Designing methods for
accessing the poor at low cost is critical. Example: ICICI Innovation in Finance.
Challenge the Conventional Wisdom in Delivery of
Products and Services
By its very nature, success in BOP markets will break existing paradigms, challenge the
current paradigms in innovation and product and service delivery in fundamental ways.
Paradoxically, the feature and function evolution in BOP markets can be very rapid. Product
developers must focus on the broad architecture of the systemthe platformso that new
features can be easily incorporated. Example: Aravind Eye Care, Jaipur Foot, Health
Surveilance by Voxiva.