THE

FORTUNE
AT THE BOTTOM
OF THE PYRAMID
ERADICATING POVERTY THROUGH PROFITS

C K PRAHALAD
Ashutosh Yadav (04)
Vineet Dubey (28)
Pritam Gayakwad (34)
Ashish Kumar Jha (41)
Anant Kawale (48)
(MMS-2007-09)





At the bottom of the
pyramid
Consists of 4 billion people
Living on less than $ 2 per day
400 million people in India constitutes the
bottom of the pyramid
Purchasing Power
Parity in US dollars
> $20,000

Tier1


Tiers 2-3


Tier 4


Tier 5
$1,500 - $20,000
$1,500
<$1,500
75 - 100
1,500 1,750
4,000
Population
in Millions
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.
BOP latent 4-5 billion
consumer opportunity
Politicians, public
policy
establishments
Aid Agencies
NGOs, civil society
organizations
Private sector, including MNCs
Economic
development
and social
transformation
PRIVATE
ENTERPRISE
Development
and aid
agencies
BOP
consumers
BOP
entrepreneurs
Civil society
organizations
and local
government
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


Create the capacity to consume
The need for new goods and services
Dignity and choice
Trust is a Prerequisite
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 the
BOP markets is easy to make.
A philosophy for developing products &
services for the BOP
- small unit packages
- low margin per unit
- high volume
- high return on capital employed
Price Performance
Innovation : Hybrids
Scale of Operations
Sustainable Development : Eco-Friendly
Identifying Functionality : Is the BOP different from
Developed 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
Some BOP markets are very large and
attractive
Local innovations can be leveraged across
other 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
Developing a
unique
approach to
BOP markets
and learning
from the
experience
Fine-tuning the
traditional
approach
Micro encapsulation of iodine in salt in India
has 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
The Voxiva Story of Peru.
Capital Intensity
Sustainable Development
Innovations

I think we have to recognize that a whole lot of
potential is going to come out of the bottom
of the pyramid
Chanda Kochhar, Executive Director
Retail Banking, ICICI Bank






to identify and support initiatives designed
to improve the capacities of the poorest of
the poor to participate in the larger
economy





poor do pay for the services rendered to them
and they ought to be viewed as consumers
rather than passive beneficiaries
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 and
relationships of MFIs and NGOs.


6 Promoters
Formation of new SHGs
6 Coordinators
Formation of new SHGs Monitors the action of promoters
Project Manager
Approve loan applications
Helps with the development of
SHGs
Self Help Groups
- 15 to 20 members
- from same village
- married
- between the ages of 20 and 50
- existing below poverty line
Each member contributes Rs 50 to a joint
savings account
Leader responsible for collection and opening
up of savings account in the bank.
The savings are converted into fund.
Used for emergency lending to an individual
within the group.
Eligible for loan after one year of formation.

Number of SHGs increased from 1500 in 2001
to 8000 in 2003.
ICICI has utilized its financial expertise to
fashion 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.
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.
.
Virtual integration of supply chain.
Results in better yield through better
practices.
Farmers benefit by realizing better prices
Inbound
Logistics
Display and
Inspection
Auction
Bagging and
weighing
Payment
Outbound
Logistics
Pricing
Inbound
Logistics
Inspection
and
Grading
Weighing
and
Payment
Hub
Logistics
Better information content.
Better information timing
Transportation cost
Transaction duration
Weighing accuracy
Professionalism and dignity
Disintermediation savings
Freight costs
Quality control
Risk management
Largest retail chain in Brazil.
- 330 stores
- 10 million customers
- 20,000 employees
Sells electronics, appliances and furniture.


Individuals stratified into five basic economic
classes: A,B,C,D and E.
C,E and D considered to be the BOP 84% of
the total population of Brazil.
Represents significant purchasing power in
Brazils economy at 41% total spending
capacity.
70% of Casas Bahias customers have no
consistent income.

Carne or passbook system allows customers
to 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.
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.

Means savings/property today
Launched in 1998
Enables very poor to pay for services and
building materials to make and upgrade their
homes.
Provide poor families looking for better
quality of life through households by offering
good quality cement and raw materials at
reasonable prices.
Offer access to credit.
Position Cemex as a responsible corporate
citizen.

Is it as easy as he makes it sound?