The corporate managers are seriously thinking whether they have been catering to the whole market or there are segments that are yet to be tapped. Bottom of the Pyramid (BOP) concept, which was first put forward by CK Prahalad, has been attracting the attention of marketers as a solution to the problem at hand. The economic pyramid of the world contains more than 400 crores of population at the bottom part whose earnings and spending per capita are less, but as a whole are much larger than they are thought of. To market to this segment, companies should devise unique and specifically tailored strategies rather than applying the conventional ones; they need to search for newer and better ways of serving the BOP consumers profitably. Companies worldwide are now convinced that the BOP segment is quite large and promises huge businesses in the years to come.
All
these years it has been assumed that the corporate sector will cater to the rich
while the poor will be served by the government. Policymakers, academicians, economists,
researchers and corporate managers have all been trapped in this misconception.
It's only now that companies have begun to realize that a huge opportunity awaits
them at the bottom of the Pyramid. They have realized that to become rich, one
needs to serve the poor. The private sector should devise ways of identifying
the potentiality of the poorer sections and serving them profitably. It's high
time that corporate managers took more steps to cater to economically weaker sections
of the society. And all this should be perceived and pursued from the point of
view of contributing to the overall economic development of the state. A few companies
across the globe have already begun enthusiastically working towards successfully
implementing this revolutionary idea. The managers who were unable to see the
Alibaba's treasure lying at the "Bottom of Pyramid" (hence forth referred
to as BOP) are now having hopes of exploring it.
The
term BOP was first coined by CK Prahalad, Harvey C Fruehauf Professor of Business
Administration, University of Michigan Business School, in his book, The
Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits.
According to him, the various markets with their magnitude of business in
the developing economies are huge. Prahalad, in the form of an Economic Pyramid,
has explained the distribution of wealth and the spending capacity of the world
population. At the top of the pyramid are the wealthy people with high-spending
capacities and habits. But the size of this segment is very small, i.e., only
between 7.5 to 10 crores out of total 600-plus crores population. Whereas, more
than 400 crores of population live at the bottom of the pyramid earning less than
$2 per day and in India around 40 crores of people earn less than Rs. 90 per day.
To succeed in the BOP market, the companies need to create products with packaging
forms, pricing and promotions that are uniquely and specifically tailored to the
bottom of the pyramid customers. |
