Base of the Pyramid. Segmenting Extreme poverty: below $1/day 1 billion people Subsistence:...
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Transcript of Base of the Pyramid. Segmenting Extreme poverty: below $1/day 1 billion people Subsistence:...
Base of the Pyramid
Segmenting
Extreme poverty: below $1/day
•1 billion people
Subsistence: $1-$3/day
•1.6 billion people
Low income: $3-$5/day
•1.4 billion people
Facts and Figures
Could swell to 6-8 billion over the next 25 years
Most live in rural villages or urban slums and shanty towns - movement towards urbanization
Markets are hard to reach, disorganized, and very local in nature
Education levels are low or non-existent (especially for women)
Base of the Pyramid
Victim/burden Creative entrepreneurs Value-conscious customers
These people can be the engine for the next round of global trade
T. L. Ceranic
Base of Pyramid Proposition
“Low-income markets present a prodigious opportunity for the world’s wealthiest companies – to seek their fortunes and bring prosperity to the aspiring poor.”
C.K. Prahalad and Stuart L. Hart, The Fortune at the Bottom of the Pyramid, Strategy + Business, January 2002
T. L. Ceranic
T. L. Ceranic
Who serves the BoP?
Implicit assumption that the rich will be served by the corporate sector (MNCs) and governments/NGOs will protect the poor and the environment.
A huge opportunity lies in breaking this code
Even “poor” people “spend”
In Dharavi, India85% have a TV
50% have a pressure cooker
21% have a telephone
… but can’t afford a house
T. L. Ceranic
How to realize the business opportunity at the BOP
Requires radical innovations in technologies and business models
Reexamination of the "price-performance" relationships for products and services
New level of capital efficiency
• "bigger is better” small-scale operations and world scale capabilities
BoP Business Model
Key components that define a BoP business model:
•Provide unique products specific to the local community•Localize value creation throughout the supply chain•Enable access to goods and services•Partner to better understand
There is a need to work with:
•MNCs•SMEs•NGOs•Local governments
T. L. Ceranic
Group Danone
Opportunity: Danone saw the opportunity to create a social business model to meet their mission statement: “Bring health through food to as many people as possible”
New Product: ‘Shokti Doi’, a nutritious yogurt product tailored to meet the specific nutritional needs of Bangladeshi children
T. L. Ceranic
New Business Model
Manufacture the product in a micro plant 50x smaller than typical Danone plant
Design simple, easy to use equipment and train local workers
Use local suppliers and products wherever possible
T. L. Ceranic
New Business Model
Build local community awareness and understanding through tailored nutrition programs
Pioneer techniques to save natural resources and produce environmentally friendly packaging
Distribute locally through shops and door to door salespeople
Compassion
Driver of social entrepreneurship
Elicits pro-social motivation -> flexible thought process -> greater commitment to action
What do you think people at the BoP need?
T. L. Ceranic
Individual activity
Write a problem/challenge faced by people a the BoP on each sticky note:
•Environment•Health•Education•Human rights
T. L. Ceranic
Group activity
Look @ all of the problems/challenges faced by the people @ the BoP and choose ONE
Come up with a plan for how BUSINESS can solve this issue
•Not through charity but an actual $ generating venture
T. L. Ceranic
Grameen Bank: The beginnings of Microfinance
T. L. Ceranic
Catholic Social Teaching Proposition
The obligation to evaluate social and economic
activity from the viewpoint of the poor and the
powerless arises from the radical command to
love one’s neighbor as one’s self.
T. L. Ceranic
Direct BoP impact