The Market at the Bottom of the Pyramid

One of the 25 Ideas for a Changing World is the focus on the bottom of the pyramid, writes Business Week, as part of its story Small Is Profitable:

Companies such as Unilever, Philips, Coca-Cola, and Motorola are finding that a focus on low prices, miniature sizes, and simple-to-use products may be the secrets to business success in developing nations, where most of the world’s population dwells. In finance, banks specializing in micro-loans of as little as $100 are the rage as a means of spurring sustainable, grass-roots development. The approach is drawing praise from U.S. Treasury Secretary Paul O’Neill and the World Bank, and is starting to win the attention of heavyweights such as Citibank (C ) and Standard Chartered Bank. Engineers in research labs from Bangalore to Boston are scrambling to develop cheap wireless phones and computers simple enough to be used by illiterates.

All these efforts are aimed at what could well be the biggest source of economic growth in the coming decades: the two-thirds of the global population now making $1,500 or less annually. Companies like Amul hope to prove it is economically viable to employ the rural poor in a multinational enterprise without destroying their traditional lifestyles. Others see the “bottom of the pyramid” of the global population as future consumers.

The article quotes CK Prahalad: “The challenge will be to create large, virtual organizations in developing economies that have the benefits of scale, but the uniqueness of small size.”

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Rajesh Jain

An Entrepreneur based in Mumbai, India.