Usually the companies in the richer world and the products which comes to the market are usually focused on Tier 1, 2 & 3 markets. Tier 4 markets i.e Bottom of Pyramid Markets are usually devoid of products. Many Companies like Hindustan Unilever, Aravind Eyecare, Narayan Hrudiyalaya, Jaipur Foot, Eid Parry, Lijjat Papad, ITC Ltd, etc have came up with the products that are specially made for BOP markets. The market volume is very high as more than 4000 million people in the world are below $2 annual per capita income, Even 46% of the Indian population live below the poverty line.......This people cannot afford to the products available for the tier 1,2 & 3 markets as they cannot afford them..... Thus a greater potential occurs at the BOP market.....Catering BOP market doesn't mean catering 'sachets" to them. Making such products which are affordable by these markets...and thus making profits..... Instead enabling them to purchase the product by enhancing the buying power of the consumers..........Reverse Innovation can bring upon the change to the BOP markets.......

1. FORTUNE AT THE BOTTOM OF THE PYRAMID
Eradicating Poverty Through Profits
Penned By:
Prof. C. K. Prahalad
Prof. Stuart L. Hart
Enlightened By:
Bhavik Doshi (B013)
Sanket Patel (D002)
Sneh Shah (C010)
Mentored By:
Prof. Ashutosh Ojha

2. The Problem
Poverty

3. The Global Scenario

4. The Global Scenario

5. The Global Scenario

6. MNC’s Global Outlook
Does not change magnitude of strategies
Real source of market promise are not
wealthy few and emerging middle income
consumers
SOURCE OF MARKET PROMISE
Billions of aspiring poor people joining market
economy for the first time

7. Four Consumer Tier

8. The Invisible Opportunity
MNC’s assumptions:
• The poor are not our target consumer because with our current cost structure.
• The poor can’t afford and have no use for the products and service sold in developed market.
• Only developed market appreciate and will pay for the new technology.
• The bottom of pyramid is not important to the long term viability of our business.
• Managers are not excited by business challenge that have humanitarian dimension.
• Intellectual excitement is in developed market.

9. Innovation and MNCs Implications in Tier 4
Drivers of Innovation Implications of MNCs
Increased access among the poor to TV and
Information
Tier 4 is becoming aware of many products and service
and is aspiring to share the benefits
Deregulation and the diminishing role of governments
and international aid
More hospitable investment climate for MNCs entering
developing countries and more cooperation from
nongovernmental organisation
Global overcapacity combined with intense competition
in Tier 1,2 and 3
Tier 4 represents a huge untapped market for profitable
growth
The need to discourage migration to overcrowded urban
centres
MNCs must create products and services for rural
populations

10. ICICI Bank & Bottom Of Pyramid
3 strategic goals:
• To increase banking penetration in rural areas through innovative ways of
defining distribution points
• To prepare rather than react to the increasingly important rural market
• To support the downtrodden as a good corporate citizen
Represent value loss
Represent value opportunity
= Supply focus of MNCs
= Economic pyramid

11. Saving
Building
equity
Access to
credit
Financial Cycle
Direct Access, bank- led model
Indirect Channel partnership model
ICICI has two models
toward serving the BOP

12. Tier 4 Pioneers
Nirma vs HLL in India’s Detergent Market (1999)
Nirma HLL (wheel) HLL (High-End
Products)
Total Sales ($
Million)
150 100 180
Gross Margin (%) 18 25 25
ROCE(%) 121 22 22

13. Key Elements

14. Creating buying power Shaping
aspiration
Improving
access
Tailoring local
solutions
1/3rd of world’s workforce are either unemployed or not paid enough
Helping world’s poor elevates themselves above this desperation line is a
business opportunities to do well and to do good
For effective application for this two intervention are crucial
Access to Credit Increasing earning potential

15. • Consider the experience of the Grameen Bank Ltd. in Bangladesh, one of the first in
the world to apply a microlending model in commercial banking.

16. Creating buying power
Shaping
aspiration
• Sustainable product innovation initiated in tier 4
Improving access
• Sustainable technologies replaced unsustainable technologies
• Case study: HLL and solar electric light fund (NGO)
• Other western companies also started to focuses on tier 4
Tailoring local
solutions

17. Example of SELF:
Creatively adapted technology and applied microcredit financing to bring electrical
service to people in remote villages in Africa and Asia

18. Creating buying power
Shaping
aspiration
Improving access
Tailoring local
solutions
• Proper distribution system and communication are essential for tier 4 communities
Case Study:
• Arvind mills 5th largest manufacturer of denim jeans found Indian domestic market sales limited.
• They found that at $40 and $60 a pair, the jeans were not affordable to the large masses and also the
distribution system was also not good enough because it only reaches to few towns and villages
• Arvind introduce Ruf and Tuf jeans kit which is of $6 only and also develop such a distribution system
so it can be possible to distribute this kit to the tailors of the rural towns and villages.

19. Creating buying power
• 30 % of total world GDP
Shaping
aspiration
• Employ less than 1% of world’s labor force
• MNCs must play role in in narrowing the gap between rich and poor
• They must nurture local markets and cultures, leverage local solutions, and generate
wealth at the lowest levels on the pyramid
Improving access
Tailoring local
solutions

20. EID Parry: Empowering Farmers
• Focused on safe-guarding the interest of sugar-cane farmers
• Developed a call centre for advising farmers
• Periodic advice on activities like soil testing, land preparation,
weeding, spraying bio-control agents, fertilizers and pesticides
• Empowering farmers by eradicating intermediaries and
providing guidance for cultivating quality crop

21. Poor as producers: Lijjat Papad
• Collective ownership run by member sisters
• Total sales more than $75 million and exports
more than $3 million
• Lijjat Papad enabled women to earn economic
independence and raise living standers