Presentation challanging Dr. C.K. Prahalad\'s view about a billion dollar market going untapped at the bottom of the pyramid i.e. amongst the world\'s poor

1. THE FEASIBILITTY OF FINDING A NEW
MARKET AT THE BOTTOM OF THE PYRAMID
In our study of the articles by Prahalad and
Hart, we learnt about how the corporations
should now focus on the poor of the world
and treat them as a market. In our
research we focus on the loopholes in
Prahalad’s proposition.

2. HOW MANY POOR ARE THERE IN THE
WORLD?????????
 PRAHALAD’S ESTIMATE: 4 BILLION
 THE ECONOMIST :600 MILLION
 POVERTY LINE DEFINED BY PRAHALAD IS
$2/DAY. ACTUALLY A SIGNIFICANT PORTION OF
THE POOR LIVE IN LESS THAN $1/DAY (E.G. OF
INDIA’S 80% POOR POPULATION, ABOUT 34%
LIVES BELOW A DOLLAR A DAY

3. PRAHALAD’s VIEWS vs. THE FACTS
 In his book, The Fortune at The Bottom of
the Pyramid, Dr. Prahalad discusses a
number of cases as potential vanguards
for other corporations to follow. These
were good initiatives as they tended
towards making certain products available
to the poor. We now present some of
these cases…..

4. CASAS BAHIA
Providing home appliances
through affordable schemes

5. Annapurna Salt
The Champ: TATA/Annapurna
Vs.
The Contender: Locally Made
Iodized Salt

6. AMUL Ice Cream
BoP innovator
OR
Accidental Hero

7. Single Serve Sachets for
Tea, Shampoo Etc.
Did they reach the poor or
found a new market?
Are they really “affordable”?

8. The MNC Fixation
Do the MNC really have a
chance to create good
business?

9. BoP Marketing
Consumerism or Welfare ?
Is local population just important for
distribution? Can they be technology
innovators?
http://www.youtube.com/watch?v=m_ho7xhgWV8

10. What do the poor spend on?
 Fuel-10 % of the time
 Food-earlier 70% of the income, Now 62
 Clothing
 Alcohol & Tobacco-6% overall across the world
 Festivals-10%
 Radio & Television- Avg. 60% in terms of joint
ownership

11. What is observed from this Spending
Behaviour?
 As per Prahalad, the poor do desire luxury
items……BUT…there are some things he
overlooked
 Majority of the poor are illiterate and hence do not have the
capability to decide what is best for them
 Prahalad states that it is the Poor's decision what they
spend on.. But considering the afore mentioned point,
wouldn’t this be like hoodwinking the poor because of their
lack of judgment about what is best for them.
 Social parity, the overwhelming attraction to products
which might not add value but which are otherwise
unaffordable are factors which are the major drivers for
selling tobacco in the forms of bidi and illicit country liquor.

12. Some other interesting points
 MicroCredit
The Microcredit revolution does not help
alleviate poverty, it just smoothens the
consumption in case of crisis
 Cost/Quality Trade Off
The poor are ready to trade off on quality
for price as with a fixed income, there are
just so many options to chose from

13. Why Corporates are still not eyeing the proposed BOP
market?. Let us see this from an INDIA perspective
 Lack of Basic Infrastructure ( electricity, roads,
crisis management)
 Corruption (Red Tapism)
 Poor concentrated mostly in Rural areas where
products like FMCG take a lot of time to pick up
sales
 Viewing globalization as an agent of poverty
increase, not alleviation
 Most BoP success stories involve either NGO’s or
MNC’s partnering with government……

14. What is needed to make BoP a success?
 Poor as Producer (e.g. Lijjat Papad)
 Government Intervention: De-Regulation,
finance options.
 Productivity: Exploit economies of scale
 Prahalad and Hammond’s view: The poor
accept lack of basic amenities like running
water… Is this the “right” way to justify
BoP strategy

15. QUESTIONS???