Poverty exists in this globe. High percentage of poor or low-income people appeared to be in those less developed or developing countries. Bottom of the Pyramid (BoP) market occupies about one sixth of the world’s population (Anderson & Billou, 2007). According to Garrette and Karnani (2010), there are unfortunately very few evidences of profitable businesses that focused in this market with large-scale operation. Some arguments suggest that BoP activities are mainly socially beneficial or virtuous but not profitable (Karnani, 2007). Anderson and Billou (2007) explained the reason for the business world has not focus on this BoP market is the lack of 4As; Availability, Affordability, Acceptability, and Awareness. Nevertheless, businesses realize that poor people spend 80 percent of their income to the basic needs such as clothing, food, and fuel (Karnani, 2007), therefore, business will be profitable from providing product and services to a huge population of this market segment (Anderson & Billou, 2007).
Developing a market based solution that alleviates the poverty and meanwhile provides socially beneficial product or services to poor people is a real challenge (Garrette & Karnani, 2010) because businesses face a big insurmountable barrier (Anderson & Billou, 2007). Overtime, only local government of the developed countries or the international organizations has tried to address the poverty’s alleviation. For example, after the Great Depression, the U.S congress created the housing assistance Act to help low-income citizens with affordable housing needs. Dallas Housing Authority (DHA) was established in 1938 to advance this Act, providing affordable and lower rent to local residents. Private businesses affiliated with DHA to profitably provide goods and services to DHA’s stakeholders. However, there still is a challenge though in these tasks as the low-income residents, in general, are vulnerable. They are disadvantaged in education, information, economic, and social advantages (Garrette & Karnani, 2010).
Strategic marketing for this market based solution requires a deep understanding of the differences in spending level, people needs and wants, affordability, availability, acceptability, and the awareness of the product and services to this market segment. Innovation in product and services is required to satisfy and overcome the difficulties and challenges. Choi, Kim, and Kim (2010) also suggested a need to redefine the global triad by analyzing the traditional global triad and discussing on “how it deters studies from including developing economies” (p. 300).
Now, you have an idea in what direction business should take in regarding to the population of the Bottom of the Pyramid.
Anderson, J., & Billou, N. (2007). Serving the world’s poor: Innovation at the base of the economic pyramid. Journal of Business Strategy, 28(2), 14–21.
Choi, C., & Kim, S., & Kim, J. (2010). Globalizing business ethics research and the ethical need to include the bottom of the pyramid countries: Redefining the global triad as business system and institutions. Journal of Business Ethics, 94, 299-306.
Garrette, B., & Karnani, A. (2010). Challenges in marketing socially useful goods to the poor. California Management Review, 52(4), 29-47.
Karnani, A. (2007). The mirage of marketing to the bottom of the pyramid: How the private sector can help alleviate poverty. California Management Review, 49(4), 90-111.