BOTTOM OF THE PYRAMID
There exists a group of people in the world who live for only $2 in a day. If we can stop thinking them as poor or as a burden to the society and start recognising them as spirited and inventive entrepreneurs or valued consumers, the world full of opportunities would begin to exist. Market development in the communities will create many new entrepreneurs at the ground levels. There should be no gender discrimination; women can as well work as distributors and small business entrepreneurs to the grass root micro enterprises. The large firms require the help of local governments and civil society organisations to succeed.
Bottom of pyramid (BOP) refers to markets that attend to some of the poorest persons on earth. According to Prahalad (2005), he recommends that business, governments and donor agencies should stop seeing the poor as victims but instead see them as active and inventive entrepreneurs as well as consumers who mandate value. BOP customers are those who live for either $2, $4, 6$ a day. According to (Prahalad, 2002) we have around 4 billion people as the BOP customers while according to the world bank, the number reduces to 2.7 billion.
Prahalad criticised the importance of the BOP customers. The need for high growth, huge market audience, making of new clients and the largely saturated markets in the home countries led to his concerns. When this poor person is helped to move out of the poverty line, they will have ideas to improve the economy of a particular region. New and old products will have increased markets and hence a large number of consumers.
There are several obstacles which bar poverty eradication. They include education, culture, ethical issues, accessibility to resources, technology and poor infrastructure. The level of literacy is necessary as educated people innovate best ideas. Some cultures do not believe in a woman starting or owning a business. Corruption in leadership has led to a ununiform distribution of resources. Some areas are left behind in development. Hence, entrepreneurs lack the motivation to invest in them. Inappropriate infrastructure has also made the areas suffer. Innovation goes hand in hand with technology. No change can succeed fully without the use of technology.
The opposing views indicate that BOP literature does not differentiate the poor and the middle class. Karnani also said that none of the BOP proponents support the recommendation that organisations can make a fortune by selling to the poor. Most of the companies that support the proposition are already established and profitable enjoying their sells to the middles class (Karnani, 2008). The exaggeration of the poor as being more affluent is harmful to both the organisations and the poor people. Not all organisations which adhere the BOP proposition succeed. Some flop because they overestimate the buying power of the poor and end up having too high prices which they can’t afford. For example, in the case of coca cola company in India launching its low price in an affordability strategy to help the poor and get more profits failed. They ended up offering the soft drinks in small pack sizes of 200 ml at R. 5 equivalent to $0.57and still the people living for $2 a day found it unaffordable. (Karnani, 2008).
In conclusion, I disagree with Prahalad statement in that low-income markets provided as a substantial prospect for the world richest companies to pursue their wealth. The coca cola tried it in India and failed. The poor can hardly make enough purchases of secondary needs. They use their money to cater for only their basic needs. The company tried as much as possible by even introducing a new repacked size, but no change was noticed in the business sales. It shows that casting people in the role of consumers is a good idea for the low-income earners, it helps an organisation value a profitable proposition. However, the consumers lack the financial potential.
Hart, C. 2002. The Fortune at the Bottom of the Pyramid.[online] strategy business.M Available at: http://www.strategy-business.com/article/11518?gko=9a4ba [Accessed 27 Apr. 2016].
Prahalad, C.K., 2009. The fortune at the bottom of the pyramid, revised and updated 5th-anniversary edition: Eradicating poverty through profits.FT Press.