INTRODUCTION & DEFINITION

Base of the pyramid efforts aim at bringing the world's poorest people into the global
economy by marketing goods and services to them which help better meet their needs. At
its worst, this becomes a means of wringing micro-profits from the poor without in any
meaningful way changing their circumstances. At its best, however, it brings
transformative tools, from micro-finance and micro-insurance, to needed goods made
available at an affordable price, into the lives of the poor.

Together, Social Entrepreneurship and base of the pyramid approaches illuminate a much
broader trend, which is to treat entrenched social and sustainability difficulties as
problems capable of solution through the conscious and context-sensitive application of
innovation.

BOP has emerged as one of the dominant ideas in business.Cognizant of the

overwhelming attention BOP has attracted and its potential impact on the billions of the
poor and on managerial practices, the author analyzes the different aspects of BOP
approach on how large corporations can serve low income customers profitably. An
attempt is made to provide an alternate perspective .

A framework is presented for assessing the appropriateness of large

corporations’ participation in BOP markets. I also emphasize the need to strengthen the
role of the poor as a producer for rapid poverty alleviation.
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CONCEPT & CASE STUDY

Did you know that your company could make a bigger profit by focusing on the market
share consisting of people who earn less than $2 per day? Have you realized that the
world’s fastest growing market is at the bottom and not the top of the fortune pyramid?
Did you know that nine countries-China, India, Brazil, Mexico, Russia, Indonesia,
Turkey, South Africa, and Thailand - collectively have a GDP of $12.5 trillion, larger
than the GDP of Japan, Germany, France, Italy, and the UK combined?

There are 5.5 million amputees in India. An additional 25,000 lose their limbs each year
due to disease, accidents or other hazards. Most of these people live well below the
poverty line and can afford neither a prosthetic limb (average cost = $7000) nor the
subsequent replacements and hospital visits. How did Dr. P.K. Sethi along with craftsman
Ram Chandra develop an effective prosthesis (cost = $30) that even enabled a
professional dancer to further her career on stage?

+ The world’s leading cause of mental disorders and retardation is Iodine Deficiency
Disorder (IDD). In India alone there are 70 million people who have IDD and another
200 million are at risk. How did Hindustan Lever Ltd, a branch of a multinational
company, solve the problem and make a profit at the same time?

+ More than 24 million Mexicans earn less than $5 a day, hence they have been unable to
get access to credit. How did this change so that the Mexicans could build affordable
housing for themselves while the third largest cement manufacturer in the world, Cemex,
continues to reap the financial rewards?

+ Blindness affects 12 million people in India. How could the Aravind eye care system
serve more than a million patients and do it mostly for free, yet continue to be highly
profitable?

ITC Case Study

An example of the bottom of the pyramid targeting at work is eChoupal in rural India.
ITC manages an agricultural trading company. To eliminate the inefficiencies in its
supply chain caused by corrupt middle men at local rural markets, it created a network of
“e-Choupals” (choupal = village square) in rural communities. Through these e-
Choupals, individual farmers have been able to check the market trading price of their
produce and sell it directly to ITC. Both the individual farmers and ITC have increased
their revenues, because the layers of ineffiency no longer have a role in the transaction
between seller and buyer.
ITC’s Agri Business Division, one of India’s largest exporters of agricultural
commodities, has conceived e-Choupal as a more efficient supply chain aimed at
delivering value to its customers around the world on a sustainable basis.

The e-Choupal model has been specifically designed to tackle the challenges posed by
the unique features of Indian agriculture, characterised by fragmented farms, weak
infrastructure and the involvement of numerous intermediaries, among others.

‘e-Choupal’ also unshackles the potential of Indian farmer who has been trapped in a
vicious cycle of low risk taking ability - low investment - low productivity - weak market
orientation - low value addition - low margin - low risk taking ability. This made him and
Indian agribusiness sector globally uncompetitive, despite rich & abundant natural
resources.

Such a market-led business model can enhance the competitiveness of Indian agriculture
and trigger a virtuous cycle of higher productivity, higher incomes, enlarged capacity for
farmer risk management, larger investments and higher quality and productivity.

Further, a growth in rural incomes will also unleash the latent demand for industrial
goods so necessary for the continued growth of the Indian economy. This will create
another virtuous cycle propelling the economy into a higher growth trajectory.

Launched in June 2000, 'e-Choupal', has already become the largest initiative among all
Internet-based interventions in rural India. 'e-Choupal' services today reach out to more
than 4 million farmers growing a range of crops - soyabean, coffee, wheat, rice, pulses,
shrimp - in over 40,000 villages through 6450 kiosks across 8 states (Madhya Pradesh,
Karnataka, Andhra Pradesh, Uttar Pradesh, Maharashtra, Rajasthan, Uttaranchal & Tamil
Nadu).

The problems encountered while setting up and managing these ‘e-Choupals’ are
primarily of infrastructural inadequacies, including power supply, telecom connectivity
and bandwidth, apart from the challenge of imparting skills to the first time internet users
in remote and inaccessible areas of rural India.

REFERENCES

www.echoupal.com

www.iimahd.net

www.p2pfoundation.com
PRODUCT(S) ON WHICH THE THEORY IS APPLICABLE

Based on our research and understanding , we could think of a variety of goods and
services which can comply to the theory . Basically, it should be of widespread use and at
the same time, affordably priced for those below poverty line. This is the BoP mantra of
profitability.

Not centering on one, we can view the following as prospective products for the poor
masses.

1. General Medical Aid

The poor class today is the middle class of tomorrow as mentioned by C K Prahalad.
Medical services, like Aravind Eye Care, have a vast scope in the constantly changing
BPL masses. They are getting more and more aware and educated on this front.

Though the purchasing power is less, there is immense population, especially in India
who can turn it into a profitable venture by force of sheer numbers.

2. Bio-Gas

In our opinion, cheap fuel like biogas or methane, if introduced commercially will find
huge mass appeal in the BPL segment. Though there are many govt. regulations on fuel,
there is no harm in thinking of the huge profitability scope in this field.