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The Fortune at

the Bottom of the

An Invisible Opportunity
What is needed is a better approach:
 To help the poor,
 Involves partnering with them to innovate
and achieve sustainable win–win scenarios
 The poor are actively engaged and, at the
same time,
 The companies providing products and
services to them are profitable.
Basic Direction
 The greatest harm big companies have done to
the Tier 4, is to ignore them altogether

 Tier 4 is the new growth opportunity for the

private sector and a realm for innovation

 Tier 4 should not be relegated to CSR…

 This market can provide sustainable advantage
as well as profits
Lets take each
assumption and
dissect it… ?
1. There is no money at
the BOP
Spending patterns
 Spend on items traditionally considered “Luxury”
 No Legal title to land they live on-
 No interested in spending on better sanitaition,
running water etc.
 85% have Color TV
 75% have a pressure cooker
 66% have gas stoves
 70% have a telephone (landline / mobile)
2. Distribution access is
 No. of cities by 2015:
 Africa: 225
 Asia: 903
 Latin America: 225
 More than 400 will have more than 1 million in
 Till now – lack of knowledge of products & services – solved
by Sat.Comm. & Mobile Telephony
 Ex. HLL – Project Shakti
3. The BOP are not brand
 Aspirations for a new and improved quality of life

 Access to mass media

 BOP consumers are value buyers

 Brand = more value for same amount of
4. The BOP consumers are
not “connected”
 China: 400 million, 600 million by 2009
 India: 200 million, exp. 390 million by 2009
 Adding 5 mn. every month (at least)
 Bangladesh: Grameen Phone
 Brazil: TeleFonika
 PCO Kiosks, Internet Kiosks etc.

 Unprecedented effect of WOM

 Add the effect of fiercely competitive Media
5. Are “laggards” at
 India
 ITC E-Chaupal
 10,000 villages, 40 Mn. People by 2010
 USD 2 Bn. In turn over
 Kerala:
 Fishermen: Mobiles for market rates
 Farmers: MCX, C-Bot
 Aqua-Guard
Challenges in the 86%
 Markets, culture and environments are demanding
 Extremely fragmented markets
 Youthful and growing populations
 Limited income and space
 Underdeveloped infrastructure
 Weak supply and distribution channels
 Rapidly changing markets

Can these Challenges

be converted into Opportunities?
The Imperative
1. Create the Capacity to
The 3 A’s
 Affordability
 Ex. Single Serve packages

 Access
 Stores selling after 8 pm (after consumers
daily work is done)

 Availability
 Buy with cash at hand – cannot defer purchase
2. Need for new good and
 Amul:
 Ice-cream at less than Rs. 5 a serving

 Prodem FFP, Bolivia

 ATM’s with touch screen, fingerprint
recognition, voice commands in 3 local
3. Dignity & Choice
 ITC E-chaupal

 ICICI Bank, micro-finance

 HLL Project Shakti

 Grameen Phone
4. Build Trust
 E-chaupal

 Casas Bahia, Sau Polo

 Consumer Durables Chain
 Trucks don’t need security

 Bimbo, Mexico
 Bread & Fresh Produce

 Grameen Bank
 Default rate less than 1%
Don’t Build A Car
When You Need A Bullock Cart
 Less is more
 Product formulation and design
must reflect the environment
 Poor infrastructure - strip things
down to basics
 People don’t need advanced
functions – they need to get work
done . Eg: Simputer -India
 Low price doesn’t mean low
 Emerging market customers
expect the most from their
meager resources. Eg: Grameen
Bank housing -Bangladesh
Don’t Build A Car
When You Need A Bullock Cart
 Look at the deeper meaning of
 Products may have deeper
meanings than their intended use
 Address deeper elements of culture
and religion
 Eg: talking Farah dolls - Middle
 No customer culture
 Lack an understanding of
 Need to be educated about how to
be customers
 Eg: Air Deccan, India
Connect Brands to the
 There is no such thing as an
‘Indian’ or ‘Chinese’ market
 Every national market is made
up of several highly unique and
fragmented markets
 Local brands thrive
 Localize the brand
 Tailor brand to individual
 Use the national/regional
Eg: MTV Asia
Think Young
 Young countries
 Young adults make up
nearly half the population in
several of these countries
 High birth rates
 Create loyal customers
when they’re young
 Make your product ‘cool’
 Huge market for
entertainment, apparel,
computers, fashion and
other such youthful
products and services
 Young celebrity
endorsements. Eg: Fastrack
watches –MTV India VJs
Grow Big By Thinking
 Reducing pack size to reach a
larger audience
 Smaller packages for price,
not convenience
 Installment plans for products
that are expensive or out of
reach to most
 Eg: The Maruti Suzuki car for
at a down payment of
Rs.2000($45) and 0% interest
Working with Technology
 Create markets in the gaps
 Find ways to fill gaps in infrastructure
Eg: Aquaguard in India, Sulabh
 Create work around solutions
 Work within limitations of climate,
infrastructure and resources
Eg: Crank powered radio in Africa
 Build infrastructure to support
the business or use existing
infrastructure creatively
Working with Technology
 Recognize unseen rivals
 Thriving business in counterfeits
 Build barriers, such as quality
guarantees to keep them out
 Modify and Apply existing
technologies in new ways
 Eg: CNG Autos in Delhi or ‘fuel
flex’ cabs in Mexico
 Digitize and MPower
 Digital media more accessible
 Cheaper to run. Eg:
Take the Market to the People:
 Position for the smallest
shop owner
 The organized retail sector in
emerging markets is often only 2-
8% of total
 Small stores number in the
millions and have greater reach
 Eg: the kirana stores of India
 Build strong supply and
distribution channels
 Distribution systems are only just
being developed
 Look for local or entrepreneurial
networks that help understand
and connect to local markets
Take the Market to the People
 Take the bank out of the
 Finance and credit options
scarce, but very important in
emerging markets
 Banks need to reach the
smallest customer to tap
‘Fortune at the Bottom of the
 Eg: Micro Credit in Africa
In Conclusion
"The transformation is just beginning.
There will be hiccups along the way

The only certainty is, the BOP markets are here to stay.

Even though they won't become developed tomorrow, they are the

And the companies that can develop the right solutions to meet their
needs will find a rich source of growth.“

Most imp… it needs a “New Way of Thinking”