Base of the Pyramid Segmenting Extreme

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Base of the Pyramid

Segmenting § Extreme poverty: below $1/day • 1 billion people § Subsistence: $1 -$3/day • 1. 6 billion people § Low income: $3 -$5/day • 1. 4 billion people

Facts and Figures § Could swell to 6 -8 billion over the next 25 years § Most live in rural villages or urban slums and shanty towns - movement towards urbanization § Markets are hard to reach, disorganized, and very local in nature § Education levels are low or non-existent (especially for women)

Base of the Pyramid § Victim/burden § Creative entrepreneurs § Value-conscious customers § These people can be the engine for the next round of global trade T. L. Ceranic

Base of Pyramid Proposition “Low-income markets present a prodigious opportunity for the world’s wealthiest companies – to seek their fortunes and bring prosperity to the aspiring poor. ” C. K. Prahalad and Stuart L. Hart, The Fortune at the Bottom of the Pyramid, Strategy + Business, January 2002 T. L. Ceranic

T. L. Ceranic

Who serves the Bo. P? § Implicit assumption that the rich will be served by the corporate sector (MNCs) and governments/NGOs will protect the poor and the environment. § A huge opportunity lies in breaking this code

Even “poor” people “spend” In Dharavi, India 85% have a TV 50% have a pressure cooker 21% have a telephone … but can’t afford a house T. L. Ceranic

How to realize the business opportunity at the BOP § Requires radical innovations in technologies and business models § Reexamination of the "price-performance" relationships for products and services § New level of capital efficiency • "bigger is better” small-scale operations and world scale capabilities

Bo. P Business Model § Key components that define a Bo. P business model: • Provide unique products specific to the local community • Localize value creation throughout the supply chain • Enable access to goods and services • Partner to better understand

There is a need to work with: • • MNCs SMEs NGOs Local governments T. L. Ceranic

Group Danone § Opportunity: Danone saw the opportunity to create a social business model to meet their mission statement: “Bring health through food to as many people as possible” § New Product: ‘Shokti Doi’, a nutritious yogurt product tailored to meet the specific nutritional needs of Bangladeshi children T. L. Ceranic

New Business Model § Manufacture the product in a micro plant 50 x smaller than typical Danone plant § Design simple, easy to use equipment and train local workers § Use local suppliers and products wherever possible T. L. Ceranic

New Business Model § Build local community awareness and understanding through tailored nutrition programs § Pioneer techniques to save natural resources and produce environmentally friendly packaging § Distribute locally through shops and door to door salespeople

Compassion § Driver of social entrepreneurship § Elicits pro-social motivation -> flexible thought process -> greater commitment to action

What do you think people at the Bo. P need? T. L. Ceranic

Individual activity § Write a problem/challenge faced by people a the Bo. P on each sticky note: • • Environment Health Education Human rights T. L. Ceranic

Group activity § Look @ all of the problems/challenges faced by the people @ the Bo. P and choose ONE § Come up with a plan for how BUSINESS can solve this issue • Not through charity but an actual $ generating venture T. L. Ceranic

Grameen Bank: The beginnings of Microfinance

T. L. Ceranic

Catholic Social Teaching Proposition The obligation to evaluate social and economic activity from the viewpoint of the poor and the powerless arises from the radical command to love one’s neighbor as one’s self. T. L. Ceranic

Direct Bo. P impact

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