Bottom

of the
Pyramid
(C.K.
Prahalad)

WHAT IS THE BOTTOM OF THE PYRAMID? DESCRIPTION 

The bottom of the (economic) pyramid consists of the 4 billion people living on less than $2
per day. For more than 50 years, the World Bank, donor nations, various aid agencies,
national governments, and, lately, civil society organizations have all done their best, but they
were unable to eradicate poverty.
 
Aware of this frustrating fact, C.K. Prahalad begins his book: "The Fortune at the Bottom of
the Pyramid" with a simple yet revolutionary proposition: If we stop thinking of the poor as
victims or as a burden and start recognizing them as resilient and creative entrepreneurs and
value-conscious consumers, a whole new world of opportunity will open up.

Prahalad suggests that four billion poor can be the engine of the next round of global trade
and prosperity, and can be a source of innovations. Serving the Bottom of the Pyramid
customers requires that large firms work collaboratively with civil society organizations and
local governments. Furthermore, market development at the Bottom of the Pyramid will also
create millions of new entrepreneurs at the grass roots level.
 
Prahalad presents his new view regarding solving the problem of poverty as a Co-
Creation solution towards economic development and social transformation (figure), of which
the parties involved are:
 Private enterprises
 Development and aid agencies
 Bottom of the Pyramid consumers
 Bottom of the Pyramid entrepreneurs
 Civil society organizations and local government
12 PRINCIPLES OF INNOVATION FOR BOTTOM OF THE PYRAMID MARKETS
Prahalad provides the following building blocks for creating products and services for Bottom
of the Pyramid markets:
1. Focus on (quantum jumps in) price performance.
2. Hybrid solutions, blending old and new technology.
3. Scaleable and transportable operations across countries, cultures and
languages.
4. Reduced resource intensity: eco-friendly products.
5. Radical product redesign from the beginning: marginal changes to
existing Western products will not work.
6. Build logistical and manufacturing infrastructure.
7. Deskill (services) work.
8. Educate (semiliterate) customers in product usage.
9. Products must work in hostile environments: noise, dust, unsanitary
conditions, abuse, electric blackouts, water pollution.
 10. Adaptable user interface to heterogeneous consumer bases.
11. Distribution methods should be designed to reach both highly dispersed
rural markets and highly dense urban markets.
12. Focus on broad architecture, enabling quick and easy incorporation of
new features.
ORIGIN OF THE BOTTOM OF THE PYRAMID. HISTORY
Before his 2005 book, Prahalad published two articles regarding this framework about
alleviating poverty:
 Jan 2002: The Fortune at the Bottom of the Pyramid (Strategy+Business),
with Stu Hart
 Sep 2002: Serve the World's Poor, Profitable (Harvard Business Review),
with Allen Hammond
USAGE OF THE BOTTOM OF THE PYRAMID. APPLICATIONS
 This framework provides an impetus for a more active involvement of the
private sector in building the marketing ecosystems for transforming the Bottom of
the Pyramid.
 Helps to reconsider and change long held beliefs, assumptions and
ideologies.
 Provides clues on developing products and services for Bottom of the
Pyramid consumers.
STRENGTHS OF BOTTOM OF THE PYRAMID THINKING. BENEFITS
The biggest strengths of the Bottom of the Pyramid approach by Prahalad is, that it helps to
reconsider and change long held beliefs, assumptions, and ideologies, which are all based on
and are supporting victim- and burden thinking:
 There is money at the Bottom of the Pyramid: it is a viable market.
 Access to Bottom of the Pyramid markets is not necessarily difficult.
Unconventional approaches such as the Avon ladies approach may work.
 The poor are very brand-conscious.
 The Bottom of the Pyramid market has been connected (mobile phones,
TV, Internet).
 Bottom of the Pyramid consumers are very much open towards advanced
technology.
ASSUMPTIONS OF THE BOTTOM OF THE PYRAMID. CONDITIONS
1. The poor can not participate in the benefits of globalization without an active
involvement of the private sector and without access to products and services that
represent global quality standards.
2. The Bottom of the Pyramid market provides a new growth opportunity for
the private sector and a forum for innovations. Old and tried solutions cannot create
markets at the Bottom of the Pyramid.
3. Bottom of the Pyramid markets must become an integral part of the work
and of the core business of the private sector. Bottom of the Pyramid markets can
not merely be left to the realm of Corporate Social Responsibility (CSR) initiatives.
Book: C.K. Prahalad - The Fortune at the Bottom of the Pyramid: Eradicating Poverty through
Profits - 
 
BOTTOM OF THE PYRAMID FORUM
Recent User Comments
Sergio Increase the "it is easy to imagine that if someone   2
Leite - Brazil Whole Pyramid move up to the top another one will  
move in counter sense, that is, to
bottom. It happens when the pyramid
does not grow in its volume. Since
space may be only occupied by an
individual, if someone gains, another
one loses. Therefore  the narrowing of
the pyramid's base is not enough. It
needs more. Let's thus expand the
whole pyramid in volume and we will
really make that its 6 billion people enjoy
wealth. So we must maintain welfare
programmes supported by a strong
 education system and by infra-structural
investments in order to organize
economics and promote better incomes
distribution. This seems a good starting
point to generate real wealth and
welfare for long and for all."
Chisakane Using House of "The Bottom of the Pyramid framework can   
Wasike - Kenya Quality With be perceived as an idea that will make the
Bottom of the poorest people in our society more creative
Pyramid and innovative. Whichever approach or policy
Framework is adopted to make this a reality can be
achieved more effectively if the
following House of Quality (House of TQM)
elements are considered;
1: Foundations; includes ethics, integrity and
trust.
2: Building bricks; includes training, teamwork
and leadership.
3: Binding mortar entails effective and sound
communication.
4: Roof is recognition."
Sandip Access to the "The financial models, such as Build Own   
Pandya - USA Financial Models Operate and Maintain (BOOM), BOO (Build
for Large Own Operate), BOOT (Build, Own, Operate,
Projects by BOP and Transfer), tailor-made for the mega-
energy-products which were planned for the
aid to the developing countries could see the
light of the day but not as expected because of
uncontrollable reasons.
People’s mindset, the cultural differences, the
language and interpretation pose a constriction
in adopting them. The developing countries
need to transform the programs available to
them by developing a country specific
regulatory structure to a reasonable risk of
implementation.
The tariff for sale of the products need to
ensure that the risk of foreign exchange is not
completely passed to the end user, the variable
component going into the product sale price is
not exceeding the affordability of the
purchaser, and so forth. Such models (BOO /
BOOT / BOOM) should be analyzed for easy
access to BOP."
SC BOP Concept by "A profound concept. Aiming at a win-win solution for all.
Narang - India CK Prahalad is As Mahatma Gandhi said something like this (I do not
Profound remember exact words) if you govern a state, think about
whether your action brings a smile to the poorest person. As
an acid test. This is an extension to that philosophy."
Emmanuel Leadership and "I am looking for ideas to start a    16
Reyme - USA Corruption in study on  how to "eliminate"
Developing corruption in developing
Countries countries. Actually, most developing
countries depend on rich countries
and international organizations to
run their internal affairs. On a
leadership standpoint, what could
effective leaders do?
At a time rich countries start cutting
their budget to overcome economic
disasters, developing countries
 increase their expenses and their
social projects. What could we do as
leaders? I would like to have ideas
from various sources across the
world."
Best User Comments 
Nikash BOP as brand "The people at the Bottom of the   44
Anand - India conscious Pyramid are referred to as brand  
conscious and at the same time they
are price sensitive. How should these
two factors go together?"
Prachi Redesigned "I have redesigned traditional hand-   6
Saini - India Water Lifting pumps and park equipments to work  
Device and Park together. The result is water lifting
Equipment device which are twice as efficient as
manual water pumps and have
minimal operational costs. These
instruments can save 2-3 hours from a
villagers life and cut pollution
substantially. Moreover, they will
utilize rural youth and give them a way
to contribute to village's economic
growth. I would like to market and
produce them in India (or any other
market) Can you tell me the direction i
should take now. Where would i be
able to find investors? sincerely
prachi"
Lily Responsibility of "Large corporations such as Nestle   5
Houston - USA International and Exxon mobile have traditionally  
Corporations supplied raw materials with a low
price from developing countries, but
they have shown only little amount
of co-operation with local
associations and governments. The
global economical downhill hits
harder on people at BOP who just
were able to taste luxury of
westernization. As if in Dante´s play
the poorest become more
vulnerable while the richest hardly
care anything else than
environmental agreements and their
own benefits. Large corporations
and the European Union should
carry more responsibility, minimize
the export of cheap European food
products to Africa and build
networks with BOP organizations.
We cannot talk about markets
without real activity. Speculation
and idealism do not make sense if
we don't do anything by ourselves
either."
Pushyamitra - Indi Rural Tourism "How is rural tourism marketing   2
a Marketing different? How can rural tourism be  
used as an effective tool to remove
unemployment of rural people?"
Yashwant Raj Bottom of "Being an entrepreneur and very basic   2
Taingaria - India Pyramid and practical knowledge of sales and  
Network marketing and challenges faced by
 Marketing middle & lower middle class in our
Hybrid Plan society i. E. How to increase income
or how to get basic income to fullfill the
daily needs. Since last 1year I am in
process to design a business model to
promote small & creative
entrepreneurs, unique and world class
production from these entrepreneurs
will be sold by distributors through our
designed network marketig or mlm
plan. We will provide all resources to
entrpreneurs, distributors. This is also
to promote home based industries,
arts & crafts, small industries and
innovative ideas and products. We will
also form entrepreneurs community
bank where we attract angel investors
and venture capitalists to invest. Like
management studies we will promote
entrepreneurship studies & courses to
develop entrepreneurial skills in mass
public. Our basic aim is to provide
economic prosperity to individuals,
region and nations. We are very near
to BOP."
India - Bivore BOP and "If the bottom of the pyramid is not   2
Sarawgi Communication connected with communication tools  
and media, how can marketers
position their product to the BOP
consumers (keeping in mind crisis
of resources for further
investments)?"
Brian - Canada Enabling BOP "Micro credit organizations such as   1
Entrepreneurs KIVA are enabling access to credit.  
Its a good start. Education
institutions (now often profit driven)
need to make the access to trade
education as well as other
marketable skills available, possibly
through micro credit. In ones own
company the contributions to micro
credit organizations could be
matched. Such a great task requires
many innovative solutions. Consider
the industrial revolution, how where
skills developed to meet the
needs?"
Diether Jugaad and "What is the role of 'Jugaad' (Hindi   1
Scherer - Germa Bottom of the term for innovative, improvising, lateral  
ny Pyramid fixes and hacks using limited
resources) within Bottom of the
Pyramid thinking?"
Dr Sanjeev Improving the "I don't subscribe to the view that the   1
Sood - India Lot of People at lot of 4 billion people at the BOP can  
BOP Takes be changed by above measures and
More initiative alone. Unless their basic daily
needs of food, shelter, literacy and
health care are met with, it shall be
unrealistic to assume that they can be
lifted above poverty line and converted
into consumers, entrepreneurs and
 engine of growth."
Vervy - India Bottom of "Which class of people come under BOP?"   
Pyramid People?
Editor - NL 20 Gateway- "To capture the gigantic opportunities and to   
Hubs deal with the immense complexities of the many
emerging markets, C.K. Prahalad and
Hrishikesh Bhattacharyya recommend in
strategy+business 50, Spring 2008, pp24-29)
that large multinational corporations should
consider to move to a  gateway-hub
structure of 20 (or so) gateways in countries
that best serve as hubs to nearby regions.
Instead of decentralized models with a single
HQ, 4 or 5 regional offices and seperate country
managers (bureaucratic and unnecessarily
complex portfolios) or centralized models with 1
unified approach (one size does not fit all), the
gateway-hub structure reduces the tension
between global integration and local
responsiveness. The 20 hubs can be split up in
10 for industrialized countries (US, Japan,
Germany, UK, France, Italy, Spain, Canada,
Australia, the Netherlands) and 10 for the
emerging markets (China, India, Brazil, Russia,
Mexico, S-Korea, Indonesia, Turkey, S-Africa
and Thailand).
The executive committee of such a firm would
contain the leaders of all hubs."