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Edited by Subhash C. Jain and David A. Griffith
Chapter 17: Integrated Strategies for the Base of the Pyramid
Ravi Sarathy INTRODUCTION The base of the pyramid (BOP) concept has captured the attention of firms, NGOs and governments since its initial formulation focusing on the unmet needs of billions of poor people across the world (Prahalad and Hart, 2002; Prahalad and Hammond, 2002; Prahalad, 2005). There are several definitions of the BOP, ranging from Prahalad’s initial estimate of 4 billion at the base of the pyramid, to exclusive focus on subsistence markets, whose concern is the truly poor which may number between 1.5 to 2 billion people, earning less than $1 a day. At the other extreme, Mahajan and Banga (2005) expand the BOP to include 86 per cent of the world’s population earning less than $10 000 a year, considering it the appropriate, but neglected target market. The World Economic Forum (2009) estimates 3.7 billion people as earning less than $3000 per year (about $8 a day), and almost 1 billion earning less than $1 a day. They further note that at the lowest levels of income, nearly three-quarters of income is spent solely on food. However, when incomes rise, even if by small amounts, to between $2 and $8 per day, discretionary income becomes available to this market segment, with the result that spending on food falls to about 41 per cent of total household spending, with nearly one-third – about 32 per cent – being spent on discretionary consumer goods, communication, entertainment and basic consumer goods. Thus, even small improvements in BOP living standards can lead to significant...
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