Discusses new business models targeted at providing goods and services to the poorest people in the world. It makes a case for the fastest growing new markets and entrepreneurial opportunities being found among the billions of poor people 'at the bottom of the [financial] pyramid'.
The article reports on the tendency for government and international organizations to address poverty, however businesses are joining in to assist with this global issue. The article refers to C. K. Prahalad's book "Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits," which proposes a model for enabling the poor to achieve prosperity and for private companies to earn profits.
Aneel Karnani, “The Mirage of Marketing to the Bottom of the Pyramid,” California Management Review, Summer 2007, pp. 90-111.
The article discusses the role of market-driven forces in the alleviation of poverty. The authors focus on strategic business models that encourage better distribution of resources to the urban poor in order to provide access to the open market. Details are provided regarding the global poor in developing countries and the challenges that face proper distribution, including inadequate civil infrastructure, illiteracy, and underdeveloped skills.
Affordability and sustainability, not premium pricing and abundance, are the new tenets of effective innovation. Westerners are struggling with the shift in mind-set, but a few emerging-market pioneers are showing the way: They're designing inexpensive products and manufacturing them with so little capital and on a scale so vast that their prices--1 cent for a one-minute telephone call, $2,000 for a car--are the lowest in the world.
If your company is intrigued by the opportunities at the bottom of the pyramid but is hesitant to plunge in, it's not alone: Despite the immensity of the markets and the volume of the hype, few multinational firms have built sizable businesses serving consumers or producers who survive on just a few dollars a day.
A decade after founding SKS Microfinance, CEO Akula explains how to make money at the bottom tier of the economic pyramid while raising the living standards of the people who occupy it. His company, which provides many small-business loans and other financial services to poor women in India, has a customer base that has been nearly tripling each year and now numbers more than 2 million. Akula attributes his firm's success in part to heeding three principles.