If you only read one thing this week…


The Next 4 Billion at the Bottom of the Pyriamid – what happens next? by ifyouonlyreadonethingthisweek
May 31, 2007, 7:26 pm
Filed under: Articles, Book reviews, Development theory, If you have 30 mins

The base of the economic pyramid (BOP) refers to the four billion people—more than two-thirds the world’s population—who live on annual incomes of less than $3000. A newly released study by the International Finance Corporation and the World Resources Institute entitled The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid makes a compelling case that this large segment is full of untapped potential for both companies and low-income consumers. Increasingly, these organizations say, market-driven approaches offer the best opportunity to provide services to the poor that are both scalable and sustainable.

With a global consumer market estimated at five trillion dollars, a growing number of companies are taking notice and exploring new strategies for reaching bottom of the pyramid consumers.
The study is full of rich data on household spending patters, market segments, and regional trends—valuable information for those designing programs in any of the traditional humanitarian sectors from food security to health to financial services.

Understanding BOP spending patterns leads to more effective approaches and strategies and the report includes a number of case studies of innovations that are improving access to services for the poor, while simultaneously making a profit and thereby ensuring sustainability. For example, many BOP consumers self-medicate in response to health problems because medical facilities are either un-affordable or unavailable.

Kenya responded to this need by creating a system of financially sustainable franchises owned by nurses and community health workers. Together these franchises provide more than 400,000 consumers with medications they need in conjunction with relevant health screenings and advice.

For humanitarian organizations it is clear that the time is ripe for new and unique partnerships with the private sector to more effectively reach low-income consumers. Making this programmatic shift will require a significant change in mindset—one that sees corporations as partners instead of donors and beneficiaries as both savvy consumers and entrepreneurs.

This link will take you to the downloadable documents. You can also purchase the book here. If you don’t have time to read the whole thing there is an excellent ten page executive summary to download here.

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[…] last week’s post optimistically extolling the virtues of Bottom of the Pyramid economics (here), Corporate Social Responsibility is carrying an article about the work of Aneel Karnani (Associate […]

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