I was asked to contribute an article to a special issue of Effective Executive on BOP Markets and Strategies. The issue explores different perspectives on the ideas popularized by CK Prahalad in The Fortune at the Bottom of the Pyramid. He argues that there is much untapped purchasing power among the world's poor, and that companies can make significant profits by selling to the poor with business models adapted to this unique market. Through selling to the poor, private companies can also bring prosperity to them and thus act as a positive force in alleviating poverty. His challenge to focus on the BOP market has been taken up by many multinational companies and social entrepreneurs with numerous books and articles appearing in the business and popular press documenting the interest (see for example Kash Rangan et al Business Solutions for the Global Poor, Stuart Hart's Capitalism at the Crossroads, and Ted London's BOP Perspective on Poverty Alleviation [pdf].
My contribution, Strategies for the Base of the Pyramid: Lessons from Social Marketing, introduces social marketing and the work that has been done in this marketplace for over 3 decades. My point is that there is a great degree of overlap in purpose and approach of social marketing and BOP efforts, and much that can be learned and shared between us. I believe that the BOP movement can be an impetus to even better social marketing and that social marketing can give creative capitalists a jump-start in understanding and working in the BOP marketplace. We should be working to bring these worlds together with a Total Market Approach. Two excerpts from the article:
The four billion people at the base of the economic pyramid (BOP) - all those with incomes below $3,000 in local purchasing power - live in relative poverty. Yet, together they have substantial purchasing power: the BOP constitutes a $5 trillion global consumer market. It tends to be concentrated in rural areas, especially in Asia. As a consequence, these markets are usually very poorly served, dominated by an informal economy, and, as a result, relatively inefficient and uncompetitive. Hammond et al make the argument that the BOP should be the focus of businesses seeking to expand into new markets. As opposed to more traditional aid programs in developing countries that are mediated or directed by governments and non-governmental organizations (NGOs), a private sector-driven, market-based approach needs to focus as much on people as producers as well as consumers, and on solutions that can make markets more efficient, competitive, and inclusive…
The TMA approach has evolved out of more than 30 years of experience conducting social marketing programs in developing countries among people now described as the BOP market. The approach has much in common with the current BOP market analysis activities, and the market-based approach to poverty reduction. Both the TMA and BOP approaches reinforce an approach to poverty reduction that is framed in terms of enabling opportunity and less in terms of aid. A successful market-based approach would bring significant new private sector resources into play, allowing development assistance to be more targeted to the segments and sectors for which no viable market solutions can presently be found. As the TMA approach says, the active entry of the private sector into providing goods and services to the poor needs to be supported, but their work needs to be assessed and evaluated in the larger context of the marketplace. This assessment needs to be focused on how the public, NGO and private sectors contribute by their unique and complimentary strengths to attain equitable, efficient, sustainable and affordable health and health care across the population.
Read the full article [pdf].