Question

What are the more attractive industries for the base of the pyramid?

Answer 1

The concept of the base of the pyramid is explained clearly by renowned business thinker C.K Prahlad. He states that corporations who are aware of the bottom of the pyramid (BOP) understand that even the most pooor people can pan out to be consumes and scutomers. As the latest information regarding product developments and trends also reach out to the low-income groups even in rural ares, they are siginificantly aware of the quality of products despite being in a poor monetary position.   Prahlad recognizes the huge barrier low income creates, and believes it can solved by taking the correct steps and allocating adequate resources to meet their needs. A commercial strategy is required for it to be implemented correctly. To do so he suggests four key aspects: the creation of buying power and aspirations through customer education and product innovation, which has to be followed by enhancement of distribution and communication systems and by tailoring local solutions appropriate, which are intertwined.

Abraham Maslow showed a framework in order to further fragment the various needs of the low-income consumers in basic needs in order to assure survival, essential services for safety and security, social interaction and finer things including self-esteem and self-actualization needs The literature supporting this states that industries that provide multiplier effects through innovative technologies and development, which lead to further sustainability in emerging markets are very crucial. One prominent example is of Nestle which needed a reliable source of high quality milk. Nestle saw that the poor dairy farmers in India needed a fair incentivisaiton for their work, which led to the creation of a flouring partnership. Nestle agreed to buy the milk for a higher price than the current market rates and also indulged in educating farmers regarding agricultural performance, supplies and material necessary for farmers to work efficiently. Consequently the company spent a lot of money in milking machines, farm cooling tanks and chilling centres and provided assistance regarding quality fodder seeds, cattle feed, veterinary medicines and procurement of bank loans. in addition to this, Nestle supports community development as well in terms of building drinking water and lavatory facilities in cooperation with the village administrators, parent associations and schools.They also look into the health issues and funds medicines for a local tuberculosis clinic, which treats the local inhabitants in and around the area. To summarise, Nestle created a win-win situation for both parties through effective business strategies.

Hence industries which can promise a sustained a profit multiplier for the poor community along with their own gains is likely to succeed in case of utilising the potential at the base of the pyramid.