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Emerging Issue Paper 1: “Innovation through Activities in Bottom of the Pyramid Market”

by on January 20, 2010

The Bottom of the Pyramid (BoP) refers to the more than four billion people who make up the lowest level of the world’s economical pyramid as defined by per capita income. These people earn less than US $1,500 a year (Daft, 2010). Despite the decades of efforts made by various organizations such as United Nation organizations, aid agencies and donor countries, quite a few people are still suffering from extreme poverty. C. K. Prahalad (2005) introduced the Bottom of the Pyramid concept to businesses, which aims to alleviate poverty through corporate activities, while making profit at the same time. From another point of view, this is one way to meet companies’ social responsibility.

The business in the BoP market is not only about the price of products. Identifying and reaching the real needs in this market relates to some innovative changes of corporate activities, and those activities can have a great impact on the company’s achievements, as well as on the whole society.

Three aspects of innovation in the BoP market are:

1)      Society: the innovation is made mainly through technological innovation, in the field of public health, for example

2)      Operation system: the innovation is made by using local profit-based organizations and establishing a partnership with aid agencies

3)      Sales strategy: the innovation is made through localization process, such as customized packets and local sales networks

These are observed in four industrial cases: two aid-based activities: Adaptive Eyewear project and Children’s Safe Drinking Water Program, a half-profit-based activity: ACCESS – Decentralized rural electrification project, and an example of profitable business: Mandom Indonesia.


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