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The Fortune at the Bottom of the Pyramid

Book Description

The world's most exciting, fastest-growing new market? It's where you least expect it: at the bottom of the pyramid. Collectively, the world's billions of poor people have immense entrepreneurial capabilities and buying power. You can learn how to serve them and help millions of the world's poorest people escape poverty.

It is being done—profitably. Whether you're a business leader or an anti-poverty activist, business guru Prahalad shows why you can't afford to ignore "Bottom of the Pyramid" (BOP) markets.

In the book and accompanying CD videos, Prahalad presents...

Why what you know about BOP markets is wrong
A world of surprises—from spending patterns to distribution and marketing

Unlocking the "poverty penalty"

The most enduring contributions your company can make
Delivering dignity, empowerment, and choice—not just products

Corporations and BOP entrepreneurs
Profiting together from an inclusive new capitalism

"C. K. Prahalad argues that companies must revolutionize how they dobusiness in developing countries if both sides of that economic equation areto prosper. Drawing on a wealth of case studies, his compelling new bookoffers an intriguing blueprint for how to fight poverty with profitability."
Bill Gates, Chairman and Chief Software Architect,Microsoft

"The Bottom of the Pyramid belongs at the top of the reading list forbusiness people, academics, and experts pursuing the elusive goal ofsustainable growth in the developing world. C. K. Prahalad writes withuncommon insight about consumer needs in poor societies andopportunities for the private sector to serve important public purposes whileenhancing its own bottom line. If you are looking for fresh thinking aboutemerging markets, your search is ended. This is the book for you."
Madeleine K. Albright, Former U.S. Secretary of State

"Prahalad challenges readers to re-evaluate their pre-conceived notionsabout the commercial opportunities in serving the relatively poor nations ofthe world. The Bottom of the Pyramid highlights the way to commercialsuccess and societal improvement--but only if the developed worldreconceives the way it delivers products and services to the developingworld."
Christopher Rodrigues, CEO, Visa International

"An important and insightful work showing persuasively how the privatesector can be put at the center of development, not just as a rhetoricalflourish but as a real engine of jobs and services for the poor."
Mark Malloch Brown, Administrator, United Nations Development Programme

Table of Contents

  1. Copyright
  2. Praise for The Fortune at the Bottom of the Pyramid
  3. Preface
  4. About the Author C. K. Prahalad
  5. I. The Fortune at the Bottom of the Pyramid
    1. 1. The Market at the Bottom of the Pyramid
      1. The Power of Dominant Logic
      2. The Nature of the BOP Market
        1. There Is Money at the BOP
        2. Access to BOP Markets
        3. The BOP Markets Are Brand-Conscious
        4. The BOP Market Is Connected
        5. BOP Consumers Accept Advanced Technology Readily
      3. The Market Development Imperative
        1. Create the Capacity to Consume
        2. The Need for New Goods and Services
        3. Dignity and Choice
        4. Trust Is a Prerequisite
      4. Benefits to the Private Sector
      5. Endnotes
    2. 2. Products and Services for the BOP
      1. A Philosophy for Developing Products and Services for the BOP
      2. Twelve Principles of Innovation for BOP Markets
      3. Making It Happen
        1. 1. Price Performance
        2. 2. Innovation: Hybrids
        3. 3. Scale of Operations
        4. 4. Sustainable Development: Eco-Friendly
        5. 5. Identifying Functionality: Is the BOP Different from Developed Markets?
        6. 6. Process Innovation
        7. 7. Deskilling of Work
        8. 8. Education of Customers
        9. 9. Designing for Hostile Infrastructure
        10. 10. Interfaces
        11. 11. Distribution: Accessing the Customer
        12. 12. BOP Markets Essentially Allow Us to Challenge the Conventional Wisdom in Delivery of Products and Services
      4. Conclusion
      5. Endnotes
    3. 3. BOP: A Global Opportunity
      1. Engaging the BOP
      2. Local Growth Opportunities
        1. Learning to Grow
      3. Local Innovations and Global Opportunity
      4. BOP Solutions for Developed Markets
      5. Lessons for MNCs from BOP Markets
        1. Capital Intensity
        2. Sustainable Development
        3. Innovations
      6. The Costs of Managing
      7. Learning to Live in a Network of Relationships
      8. Endnote
    4. 4. The Ecosystem for Wealth Creation
      1. Market-Oriented Ecosystem
      2. Ecosystems for a Developing Country
      3. Learning the Sanctity of Contracts
      4. Reducing Inequities in Contracts
        1. Building Governance Capabilities Among the Poor
      5. Endnotes
    5. 5. Reducing Corruption: Transaction Governance Capacity
      1. Are the Poor Poor?
      2. TGC
      3. Building TGC
      4. The Andhra Pradesh e-Governance Story[8]
      5. eSeva
      6. Center for Good Governance
      7. Impediments
      8. Lessons from the Andhra Pradesh Experiment
      9. Endnotes
      10. Appendix: List of eSeva Services
    6. 6. Development as Social Transformation
      1. Development as Social Transformation
      2. Breaking Down Barriers to Communication
      3. BOP Consumers Upgrade
      4. Gaining Access to Knowledge
      5. Identity for the Individual
      6. Women Are Critical for Development
      7. Evolving Checks and Balances
      8. The Real Test: From the Pyramid to the Diamond
      9. Endnotes
  6. II. Innovative Practices at the Bottom of the Pyramid
    1. I. The Market at the Bottom of the Pyramid
      1. Casas Bahia: Fulfilling a Dream
        1. Scope and Size of Opportunity
        2. Typical Customer
        3. Competitive Landscape
        4. Casas Bahia Business Model and Positioning
          1. Management Style
        5. Finance
          1. Brazilian Overview
          2. Casas Bahia's Role
          3. Training
          4. Cash Management
          5. Products
          6. Distribution
          7. Delivery Drivers
          8. Delivery Process
          9. Stores and Storefronts
          10. Marketing
          11. Technology
          12. Example of Technology at Casas Bahia
          13. History with IBM and Linux
          14. Technology Today
          15. In the Store
          16. Uniqueness
          17. Ongoing IT Projects
          18. Future
          19. Human Resources Management
        6. Futures Challenges
        7. Sources
      2. CEMEX: Innovation in Housing for the Poor
        1. CEMEX: Mexico
        2. Patrimonio Hoy
        3. Mexican Society
          1. Savings
          2. Women and Entrepreneurism
          3. Housing
        4. Initial Market Research: Guadalajara, Mexico
          1. Market Eye-Openers
        5. Patrimonio Hoy: Program Design
          1. Identification of Offices or Cells
          2. Cell Setup
          3. Customer Enrollment
            1. Socios or Partners
            2. Promoters
          4. Savings—Credit Payment Cycle
            1. Phase 1 (First 10 Weeks)
            2. Phase 2 (11–70 Weeks)
          5. Material Distribution and Delivery
        6. Value Analysis
          1. Value to Promoters
          2. Value to Socios and Partners
          3. Value to Suppliers
          4. Value to Distributors
        7. Operating Model of Patrimonio Hoy
          1. Revenues
          2. Costs
          3. Marketing
            1. Community Outreach
            2. Word of Mouth
            3. Pricing
          4. Promotion
          5. Distribution
          6. Risk Management
        8. Strategic Importance of Patrimonio Hoy to CEMEX
          1. Sustainable Growth Strategy and Innovation
        9. Challenges
        10. Key Lessons from Patrimonio Hoy to CEMEX
        11. Leveraging This Learning Through Contrumex
          1. Evolution of the Business Idea
          2. The Business Model
          3. Construmex USA
          4. Dolex USA
          5. Construmex Mexico
          6. Construmex Distributors in Mexico
          7. International Growth
        12. Endnotes
    2. II. Known Problems and Known Solutions: What Is the Missing Link?
      1. The Annapurna Salt Story: Public Health and Private Enterprise
        1. The Public Health Crisis: Iodine and IDD
          1. Iodine Deficiency
          2. Excess Iodine
          3. Iodine Supplementation
        2. Salt Market
          1. Diverse Markets
            1. Iodized Salt in India
          2. Iodine Characteristics and K15 Technology
          3. Iodine Loss in Indian Salt
        3. The Business of Salt In India
          1. Tata Salt
          2. Dandi Salt
          3. Other Competitors
        4. HLL Company Profile
          1. HLL's Entry Into Branded Staples
          2. The Evolution of Annapurna Salt
          3. Hindustan Lever Research Center
          4. HLRC and Annapurna Salt
        5. HLL Salt Target Market
        6. HLL Product Line and Pricing
        7. HLL Market Strategy
          1. Annapurna's Message
            1. Advertising
          2. Market Fragmentation
          3. Market Share
        8. HLL Manufacturing and Distribution
          1. HLL's Salt Production
          2. Gandhidam Factory
            1. Production Costs and Western India's Role in Decreasing Them
          3. Transport
            1. Innovations in Transport
          4. Retail Price Schemes
        9. Direct Distribution to Reach Rural India
          1. Project Shakti Background
          2. Shakti Business Goals
        10. Implementation Approach
          1. Site Selection
            1. Leveraging Government Relationships in Site Selection
          2. Gender Considerations
          3. Project Shakti Local Organization and Process
            1. Shakti Dealer
            2. Dealer Evaluation
            3. Shakti Pracharani
        11. Market Strategy
          1. Marketing Annapurna Through Project Shakti
          2. Stimulating Demand Through Linkages
          3. Stimulating Demand Through Education
        12. Shakti Sales and Margins
        13. Competition
        14. 2002 Results
        15. 2003 Performance
        16. Challenges
          1. Long-Term Vision
          2. Leveraging Know-How Globally
        17. Conclusions
        18. Endnotes
      2. Selling Health: Hindustan Lever Limited and the Soap Market
        1. Diarrheal Disease
          1. What Causes Diarrheal Disease?
          2. Handwashing as a Preventive Measure
        2. The Need for Behavior Change
          1. A Public Health Issue in the Private Realm
        3. Hindustan Lever Limited
          1. The Largest Soap Manufacturer in India
          2. HLL's Ability to Reach the Masses
          3. HLL's Formula Is Working
        4. Business Opportunity Through Health
          1. The Worldwide Soap Market
          2. Soap in India
          3. The Large Unmet Consumer Need
        5. Levering Health Messages Through the Global Public-Private Partnership for Handwashing with Soap
          1. Partners
          2. The Kerala Program
          3. HLL and the PPP
        6. Leveraging Health Messages for Lifebuoy Soap
          1. The History of Lifebuoy
          2. Brand Revitalization on a Health Platform
          3. Product, Cost, and Marketing Strategy
        7. New Communication Channels: Multicontact Programs and Swasthya Chetna
          1. Health Messages and the Rural Consumer
          2. Program Design: Low-Cost, Scalable, and Sustainable
          3. Creating Behavior Change
          4. Contact 1: School and Village Presentation
          5. Contact 2: Lifebuoy Village Health Day
          6. Contact 3: Diarrhea Management Workshop
          7. Contact 4: Launch of the Lifebuoy Health Club
          8. HLL and Lifebuoy Swasthya Chetna
        8. CONCLUSION
          1. What Does HLL Gain from Marketing Public Health Messages about Soap?
          2. Methods for Increasing Market Sales
            1. Scalability
          3. Impact on Behavior Change and Soap Sales
          4. Developing the Expertise to Sell Health
        9. Endnotes
    3. III. Known Problems and Unique Solutions
      1. Jaipur Foot: Challenging Convention
        1. The Nature and Scope of the Problem
          1. Global Amputees
          2. Developed World
          3. Developing World
          4. Treatment Costs
            1. Developed World
            2. Developing World
        2. History of Prosthetics
          1. Lower Limb Anatomy
          2. Gait Cycle
          3. Lower Limb Prosthesis: An Attempt to Simulate Natural Limb's Functions
        3. Development of the Jaipur Foot
          1. Step 1: Design Considerations
          2. Step 2: Overcoming Constraints
          3. Step 3: Deviation from Traditional Design
          4. Step 4: Materials Sourcing
          5. Step 5: Production Equipment
          6. Step 6: Labor
          7. Step 7: Fabrication
          8. Step 8: Fitting of the Jaipur Foot
          9. Competitive Benchmarking
          10. Community Outreach: Providing Access
            1. BMVSS
        4. Jaipur Foot: Filling a Social Need
          1. Jaipur Foot Operations
          2. Comparison with Ossur
          3. Scalability
            1. Camps
          4. New Locations
        5. Future of Jaipur Foot
          1. Jaipur Foot Technical Improvements
          2. Collaboration with Space Research Organization
        6. Endnotes
      2. The Aravind Eye Care System: Delivering the Most Precious Gift
        1. Organization of Aravind Eye Care
        2. Financial Self-Sustainability
        3. Recruitment and Training
        4. AEHs Workflow
          1. Outpatient Departments
          2. Surgical Wards
        5. Community Outreach Programs
          1. Eye Camps
          2. Community-Based Rehabilitation Project
          3. Eye Screening of School Children
          4. Refraction Camps
          5. Use of IT Kiosks for Teleadvice
        6. Other Units and Activities of the Aravind Eye Care System
          1. Aurolab
        7. LAICO
          1. Aravind Medical Research Foundation
          2. Aravind Center for Women, Children, and Community Health (ACWCCH)
          3. Rotary Aravind International Eye Bank
          4. Aravind Postgraduate Institute of Ophthalmology
        8. Aravind Eye Care System: Future Directions
        9. Endnotes
    4. IV. Known Problems and Systemwide Reform
      1. ICICI Bank: Innovations in Finance
        1. The Nature of the Market in India
        2. History of Microfinance
        3. ICICI Bank and the BOP
        4. Direct Access, Bank-Led Model
        5. History of the Bank of Madura: The Rural Development Initiative
        6. Merger with Bank of Madura
        7. Scaling SHGs
        8. Learning to be Financially Smart
        9. Indirect Channels Partnership Model
        10. Microfinance Institutions
          1. Rural Kiosks
        11. Future Initiatives
        12. Conclusion
        13. Endnotes
      2. The ITC e-Choupal Story: Profitable Rural Transformation
        1. The Paradox of Indian Agriculture
          1. Economically Vital Yet Archaically Regulated
          2. High Production Yet Impoverished Producers
          3. Proportion of GDP to Employment
          4. Solution Essentials
        2. The Oilseed Complex[2]
          1. Marketing Prior to the e-Choupal
            1. The Mandi
            2. The Commission Agents
          2. Mandi Operations
            1. Inbound Logistics
            2. Sources of Inefficiency
            3. Display and Inspection
            4. Sources of Inefficiency
            5. Auction
            6. Sources of Inefficiency
            7. Bagging and Weighing
            8. Sources of Inefficiency
            9. Payment
            10. Sources of Inefficiencies
            11. Outbound Logistics
            12. Sources of Inefficiency
            13. Other Sources of Market Inefficiency and Their Impact
        3. ITC: IBD and the Soya Business
          1. The Tactical Imperative
          2. The Strategic Imperative
          3. The Social Imperative
        4. e-Choupal: Vision and Planning
          1. Re-engineer as Opposed to Reconstruct
          2. Address the Whole, Not Just a Part
          3. An IT-Driven Solution
          4. Clarity of Payback Streams
          5. Modularity of Investments in Size and Scope
          6. Risk Assessment and Mitigation
          7. Managing Bureaucracy
          8. e-Choupal Operations: Participants and Processes
            1. The e-Choupal
            2. The Sanchalak
              1. Maintaining Village Trust
              2. Picking and Training Sanchalaks
              3. Performance and Motivation
              4. Sustaining Commercial Volume
            3. The Samyojak
              1. Why Did the Samyojaks Help?
            4. The Transformation of the Traditional System: e-Choupal Processes
              1. Price Setting and Dissemination
              2. Inbound Logistics
              3. Inspection and Grading
              4. Weighing and Payment
              5. Logistics and Storage
              6. Farmer Gains
              7. ITC Gains
              8. e-Choupal Procurement Savings in Numerical Terms
        5. The Social Impact of e-Choupals
          1. Improved Agriculture
            1. Bridging the Information Gap
            2. Cheaper and Smarter Agricultural Inputs
            3. Farmer as a Source of Innovation
          2. Better Lifestyles
            1. Orchestrating the Network
            2. Sources of Efficiency
            3. Status of Operation
          3. Brighter Futures
            1. Knowledge of the World
            2. Access to Credit
            3. Insurance and Risk Management Services
        6. Detractors, Risks, and Limitations
          1. Detractors
          2. Risks and Limitations
            1. Subversion of Samyojaks Toward Competitive Entry
            2. Farmers and Customer Service
            3. Social Impact Limited by Stratification
          3. e-Choupals: Future Generations
        7. Endnotes
    5. V. Scaling Innovations
      1. The Voxiva Story
        1. The Founders of Voxiva
          1. Voxiva: A Social Venture
        2. Voxiva in Peru
          1. Peru's Ministry of Health
            1. Problem Definition
          2. How It Works
        3. The Alerta Pilot
          1. Cost–Benefit
        4. Alerta Deployed for the Peruvian Navy
        5. Beyond Health Care in Peru
        6. Application in Developed Countries: From Peru to the Developed World
        7. Voxiva's Lessons Learned
        8. Voxiva's Global Rollout
          1. Iraq
          2. HIV/AIDS in Africa
          3. India
        9. Voxiva's Challenges
        10. Conclusion
        11. Endnotes
  7. Biographies
  8. About the CD
    1. Technical Information
    2. Limited Warranty
    3. Technical Support