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Marketing challenges in serving the bottom of the pyramid
Edited by Dennis Pitta
An executive summary for managers and executive readers can be found at the end of this issue.
Introduction
The bottom of the pyramid (BOP) approach to earning corporate profits has gained considerable attention in the marketing literature. It has awakened managers to the potential of serving an unserved market and alleviating the level of global poverty while still earning a profit. However, the BOP proposition, while clear, appealing, and enlightening has not been accepted in an unqualified manner. One branch of the BOP literature puts forth the elements of the BOP proposition and supports its findings with numerous case studies ([16] Prahalad, 2004). Those studies portray the poor as motivated by similar desires as the rich. They want quality products and any company that can supply those products at the right price will gain their business. Some of the case studies show the strategies for reducing the effective price of products through packaging and developing lower cost sizes. Prahalad and others describe the untapped potential of the BOP, and list strategies that companies may use to tap that potential.
An opposing branch of the literature ([11] Karnani, 2007a; [13] Martinez and Carbonell, 2007) analyzes the nature of the BOP market, the applicability of the case studies that underpin the concept, and refutes its basic premises. Instead of a market of untapped potential, this literature stream sees a financial desert that BOP principles may harm more than help. The BOP may be a less a source of significant profits than a source of serious losses. Karnani's analysis posits that the poor may want the same products as the rich do but by virtue of being poor, they cannot afford them. The poor spend most of their income on food, clothing, and fuel. For the poor, the mathematics are clear: buying a branded product reduces the funds they must devote to survival. In contrast, Karnani suggests that raising income will alleviate their poverty, provide cost effective products to other consumers, and allow the formerly poor to consume more. Raising their incomes may require that they become producers with stable jobs and wages.
Both viewpoints concentrate on the poor but draw different conclusions about how...