Bottom of pyramid

1. BOOK REVIEW GROUP-3 BOTTOM OF PYRAMID

2. What is Bottom of Pyramid?..... In economics, the bottom of the pyramid is the largest, but poorest socio-economic group It is also often referred to as the "Base of the Pyramid" or just the " BoP " Current usage refers to the” billions people living on less than $2 per day ” -As defined by Professors C.K. Prahalad and Stuart L. Hart (in 1998 )

3. ERADICATING POVERTY THROUGH PROFITS :   The Bottom of the Pyramid (BOP) has emerged as a dominant concept in business, -Propelled by C.K Prahalad’s (2005 ) Has the potential to impact the world’s billions of poor people – by the managerial practices of multinational corporations . Important to analyze how large corporations can serve low-income customers profitably.

4. The Economic Pyramid <$1500 4000 $1500 $1500-$2000 >$20000 75-100 1500-1750

5. An insight into Base of the pyramid An insight into Base of the pyramid Bottom of the pyramid consumers are ready to accept the new products. But the question arises? How the marketers go about to meet the need profitably? Therefore here the challenge for the marketers lies in not providing cheap products but also in providing value for money products. The solution to the above stand lies in the 4 ‘I’s: Introduction, Infrastructure , Innovation, and Improvement  

6. THE POWER OF DOMINANT LOGIC :  Exploitation of poor people by Private sector. Rural population was primarily poor & urban population was relatively rich. Private sector businesses , especially MNCs logic about BOP.

7. ECONOMIC DEVELOPMENT AND SOCIAL TRANSFORMATION APPROACH

8. THE NATURE OF BOP MARKET There is money at BOP. Access to BOP markets . The BOP markets are Brand – Conscious. The BOP market is connected BOP consumers accept advanced technology readily  

9. MARKET DEVELOPMENT IMPERATIVE Create the capacity to consume The need for new goods and services Dignity and choice Trust is a Prerequisite  

10. BENEFITS TO THE PRIVATE SECTOR Huge market potential with 4 to 5 billion underserved people and economy of more than $ 13 trillion PPP The needs of the poor are many . Thus , the case for growth opportunity in the BOP markets is easy to make.

11. PRODUCTS AND SERVICES FOR THE BOP A philosophy for developing products & services for the BOP - small unit packages - low margin per unit - high volume - high return on capital employed  

12. Principles of BOP :  Price Performance Innovation : Hybrids Scale of Operations Sustainable Development: Eco-Friendly Identifying Functionality Process Innovation

13. Contd …. Deskilling of work Education of Customers Designing for Hostile Infrastructure Interfaces Distribution: Accessing the Customer BOP Markets essentially allows us to challenge the conventional wisdom in delivery of Product

14. BOP : A Global Opportunity BOP : A Global Opportunity Some BOP markets are very large and attractive Local innovations can be leveraged across other BOP markets Some innovations from the BOP markets will find applications in developed markets Lessons from the BOP markets can influence the management practices of global firms

15. ENGAGING THE BOP Developing a unique approach to BOP markets and learning from the experience Fine-tuning the traditional approach Learning from the BOP Fine tuning the traditional approach

16. Two innovative models to serve the BOP :  The Direct Access, Bank-led Model - Catalyzed by the merger with Bank of Madura. - Utilizes its power to promote and grow SHGs. - Indirect Channels Partnership Model - Looks to leverage current infrastructure and relationships of MFIs and NGOs .

17. ICICI Bank: Innovations in Finance “I think we have to recognize that a whole lot of potential is going to come out of the bottom of the pyramid” _ By Chanda Kochhar , Executive Director Retail Banking, ICICI Bank  

18. Three-tier System

19. SHGs :   Self Help Groups -15 to 20 members - from same village - married - between the ages of 20 and 50 - existing below poverty line

20. How it Works? Each member contributes Rs 50 to a joint savings account Leader responsible for collection and opening up of savings account in the bank. The savings are converted into fund. Used for emergency lending to an individual within the group. Eligible for loan after one year of formation. 

21. Results   Number of SHGs increased from 1500 in 2001 to 8000 in 2003. ICICI has utilized its financial expertise to fashion a model that is economically viable. ICICI has positioned itself as socially conscious corporate citizen. Helps ICICI’s bargaining power with the RBI and other government institutions.

22. Jaipur Rugs

23. Introduction Founder : Mr. Nand Kishore Chaudhary Founded in 1978 Manufactures a range of handmade carpets Winner of the Ernst & Young 2010 Indian Entrepreneur of the Year Award. Eradicating Poverty Through Profits. Labour intensive industry.

24. Involves 60 processes for each final product. All processes accomplished by grassroots level people developed and trained by jaipur rugs foundation. Working for upliftment of poverty struck people in the most remote areas. By not compromising with the quality of the product they offer.

25. By far has helped 52,000 jobless people become artisans. Target : 1,00,000 till 2016 Annual turnover ₹ 82 crore . Every artisan is an entrepreneur. Provides direct employment opportunity for needy villagers earlier dependent on shrewd middlemen.

26. Give more and better facilities to weavers which resulted in better outputs and loyal employees. Happier and satisfied the workers, more the productivity. Understand your employees as well as your customers to grow business.

27. “Finding yourself through using yourself, the more I use myself the more I find myself.”

28. Challenges Maintaining large workforce. Providing International level working conditions. Evaluating global market scenario.

29. Case: HLL

30. Conclusion Add any video