Bottom Of The Pyramid

Publication Date :

16 Jun, 2025

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Table of Contents

What Is The Bottom Of The Pyramid (BOP)?

Bottom of the pyramid (BOP) refers to a market dependent economic development model promising alleviation of worldwide poverty along with business growth. It helps 4 billion lower-income consumers by meeting their needs, increasing their incomes and productivity to assimilate them into the formal economy using meticulous planning and logistics.

It includes the two-thirds poor global population residing in Asian and African continents like Niger, Indonesia and China largely. People in these areas have limited skills and earn a daily income of up to 1.90 dollars. Nevertheless, they exhibit tremendous purchasing power of $7 trillion household income.

Key Takeaways

The bottom of the pyramid means an economic development strategy that relies on the market aiming to reduce global poverty while promoting business growth.
It benefits most global lower-income customers by raising their wages, boosting productivity, providing for their necessities assisting their integration into the formal sector through careful planning and logistics.
It has characteristics like addressing the unique needs of lower-income populations, facilitating daily needs fulfillment, and overcoming the poverty penalty.
It offers an untapped market having large purchasing power amounting to about $7 trillion in household income but poses hurdles in reaching out to informal and scattered BOP markets.

The Bottom Of The Pyramid In Marketing Explained.

The Bottom of the pyramid in marketing can be stated as catering to the needs of the poorest global population having limited reach to services, infrastructure and resources. In turn, the firms engaged in such markets expect to earn good profits and loyalty from consumers because major companies neglect them, leaving a breeding ground for innovation, cost savings and growth in business, operations and revenues. Bottom of the Pyramid by C K Prahalad has now become an important part of the Bottom of the Pyramid economics.

It comprises of strategy to build products and services meeting the unique necessities of the BOP market segment. They do it by using technology and fresh distribution channels. They also adapt the way they do business to fulfill the subsistence livelihood levels, leaving out needs and poverty penalties. The Bottom of the pyramid strategy is ingrained with the 4As of access, availability, awareness and affordability, along with the 5Ds comprising dignity, distribution, development, design and demand.

BOP market targeting requires essential elements like understanding the market in a local context involving social and cultural factors and Abel to generate value for BOP customers. Besides, challenges like access to resources, awareness and limited infrastructure have to be resolved. A successful BOP marketing campaign lies on previously stated factors that result in a large social impact and social impacts, as evident from Google's Android platform.

It has become a cornerstone of companies in the financial sector to expand their profitability reach through innovation, cost savings and growth. One of the remarkable impacts of BOP has been its poverty alleviation in the poorest of people, as advocated by world organizations.

Characteristics

The BOP has the following characteristics as shown below:

It helps meet the unique needs of lower-income populations often neglected by bigger companies.
It facilitates poor people to fulfill their daily needs through fair-priced products and goods.
It helps overcome the poverty penalty, where the poor pay more price for services and goods as compared to the middle or upper class due to lack of banking exposure and being subjected to high interest rates.
These population classes have sensitivity towards optimum utility but at affordable prices, going for alternative low-cost services or products.
The economy class always wants to pay more for quality and value-containing products or services like healthcare and daily soaps.
These people have more awareness about brands having greater performance and quality.
They need fresh distribution channels and associations with government agencies and NGOs to access markets.

Examples

Let us use a few examples to understand the topic.

Example #1

An online example published on 15 September 2023 discusses the event of e4m pith top 50 brands centered on the BOP sector. Such a category recognizes top brands that excel in distribution, technology, performance and quality to captivate a variety of segments of the audience. On 18 October, the pitch top 50 brands was unveiled in Gurugram, honoring top brands throughout the ten categories.

The BOP category comprises innovative brands mixing marketing elements that focus on tier 2 & tier 3 cities. Two big companies, namely Colgate and Bajaj Auto, including four others, had won in the BOP category in 2022. The current edition of the event has D Shivakumar as chairman of its advisory board consisting of important leaders of Wavemaker, Honasa, and Torrent Pharmaceuticals. All these helped in the evaluation of entries of companies concerning results, consumer connect, and innovation.

Example #2

Let us assume a firm named Ecolighter operates in a nearby Gomar village, Old York City, in Povertia country. Ecolighter sells low-cost solar lanterns created for the BOP market. Gomar village has 70% population without electricity using kerosene lamps at $20 per liter per month in their homes, so they are in need of an affordable lighting system. Hence, Ecolighter decides to target poor farmers earning $2 per day with its $5 solar lamps.

The Ecolighter solar lamps need only sunlight to light up after one time of investment of $5. So, poor farmers started buying them to save $240 yearly instead of kerosene lamps. As a result, 15000 units of Ecolighter solar lamps were sold in the village, reducing monthly lighting costs and increasing study time for kids. Moreover, Ecolighter also generated profits from the BOP-based solar lantern.

Advantages And Disadvantages

Let us use the table to understand the pros and cons of the BOP:

Advantages	Disadvantages
Offers an untapped market having large purchasing power amounting to about $7 trillion in household income.	Businesses have to adapt their business models plus new strategies to cater to the needs of BOP consumers.
Helps improve the quality of life of BOP consumers by providing services and products.	Poses hurdles in reaching out to informal and scattered BOP markets.
Has the potential to give substantial profits to businesses by targeting a market of BOP.	The poverty penalty has been levied on BOP consumers as access to banking is difficult, and they face higher rates of interest.
It has led to the shrinkage of the number of people constituting the base of the pyramid owing to the rise in purchasing power.	Distribution channels and newer technologies need a lot of investing to generate value related to BOP consumers.
Has transformed the lives of BOP communities because of affordable financial services and mobile phones.	Luxury products being sold are centered on the ethical basis of lower-income consumers.
Brands successfully build relationships plus loyalty with consumers through affordable prices and quality.	Lack of purchasing power and poor infrastructure have put limitations in some BOP markets.
Has the potential to uplift the poor from poverty by giving ample economic growth opportunities.	Mandates companies to have a long-term dedication to serving the BOP market to extract maximum potential.