What is the Bottom of the Pyramid?
The Bottom/Base of the Pyramid – the BoP – refers to the economic pyramid in which we can divide the world’s wealth. At the top of this pyramid we find wealth and people with many opportunities to generate their own income. At the Bottom of the Pyramid there are 4 billion people living in poverty, having less than 2 dollars to spend a day.
In 1932 the expression ‘Bottom of the Pyramid’ was already used by Franklin D. Roosevelt, president of the United States at the time. However, since the publication of the article ‘The Fortune at the Bottom of the Pyramid’ by C.K. Prahalad and Stuart L. Hart, the expression became common use. The article describes the opportunities at BoP as soon as multinationals will consider these people as potential costumors or as entrepreneurial people, rather than victims of the prevailing poverty. When the term is used today, it generally refers to the ideas coming from this article.
A world of opportunities for Western companies
Despite the fact that people at the Bottom of the Pyramid do not have much money to spend, they can still be a valuable market for western companies. Research shows that people at the Bottom of the Pyramid spend money on a wide range of products, from soap to telecom, often coming at a high price: products are produced human- or environment unfriendly.
Entering these markets does ask for distinctive approach. Some basic principles are:
- Cooperate with perhaps unusual partners, such as local companies, NGOs and local governments;
- Involve the local community in order to really understand the situation and the needs of the poor;
- Improving the capacity of the local comunity, both on knowledge as financial.