Anand Kumar Jaiswal

The Fortune at the Bottom or
the Middle of the Pyramid?

The Bottom of the Pyramid (国际收支平衡表) has emerged as a dominant concept in busi-
内斯, propelled by C. K. Prahalad’s The Fortune at the Bottom of the Pyramid.1 Given
the enormous attention the concept has attracted, it has the potential to impact the
world’s billions of poor people—as well as the managerial practices of multina-
tional corporations. This double potential makes it important to analyze how large
corporations can serve low-income customers profitably.

Prahalad and Stuart Hart argued in 2002 that multinational corporations
(MNCs) have only targeted customers at the upper end of the economic pyramid
and have ignored BOP customers, assuming that they are inaccessible and unprof-
itable. Prahalad and Hart argued further that MNCs should view BOP markets as
an unexploited opportunity and be proactive in fulfilling the needs and wants of
low-income consumers. To tap the vast markets at the BOP, MNCs must specially
design and develop quality products and services, or they must select some to alter
and make available at lower cost. Serving BOP customers is a profitable opportu-
nity for corporations. It is also a social imperative, given that two-thirds of the
human population (about four billion people) are at the bottom of the economic
pyramid. By addressing the BOP, they say, MNCs can curtail poverty and improve
the living conditions of the world’s poorest.

In these arguments, 然而, BOP proponents do not take a holistic perspec-
主动的. Several weaknesses in the BOP theory often go unacknowledged. Considering
the far-reaching implications of these proposals, the underlying premises demand
careful scrutiny. Several questions need to be answered: Is there really a “fortune”
at the bottom of the pyramid? 如果是这样, can MNCs tap it as easily as BOP proponents
建议? And—is there also a fortune for the bottom of the pyramid?

In answering these questions, I offer an alternative perspective on the BOP
概念: I believe that we must help the poor to become selective consumers. 那
是, we must avoid both undesirable inclusion and exclusion. Undesirable inclusion
means marketing products to the BOP that are not likely to enhance their well-
being or that they are likely to abuse. Exclusion means failing to offer them prod-
ucts or services that are likely to enhance their well-being. I also suggest a frame-

Anand Kumar Jaiswal is Visiting Assistant Professor of Marketing at the Indian
Institute of Management in Ahmedabad, 印度 (IIMA).

从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023

Anand Kumar Jaiswal

桌子 1. Population and Gross National Income Per Capita: Atlas Method and
Purchasing Power Parity in 2005.

* Under this method, the World Bank uses a conversion factor in order to mini-
mize the impact of exchange rate fluctuations in the cross-country comparison of
gross national income.

** The “international dollar” is the most commonly used purchasing power parity
exchange rate. It is defined as a hypothetical unit of currency that has the same
purchasing power that the U.S. dollar had in the U.S. 换句话说, one can pur-
chase an equal amount of goods and services with an international $ in a particu- lar country as with a U.S. $ 在美国.

来源: World Bank (2006).

work to assess when it is appropriate for large corporations to participate in BOP
市场, and I emphasize the need to strengthen poor people’s roles as producers,
rather than merely consumers.

THE FORTUNE AT THE BOTTOM OR
THE MIDDLE OF THE PYRAMID?

Before looking at the larger questions, it’s important to estimate the true size of the
BOP market. Prahalad and Hart refer to the four billion people in Tier 4 as the bot-
tom of the pyramid.2 But certainly income inequality is widespread across the
developing countries where the BOP population lives. Many developing countries,
especially the least developed countries (LDCs), are characterized by extreme
贫困. Many factors make it unrealistic for the private sector to participate in
economic development in most LDCs. Among them are inefficient regulation,
widespread corruption, lack of basic infrastructure, extreme poverty, 和
underdeveloped financial and banking structure. In these countries, people’s most
basic needs must be fulfilled before anyone can look at them as profitable BOP
市场. The success stories of MNCs serving poor customers cited in the BOP lit-
erature are predominantly in fast-growing economies such as India, where the

创新 / winter 2008

从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023

The Fortune at the Bottom or the Middle of the Pyramid?

桌子 2: Average Annual Income: Comparing Selected Least Developed
Economies and Newly Industrialized Economies.

来源: World Bank (2006). 见表 1 for description of two methodologies.

GDP per capita remains low, as well as in countries like Brazil and Mexico with
higher per-capita income. 不出所料, BOP advocates fail to provide cases of
MNCs serving the BOP population in LDCs.

World Bank data can be used to estimate the true size of the BOP market. 在
2005, 2.4 billion people lived in low-income countries (桌子 1), 和 751.8 百万
of those lived in LDCs where the per capita gross national incomes averaged U.S.
$378.2. Realistically, these very low income earners at the extreme bottom of the pyramid are not likely to be profitable customers for MNCs. (见表 2 for com- parative figures for selected countries among the LDCs and Newly Industrializing Economies.) 在 2001, 1.1 billion people were living on less than $1 a day, 其中
World Bank considers to indicate extreme poverty. If we enlarge the base, a total of
2.7 billion people live on less than $2 a day.3 The 1.1 billion people living in acute poverty, and struggling to meet even their basic needs, cannot possibly be viewed as a profitable market for large corporations. Whatever fortune does exist is only at the lower middle and middle of the pyramid, definitely not at the bottom. When Prahalad and Hart talk about “doing business with the world’s 4 billion poorest,”4 they count the entire population of both developing countries and least-developed countries. Depending on the products and services and economic conditions pre- vailing in poor countries, a significant portion of this population will be totally out of the direct reach of MNCs. MNC involvement in LDCs can be viable and fruit- ful only after these countries reach a certain threshold of economic development. 创新 / winter 2008 87 从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023 Anand Kumar Jaiswal Karnani5 provides an interesting contradiction to Prahalad’s estimate that the BOP market size is $13 trillion at purchasing power parity (PPP).6 He construes
that as a gross overestimation. Using the World Bank estimate of $1.25 a day as the average consumption of the 2.7 billion poor and total poor, he calculates the BOP market size as $1.2 兆. He also points out that MNCs would repatriate profits
at actual currency exchange rates, not at PPP. Taking this factor into account, 他
estimates the BOP market size as less than $0.3 兆, which is just 2.3 percent of Prahalad’s estimate of $13 兆.

HYPE AND SACHETS: THE BOP SUCCESS STORY

Whether or not Prahalad’s numbers are accurate, his accounts of corporations suc-
ceeding at the BOP sometimes strain credulity. They tend to inflate the success of
some companies, and give too much credit to a few innovations, such as the use of
small packages.

Perhaps the company most often cited in the BOP literature is Hindustan
Unilever Limited (HUL),7 the Indian subsidiary of Unilever, which Prahalad and
Hart refer to as “a pioneer among MNCs exploring markets at the bottom of the
pyramid.”8 They point to HUL as a successful example of how large corporations
can profitably tap BOP markets, for products including candy, salt, and detergent.
第一的, Prahalad and Hammond write about HUL’s success with low-priced
candy aimed at the BOP markets.9 They write that Max candy, a high-quality con-
fection prepared from sugar and real fruit, is sold at retail for about a penny a serv-
英. It is interesting to consider the real fate of this BOP initiative. 开始于 2001,
HUL offered Max in two sizes, 在 25 paise (.06 cents) 和 50 paise (1.2 cents); 之后,
because of low profit margins, the company raised the prices to 50 paise and Rs2
(5 cents). After three years, Max had garnered a market share of less than 5 百分.
在 2004, its sales were about Rs500 million ($12.5 百万); the entire organized confectionery industry was estimated at Rs12 billion ($300 百万).10 在 2005,
HUL pulled out of the confectionery business, as the company was not satisfied
with its results.11

Prahalad has also touted the case of Annapurna iodized salt as another BOP
success story for HUL.12 He writes that although several other salt brands were
iodized, HUL was the first to focus on iodine’s health benefits in its marketing.13
But national salt brands, including Annapurna, are beyond the reach of most poor
消费者. 实际上, most of the poor have been buying more affordable iodized salt
brands produced by local companies. National brands like Annapurna cost about
Rs7-8 (17.5-20 cents) per kilogram compared to the Rs2-3 (5-7.5 cents) for local
brands. 在 2002, national brands had a 45 percent share of the overall iodized
branded salt market while local brands held the remaining 55 percent share.14 Also,
Tata Salt, not Annapurna, is the leader in the national branded salt market in India.
No wonder then, that R. Gopala Krishnan, the former vice president of HUL, 说
that Prahalad’s “illustration of Annapurna salt as co-creating a market around the
needs of the poor” was “misplaced”; 实际上, he said, “Annapurna salt has not co-

创新 / winter 2008

从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023

The Fortune at the Bottom or the Middle of the Pyramid?

created anything.”15

Prahalad also discusses HUL’s Project Shakti, a sales and distribution initiative
it started in 2000 to increase product penetration into rural markets. 根据
the company, this initiative aims “to empower underprivileged rural women by
providing income-generating opportunities.” As part of this project, the company
selects a woman as a Shakti entrepreneur (Shakti Amma) from a self-help group
(SHG) set up by an NGO or government body. The company’s rural distributor
supplies the stocks to this woman, who in turn sells the products to consumers as
well as to retail outlets in the village.

In Hindi and many other Indian languages, “Shakti” means energy, strength or
empowerment. In the Hindu tradition, Shakti represents the goddess and embod-
ies the divine feminine power. The name symbolizes the role envisioned for the
women in the new venture. Project Shakti may have helped reduce poverty some-
什么, as it typically generates employment for one woman in a village of under
2,000 人们, but the net capital flow to rural areas is questionable.16

实际上, most of HUL’s BOP initiatives were not proactive and intentional, 但
were reactionary moves in response to competitive pressure. 例如, HUL
was forced to enter the low-cost detergent market. In the middle 1980s, Nirma
started selling a low-cost detergent to rural, and low-income urban, 顾客. 它是
price was one-fifth that of HUL’s competing brand. Nirma rapidly captured a mar-
ket that HUL had overlooked. It became the largest selling detergent brand and a
household name in India. After five years, HUL recognized that it was vulnerable,
and launched its own low-priced detergent brand, Wheel, as part of project STING
(Strategy to Inhibit Nirma Growth).17 As the very name of the project indicates,
HUL entered the BOP market with the objective of arresting Nirma’s growth.

Is Sachet Marketing Revolutionary?

BOP proponents mention sachets (small packets) as an innovation that has deliv-
ered many products to BOP customers. Prahalad suggests that if BOP customers
“don’t have lump sums to buy 20 ounces of shampoo at one time,” a company
should “do what Unilever did in India: Sell single servings of shampoo so the cost
structure matches what they can afford.”18 In fact, sachets were introduced in 1976,
not by HUL but by CavinKare, a local South India-based company, with its
“Velvet” brand.19

在 1999, CavinKare came up with another pricing innovation: it launched a 4-
ml sachet of Chik shampoo priced at 50 paise (1.25 cents). The launch was a great
成功: Chik’s market share jumped from 5.61 百分比在 1999 to over 23 百分
在 2003. It became the largest selling brand in rural markets. As Chik’s volume and
market share grew rapidly, HUL saw the potential of the market it had always
ignored—as well as its own vulnerability. It responded by launching 50-paise and
one-rupee sachets of its Lux, Clinic Plus, and Sunsilk brands. HUL had always
viewed rural consumers as a low-margin, inaccessible segment. It entered the BOP
market for shampoo primarily because of its potential vulnerability, not as part of

创新 / winter 2008

从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023

Anand Kumar Jaiswal

a planned strategy to serve poor customers. Considering all these cases, 然后, 这是
simply incorrect to give HUL the status of a pioneer in tapping BOP markets, 作为
the literature on BOP does.

Small Isn’t Always Beautiful

BOP proponents view sachets and other small packages as an ideal way to tap low-
income markets. Prahalad argues that because small packages are more affordable,
they encourage consumption and provide a choice for the poor.20 But the empiri-
cal evidence does not support his contention. An AC Nielsen study on rural mar-
kets in India revealed that, for several products, the best-selling package size is the
same across rural and urban areas.21 For products including biscuits, jam, washing
powder, sanitary napkins, and milk powder, the smallest available packages are not
the largest contributors to the total volumes of products sold in rural areas. 这
two exceptions are shampoo and razor blades; for these two products the smallest
packages do account for the largest share of the total volumes sold. In the cases of
jam and milk powder, larger packages (例如. 500 G) are better sellers, 虽然
smaller packages are available (例如, 12 g in jam and 3 g in milk powder).

If Prahalad and Hart are correct in their argument that the poor “look for sin-
gle-serve packaging,”22 then we would expect small-size packages to be the most
popular for most products in rural markets, not just for shampoo and razor blades.
The smaller packages of shampoo and razor blades also perform better in urban
markets as well as rural ones. For shampoo this is probably true because shampoo
sachets offer better value than larger packages. With sachets, consumers pay lower
prices per unit volume. 例如, Sunsilk Black shampoo in sachets costs
大约 25 paise (.6 cents) per ml. 另一方面, shampoo in a bottle
costs approximately 5 paise (1.25 cents) per ml (a 200-ml bottle costs about Rs99,
或者 $2.50). This is true for almost all the major shampoo brands in India.23 The arti- ficial price differential actually contributes greatly to the popularity of shampoo sachets. Another study in India, by LG Healthcare, questions whether sachets are valuable for marketers: although they have helped increase penetration, they have also led to a decrease in overall consumption.24 For most products, the logic of serving the poor by simply offering smaller packages may not be as workable as Prahalad argues. To make small packs more affordable, companies must keep their unit cost lower compared to larger packs. This does not make economic sense: it is by selling larger packages that companies can reduce their processing and transaction costs, not the other way around. Companies usually reward consumers who buy larger, or economy-size packages, through low-unit pricing, because of their associated cost savings. Low-price shampoo sachets are an atypical case or an unusual distortion of the market. 实际上, companies are trying to persuade consumers to move up from sachets to bot- tles; though sales volume has risen because of sachets, the profits and revenues have dropped.25 90 创新 / winter 2008 从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023 The Fortune at the Bottom or the Middle of the Pyramid? LARGER MNC FAILURES WITH THE BOP In addition to this fairly spotty evidence of financial success, MNCs have not been wildly successful in other aspects of their attempts to enter BOP markets. In some cases they have actively generated trouble; in other cases their apparent success is due to other factors, or they simply are not the remarkable innovations Prahalad claims them to be. MNCs Create Problems First, MNCs may actually create serious problems—contrary to the impression one gets from the BOP literature. Prahalad and Hart state: “For corporations that have distribution and brand presence throughout the developing world, such as Coca-Cola Company, the bottom of the pyramid offers a vast untapped market for such products as water and nutritionals.”26 However, this contention is far from reality, and companies can do more harm than good. Coca-Cola set up a plant to bottle water in Palachimada, a village in Kerala, a state in southern India. After the plant started operating, the villagers alleged that the groundwater was rapidly being depleted in surrounding areas; they started protesting to protect their well water. The company was also accused of distribut- ing waste sludge containing unacceptably high levels of cadmium to villagers as free fertilizer. In July 2003, the BBC reported that tests conducted in the UK, at the University of Exeter, had shown that the sludge contained dangerous quantities of heavy metals such as cadmium and lead, which had already contaminated the food chain and the groundwater. 更远, sludge simply cannot be called fertilizer. It was also said that the company failed to distribute drinking water to the local popula- tion satisfactorily.27 In August 2005, the Kerala State Pollution Control Board (KSPCB) ordered the plant to stop operating, as it did not have the required facil- ities to treat its waste. KSPCB observed that the cadmium presence in the sludge was 400 到 600 times above the permissible limit and that the plant was contami- nating drinking water in the village.28 This is only one example of the harm that can occur when people in the BOP are seen only as consumers, as potential sources of profits, and not as active individuals participating in their communities. BOP Enablers That Mask Weaknesses Moreover, when large organizations succeed in working with the BOP, they often cannot take all the credit for their success. Several factors, often invisible, help organizations to serve BOP markets on a sustainable and profitable basis. 这些因素, or “BOP enablers,” can come in various forms. 例如, other organi- zations may provide support and access to low-cost or free advertising and com- 通讯, and workers may be available at wages below the market rate.29 Prahalad cites Aravind Eye Hospital (AEH) as an organization serving poor patients among the BOP population in India. Several facilitating factors helped AEH make its business model sustainable. 第一的, AEH draws its patients to the hos- pitals from eye camps, which are organized by local business units, wealthy indi- 创新 / winter 2008 91 从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023 Anand Kumar Jaiswal viduals, or social service organizations such as the Lions Club, Rotary Club, and Vivekananada Kendra. These organizations bear the publicity costs and other costs incurred in organizing the eye camps, such as patient transportation, 食物, and aphakic glasses. These organizations also pay for expenses related to transportation and meals for the patients selected for surgery. 此外, AEH pays only for the cost of surgery and medicine.30 AEH was supported by the SEVA Foundation, Sight Savers International, Canadian International Development Agency, and other organizations in setting up Aurolab, which manufactures intra-ocular lenses (IOL), sutures, and other products used in eye surgery.31 Through Aurolab, AEH gets supplies of IOL lenses and other prod- ucts at a substantial discount. 此外, it is somewhat surprising to find AEH being discussed as a BOP success story, because the BOP approach calls on MNCs and the private sector to participate in low-income markets. As not-for-profit organizations, these two organizations are in a different category, Another facilitating factor for many organizations serving the poor is a body of employees dedicated to a cause and ready to work for below-market pay. 例如, doctors and hospital staff at AEH are extremely dedicated to the cause, hard working, and productive—and they work for far less than they would get in most private hospitals in India. 相似地, Amul, described later on, relies on employees who are dedicated to the cause of milk producers. Amul’s wage costs are less than 1 percent of total sales volume, while its private sector competitors have a wage cost of about 6 percent of sales.32 Several other factors enable organizations to serve BOP customers, including government subsidies, reduced taxes, and access to technological know-how devel- oped at government-funded laboratories at low or no cost. 例如, the mas- sive campaign to encourage people to use iodized salt was initiated by government agencies, with support from NGOs and other social institutions. This in turn helped HUL to sell its Annapurna iodized salt in India. Old Wine in New Bottles As Prahalad articulates how the private sector can exploit profitable opportunities by tapping BOP markets, he gives the impression that this is a revolutionary idea. But companies have been selling to the BOP in one form or another for several decades. 相似地, as he describes how microfinance is useful for tapping the BOP market, it seems to be a new model for serving the poor. But microfinance has long been recognized as an efficient way to eradicate poverty. The Grameen Bank, Muhammad Yunus’s landmark innovation, attracted worldwide attention many years before the BOP concept came to light. Less famous but larger is Bank Rakyat Indonesia, which has the world’s largest sustainable micro-banking system and has held a dominant position in commercial microfinance in Indonesia for more than 20 years.33 Furthermore, organizations such as Amul, the State Bank of India, and Nirma have long realized the importance of serving BOP customers. The State Bank of India (SBI), a public sector bank, has been providing banking services for 92 创新 / winter 2008 从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023 The Fortune at the Bottom or the Middle of the Pyramid? two centuries, and has more than 8,000 branches all over the country. It has been serving rural poor customers by providing bank loans for agriculture and other purposes and offering personal banking products. The sheer size of its network of branches helped it reach out to rural customers. In addition to SBI, other nation- al banks and rural cooperative banks have been serving rural and BOP customers, with services designed specifically for them. At some banks, a villager can open an account with as little as Rs500 ($12.50), whereas MNC banks may require a mini-
mum balance of Rs5000 ($125) 或者更多, well beyond the capacity of most BOP customers. Many other organizations such as the National Bank for Agriculture and Rural Development, other nationalized banks, and Nirma have been serving BOP cus- tomers for decades. These facts make it difficult to accept Prahalad’s contention that few initiatives have focused on developing BOP markets. Closing the Gaps in the BOP Model: Including and Excluding the Poor By 2020, Prahalad asserts, poverty can be eradicated through BOP initiatives.34 To eliminate poverty in just 15 years sounds like wishful thinking. Nor is it clear how the BOP initiatives described above—selling products like candy, shampoo, or detergent—will magically eradicate poverty. Prahalad has not outlined the mech- anism that will help eradicate poverty if the poor start buying products from big companies using the little money they have.35 This is the key issue: BOP consumers really cannot buy more than they currently do because they have so little dispos- able income. One interesting approach comes from Karnani, who argues that if the objec- tive is to reduce poverty and increase the income level of the poor, we should view them as producers, not as consumers.36 But to truly tackle their problems, we must consider how they function as consumers. 那是, we need to facilitate production by the poor, and also support them in selective consumption. Selective consump- tion means choosing to enable or restrict consumption, based on the characteris- tics of the goods to be consumed and the effect they will have on the well-being of consumers. To understand the dynamics of promoting and curtailing consump- tion by the poor, it is useful to view it from the perspective of which target markets a company chooses to include and exclude. When marketers make such choices, they can have significant effects for the individuals involved.37 Developing the poor as producers is also important. Inclusion Decisions Some marketing choices encourage the poor to consume products that have neg- ative side effects. Thus the poor are included in the market, but in an undesirable way. An example of such inclusion is marketing products like drugs and tobacco to vulnerable customers who are likely to abuse them. If companies start seeing BOP consumers as a potentially profitable market, those customers become more vul- nerable to unethical inclusion. 创新 / winter 2008 93 从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023 Anand Kumar Jaiswal It is worth considering the complex ways that the marketing activities of large corporations can affect the quality of life for the BOP population. Disparities in income and differences in lifestyles can make the poor and underprivileged feel even more deprived by comparison. When companies intensively advertise and promote their products, BOP customers may aspire to buy products well beyond their basic needs, misplacing their priorities as they allocate their scarce resources.38 That is, they may spend their meager funds on fashionable products, or on the latest appliances or products that do not enhance their well-being; then they have less to spend on education, nutrition, and health care. Influenced by an attractive advertising campaign, a rural woman may be induced to buy skin light- ening cream or hair colorant instead of using that money to buy essential items such as vegetables or health care products. The problem with the consumer-focused BOP approach is that it does not dif- ferentiate between priority and non-priority areas. Prahalad and Hammond even argue that BOP customers are a lucrative market for “luxury” goods.39 We should not assume, they say, “that the poor are too concerned with fulfilling their basic needs to ‘waste’ money on non-essential goods.” However, marketing non-essential and luxury goods to BOP consumers is their undesirable inclusion by companies. If they use too much, or inappropriate, advertising and other forms of sales pro- motion, especially to the poor, that can lead the poor to allocate their scarce finan- cial resources to imitative consumption. The eChoupal case is one example of undesirable inclusion of the poor as a target market. 实际上, the eChoupal initiative of ITC, an Indian private sector com- 公司, has been prominently discussed in the BOP literature as a good example of a large company serving rural customers. The eChoupals aim to help farmers by providing them real time information about price and market demand of farm produce and also by reducing the market intermediaries. As a model, eChoupal can provide certain benefits to farmers, such as better prices for their farm pro- duce, but ITC is now selling its cigarettes to farmers at Choupal Saagar (rural malls), which were opened as extensions of eChoupal. Since conventional distribu- tion channels are severely limited in their ability to penetrate rural markets, eChoupal is serving as a new distribution channel, increasing the reach of ITC’s tobacco products in rural areas. Research has shown that people who are poor, less educated, and underprivi- leged consume significantly more tobacco.40 If companies aggressively market their cigarettes, they exacerbate the existing tendency of the poor to smoke. The eChoupal initiative should be seen in the overall context of ITC’s attempt to refur- bish its image, reducing its business risk by diversifying into other products and using eChoupals as a distribution channel for its various products, including ciga- rettes. Some commentators have already expressed their concerns. 例如, 在 2004, an Economist writer said that the chairman of ITC was “trying to embellish ITC’s tobacco-stained image,” or perhaps it was looking “to diversify away from a product always at risk of government action” (such as Delhi’s recent ban on smok- ing in public places).41 94 创新 / winter 2008 从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023 The Fortune at the Bottom or the Middle of the Pyramid? Exclusion Decisions On the other hand, the poor can be wrongfully excluded from the market if com- panies curtail, or fail to enable, their consumption of products that enhance their well-being. One example of an exclusion decision is a company not offering prod- ucts such as medicines because it assumes the customer cannot pay the specified price. Karnani argues that seeing the poor as producers, not as consumers, can lead to their being excluded in undesirable ways.42 I argue that the poor also need to be seen as consumers for two other reasons. 第一的, they can save money if companies provide products at lower cost and offer them greater value. 第二, the poor obvi- ously need to be consumers of welfare-oriented goods and services such as fertil- izers, pesticides, cattle feed, and other agricultural inputs, as well as insurance and micro-finance. Agricultural inputs directly boost farm income. Consumption of welfare goods also helps raise income. 例如, health insurance reduces the risk and cost of medical treatment and helps reduce the productivity loss that results from prolonged ill health or untimely death because they cannot pay for health care. It also adds to the income of the poor, even if they spend their money on health insurance. 因此, consumption of welfare goods can improve the quality of life of the poor and raise their productivity. Exclusion actions assume more significance because of the peculiar problem of counterfeiting, or look-alike brands, so prevalent in the BOP markets. They suc- ceed mainly because rural people are illiterate and have little consumer awareness. According to a study by AC Neilsen, 80 percent of shoppers who bought fake brands believed that they were buying genuine ones43—and fake brands are typi- cally of very low quality. 实际上, fake food and drug products can lead to severe health problems, or even death. From the perspective of consumers’ welfare, 然后, it is important to ensure that the products sold to the poor be safe and of decent quality, and they that offer decent value. Based on these issues of inclusion and exclusion, four criteria can help us to evaluate whether it is appropriate for an MNC to enter a particular BOP market. (1) Can the company’s products respond to basic needs such as health, nutrition, 教育, 住房, ETC。? (2) Is the company’s marketing communication educa- tional and informative or does it create and strengthen people’s aspirations to con- sume goods they do not need? (3) As the products are developed, does the compa- ny bear in mind the special needs of BOP consumers, or does it import products already developed for non-BOP markets? (4) Do the products enhance customers’ well-being? The Poor as Producers Apart from the criteria for selective consumption, the other way to evaluate the value of MNCs in the BOP market is the extent to which they engage the poor as producers. The key here is providing mechanisms to bring products to the market. Two good models are Amul and Shri Mahila Griha Udyog Lijjat Papad, which innovations / winter 2008 95 从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023 Anand Kumar Jaiswal enable thousands of milk producers and low-income women to engage in decen- tralized production. Thus they contribute immensely to income generation among the poor. Amul, started in 1946, is one of the best examples of an organization trans- forming the lives of rural people. In a partnership between professional managers and milk farmers, Amul daily collects 6.5 million liters of milk from about 2.6 米尔- lion farmers and converts it into value-added milk products. Gujarat Cooperative Milk Marketing Federation, which markets milk and milk products with Amul brand, is India’s largest food products marketing organization, and its affordable products fulfill the nutritional needs of millions of customers. Shri Mahila Griha Udyog Lijjat Papad is an organization manufacturing papad,44 as well as spices, wheat flour, and detergents. This initiative by women, mostly from the lower strata of society, began in Mumbai in 1959. It gradually expanded to 67 branches in different states all across India. Membership has grown from seven founding women to more than 40,000 女性. Following the concept of collective ownership, the organization is run by member sisters. 今天, 内存- bership is open to any woman who has faith in its basic philosophy. For its papad production, the organization has a completely decentralized model. Each morn- 英, at each branch, kneaded dough is distributed among the women. The women take the dough to their homes, and make papads by rolling and then drying them, and return the dried papads after one or two days. The organization’s total sales exceed Rs3 billion ($75 百万) with exports of more than Rs120 million ($3 米尔- 狮子). The organization has enabled women to earn economic independence and raise their families’ living standards, all through engagement with dignified labor.45 SOME FINAL THOUGHTS The BOP concept, as popularly stated and accepted, ignores many fundamental elements of poverty alleviation. Education is one such element. Empirical evidence shows clearly that education has a direct impact on economic growth, income gen- 进化, and improved quality of life. The East Asian countries (例如, 日本, 新加坡, 中国, and Korea) invest far more in basic education than do the South Asian countries (例如, 印度, 巴基斯坦, and Bangladesh), which have large BOP pop- ulations. This difference is cited as a key contributor to differences in their eco- nomic growth.46 According to a World Bank study on the rapid economic growth and education policies in East Asia: Better performance will depend on, 除其他事项外, investments in human capital—specifically education. Underinvestment in education results in severe losses in economic growth and development. Economic miracles do not happen out of the blue; they are based on education mir- acles. There are no shortcuts.47 To eliminate poverty requires free basic education and affordable technical educa- tion for the poor through public-private partnerships. On the consumption-pro- duction debate described above, education can help the poor in their role as con- 96 创新 / winter 2008 从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023 The Fortune at the Bottom or the Middle of the Pyramid? sumers by helping them make better choices and properly allocate their resources. Education can enhance their productivity and make them more efficient. It can provide the poor with marketable skills and thus increase their employment opportunities. Since the poor lack the income to finance a technical education, they need easily available educational loans as well as governmental interventions such as education subsidies. In addition to education and other support, we need to take a balanced and cautious approach toward the BOP. We do not know exactly how Prahalad’s pro- posed ideas will work. Will they always work? 如果不, when will they work and when not? Though Prahalad presented only success stories, we also know that BOP ini- tiatives have created serious problems. Examples like Coca-Cola’s alleged involve- ment in depleting the groundwater in Kerala show that MNCs’ engagement in BOP markets can also be problematic. To take a balanced approach, we must look at success stories as well as failures. The failures and resulting problems indicate that when MNCs participate in low-income markets, they must be cautious. We also need systematic research to understand the ways that BOP initiatives can actually help the poor to increase their earning power, and thus benefit them, directly or indirectly. 迄今为止, few researchers have examined Prahalad’s model for tapping low-income markets. Theories and assumptions about serving BOP mar- kets need to be tested. The limitations of Prahalad’s model should be clearly out- lined and general theories should be derived. Research on success stories and fail- ures will help us develop a framework for the private sector to engage in BOP mar- kets in less risky and more fruitful ways, creating win-win situations. Developing and testing propositions can be a first step towards this objective. Systematic research and debate can help us understand the problem well and close the gap in the existing BOP proposition. To conclude, 然后, Prahalad’s work on the fortune at the bottom of the pyra- mid has become a dominant idea for discussion among practicing managers, 阿卡- demicians, and policymakers. He argues that MNCs can do profitable business with the 4 billion customers at the bottom of the economic pyramid and that doing so will help lift the poor out of poverty. His perspective is promising and defies many conventional assumptions about business. He makes a key contribu- tion by drawing the attention of large corporations to the often ignored and for- gotten BOP population. 然而, considering the dangers and risks involved, all stakeholders should proceed carefully to avoid adding further woes to already mar- ginalized and vulnerable BOP customers. Managers working in MNCs also need to be circumspect in their BOP initiatives in order to minimize possible complica- tions and failures. Instead of simply being driven by a proposition that has attract- ed wide attention or has an emotional appeal, they should craft their BOP strate- gies carefully, keeping in mind promises as well as threats on the way. Then we can start to talk about not just the fortune at the bottom but also the fortune for the bottom of the pyramid. 创新 / winter 2008 97 从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023 Acknowledgements Anand Kumar Jaiswal The author is thankful to S. Saravanan, an academic associate at IIMA, for his help in preparing this article. He also thanks professors Abhishek Mishra, Ankur Sarin, and M. 右. Dixit of IIMA for many helpful comments on earlier versions of the manuscript. Endnotes 1. 普拉哈拉德 (2005). 2. Prahalad and Hart (2002, p. 2). 3. World Bank (2002). 4. Prahalad and Hart (2002, p. 2). 5. Karnani (2007). 6. Purchasing power parity (PPP) is used to equalize the purchasing power of different currencies in their respective countries for a given basket of goods. The PPP exchange rate takes into account the cost of living and makes required adjustments for it. 例如, one can exchange a U.S. dollar in a developing country like India and purchase more goods than by spending a dollar in the United States. 7. 在 2007, the company changed its name from Hindustan Lever Limited (HLL) to Hindustan Unilever Limited (HUL). In Prahalad’s work, HLL was used. 8. Prahalad and Hart (2002, p. 5). 9. Prahalad and Hammond (2002, p. 51). 10. Bhushan (2004). 11. “Hind Lever Unilever Recasts” (2005). 12. 普拉哈拉德 (2005). 13. 普拉哈拉德 (2005, p. 179). 14. Gopalakrishnan (2002). 15. Krishnan (2004). 16. Rajshekhar (2006). 17. Ahmad and Mead (2004). 18. “A New Path to Profit” (2005, p.25). 19. Ranganathan (2003). 20. 普拉哈拉德 (2005, p.16). 21. Dobhal and Munshi (2005). Although the BOP population consists of both rural and urban poor people, the incidence of poverty is much higher in rural areas in India. According to the National Council of Applied Economic Research, in rural areas 55 percent of households are in the “destitute and aspirant” category, with annual incomes under Rs 16,000 ($400) or between
Rs 16,001 和 22,000 ($400 到 $550), 分别; the corresponding figure for urban areas is
27 百分. Hence comparisons of rural versus. urban patterns also reveal broad patterns in the
BOP and non-BOP populations
22. Prahalad and Hart (2002, p. 10).
23. Krishnan (2001).
24. “Sachets Swell Market” (2004).
25. “Sachet Success Haunts Shampoo Cos.” (2003).
26. Prahalad and Hart (2002, p.12).
27. Rajeev (2005).
28. “PCB Orders Coca-Cola” (2005).
29. Dixit and Sharan (2007).
30. Rangan (1994).
31. 普拉哈拉德 (2005); Ibrahim, Bhandari, Sandhu, and Balakrishnan (2006).
32. “Can MNCs build brands?”(2003).
33. 罗宾逊 (2002, 2004).

创新 / winter 2008

从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023

The Fortune at the Bottom or the Middle of the Pyramid?

34. 普拉哈拉德 (2005, p.112).
35. Walsh, Kress, and Beyerchen (2005).
36. Karnani (2007).
37. Sirgy and Lee (1996); Smith and Quelch (1993).
38. Belk (1986); Sarin and Venugopal (2003).
39. Prahalad and Hammond (2002, p. 50).
40.. Rani, Bonu, Jha, 阮, and Jamjoum (2003).
41. “Cigarettes and virtual cathedrals,” The Economist (2004).
42. Karnani (2007).
43. Mohan (2003).
44. Papad is an Indian ethnic product made of flour and spices. It can be roasted or fried, 和

served as an accompaniment to a meal or as a snack or appetizer.

45. For more information on the organization, visit http://www.lijjat.com or see Ranganathan

(2003).

46. 托马斯 (2000).
47. Tilak (2002).

参考

Ahmad, 磷. S。, & Mead, J. (2004). Hindustan Lever Limited (HLL) and Project Sting. Charlotteville, VA:

Darden Business.

A new path to profit. (2005, 一月). Fast Company, p. 25.

Belk, 右. 瓦. (1986). Macro consumer behaviour issues in developing countries. In K. Erdogan, F. A.
Fuat, 中号. Karafakioglu, 中号. Karabulut & M.Oluc (编辑。), The role of marketing in development, glob-
阿尔, consumer and managerial issues: Proceedings of the International Conference on Marketing and
发展. Muncie, 在: Ball State University.

Bhushan, 右. (2004, 四月 22). HLL changes track in confectionery business. Times of India.

Can MNCs build brands? (2003, 六月 22). Business India.

Cigarettes and virtual cathedrals. (2004, 六月 3). The Economist.

Dobhal, S。, & Munshi, S. D. (2005, 一月 30). The new rural consumer. Business Today, PP. 73-76.

Dixit, 中号. R。, & Sharan, G. (2007). Leveraged innovation management: Key themes from the Journey of

Dewrain Harvest Systems ( IIM Ahmedabad working paper No.2007-01-04).

Gopalakrishnan, 右 (2004, 十月 20). Unshackling rural markets: For authentic engagement, 第一的.

The Hindu Business Line.

Hind Lever Unilever recasts its foods business. (2005, 二月 12). Business Standard.

Ibrahim, M。, Bhandari, A。, Sandhu, J. S。, & Balakrishnan, 磷. (2006). Making sight affordable: 第一部分.
Aurolab pioneers production of low-cost technology for cataract surgery. Innovations, 1(3), 25-41.

Karnani, A. (2007). Fortune at the bottom of the pyramid: A mirage—How the private sector can help
alleviate poverty (Working paper). Ann Arbor, MI: University of Michigan, Stephen M. Ross
School of Business.

Krishnan, A。(2001, 一月 21). Sachet revolution: Buy less, save more! The Hindu Business Line.

Mohan, D. (2003, 九月 16). The parallel economists. Wadhera Soaps, Detergents and Toiletries

审查.

PCB orders Coca-Cola to stop production.(2005, 八月 20). The Hindu.

普拉哈拉德, C. K. (2005). The fortune at the bottom of the pyramid: Eradicating poverty through profits.

新德里: Pearson Education and Wharton School.

普拉哈拉德, C. K., & Hammond, A. (2002, 九月). Serving the world’s poor, profitably. 哈佛

Business Review, PP. 4-11.

创新 / winter 2008

从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023

Anand Kumar Jaiswal

普拉哈拉德, C. K., & 哈特, S. L. (2002). The fortune at the bottom of the pyramid. 战略 + 商业,

26, 1-14.

Rajeev, D. (2005, 八月 23). Sludge dirt on Coca-Cola. Asia Times. Retrieved December 15, 2006,

from http://www.atimes.com/atimes/South_Asia/GH23Df02.html

Rajshekhar, 中号. (2006). On the World Bank, self-help groups, market linkages and the private sector.

Retrieved May 17, 2007, from http://www.fracturedearth.org/?p=151

Rangan, K. V. (1994). The Aravind Eye Hospital, Madurai, 印度: In service for sight (Harvard Business

School case study). Cambridge MA: Harvard Business School.

Ranganathan, C. K. (2003, 七月). The making of chik. Praxis, PP. 22-27.

Rani, M。, Bonu, S. Jha, P。, 阮, S. N。, & Jamjoum, L. (2003). Tobacco use in India: Prevalence and
predictors of smoking and chewing in a national cross sectional household survey. 烟草
控制, 12, 4.

罗宾逊, 中号. S. (2002). The microfinance revolution: 卷. 2. Lessons from Indonesia. 华盛顿,

直流: World Bank and Open Society Institute.

罗宾逊, 中号. (2004, 十二月 1). Why the Bank Rakyat Indonesia has the world’s largest sustain-
able microbanking system (International Seminar on BRI’s Microbanking System). Retrieved
四月 7, 2008, 从

Sachet success haunts shampoo cos. 现在. (2003, 九月 16). Soaps, Detergents and Toiletries

审查.

Sachets swell market, shrink consumption. (2004, 八月 26). Economic Times.

Sarin, S。, & Venugopal, 磷. (2003, 一月 4-7). The marketing contribution barometer. Paper present-
ed at the 8th International Conference on Marketing and Development: Globalization,
Transformation, and Quality of Life, Bangkok, Thailand.

Sirgy, 中号. J。, & 李, D.-J. (1996). Setting socially responsible marketing objectives: A quality-of-life

方法. European Journal of Marketing, 30(5), 20-34.

史密斯, 氮. C。, & Quelch, J. A. (编辑。). (1993). Ethical issues in research and targeting consumers. 在

Ethics in marketing (PP. 145-195). Homewood, 伊尔: Irwin.

托马斯, V. (2000). Education is key to development: Evidence from Korea and India (World Bank
报告). Retrieved May 22, 2007, from http://www1.worldbank.org/devoutreach/winter00/arti-
cle.asp?id=41#education

Tilak, J. 乙. G. (2002). Building human capital in East Asia: What others can learn. 华盛顿, 直流:
从

世界
23,

Retrieved

Bank.

2007,

可能

Walsh, J. P。, Kress, J. C。, & Beyerchen, K. 瓦. (2005). “Book review essay: Promises and Perils at the

Bottom of the Pyramid,” Administrative Science Quarterly, (九月), 473-482.

World Bank. (2002, 一月). Globalization, growth and poverty: Building an inclusive world econo-
我的 (World Bank Policy Research Report). 华盛顿, 直流: World Bank and Oxford University
按.

100

创新 / winter 2008

从http下载的://direct.mit.edu/itgg/article-pdf/3/1/85/704261/itgg.2008.3.1.85.pdf by guest on 08 九月 2023 Anand Kumar Jaiswal image

下载pdf