Life at the bottom of the pyramid

Posted by Anupriya Gupta
September 7, 2017

Self-Published

Recently I had to give a presentation in college in the topic, the Bottom of the Pyramid, a theory proposed by C K Prahalad. These are the people who live in society earning $2.5 per day. Although we read about poverty every day and how government is making efforts to eradicate it, this theory struck me.

It was an effort to change the mindset of the big companies who just value their affluent customers. But huge potential lies in the rural market, which was always looked down upon. I’d like to highlight the inspirational story of the Chik Shampoo. Back then, shampoo was only sold in bottles and not in sachets, available only to the urban society. This proved to be a game changer when the company started manufacturing the shampoo in sachets. They went to south and gave live demonstration of shampoo being applied on a boy and showing advertisements of it between movies. They even distributed free shampoos to the live audience present there. They made huge profits in rural Tamil Nadu and Andhra Pradesh and their sales spiked three to four times.

It is estimated that 2.7 billion people are the bottom of pyramid. Prof C K Prahalad proposed significant changes in the already existing market strategies by introducing the concept of “next” practices as opposed to the “best” practices, which is globally used by the academic community and professionals all over the world. The idea was to tap the potential just by “re-engineering” the product features. He targeted a considerable population by fixing the prices of the commodities so that it could be used on an economical scale.

The idea was simple, yet effective.  Another success story was when Godrej and Boyce introduced “Chotukool”, an affordable refrigerator at a nominal price of Rs. 3500 in Indian rural society. The company co-designed it with the village women in order to assure acceptability and distributed it by the help of members of a micro-finance group.

The rural market is a wonderful opportunity for the companies to increase their profits if they utilize the resources effectively. The success stories reinforce this statement as the companies strive to make the products available to the rural society.

 

 

 

 

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