News

07.15.2014

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The evolution of BoP market

About one year ago, we talked about the emergence of BoP market strategies ("Bottom of the Pyramid") as a way to reconcile the logic of the market and the help of the poor. Let's have a look on the early successes and questions about the economic viability of such system.

After ten years of experimentation, the concept of BoP holds its main weakness of the fact that there are not enough economic opportunities, which allows to ask questions about the economic viability of this approach.

Other difficulties have arisen as high transaction costs facing competition from a more competitive local and international market.

However, we can also mention the positive elements in the development of this concept. Indeed, new business models could emerge and develop as mobile banking that caters to an underprivileged population, often living in rural areas.

Moreover, we can highlight the example of an innovative partnership between Bel Group and Groupama relying on a network of street vendors to propose microinsurance offers with a "last mile" distribution in order to reach people far from the center, farmers and often poor. This is an encouraging partnership for the success of BoP strategies.

More than economic interest of companies to develop their products on the market for low-income population, we should now understand that the market has a key role in the survival strategies of poor people , a "social conquest".

In the same spirit, the principle of microcredit allows everyone to enter the local market through the development of a small profitable business. Learn more about microcredit .

It is primarily for C.K. Prahalad, professor and author of a book on the concept of BoP , to promote "economic democracy" based on equal market access for all.

Sources :
YouPhil
What is the BoP?
"The Fortune at the Bottom of the Pyramid", C.K. Prahalad & Stuart L.Hart

Tags : BoP, microcredit, Prahalad, bottom of the pyramid, poor, MicroWorld, mobile banking