The Bottom of the Pyramid (BoP) has emerged as a dominant concept in business, propelled by C.K Prahalad’s “The Fortune at the Bottom of the Pyramid”. The BoP is the largest, but poorest socio-economic group. In global terms, there are 3.7 billion people who are largely excluded from formal markets, the group earns less than $2 per day and 60% of the 3.7 billion people live in China and India. Given the enormous attention the concept has attracted, it has the potential to impact the world’s billions of poor people.
India in particular has created a mark on the global map with the concept and has been successful in changing the perception of India from a manufacturing and back-end process hub to a research and innovation Hub. The Indian and Multinational corporations have not only limited innovative solutions for the Indian market but are now taking these innovations to international platform and are treating India as a BoP Innovation and Research Hub.
The Year 2010 saw many new innovations coming from corporations like Tata, Hindustan Unilever (Indian Subsidiary of Unilever), Godrej & Boyce, Narayana Hrudayalaya, and Vortex among others who have been working on innovative offerings to the BoP. The concept has been simple with working on a design and product with prior knowledge of the cost rather than the other way round and providing high quality and value for money propositions.
The most remarkable innovation of Tata Swach range of Water Purifiers from Tata Chemicals-A Tata Group Company satisfying the essential necessity of purified water for the BoP for as low as Rs.499 ($10). This innovation not only provided a source of potable drinking water but also provided a low cost solution to the already existing purifiers in the Indian market without the need of electricity, which is a scarce resource in India.
Another landmark innovation was in the area of refrigerator from Godrej & Boyce called ChotuKool. It provides all the functionality of a normal refrigerator but can run on a battery and doesn’t need continuous power supply unlike the traditional refrigerator. Priced at Rs.3250 ($69), weighing just 3-4Kgs and works on just 20 parts as compared to over 200 parts in a traditional refrigerator it is the ultimate game changer, not only for the BoP but also for top of the pyramid consumers who could utilize it for camping and other leisure activities. It also provides an opportunity to the rural population to become the last mile connectivity of their supply chain and provides $3/refrigerator commission to the rural agent.
Narayana Hrudayalaya, The world renowned Heart Institute is setting up an ultra low cost Hospital near Mysore which will be a super-specialty hospital to provide medical treatments at a very low cost. The hospital won’t be investing much in the infrastructure with the help of pre-fabricated material in the construction. The Intensive Care unit will be the only department to have concrete structure which will help this 300 bedded hospital to be constructed at a minimal cost of Rs.16 crore. The Hospital intends to extend this cost cuttings and provide medical services at a low cost wherein a Heart Operation which costs around Rs.2,00,000 will eventually cost Rs.50,000 to the end customer in this hospital.
Vortex is a startup incubated at Indian Institute of Technology, Chennai which has been successful in making rural banking a reality with the low cost ATM. The startup has over 6 patents registered and operates at a low cost at the same time the machine is able to work at ambient temperatures of up to 50 degree Celsius unlike the traditional machines which are high on power consumption as well as needs air conditioning system to keep it cool. The company has also brought in Solar ATM and Biometric ATM now under its portfolio for catering to the rural needs.
Apart from the latest ground breaking innovations for the BoP, The earlier innovations have been a run away success like the sachets of Shampoo priced at Rs.1/Rs.2. The budget business hotel chain, Ginger Hotel from Indian Hotels, Project Shakti from Hindustan Unilever who has got the rural Self Help Groups (SHG) to act as its last mile connectivity in rural India and now has a commanding position in the Indian Rural market, The Nokia Life Tools from the Nokia India which has empowered the rural India with basic information, and not to be forgotten the world renowned Tata Nano, the Wonder car known for its marvelous engineering.
Government on their part has been providing a lot of subsidies for rural initiatives and promoting programs like Financial Inclusion, Unique Identification (UIDAI), Internet and mobile connectivity for the BoP. Private Universities in India and corporations together are forming Joint Venture like Manipal University-Philips BoP Initiative, which will enable the growth in Research and Innovation in the coming years to come, which will change the BoP market attractiveness not only in India but through Indian Innovations worldwide.
What’s your take on the BoP market and the possible opportunities?
[Guest article by Akshay Rao, Corporate Strategist.]