Written by Vineet Sethi
Remember Nirma? Washing Powder Nirma?
Nirma, founded by a chemist Karsan Patel, took market share from industry leaders like HUL with its cutting-edge marketing, pricing, and supply chain plan.
Targetting the Bottom Of The Pyramid and acquiring knowledge of client needs, a near-to-perfect pricing strategy, and outstanding marketing and supply chain approach, Nirma disrupted the status quo of a high-profile FMCG business during that time.
In recent times, OYO Rooms is another excellent example of success at the bottom of the pyramid.
For the past several years, startups in India have been trendsetters in the global business economy. India now ranks 20th among the top 100 countries in the 2021 Global Startup Ecosystem Index by Startup Blink. My observation is that most of these start-ups seek to create a “niche product” for an “exclusive audience” especially in e-commerce.
However, there are plenty of reasons why you should not ignore the Bottom Of The Pyramid (BoP) if you are an entrepreneur looking beyond your local market. Read on to know more…
The term ‘Bottom of the pyramid’ (BoP) refers to the segment of the under-resourced population bound by economic limitations. In other words, these are people who have little or no access to goods and services which are commonplace in developed economies.
In a nutshell, businesses at the BoP target markets with customers who have low incomes or struggle to afford basic amenities. Once you understand this concept, you will realize it is not an easy task for entrepreneurs to tackle these markets. It requires not just a different set of strategies but also a completely different mindset and business processes.
5 Reasons Why Entrepreneurs Should Not Ignore The Bottom Of The Pyramid
1. BoP customers are your best source of insights
Entrepreneurs often struggle to understand their customers’ real needs and wants. Basic needs or wants in affluent markets may have already been fulfilled. By targetting the needs of other population segments, you gain valuable insights into real needs and wants. You can then use this information to design innovative and unique products or services.
2. Bottom of The Pyramid markets will help you discover product/service ideas
When you design your products or services for the BoP, you identify a problem and create a product or service that addresses that problem. If you target the BoP, you will have plenty of opportunities to discover product and service ideas. Moreover, you will be able to test them quickly and then make necessary modifications. The BoP is an evolving market with plenty of growth potential. With online marketing and platforms like Facebook, Instagram, and YouTube, you can access millions of people worldwide. This means you no longer have to target customers in your local region.
3. BoP is the fastest growing market segment
An estimated $4.6 trillion worth of goods and services are being sold at the BoP. This number is expected to increase to $15.4 trillion by 2030. The BoP market segment has been growing at 12% every year. This is almost double the global average growth rate. While companies may have ignored the BoP in the past, it now proliferates and attracts large multinationals’ attention. According to a report, multinationals spend $100 billion every year on the BoP market. This suggests that entrepreneurs who target the bottom of the pyramid will have plenty of growth opportunities.
4. You can build a BoP brand for your existing market
You may have taken the time to build your brand and get customers in your local region. However, if you want to grow the business to a national level, you need money. You will have to spend money on advertising, hiring best-in-class salespeople, and setting up new offices. This will take years and cost you a fortune. The bottom of the pyramid, on the other hand, offers you an opportunity to build a brand for your existing market. All you need to do is look beyond your current products and services. You can design products and services specifically for the BoP.
5. There is a massive potential for employment generation
One of the biggest problems faced by the BoP is a lack of employment. The majority of people at the BoP have low-paying jobs. Entrepreneurs who design products and services specifically for the bottom of the pyramid can help boost employment generation.
There is much more to be discovered and unearthed in this bottom of the pyramid. Entrepreneurs are sitting on a pot of gold.
At Beyond The Panorama, we work with businesses to develop their digital brand presence, and a big part of that is content writing for various channels. If you are looking for help to organize this business function, we would love to have a conversation and set it up!
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