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:: 48 India

Reaching Out to the Bottom of the Pyramid
48 India 10/10/2008 12:59:38 PM

The concept of ‘Bottom of the Pyramid’ (BOP) was proposed by C.K Prahalad and Hammod in 2002. It refers to the approximate 4 billion people across the globe with a purchasing power of EUR 1000 per year or less.
The article attempts to provide insights into the Indian Bottom of the Pyramid market segment and the potential it could offer to a multinational company to expand its market and build a global base here.

The Indian economy is growing at an annual rate of 8 percent. This growth is considerable when compared to the growth of European countries, which is less than 2 percent on a 10-year average, and the growth of the American economy, which is approximately 3 percent.

Moreover, there has been significant reduction in poverty levels and increase in quality consciousness among the Indian rural and urban ‘under-served’ in the past 10 years. This changing scenario in the Indian economy could translate into an investment opportunity for many multinational companies.

The NCAER analysis (fig 1 > see *.pdf) shows an increase of over 150 percent in the number of consumer class households in the last 10 years. Simultaneously, the ‘deprived’ have decreased from 32 million to 17 million. This emergence of the BOP segment could be defined as a new consumer market.

The BOP market in India comprises a population of 750 million (70 percent of the population) living in 600,000 villages (rural area). In addition, the 70 million people residing in urban cities constitute the urban poor market. This ‘latent’ market may enable MNCs to develop their global base and expand their market.

From Pyramid to Diamond
The change in the structure of the consumer class as depicted in fig 2 signifies a substantial opportunity for
marketers to capitalise on this fast-growing consumption class. In fact, it is imperative that marketers focus on developing innovative products to meet consumer needs. The rural market has been increasing steadily at a rate greater than the urban market. About 53 percent of FMCG and 59 percent of the consumer goods market reside in the rural sector. Therefore, rural markets are vital for the growth of most companies.


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