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The Globe: Is the Bottom of the Pyramid Really for You?

Below is a short excerpt from the article "The Globe: Is the Bottom of the Pyramid Really for You?" authored by Ashish Karamchandani, Mike Kubzansky and Nishant Lalwani of the Monitor Group and featured in the March edition of the Harvard Business Review.

If your company is intrigued by the opportunities at the bottom of the pyramid but hesitant to plunge in, it’s not alone: Despite the extent of the markets and the volume of the hype, few multinational firms have built sizable businesses serving people who survive on just a few dollars a day. Companies sense that profits in this market are elusive, and the evidence backs them up.

Apart from some successes in industries such as telecommunications, fast-moving consumer goods, and pharmaceuticals, global corporations have been largely unable to reduce costs and prices enough to serve poor consumers. Our research shows that a only minority of corporations that have engaged with poor populations have created businesses with 100,000 or more customers in Africa or 1 million in India. Procter & Gamble, for example, invested more than $10 million in its PUR water purification powder for bottom-of-the-pyramid markets—but eventually had to shift the product to its philanthropic arm because take-up struggled to exceed 5%. Sourcing from bottom-of-the-pyramid producers is not easy, either. Few companies, our research shows, have successfully integrated large numbers of small, disaggregated suppliers into their value chains.