Why is serious investment in bottom- of-the-pyramid (BOP) markets the exception rather than the rule? What keeps companies from building lines of business by meeting the needs of the poor in developing markets?
- Business as usual does not apply. “First, and perhaps most fundamentally, these new markets look awfully different from the standardized markets of the West.” For example: “Weak infrastructure creates challenges to product distribution that range from uncertain to insurmountable.”
- “Most companies donâ€™t know how to package products for poor people, and they donâ€™t know what products and services the poor prefer.” Some companies such as Unilever have been very successful in marketing consumer goods. “But consumer goods are, in many cases, peripheral to a more substantial opportunity with a wider potential customer base in developing markets â€“ namely, meeting the basic demand for housing, clean water, medical insurance, and legal and financial services that fit local needs, customs, and income.”
- “[B]usiness investments in social and infrastructure needs often face the highest regulatory hurdles.”
Their proferred solution: Don’t recreate, innovate via grassroots design
[T]here is another way to look at developing markets. Rather than starting with the status quo in rich countries and measuring business opportunities in poor ones by gauging what it would take to recreate that environment, businesses can take a step back and do what entrepreneurs have always done: ask questions like â€œWhat do people need?â€ â€œWhy donâ€™t they have it?â€ and â€œHow do they get it?â€
That approach is the essence of grassroots design. Though it requires more initial thought and creativity, it makes things far simpler in the long run. Businesses that start with a grassroots design process end up with products and services that meet real, as opposed to perceived, needs; integrate local materials and processes; and reflect the culture and aesthetic of their customers. Of course, a company that embraces grassroots design does not gain the benefits of simply importing its existing business model and product line. But mass markets are fragmenting everywhere, and firms that learn to design up from local circumstances will compete better wherever they operate.
Thanks, Rob K.