Thursday, December 27, 2007

Bottom of the Pyramid a Mirage?


Debates and arguments are beneficial , many a times the process brings out dimensions which have not been thought-off by the parties involved. Infact it is when some one questions you that you are able to articulate your thoughts better than when your idea is accepted passively by peers and others.

The debate between Prof C K Prahalad and Prof Aneel Karnani on the viability of the concept of Bottom of the pyramid marketing is one such debate. C K Prahalad is the one who propounded the theory that the Bottom of the pyramid consumers with incomes less than $2 per day can be a viable and a profitable segment to market and he places the onus of these activities on MNCs who have ignored this market till now. He says serving the bottom of the pyramid can become a win-win situation for both the consumers as well as the companies and also serve as a source of innovation. In his book 'Fortune at the Bottom of the Pyramid' he has written many cases on how the concept has been applied in many emerging economies. The book was published in 2004, but in the preface of the book CKP admits the fact that he has been working on the issue for many years and the struggle he had to go through before the idea was accepted. And as of today one finds that the idea has been taken forward by many companies and there are joint initiatives in terms of BOP labs being set-up in many developing countries.

Prof Aneel Karnani in his article Mirage at the bottom of the pyramid argues that the BOP argument is riddled with fallacies. According to him the BOP approach looks at the low income consumers as alternate markets and with the current low levels of income this seems to be a difficult proposition to accept. He goes on to look at each of the cases which have been given in the book and identifies the problems, including the estimated market size and number of BOP consumers. He emphasizes towards the end of the article that rather than looking at BOP consumers are buyers of products produced by multinationals they should been seen as producer . This is the only way in which the real income of these consumers would increase and real poverty alleviation would happen. CKP has responded to the article , link.

1 comments:

Anonymous said...


Debates and arguments are beneficial , many a times the process brings out dimensions which have not been thought-off by the parties involved. Infact it is when some one questions you that you are able to articulate your thoughts better than when your idea is accepted passively by peers and others.

The debate between Prof C K Prahalad and Prof Aneel Karnani on the viability of the concept of Bottom of the pyramid marketing is one such debate. C K Prahalad is the one who propounded the theory that the Bottom of the pyramid consumers with incomes less than $2 per day can be a viable and a profitable segment to market and he places the onus of these activities on MNCs who have ignored this market till now. He says serving the bottom of the pyramid can become a win-win situation for both the consumers as well as the companies and also serve as a source of innovation. In his book 'Fortune at the Bottom of the Pyramid' he has written many cases on how the concept has been applied in many emerging economies. The book was published in 2004, but in the preface of the book CKP admits the fact that he has been working on the issue for many years and the struggle he had to go through before the idea was accepted. And as of today one finds that the idea has been taken forward by many companies and there are joint initiatives in terms of BOP labs being set-up in many developing countries.

Prof Aneel Karnani in his article Mirage at the bottom of the pyramid argues that the BOP argument is riddled with fallacies. According to him the BOP approach looks at the low income consumers as alternate markets and with the current low levels of income this seems to be a difficult proposition to accept. He goes on to look at each of the cases which have been given in the book and identifies the problems, including the estimated market size and number of BOP consumers. He emphasizes towards the end of the article that rather than looking at BOP consumers are buyers of products produced by multinationals they should been seen as producer . This is the only way in which the real income of these consumers would increase and real poverty alleviation would happen. CKP has responded to the article , link.

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