Business Strategies at Business Strategies at the Base of Pyramidthe Base of Pyramid

World Economic Congress – May 16, 2008

Arlington. Virginia

Sean Collins – University of Alberta

OverviewOverview

Base of Pyramid - DefinitionBase of Pyramid - Definition

Collection of individuals living at income levels of $3,000 or less.

Estimated total the market size of over 4 billion people.

Concentrated in developing nations with nearly have of BoP consumers living in India and China

Base of Pyramid - SizeBase of Pyramid - Size

BOP

Population

(millions)

BOP Share

of total

Population

(%)

BOP

Income

(millions)

PPP

BOP

Income

(millions)

US$

BOP Share

of Total

Income

Africa 486 95.1 429,000 120,000 70.5

Asia 2,858 83.4 3,470,000 742,000 41,7

Eastern

Europe

254 63.8 458,000 135,000 36.0

Latin Amer.

Caribbean

360 69.9 509,000 229,000 28.2

Case StudiesCase Studies

Consumer ChallengesConsumer Challenges

Poverty PremiumPoverty Premium

Demonstrates difficulty in using average prices for economic purposes

Returns to ScaleReturns to Scale

Modification of business models have the potential to open up huge new markets◦ Likened to Henry Ford and the Model T

New Market New production method New business model

High costs to overcome barriers to entry◦ Lack of infrastructure◦ Significant efforts required to establish brand and corporate

reputation – Aguas del Tunari’s privatization of Cochabamba’s water show drastic consequences of not establishing a reputation in a developing nation.

◦ Language and cultural barriers exist from region to region.

Cemex – Patrimonio HoyCemex – Patrimonio Hoy

Future ResearchFuture Research

Contact InformationContact Information