A Look At The Bop

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a look at the bottom of the pyramid

A Look at the Bottom of the Pyramid

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a look at the bottom of the pyramid

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a look at the bottom of the pyramid

“…he may well be the most influential thinker on business strategy today.” --- Business week

He has been named among the top ten management thinkers of the world in every major survey for over ten years

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a look at the bottom of the pyramid

“ The real source of market promise is, not the wealthy few in the developing world or even the emerging middle- income consumers. It is the billions of aspiring poor who are joining the market economy for the first time”.

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a look at the bottom of the pyramid

Indian Cases cited by C K Prahalad Product / Project / Service

Person / Organisation

E-Chaupal Story

Indian Tobacco Company, ITC

Innovations in Finance

ICICI Bank

Arvind Eye Care System

Padmashree Dr G Venkataswamy

Jaipur Foot

Mahaveer Vikalang Sahayata Samiti

Selling Health in the Soap Market

Hindustan Lever Ltd

The Annapurna Salt Story

Hindustan Lever Ltd

Indiagriline

EID Parry

E-seva, E-governance

Govt of Andhra Pradesh

Governance among the poor

The Bank of Madurai

Shakti / I Shakti

Hindustan Lever Ltd

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a look at the bottom of the pyramid

The poverty premium

Item

Dharavi

Warden Road

Poverty Premium

600- 1000%

12- 18%

53

$1.12

$0.03

37

Phone Call

$0.04- 0.05

$0.03

1.8

Rice Per Kg

$0.28

$0.24

1.2

Annual Interest on Credit Municipal Grade Water

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a look at the bottom of the pyramid

A Look at the Rural Pyramid

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a look at the bottom of the pyramid

Market potential is large at the BOP • 700 million people • These 700 million people need products and services they do not get today

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a look at the bottom of the pyramid

Rural market will continue to be large, rate of urbanization is low and decreasing

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a look at the bottom of the pyramid

When do you receive newspaper in the village? Response of newspaper vendors in the villages Time

%

Before 7am

16

7am to 8am

14

8am to 9am

32

9am to 10am

17

10am to 12am

19

After 12am

2 10

a look at the bottom of the pyramid

Touring Open Air Theatre Location: Thapar village, Taluka: Junnar, District: Pune Catchment population: 15000 approx. inclusive of 40 neighbourhood settlements New movies are released 2-3 months after city release. New movies are shown approx for 2-4 days, with only 1 show per day. Old movies also receive good viewership. In a week 1 new movie and about 2 old movies are viewed. Occupancy for new movies: 1st day : 200-250 viewers 2nd day : 150-175 viewers 3rd day : 100 viewers During festivals and fairs the viewership shoots up 11

a look at the bottom of the pyramid

Rural markets are reachable • Rural buyers are habituated to travel to weekly bazaars within „panchakroshi‟ (neighborhood with 15 km radius) • Rural roads have improved, are improving further: Additional 146,185 km of all weather roads connecting 66,800 habitations are planned to be built by Dec 2009 under Pradhanmantri Gram Sadak Yojana

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a look at the bottom of the pyramid

Like every body else in the world, the Rural Indian wants good things in life • Good quality • Reasonable price • Assured supply

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a look at the bottom of the pyramid

Rural buyers feel cheated, helpless and angry • Black outs • Spurious seeds • Spurious medicines and quacks

• Sensitive technologies with inherent risks

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a look at the bottom of the pyramid

Black outs – 15 Km from Pune • Availability of power for commercial & Domestic use • Taluka Khed,Dist.Pune • Villages: Dhavadi, Retavadi, Kharkudi, Mandavala, Holewadi Date

1

2

3

4

5

6

7

8

9

1 0

1 1

1 2

1 3

1 4

1 5

1 6

1 7

1 8

1 9

2 0

2 1

2 2

2 3

2 4

21/7/2008 22/7/2008 23/7/2008 24/7/2008 25/7/2008 26/7/2008

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a look at the bottom of the pyramid

Spurious seeds • 38% of BT Cotton seeds are found to be spurious by Government inspectors • 24% of high yielding improved seeds for vegetables were found spurious • Spurious seeds means loss of all income and incurring of excessive costs

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a look at the bottom of the pyramid

Spurious medicines and quacks Per capita expenditure on medicine and medical services in rural areas is 1.6 times that in urban areas because of wrong treatment and ineffective drugs!

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a look at the bottom of the pyramid

Sensitive technologies with inherent risks When a farmer enters cow cross breeding program with one cow, he ends up incurring losses 45% of the times because:

• The semen has to be transported in liquid Nitrogen to the remotest village • The crossbred cow is more susceptible to diseases

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a look at the bottom of the pyramid

Why is there a large gap between potential and realized market? A common myth: Farmers are reluctant to change. They do not accept new technologies, new products. The truth: Farmers welcome change. They adopt new technologies, new products.

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a look at the bottom of the pyramid

Farmers are not reluctant to change. They accept new technologies, new products

The green revolution: Wheat production

Year

Production million tones

Yield kg per hectare

Farmers

1966-67

11.39

887

6,420,000

1971-72

26.41

1,380

9,570,000

% change

131.9

55.6

49.1

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a look at the bottom of the pyramid

Farmers are not reluctant to change. They accept new technologies, new products The green revolution: Fertilizer consumption

Year

Nitrogen (N)

Phosphor us (P2O5)

Potassi um (K2O)

Total

1960-61

212

53

29

294

1970-71

1,479

514

236

2,256

% change total

667.3

Consumption (000 tons)

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a look at the bottom of the pyramid

Farmers are not reluctant to change. They accept new technologies, new products The white revolution: Milk production and marketing Year

Number of farmers’ co-operatives

1970 – 1980

1,000

1981 – 1985

43,000

1986 – 1996

73,000

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a look at the bottom of the pyramid

The secret behind the success of Green & White revolutions The green revolution reduced the risks in production:

 Shorter production cycle  Draught resistant varieties  Pest resistant varieties

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a look at the bottom of the pyramid

The secret behind the success of Green & White revolutions

The white revolution reduced the risks in milk marketing

 Chilling plants  Cold transportation  Pasteurizing plants

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a look at the bottom of the pyramid

The way forward Education + Information + Quality products + Quality services + Entertainment

Credible source Reliable delivery system Knowledgeable risk averse rural buyer with buying power

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a look at the bottom of the pyramid

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a look at the bottom of the pyramid

MEDIA CONVERGENCE for Rural Consumer Vertica l

Print, Personal Promotion

Rural Consume r

Horizontal Convergence

27

a look at the bottom of the pyramid AgroWon Center : Proposed Set up

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a look at the bottom of the pyramid

AgroWon Center

1

Mini Movie theatre

10

Bank loans, Insurance

2

Education

11

Auto products sales

3

Agro inputs

12

24 Hour response line

4

Information center

13

Vocational guidance

5

Job / recruitment services

14

Entertainment program

6

Outbound tele services

15

Animal health service

7

Procurement and marketing

8

Land transactions

16

Medical camps

9

Net cafe, printouts, horoscope etc.

17

Painting exhibitions

18

Pustak dindi

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a look at the bottom of the pyramid

AgroWon Center

One Center in each village with population more than 7,000 10,000 Centers on all India Basis

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a look at the bottom of the pyramid

Current rural market size – Top 15% Item Education

Medical Consumer services Durable goods Others Total

Rs. Million

$ Million

5,612

140

15,201 17,298 9,499 32,361 79,972

380 432 237 809 1,999

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a look at the bottom of the pyramid

Eradicating Poverty Through Profits

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a look at the bottom of the pyramid

Who are poor? How poor are they?

Where are the poor? How many are they? 33

a look at the bottom of the pyramid

Rural Population in Monthly per capita expenditure groups 5 Cr 16 Cr 34 Cr 21 Cr

more than Rs 1155 Rs 690 to Rs 1155 Rs 410 to Rs 690 Less than Rs 410

* Source: National Sample Survey 2005

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a look at the bottom of the pyramid

What is the living standard of the poor?

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a look at the bottom of the pyramid

Expenditure Item

MPCE

Expenditure Item

MPCE

cereals

67.95

education

1.88

fuel and light

23.50

intoxicants

1.80

vegetables

16.68

footwear

1.49

clothing

15.14

salt

0.76

edible oil

11.08

fruits: fresh

0.64

Miscelleanous

10.15

pan

0.44

consumer services

7.51

clothing: second hand

0.36

pulses

6.00

medical-institutional

0.35

beverages, etc.

5.45

gram

0.31

spices

4.82

fruits: dry

0.14

medical-non-inst.

3.93

rent

0.11

egg, fish and meat

3.55

cereal substitutes

0.09

sugar

3.44

taxes and cesses

0.06

milk products

2.65

tobacco

2.65

2nd hand durable goods

0.00 36

a look at the bottom of the pyramid

Do any of the case studies cited by C K Prahalad or cited by me help in eradicating, nay lessening the poverty of the rural poor?

37

a look at the bottom of the pyramid

Indian Cases cited by C K Prahalad Product / Project / Service

Person / Organisation

E-Chaupal Story

Indian Tobacco Company, ITC

Innovations in Finance

ICICI Bank

Arvind Eye Care System

Padmashree Dr G Venkataswamy

Jaipur Foot

Mahaveer Vikalang Sahayata Samiti

Selling Health in the Soap Market

Hindustan Lever Ltd

The Annapurna Salt Story

Hindustan Lever Ltd

Indiagriline

EID Parry

E-seva, E-governance

Govt of Andhra Pradesh

Governance among the poor

The Bank of Madurai

Shakti / I Shakti

Hindustan Lever Ltd

38

a look at the bottom of the pyramid

Indian Cases cited by Dr Karandikar

Product / Project / Service

Person / Organisation

Agrowon

Sakaal Papers

Rural Multimedia Centre

Multimedia Group

White Revolution

Amul, BAIF

Green Revolution

Government of India

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a look at the bottom of the pyramid

40

a look at the bottom of the pyramid

What needs to be done?

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a look at the bottom of the pyramid

What needs to be done?  Create employment: Employment guarantee scheme  Educate & Increase Productivity: Child Centered Joyful Learning  Reach out to the poor: Reduction of malnutrition amongst poor children- Dr Abhay Bang, Dr Rani Bang

 Leverage limited local resources: BAIF in tribal areas of Gujarat  Create purchasing power: Women‟s Self-Help Groups  Recognise right to credit: Grameen BankDr Mohammed Younus

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a look at the bottom of the pyramid

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a look at the bottom of the pyramid

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