a look at the bottom of the pyramid
A Look at the Bottom of the Pyramid
1
a look at the bottom of the pyramid
2
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
3
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”.
4
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
5
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
6
a look at the bottom of the pyramid
A Look at the Rural Pyramid
7
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
8
a look at the bottom of the pyramid
Rural market will continue to be large, rate of urbanization is low and decreasing
9
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
12
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
13
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
14
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
15
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
16
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!
17
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
18
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.
19
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
20
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)
21
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
22
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
23
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
24
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
25
a look at the bottom of the pyramid
26
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
28
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
29
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
30
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
31
a look at the bottom of the pyramid
Eradicating Poverty Through Profits
32
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
34
a look at the bottom of the pyramid
What is the living standard of the poor?
35
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
39
a look at the bottom of the pyramid
40
a look at the bottom of the pyramid
What needs to be done?
41
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
42
a look at the bottom of the pyramid
43
a look at the bottom of the pyramid
44