Define the bottom of the pyramid. How can the bottom of the pyramid offer business opportunities?
What will be an ideal response?
Bottom of the Pyramid (BoP) constitutes the largest share of the world population with a 65 per cent share, and is also the poorest group globally. The key characteristics of the BoP segment are that BoP:
• is heterogeneous across multiple dimensions;
• includes the portion of the world’s population with the least amount of income;
• contains local enterprises that generally are not well integrated with the formal capitalist economy;
• lives primarily in the informal economy and constitutes the majority of humanity.
The main tenet of BoP is that the aggregate spending of this population can generate new opportunities for firms. Often in BoP consumers do not have the means to save for major expenses such as buying homes or cars etc., hence their spending is focused on products which may improve their life standards. For instance, a sizeable section of BoP owns television sets. Firms can create successful business models designed to meet the needs of this segment of the population. Meanwhile, continued relations between BoP consumers and firms can also help reduce poverty and improve living standards.
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