BoP 2.0: Tap BoP Markets — The Way to Grow
Companies Should Look to Tap BoP Markets to Grow!
BoP in India
Bottom of Economic Pyramid (BoP) is the largest part of an economy consisting population with the least income and wealth. This term is also used to refer to the masses in an economy. The definition of BoP may differ from Government to Government, Country to Country, and even Urban Areas to Rural Areas. In India, 5 out 6 people belong to BoP i.e. over 1 billion people live on an annual household income of less than 2,00,000 INR which was projected to decrease by 2015 to 997 million people i.e. 80% of the total population.
In Urban India, people are considered to belong to BoP with an annual household income of less than 3,00,000 INR. Whereas in Rural India, this amount goes down to 1,60,000 INR.
BoP 2.0
The idea of BoP (Bottom of the Economic Pyramid) was introduced to the world in 2002. Authors of that article, Prahlad, and Hart state that fortune lies at the base of an economic pyramid in form of poor in a country presents a business opportunity for companies which is untapped yet and it can help them to revolutionize business processes to make profits along with eradicating poverty. This article led Unilever, Cemer, and few more companies to create innovative business products, solutions, or models targeting the base of the economic pyramid in developing or under-developed countries like India, Kenya, etc. It took a few years but that’s how this idea caught on. The co-writer of the concept BoP, Hart seeks the evolution of the BoP concept to what can be termed as BoP 2.0.
BoP 2.0 means that local communities should be involved in the process to create innovative business products, categories, strategies, models, and solutions targeting the base of the pyramid. BoP 1.0 tries to transpose the business models and products from the top of the pyramid to the base of the pyramid at cheap prices which will fail. BoP 2.0 states that companies should be looking for innovative business models and products.
The way to tap BoP markets
Companies working for BoP markets now have to co-work with communities belonging to BoP rather than just viewing them as consumers. Co-working is important so as to understand their needs and demands to create innovative and market fit products and solutions. Prior to the concept of BoP, such markets were not on anyone’s radar. The concept drew attention to the two-thirds of the people who have been ignored till then to generate innovative products to lift the people belonging to BoP and not exploit them by simply ‘selling to the poor’.
When Godrej failed to sell the Chotukool refrigerator (BoP refrigerator), which was a little metal box with little freezer compartment, they went through a co-creation exercise where a small team from the company lived in local communities to collect data from mostly women about household expenditures. This allowed them to establish relationships within the community including potential entrepreneurial partners and not just customers. Chotukool was a different category or an innovative product, particularly for BoP markets.
In the last 2 decades, most of the governments and companies have tried to focus on the elite class (which they always did) and the rising middle class. But this can’t last as it has limits which have been reached. For tapping growth, companies have to think about reaching the remaining part of the world i.e. 4–5 billion people at the BoP. Co-creation can create new products and business models to create a market that didn’t exist before along with lifting the people belonging to BoP, improve people’s lives, and generating income.
Just Jobs
Just Jobs, a Delhi based job portal, exclusively designed and developed for entry-level and blue-collar job sector. It’s CEO & Co-Founder, Kishore Beniwal has worked as blue-collar labor for 4 years, and later he worked as a designer which led to starting his own startup as he himself faced those difficulties related to job search and career advancement that a blue-collar worker faces. It is in line with the concept of BoP 2.0 as it is an innovative product particularly for the BoP market in India to lift them, make lives better, and generate income.
