The “Bottom of the Pyramid”: A Market of Four Billion People

“The forgotten men at the bottom of the pyramid”, to whom Franklin Roosevelt referred in April 1932 at the beginning of the Great Depression –and who were simply the American victims of the grave economic crisis of the 1930s– have come in for more thorough study over the last 10 years or so. The expression “bottom of the pyramid” now refers more broadly to the poorest individuals on the planet. The statistical definition varies a little, depending on the analysis applied and data employed, but those concerned are generally taken to earn little more than 5-10 US dollars per day. They are found for the most part in the developing and emerging countries and, to judge by Jean-Michel Huet’s analysis here, there are some four billion of them living on less than seven US dollars a day. Four billion people who have the same basic needs as everyone else –food, drink, lighting etc.– but who are barely of any interest to private companies, given their low degree of creditworthiness. This is very probably a strategic error. As Jean-Michel Huet shows (after an initial presentation of this segment of the population), it is entirely possible for a company to meet the needs of groups at the bottom of the pyramid, while still remaining profitable. Huet gives details of three economic models that have proved successful in this area (the direct model, the innovation model and the public-private partnership), based on various examples in the fields of access to water, telephones etc. and on the experiences of pioneering companies (Schneider, Veolia, Danone etc.). Provided the approaches are conceived and carried out from a win-win standpoint as part of a genuine long-term strategy, targeting groups at the bottom of the income pyramid affords a real commercial opportunity for private companies and, moreover, plays a real part in improving the living conditions of those individuals.