The bottom of the pyramid is an economic term that was used to denote the greatest population that was comprised of the poorest people both economically and socially, who were living in a very low income per day. It is the most segregated group that contained a very invisible potential and market that was never served for a long time. Because of the many barriers and challenges that faced this group, it was cut from enjoying the privileges of the globalized economy and the technologically advanced world because it was claimed that they could not afford commodities enjoyed by most of the middle class and the top class people (D'Auria & Josephson, 2010). With the biggest and the poorest, it was realized that there is something that could still come out of this group of people. The idea of getting to invest in such areas that are not developed and blocked by the many opportunities, is the success of the micro finance industry that was put manifest in very many parts of the world. It is through this that the paper is going to look at the opportunities available in this segment that was despised by very many companies.
It is a fact that the top tier of the pyramid is by this time saturated or moving to saturation because of the business potential in the first two tiers. The richest people in this tier had the ability to purchase goods and services, and that is the reason very many companies majored in the top tiers of the pyramid and avoided the bottom of the pyramid tiers that equally have business potential (Prahalad, 2008). Many companies hold the myth that the top of the tier has business potential thus avoiding the bottom of the pyramid tiers. Having realized that the bottom of the pyramid tires too have business potential. There are several myths that companies in the past held about the bottom of the pyramids tiers making them to avoid investing in them. The first myth that companies held about the bottom of the pyramid is that, the only concern for people at the bottom of the pyramid is to attain their basic needs and nothing else. The myth assumed that they use they used all their savings to meet the very important needs. For a very long time, most companies in the developed companies held the assumption that, many people in the developing nations had just enough to sustain them. It is this assumption that made very many countries to avoid investing in such nations. The reality here is that, people in the developing nations only got concerned with their present consumption where the purchase of goods and services relied on the disposable income which was at times higher compared to people who belong to the higher or at the top of the pyramid tier. It is by this reason that very many multinational corporations decided to introduce their services and goods to such developing nations.
The second myth is that, the people in developing countries have no desire for technology, and that they would not have the desire for goods and services produced using the present technology. It is true that, goods and services produced through advanced technology become expensive (D'Auria & Josephson, 2010). It is this assumption that made the companies in developed countries to believe that, people in developing countries would not afford such commodities or services produced out of the present technology. The reality about consumption in the bottom of the pyramid is that, people at the bottom of the pyramid also use the present technologies. The use of banking services was never thought of doing any better in the nations with a dominance of people at the bottom of the pyramid. Presently, the greatest success that was made by the banking sector originated from the use of banking services by women in most developing nations that have a dominance of people in the bottom of the pyramid. It thus, means that, people at the bottom of the pyramid also use services like banking and the use of technology.
The next myth is that, the companies’ processes and cost structure are unable to healthily support the customers at the bottom of the pyramid. Bearing in mind that the disruptive innovation in the products produced and the distribution is very important in settling the costs of commodities and ensuring high quality of goods and services. It, therefore, means that such companies can adjust and effectively capture the market at the bottom of the pyramid (Prahalad, 2008). The fourth and the last myth is that, the bottom of the pyramid market would not sustain long term viability of business. The assumption that the BOP market cannot sustain the future market for goods and services is false. It is because of the saturation at the top of the pyramid, business that invest in such markets will not sustain themselves, the fact is that, the BOP is the only market segment that had the potential for future market since very few or no company at all had got into this market.
The Nike Company is one of the companies that have their origin in the United States of America and successfully managed to create the market at the bottom of the pyramid. The Nike Company operates in Pakistan that is one of its largest producers of the sporting apparel (Clark, 2004). The company managed to set the market in Pakistan where it produced a good quality of sporting gadgets. The company produced sporting shoes, sports outfits and especially majored in the production of athletics products. The decision to diversify its operation from America to Pakistan was majorly to increase the profits and be able to maintain its operation. It is this decision that enabled it to make serious profits from Pakistan making it one of the best producers of the Nike commodities that were sold elsewhere.
In conclusion, the BOP that very many companies in developed companies despised and never saw anything good that could come out of it, became one of the best bases of the future market. The many assumptions that were held by the multinational corporation are never true since many companies that decided to invest in BOP realized best outcomes. For any multinational company that would wish to build a strong base for the future market, it, would therefore, invest in the bottom of the pyramid so as to sustain itself in the future market.
Clark, E. (2004). Around the corporate campfire: How great leaders use stories to inspire success. Sevierville, Tenn: Insight Pub. Co. https://www.google.com/search?q=the+sucess+of+nike+company+in+pakistan&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a&channel=fflb
D'Auria, S., & Josephson, J. A. (2010). Offerings to the discerning eye: An Egyptological medley in honor of Jack A. Josephson. Leiden: Brill.
Prahalad, C. K. (2008). The fortune at the bottom of the pyramid. Upper Saddle River, NJ: Wharton School Publ.