Rethink the bottom of the pyramid

Multinational companies must look to the poorest socio-economic group to boost their business, experts said at a programme yesterday.


Urs Herren

In global terms, the group, known as the bottom of the pyramid, consists of around 2.5 billion people who live on less than $2.5 a day.

Reaching out to this demographic group, often referred to as BoP, will not only expand their businesses, but also pull them out of poverty, they said.

The comments came at a workshop on the business innovation for BoP, organised by non-governmental organisation Swisscontact in association with MART, an India-based consulting firm on emerging markets, and The Daily Star.

The programme, in its second edition, had a host of industrialists, businessmen, researchers, academics and development activists discussing the latest business innovations -- targeting and improving the lives of the BoP.

"Companies look at this segment of the society as a market not as liability,” said Urs Herren, the Swiss ambassador to Bangladesh.

He said the poor offer huge scope for the private sector -- both as a source and consumers.

"There is a need for business innovation for the bottom of the pyramid," the diplomat said, while urging the global companies to tailor their marketing strategies to the segment's needs.

Herren also said Bangladesh needs to use the $3.5 billion it spends annually on social welfare projects -- which is about double the amount of official development assistance -- more effectively.

Heinrich M Lanz, president of Swisscontact, said there are millions of people around the world who are excluded from the benefits of globalisation.

"It remains to be seen how we can include them with the globalised world. If we can reach them it will give them the necessary means to change their lives in a successful way."

The BoP should not be looked as the poor -- but as a market, he added.

"Some countries around the world, including India, have proved that you can do business with the poor," said Kirti Prasanna Mishra, partner of MART.

He, too, said that BoP should not only be looked at as consumers -- but also as producers.

"Companies should come up with the right kind of products for the poor, while keeping their affordability in mind."

Mahfuz Anam, editor and publisher of The Daily Star, said the concept of BoP is fitting for countries like Bangladesh.

"In fact, we all know the Saarc region has the highest concentration of poor people in the world. What better idea can there be than the idea that focuses on the bottom of pyramid."

According to the 2011 UN Human Development Indicators, about 86 million people make up Bangladesh's poorest socio-economic segment.

Anam said the bottom of the pyramid is imperative, so special attention must be paid to it.

"If the bottom falls out there is no pyramid at the end of the day, no matter how beautifully the pyramid is structured."

From an economic and social point of view, there cannot be a concept more suitable than the BoP for Bangladesh, he said.

The problem lies with the people sitting at the top and middle of the pyramid as they see the BoP as poor, unskilled and helpless, Anam said.

"But they are not helpless and waiting for a hand-out. This has been shown to us by none other than Prof Muhammad Yunus -- that they are creative and capable of managing their resources. What they lack is the attention of the society."

"We, who are not in the BoP, need to change our mindset about the BoP," he said, while urging corporations to work to lift people out of the BoP.

Allocating more resources to the BoP would yield more value, as he thought the poor made the most efficient use of them, Anam added.

Niaz Rahim, group director of Rahimafrooz Bangladesh, said many producers at the BoP do not have access to the market.

"If we can give them adequate market access their livelihood will improve."

Mobasherur Rahman, the head of institutional development at bKash Ltd, said the introduction of mobile banking has given people the opportunity to send and receive money at cheaper rates.

Later at a discussion meeting, Asif Saleh, senior director of strategy, communications and capacity of BRAC, said the businesses must find solutions to the changing needs of the people -- otherwise, they would not survive.

Aman Ashraf Faiz, a deputy director of the commercial division of Grameenphone, said the BoP has become a new growth area for businesses.

"There is a humongous change at the BoP in case of mobile subscribers. In the coming days, of every three connections sold, two will come from the BoP."

Mamun Rashid, director of BRAC Business School, said if data about the BoP is not available then steps have to be taken to rectify the situation.

Prof Niaz Ahmed Khan, chairman of Department of Development Studies of University of Dhaka; Sharif M Hassan, deputy managing director of Market Access Group; F H Ansarey, executive director of ACI Ltd; and Sara Zaker, group deputy managing director of Asiatic 360, also spoke.

News Source: 
The Daily Star