Serving the world's poor: innovation at the base of the economic pyramid

Abstract

Purpose: The purpose of this paper is to test the hypothesis that there are common challenges and approaches in serving low‐income customers in developing markets, and that these can be articulated and refined to get better business results. Design/methodology/approach: This article derives from research on serving customers at the bottom of the economic pyramid in industries such as fast‐moving consumer goods (fmcg), financial services, telecommunications, construction, health care and home appliances. A two‐year research project was undertaken to test the hypothesis that there were common challenges and approaches in serving bottom of the economic pyramid customers, and that these could be articulated and refined to get better business results. Field visits were made to China, Egypt, India, Mexico and the Philippines, and in‐depth interviews took place with companies that had succeeded in serving customers living in poverty. Companies were identified from the existing body of literature, observation and personal contact. Additionally, data were collected from developing case studies on multinational corporations and local firms that have been successful in serving low‐income customers in developing markets. Findings: The research resulted in the development of a structured framework for developing strategies to serve low‐income customers in emerging markets, Practical implications: The paper is of direct practical relevance for management practitioners. In particular, the paper suggests that managers need to go beyond traditional marketing approaches to adopt strategies that are customer‐ rather than firm‐centric, and take into account the unique institutional context of many developing markets. Originality/value: The paper is original in its recommendation that managers might also need to go beyond traditional business partners in developing markets, and explore the role of non‐traditional participants.