BOP-focused businesses need to reach 100 million customers

October 6th, 2011 by Dave Leave a reply »

Matt Bishop of The Economist recently interviewed prolific inventor and global poverty innovator Paul Polak about his views on how best to reduce poverty on a large scale for base-of-pyramid (BOP) populations (< $2/day PPP income).

A few highlights on Paul’s comments from the below video interview:

  • We will not make a meaningful impact on poverty without selling useful products to the BOP and making a profit from them
  • There is a big difference between selling something to BOP customer which gives them more value than what they paid than ripping them off (which is mostly what they have experienced)
  • In order to be sustainable, businesses targeting BOP populations generally need to target reaching 100 million customers because of the low profit margins (his previous advice was at least 1 million customers)
  • Businesses need to seek out “radical affordability” and highly distributed last mile distribution strategies in order to be successful in BOP markets
  • To make your product/service attractive to BOP populations, it must double their income in a relatively short period of time in order for them to take the risk
  • He believes that most of the successful BOP businesses will come from new startups rather than multi-nationals who just don’t have the DNA to think about and build these new type of businesses
  • There will be huge failures of BOP-focused businesses — this doesn’t mean there isn’t an opportunity (he noted that the Indian Andra Pradesh microfinance crisis is hardly a wimper compared with the disruption that accompanied the changes in the Soviet Union/Russia starting in 1989)

Thanks to NextBillion.net for alerting me to this.

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