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Generating Wealth at the Base of the Pyramid – A Study Using ABCD Analysis Technique

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Abstract: It is known that the bottom of the pyramid is the largest but poorest socio-economic group in the world. The current usage of the term ‘bottom of the pyramid’ refers to the four billion people living on less than $ 2 per day, the definition was proposed in 1998 by C. K. Prahalad and Stuart L. Hart. The wealth and revenue generation capabilities at the base of the pyramid, especially in emerging markets have been the topic of many studies and research in the recent years. The potential of the customers, who live on less than $ 2 per day, is immense. This population of four billion is expected to grow to six billion in the coming 10 years. As developed world economies are getting saturated and a lot of multinational companies have turned towards emerging economies to tap deeper markets for growth. The business models adopted by some of these multinationals are unique and have given immense revenue to the companies. Ted London, at the University of Michigan, focuses on the poverty alleviation implications of the base of the pyramid ventures. His focus has been on the poverty alleviation perspective of BoP approaches as was initially proposed by Prahalad and Hart. A more recent focus has also been on the impact successful BOP approaches have on sustainable development. At the core of its articulation, the BOP perspective relies on the hypothesis of mutual value creation, the more the value created for the communities and consumers living in this segment, the higher the value attained by the venture. These ventures are expected to generate acceptable social and economic returns to the organization operating in these segments and to the communities it is serving. ABCD analysis technique is a model evaluations tool which takes into account all parameters of a business model. This technique evaluates a business model, strategy or operational strategy from the standpoint of the advantages, benefits, constraints, and disadvantages arising out of it. Further, it streamlines the data to identify the critical constituent elements in each determinant factor to narrow critical elements that need to be looked at to overcome the constraints and focus on the advantages to give the benefits. This paper is a study to analyse whether it is possible to generate revenue profitably by selling in BOP segments of emerging markets and its effectiveness in providing value to companies and generating revenues.

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