Business Models for the Base of the Pyramid – Summary of the Workshop

Introduced by:
Anuradha Narasimhan, Category Director - Health & Wellness, Britannia

Led by:
Pradeep Prabhala, Monitor Group
Svenja Bodtlaender, The Value Web

Experts:
Djordjija Petkoski, Head of Business Competitiveness and Development, World Bank Institute, USA
Christopher Grasset, Chief Operating Officer, Sprinkles Global Health Initiative, Canada

While many companies recognize that there are business opportunities at the base of the pyramid (BoP), not many organizations have successfully tapped them. Often they are unsure of the appropriate business model suited to engage these consumers and address their needs and preferences. As such, this workshop was designed to identify the key challenges that enterprises face while trying to deliver  high quality, nutritious and affordable product to the BoP and develop potential solutions to overcome those hurdles.

In this workshop, participants explored ways of thinking about key challenges that consumers and businesses face in the BoP market. They started off by looking at the challenges from four lenses (demand, customer understanding, local value chain support, internal organizations challenges) and shared their individual experiences. Out of this input they created guiding principles for developing commercially viable and scalable business models to engage customers at the BoP.

The guiding principles, as decided by the participants are as follows:

Demand

• Do not confuse need with demand
• Invest in marketing campaigns to build categories

Customer understanding

• Segment the consumer base by not just looking at incomes
• Understand the consumer cash-flows while designing products and delivery mechanisms

Local value chain support

• Procure and produce as locally as you can but understand the trade-offs
• Take ownership of organizing the value chain by forging partnerships

Internal organizational challenges

• Create the right employee mind-set to operate in these market and have realistic return expectations
• Use appropriate measures to track progress and actually think beyond traditional measures

Participants then used the guiding principles to develop business models for two specific product launch scenarios playing in Asia and Africa.

A separate team developed an evaluation model to measure the attractiveness of business models, which looked at:

• Desirability: consumers reason to buy
• Feasibility: capabilities within the company to scale this model
• Viability: commercial viability and risk mitigating mechanisms

Some of the learning’s from this exercise were:

• Solve for consumer value propositions and internal capabilities simultaneously
• There is no holy grail for business models at the BoP. More often than not it is making adjustments to your existing models to serve this market