Premium
Reaching customers at the base of the pyramid—a two‐stage business strategy
Author(s) -
Gollakota Kamala,
Gupta Vipin,
Bork James T.
Publication year - 2010
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.20361
Subject(s) - business process reengineering , pyramid (geometry) , business , marketing , value (mathematics) , excellence , quality (philosophy) , bottom of the pyramid , population , customer base , industrial organization , computer science , philosophy , physics , demography , epistemology , lean manufacturing , machine learning , sociology , law , political science , optics
Two‐thirds of the world's population make less than $2,000 a year. There is increasing attention paid to how private firms can play a role in improving the quality of life of people at the bottom of the economic pyramid in ways that are mutually beneficial. But despite the promise of mutual benefit, many firms have not been able to serve very poor customers profitably. In this article, we present a two‐stage business strategy that will help firms to serve customers at the base of the pyramid. We suggest that in the first stage, firms need a deep cost management strategy, involving a focus on core customer value, and holistic operations reengineering. In the second stage, we suggest that firms need to consider a deep benefit management strategy, involving value reengineering, partnering for excellence, and creating inclusive channels. We support our ideas with examples of successful and unsuccessful cases of firms that have tried to serve the poor. © 2010 Wiley Periodicals, Inc.