A
few years ago, two American business school professors, CK
Prahlad and Stuart Hart, in their path-breaking study argued
that companies have for long ignored a particular segment
of the society that represents the bottom of the economic
strata but presents a multi-billion-dollar business opportunity.
While the concept has not made its way to the strategy agenda
of companies the way it should have, business leaders can
do well to sit and take notice, as the latest report by the
World Resource Institute (WRI) and International Finance Corporation
(IFC) reveals that the segment holds unexplored opportunities
of an incredulous $5 tn a year,. The study titled,' The Next
4 Billion', promises to help remove the biggest barrier which
has prevented companies from exploring this market: empirical research/evidence substantiates the BOP theory and practice.
The latest study by WRI/IFC for the first time ever puts a
number on the size and scope of the BOP market. Findings are
based on surveys involving 8 important sectors and households
in 110 countries for income, and a subset of 36 more for expenditures.
This is sure to galvanize competition among corporates to
capitalize on the growth potential of the global BOP market.
One
major reason that held back marketers from exploring growth
opportunities in this market has so far been the lack of a
strong statistical evidence to justify the optimism. The findings
of the WRI/IFC study, therefore, are set to boost the case
for the entry of corporates into the BOP market. It does not
just throw light on the size of the global BOP market but
also offers some other interesting insights. The study identifies
different sub-segments or layers of the BOP market with the
threshold annual income of less than $3,000 (in local purchasing
power), with an overwhelming majority of them living in Africa,
Asia, Eastern Europe, Latin America and the Caribbean.
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