Given this profile, what is the point of disagreement between these two consultants? A) They disagree on whether the most important emerging markets are in China or India. B) They disagree on how best to distribute products to the very poor in emerging markets. C) They disagree on whether there is such a thing as the “aspiring poor.” D) They disagree on whether it is worthwhile to try to alleviate poverty. E) They disagree on whether selling to “poorest of the poor” will be practical or profitable
There are some 4.5 billion people in the base of the pyramid as customers, diverse suppliers and strategic distribution and retail partners. These people live primarily in Asia, Africa and South America. The BOP is defined as those people that earn less than $ 8 per day. They are value demanding consumers, resilient and creative entrepreneurs, producers, business partners and innovators. Because they are largely excluded from formal markets, there is a strong demand for innovative products, services and technologies that provide access to basic needs.
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Consultant 1 argues that businesspersons should turn their attention to the poorest of the 4 billion people in developing markets, the core of the base of the pyramid, who are slowly but steadily becoming part of the market economy. While per capita income is small, she believes the potential size of this market is huge and represents the next frontier of globalization.
She notes that firms focused on developed markets may need to rethink how they make and market their products to meet the needs of the aspiring poor. For example, one approach is to sell products like toothpaste or shampoo in single-use sizes.
Rethinking operations offers promising paths for firms to make a positive difference in alleviating the tyranny of poverty that defines daily life in the base of the pyramid—and, she adds, improve productivity and profitability.
Consultant 2 disagrees. He believes the size of the base of the pyramid has been overhyped with a catchy term and in actuality, the total market is very small. Sure, there are many but many poor folks does not create compelling opportunities.
Moreover, much, if not all, of the incomes of people at the bottom of the pyramid is consistently spent on food, shelter, and other fundamental necessities.
Then, there is the challenge of actually making a profit. MNEs, especially those in the West, will likely find it difficult to reduce their costs of production to a level necessary to be able to sell to the folks that make up the base of the pyramid.
Further complicating matters, he tries to explain, is evidence that the cost of operation in poorer markets is often unexpectedly high because of their infrastructure and institutional limitations.
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Question | Given this profile, what is the point of disagreement between these two consultants?
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