The Next Billions: Unleashing Business Potential in Untapped Markets

Source
World Economic Forum
Publisher
World Economic Forum
Publication date
January 2009
Type
Reports
Category
Social Entrepreneurship
Responsible Business in Emerging Markets
Discipline
Entrepreneurship
Language
english
Free/Pay for content
Free
 
Companies around the world are increasing their engagement in emerging markets, yet many remain focused on the high-income populations in those countries. In fact, the world’s low-income population (the so-called “base of the pyramid”, or BOP) represents considerable productive and entrepreneurial potential, as well as untapped demand for products and services. Yet, challenges in the business operating environment often limit the uccess of standard business models in the BOP market. Companies that manage to overcome these challenges can generate both commercial benefit and sustainable livelihoods for the poor.

Success requires creative, new approaches to sourcing and distribution, product design and partnerships. This report presents an overview of the opportunity at the BOP, outlines strategies that a number of companies have adopted to generate both commercial and social benefit in this market, and suggests design principles that companies and partners can use when devising their own approaches.
Globally, 3.7 billion people are largely excluded from formal markets. This group, earning US$ 8 a per day or less, comprises the “base of the pyramid” (BOP) in terms of income levels. With an annual income of US$ 2.3 trillion a year that has grown at 8% in recent years, this market represents a substantial growth opportunity.
While it is highly diversified, much of the BOP represents a fast-growing consumer market, an underutilized productive sector, and a source of untapped entrepreneurial energy. Engaging the “next billions” at the BOP as producers, consumers and entrepreneurs is therefore key to both reducing poverty and driving broader economic growth . 
Historically, challenges in the operating environment have deterred companies from engaging in this market. As a result, people at the BOP remain beneath the radar of most conventional business models, often forced to rely on informal markets and substandard products. Companies that find new ways to overcome constraints and tap opportunities can gain insights, market share and customer or supplier loyalty, and will secure a strong position in this growing market.

Successful business models can substantally improve BOP incomes and livelihoods, improving access to essential goods and services while catalyzing economic multipliers and reducing inequality. Therefore, the BOP market offers a meeting ground where corporate economic benefit and social impact can be achieved together.