What is BoP?
BoP is the biggest part of the population of an economy consisting of people with the least wealth or income. An economic pyramid is a representation of a country’s population in terms of their income and wealth. In India, people with annual income of less than 2 Lakh INR falls into BoP which means over 80% of people earn a monthly income below 16,667 INR. In 2005, over 1 billion people belong to BoP. This figure was expected to decrease to 997 million in 2015 i.e. a matter of concern as almost 80% population of India belong to BoP, who can’t even afford the basic amenities of life.
In Urban India, the above figure changes to people earning less than 3 Lakhs INR in a year and in Rural India, it down to 1,60,000 INR.
The growth for any economy as a whole is only possible along with the growth of BoP. The base of Economic Pyramid Market is often untapped by large companies as they don’t see them as a potential customer. However, here lies an opportunity for big organizations to work towards the eradication of poverty and unemployment, contribute to an economy’s growth and make a fortune out of it as well. They can serve them to raise their standard of living.
Innovative business model
One of the biggest mistakes, a company can do here is not innovating business practices and models according to the target audience. Such a market brings a bunch of challenges right from high operating cost to poor economies with a set of whole new audience to cater to. Take an example of Dharavi, Mumbai, it is one of the largest slums in the world, resident for over 8,00,000 people but it is also one of the most prominent industry for pottery, textile, and recycling. An organization cannot sell them what it sells to others or everyone, they need to look for innovation.
Understand the target audience
It is important to understand the needs and wants of the target audience, along with their spending and earning capacity. Such information will help firms to innovate and create the best market fit product or services to cater to the needs and wants of the target audience. It requires a comprehensive approach where the company first understands its targeted audience and then start working for them.
Co-work with local communities
To know more about the target audience, it will be recommended to co-work with local communities, spend time with them to build trust about a brand among them and also to know about the consumer behavior. Rather than just seeing them as consumers, try to build a relationship with them to build trust and produce market fit innovative products.
Tap 2/3rd of the population
Companies and governments have been tapping elite class and rising middle-class markets in the last 20 years. But the limits of it have been reached and its time look at the other 2/3rd part of the population to tap them by creating innovative market fit products and services along with innovative business models, strategies, and practices. Learning about audience would be the first step to achieve this successfully for which co-working with local communities is important. Here companies can create products or services which didn’t exist before along with improving those living standards of people belonging to BoP and generate income out of it.