The Concept of Finding Gold at the Bottom of the Pyramid

We have a myriad of companies coming up as well as fighting with each other to serve high-class people or people in the upper middle class. They are fighting for brand positioning, brand recognition, aesthetics, super-quality products, customer experience, extra profits, and other such parameters. However, marketers are now realizing the untapped market or the untapped customer segment. The bottom of the pyramid at the top of the pyramid, we have numerous competitors, but at the bottom of the pyramid, we have numerous consumers. More than half of the world’s population is in the mid-segment and at the bottom of the pyramid.

In this article, we will be diving deep into the concept of finding gold at the bottom of the pyramid, and we will also be understanding how renowned companies in the business domain have tweaked themselves to serve this segment of customers.

Who is at the Bottom of the Pyramid?

The total population of the world is close to 8 billion, out of which around 5 billion people or customers are unserved or underserved by companies. Companies are making huge efforts to satisfy already satisfied customers but are not realizing the opportunity the bottom of the pyramid has. The bottom of the pyramid basically refers to people who live at the bottom end of the income hierarchy. It was found that among these 5 billion people, 4 billion of them earn less than $2 a day.

The Concept of Finding Gold at the Bottom of the Pyramid

The concept of finding gold at the bottom of the pyramid was founded by the business writer and professor C. K. Prahlad. Prahlad noticed the untapped segments of India and China and how these customers are struggling to find products that meet their needs. A company can only find gold at the bottom of the pyramid when it has an equal need for profits and for philanthropy. A company that is just here for profit will be exploiting this segment, and hence it will not survive in the long run and will have huge financial penalties to clear.

All of us also know the dilapidated conditions of NGOs. For finding the gold, companies have to do more with less of the resources they have, and they have to keep the customers happy. Here, marketers have to apply reverse innovation. They have to find products that are useful for customers and then innovate them again to make them available at a lower price with a little compromise on quality.

This is a huge market segment with billions of customers, and customers will purchase the product without those expensive and absurd advertisements. Though the key to production at the bottom of the pyramid is to understand what the customers want and need, The needs and wants of these customers will change with geographical locations and changes in religion and customs. For example, many companies are coming up with packaged products designed specially to meet the deficiency of these customers, or companies are coming up with small sachets of hygiene products so as to help the customers maintain basic hygiene without feeling the burn in their pockets.

Hindustan Unilever Limited (HUL) understood that the rural segment of India is interested in buying shampoos and other HUL products for consumption, but they are not ready to purchase the mega packs or the 1kg packs. The daily income of these students is close to $2 a day, and they do not generally know about their next day's meal. The companies came up with 1 rupee or 2 rupees sachets for the customers. These are one-time uses, and customers can easily purchase them.

Examples of Renowned Companies From the Business Domain that have Found Gold at the Bottom of the Pyramid

Some practical examples that will help us understand the concept better are −

  • Danone Project in Bangladesh − The aim of the project is to provide the customers of Bangladesh with low-cost and nutritionally fortified yogurts. The company started this project as an initiative to fight malnutrition, and it has been a success. The project started in partnership with the Grameen Foundation.

  • Hindustan Unilever Limited (HUL) − The company, after its research, found out that in Ghana, the bottom of the pyramid is suffering from iron deficiency, resulting in mental retardation, and came up with products like Annapurna low-cost and iodized branded salt. Blue Brand migrants in Nigeria to fight malnutrition, all in partnership with UNICEF.

  • Narayana Hardulaya Hospital − The hospital charges a flat fee of $1500 for heart bypass surgery, and it is astonishing to know that the cost of the same surgery is around 50 times higher in the United States. The mortality rate during the surgery is lower in the hospital than in the US, and the surgery success rate is higher in the Narayana Hardulaya Hospital than in the US. Along with this, the hospital also works free of charge on hundreds of infants, thus protecting them from serious illness.

  • Nestle − the brand came up with low-fat brand Maggi dried noodles for the rural parts of India and Pakistan. The aim was to provide customers with a nutritious meal that can be cooked easily and procured at a low cost, and the brand is a huge success in both countries.

  • Procter & Gamble (P&G) − the brand came up with nutritious drinks and purified water brands for areas in the Philippines that do not have access to clean drinking water.

The number of customers that a brand can serve when they go to the bottom of the pyramid is huge. The only way to succeed at the bottom of the pyramid is to develop products that consumers need. Develop them at a low cost and do not exploit the customer segments. It is the best area to enter if a company is highly motivated by philanthropy and wants to serve society. Not only will the brands be selling their products, but they will also be changing lives with their products and services. Every year we are seeing that out of these 5 billion people, 1 billion of them are becoming first-time users of the brand's products, and this is a success for the business community as a whole.

Updated on: 11-May-2023


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