BOP 1

Book Review: Chapter 1 (The Market at the Bottom of the Pyramid)

Book: The Fortune at the Bottom of the Pyramid

Library Reference: None

Amazon Reference:

Quote: “All of us are prisoners of our own socialization. The lenses through which we
perceive the world are colored by our own ideology, experiences and established management practices. Each one of the groups that is focusing on poverty alleviation—the World Bank, rich countries providing aid, charitable organizations, national governments, and the private sector—is conditioned by its own dominant logic.”
-C.K. Prahalad

Learning Expectation:

In this chapter, I am expecting to learn who the markets at the Bottom of the Pyramid (BOP) are, referring to the title of the said chapter. Aside from this, I also want to know what the power of dominant logic is. I also want to know about the nature of the BOP markets and the concept of the market development imperative. Hopefully, by the end of this chapter, I will indeed achieve the knowledge I expect to gain from this.

Review:

Based on how I understood what I have read, the bottom of the pyramid refers to the poor people. If this is indeed the case, then I can think of the bottom of the pyramid as some kind of social structure wherein the rich people are on top, the middle-class are in the middle and the poor are in the bottom. It is like saying that the rich are the most powerful and ideal people to target as customers since they have the most capability to afford whatever we may have to offer. In my opinion, these three types of people should either be in equal positions or the poor should be on top of the pyramid. Aside from this, the reason why the poor are in the bottom of the pyramid is that they dominate the rich and the middle-class in number which I would very much agree on.
The poor outnumbers the rich people and the middle-class people. Among all of the topics I have read in this chapter, I would like to focus on the dominant logic which basically refers to the assumption in relation to the bottom of the pyramid. In dominant logic, there are 5 different assumptions that people have in relation to the bottom of the pyramid.

The first assumption states that we conclude that the poor are not our target customers for the reason that they would not be able to afford our products and services. In my opinion this would be a very wrong assumption and the reason why I say this is the structure of the pyramid itself. It is wrong because the poor outnumbers the rich people so one can have more opportunities to earn more money if they focus on the bottom of the pyramid instead of focusing on the few people at the top of the said structure whom they assume have the most capability to afford anything.

The second assumption is that the poor do not have any use for products sold in developed countries. This is also a wrong assumption in my opinion because it does not mean that these people are poor, they do not have use for items sold in developed countries. The only difference between the rich people and the poor people is the fact that the rich people lives a more fancied life and has more money while the poor work do not have that much money. Other than that, there is really not that much difference about these people, both of them has the same necessities, both are people and both have money no matter how much money they have.

Only developed countries appreciate and pay for technological innovations is the third assumption. I do not agree with this assumption. Based on observation, the poor have just as much interest in technology as a reach person or even more. On what I have observed, poor people are more engrossed to text messaging, surfing the Web, listening to mp4s, mp3 and gadgets alike. I think that is enough proof that the poor take up as much interest or even more in technological innovations as the rich people.

The next assumption is that the bottom of the pyramid markets is not critical for long-term growth and vitality of MNCs or multinational corporations. Again, I disagree with this because I believe that the BOP markets are most necessary for a corporation’s growth and vitality since they dominate the pyramid or in other words, they outnumber the rich and the middle-class in the structure of the pyramid.

The last assumption which I consider wrong is that intellectual excitement can only be found in developed markets and it is hard to recruit managers from the bottom of the pyramid. I consider this wrong too because in my point of view, finding a manager is not all about intellectuality, it is more on a person’s skill. A person from a developed market can be more intellectual that a BOP person but a person from the BOP market can be more skilful than a developed market person. To simply put it, we can never conclude that the people from developed markets are always better than those from the BOP market.

What I Learned:

By the end of this chapter, I learned that there are five different assumptions about the BOP markets and I have actually disagreed with all of these assumptions because it all says that there is no money in the bottom of the pyramid. Actually I think that most money can be found in the BOP and a lot of people fail to understand this sadly.

Integrative Questions:

1. What is the power of dominant logic?
2. What is the nature of the BOP markets?
3. What is the market development imperative?
4. Why did C.K. Prahalad say that trust is a prerequisite?
5. Why is it said that there is money at the Bottom of the Pyramid (BOP)?