BOP 2

Book Review: Chapter 2 (Products and Services for the BOP)

Book: The Fortune at the Bottom of the Pyramid

Library Reference: None

Amazon Reference:

Quote: “Addressing the market opportunity at the BOP requires that we start with a
radically new understanding of the price-performance relationship compared to that currently employed in developed markets. This is not about lowering prices. It is about altering the price-performance envelope.”
-C.K. Prahalad

Learning Expectation:

I hope to learn by the end of this chapter, the explanation to the quotation I have taken from the chapter because it interests me very much. Aside from this, I also want to learn the twelve principles of innovation for BOP markets. I also want to learn about how we can make the said principles.

Review:

This chapter primarily revolves around the twelve principles of innovation for BOP markets. These so-called principles are based on my understanding building blocks of a philosophy of innovation for the BOP markets.

The first principle is price performance. As C.K. Prahalad stated, price is an important part of the basis for growth in the BOP market. Price performance according to him not only focuses on the lowering prices. It is about creating a new price-performance envelope. In my opinion, this is quite a good principle because the BOP market is supposed to be businesses’ target market since they are many in number. The lower the price is, the more that they would buy, after all, the BOP market can also afford whatever the rich can afford, the only difference or question is when they will be able to get it.

The next principles are innovation: hybrids and scale of operations. I honestly do not get the whole idea of hybrids in innovation but based on how I understood it, the hybrids of innovation means making use of different innovation strategies to gain money and to approach the market. On the other hand, scale of operations means that solutions developed should be scalable and transportable across countries, cultures and languages since BOP markets are large.

The fourth and fifth principles are sustainable development: eco-friendly and identifying functionality. As named, eco-friendly, it means identifying if your business is eco-friendly or helps in the betterment of the environment. It means considering how our product or service will affect the environment. On the other hand, identifying functionality means identifying the difference between the BOP market and the developed market. By knowing this, on my opinion, would help in knowing what kind of products and services would be appropriate only for BOP market or developed market and what would be appropriate or suitable for both markets.

The sixth is process innovation and the seventh is deskilling of work. I do not really understand process innovation that much so I would not be able to explain it well enough while deskilling of work means not requiring that much from the BOP markets because there is a shortage of talent in the BOP market as stated by the author.

Education of customers and products must work in hostile environments are the next principles. Education of customers means having to educate customers in the product or service you offer in order for them to have an idea as to how it will benefit them and how they would be using these. Products must work in hostile environments because the BOP markets are usually located in such environments so obviously, it would be recommended to provide products that would be able to work in such conditions.

Research, innovations must reach consumers and product developers must focus on the broad architecture of the system. Research refers to studying things about BOP markets in order to know them better and to know how to deal with them and know what products and services you can offer to them. Sadly, I do not understand the last two innovation principles so I cannot explain it at all.

What I Learned:

By the end of this chapter, I learned that there are twelve innovation principles for BOP markets. I also learned how these principles would be able to help me know how to interface with the BOP market.

Integrative Questions:

1. What are the 12 principle of innovation for BOP markets?
2. How can we make the innovation principles happen?
3. What is deskilling of work?
4. What is scale of operations?
5. How is BOP different from developed markets?