Connecting the ‘Bottom of the Pyramid Socially Responsible Distribution
Abstract
While interest and debate about the base of the pyramid (BOP) as a poverty alleviation perspective is growing, most of the current research has focused on business strategies for organizations interested in exploring these markets. The majority comprising the bottom of the pyramid resides in hundreds of thousands of villages located beyond most multinationals ‘distribution networks. Its access to essential goods is limited not just by high prices, but also by inadequate rural distribution, which also restricts the poor in distributing its produce. We use the term socially responsible distribution to describe initiatives that provide poor producers and consumers with market access for goods and services that they can benefit from buying or selling, by helping neutralize the disadvantages they suffer from inadequate physical links to markets, information asymmetries, and weak bargaining power. This paper examines three socially responsible distribution case studies of multinational company, government and NGO initiatives. It identifies how socially responsible distribution can be achieved by strategies that take cost out, reinvent the distribution channel or take a long-term perspective that invests for the future. It summarizes procedures and precautions for setting up distribution into the rural bottom of the pyramid, and the payoffs from socially responsible distribution strategies. The purpose of this study is to examine which changes companies need to implement in their transactional marketing strategy to sell to the poor when launching a product innovation in low-income countries. The paper confronts the literature on the “bottom of the pyramid” with the diffusion of innovations theory in order to identify the country characteristics that call for marketing changes when entering low-income markets. Tapping the potential of the BOP requires not only radically lowered priced products but also consumers with higher income. The lesson here is relevance, adaptability & tailoring products to suit specific BOP needs in an efficient manner.