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10:52AM

Great "Bottom of the Pyramid" logic

WSJ story on multinationals finding steady profit in marketing to the poor, who offer a "relatively stable demand":

Analysts have long argued that companies selling products and services to people earning less than $4 a day can outperform in tough times.  This is because consumers still must buy food, soap and other basic goods when the economy is bad, even as middle-class buyers cut back on discretionary items like fashion or gadgets.  Companies selling everything from cheese to diapers to frozen fish ahve discovered in Indonesia that they can turbocharge growth and add more stability to sales during slowdowns by offering small package sizes that are more affordable for the poor who have limited spending money on any given day.

One nit:  "Analysts have [not] long argued ..."

That was C.K. Prahalad's Bottom of the Pyramid logic that was first opposed, then ridiculed and now gets passed off as the conventional wisdom of the analysts.

Simplistic point, but smart people can make a lot of money off such simple stuff.

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Reader Comments (2)

What is so new about this model. It's what Wal-Mart has been doing for years.

July 29, 2012 | Unregistered CommenterChristopher D. Dye

Wal-Mart has always been cited by the bottom-of-the-pyramid logic. Anybody who caters to DIY types (do it yourself) qualifies.

Sears Roebuck in 1900 qualifies.

The model isn't new. Prahalad writes at length how many big US corporations began as sellers to the bottom-of-the-pyramid. In fact, one of his best stories involves Singer Sewing Machine Corp., as a sewing machine is an ultimate DIY tool (make your own clothes).

July 30, 2012 | Registered CommenterThomas P.M. Barnett

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