Race to the bottom
Monday, November 26, 2007
Business Strategy Review
“Value at the Bottom of the Pyramid“
By Juan Luis Martinez and Mar?a Carbonell
C.K. Pralahad’s book, “The Fortune at the Bottom of the Pyramid”?about those with an annual income of $2,000 or less?is the inspiration behind the first of two articles from London Business School’s journal. The authors look at how firms can tap this fortune. They pointedly state that companies should work with (rather than extract money from) the poor, and avoid a paternalistic approach.
Codensa, a Colombian energy firm, is presented as a case study. Needing to expand its market, Codensa turned its attention to the informal economy and came up with a successful strategy that let poor customers buy appliances on credit, repaying the loan via their energy bills. Codensa is now trying to diversify its services to such customers, with plans to offer everything from funeral arrangements to magazine subscriptions.
Click here to access the abstract of “Value at the Bottom of the Pyramid“