Strategic Innovation at the Base of the Pyramid

Brazils poorest households have an annual total income of around $73 billion per annum; Chinas have an annual income of about $691 billion; and Indias have an income of about $378 billion. However, even though there has been a burst of interest in recent years in how economic growth is unfolding in...

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Bibliographic Details
Published in:MIT Sloan management review 2007-09, Vol.49 (1), p.83
Main Authors: Anderson, Jamie, Markides, Costas
Format: Article
Language:English
Subjects:
Business models
Communications networks
Customer services
Emerging markets
GDP
Gross Domestic Product
Households
Innovations
Low income groups
Management science
Market strategy
Prepaid services
Pricing policies
Product acceptance
Product development
Profits
Studies
Success
Supply chains
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Summary:Brazils poorest households have an annual total income of around $73 billion per annum; Chinas have an annual income of about $691 billion; and Indias have an income of about $378 billion. However, even though there has been a burst of interest in recent years in how economic growth is unfolding in the developing world, most of the research is still focused on how growth occurs in developed markets. Strategic innovation in developing markets is fundamentally different from what occurs in developed economies, the authors argue. It is not about locating new whos (assuming the products and services are affordable, there are plenty of under- and nonconsuming customers to tap). More often, it involves adapting existing products to customers with fewer resources or different cultural backgrounds and creating basic market ingredients such as distribution channels and customer demand from the ground up. Using examples from mobile telephony in the Philippines; consumer goods, power equipment, and auto industries in India; the personal care market in Brazil; and the appliance industry in China, the authors discuss cases from companies including Smart Communications, Hindustan Unilever, Tata Motors, Eveready, and Haier. They present a framework for strategic innovation based on four factors (affordability, acceptability, availability and awareness) and show how companies can create value.
ISSN:1532-9194