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Selling to the Poor

December 28, 2010 • Asia - Pacific, China

By Aneel Karnani

The poor, of course, have many unmet needs. It would be wonderful if business could satisfy all (or even most of) these needs and make a profit in the bargain. It would be a painless, even a profitable, way to solve the problem of poverty. That is the seductive appeal of the ‘bottom of the pyramid’ proposition popularized by C.K. Prahalad in his book The Fortune at the Bottom of the Pyramid. Unfortunately, this solution does not work. The consulting firm Monitor Group concluded, after an extensive survey, that there are very few examples of profitable businesses that market truly beneficial goods in low-income markets and operate at a large scale. The problem is that the market for selling to the poor is just too small, and the poor have very little purchasing power, which makes the market not all that attractive for companies.

However, there are some, even though limited opportunities to make profits and simultaneously help alleviate poverty. The challenge is to design creative market-based solutions for alleviating poverty, which implies profitable businesses that sell beneficial products and services to the poor that genuinely improve the quality of their lives, at prices they can afford. That is the focus of this article.

 
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One Response to Selling to the Poor

  1. Mr. Karnani,

    I was reading your article and find it very interesting. Since the publishing in 2010, have you continued to research the changes in the marketplace and arrive at the same conclusions now as you had in 2010? I am curious to find if there has been an improvement or a decrease in successful business models servicing the poor.

    Thank you,

    Richard D. Matthews

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