April 27, 2011

GET RICH BY HELPING THE POOR?:

Save the Poor by Selling Them Stuff — Cheap: The bottom-of-the-pyramid marketing movement tries to profit the developing world and make a profit at the same time. (Vince Beiser, 4/25/11, Miller-McCune)

For decades, the main model of Third World aid has been the obvious: Give stuff to poor people — be it hydroelectric dams, surplus food or medical equipment. But Western countries have poured some $1.5 trillion into such efforts over the last 60 years, and more than 1 billion people worldwide still live on less than a dollar a day.

The Extreme Affordability program is an experiment with a dramatically different approach to fighting poverty, one that in recent years has generated tremendous buzz among academics, development workers, entrepreneurs and corporate executives. It’s called “bottom of the pyramid” marketing. The idea is to harness capitalism to solve the problems of the world’s poorest — those at the bottom of the global economic pyramid. If you design a useful product for a market rather than for charity’s sake, the theory goes, the target population is more likely to actually want it and use it. If businesses can turn a profit making that product, it not only creates jobs but will keep getting made even if Western donors lose interest. And there should be colossal profits to be made: The world’s poor don’t have much money individually, but there are billions of them.

Get rich by helping the poor. It’s a powerfully alluring idea. A surge of books, symposia, blogs and corporate annual reports champion it. Major organizations, including the World Bank and the United Nations Development Program, have set up programs that support it. Venture capital funds are giving millions to startup firms trying to implement it. MIT, Penn State, Cornell and other top universities in the U.S. and other countries are teaching MBA students about it. “It’s picking up, big time,” says Luiz Ros, manager of a $250 million Inter-American Development Bank fund dedicated to supporting bottom-of-the-pyramid ventures.


Posted by at April 27, 2011 6:10 AM
  

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