You can’t have a successful business without a solid business model. What about this one: small unit packages, low margin per unit, high volume and high return and 40 million consumers?
We’re talking about the untapped opportunity of those people who are considered at the bottom of the pyramid. Yes, their buying power is only $2 a day, which we can’t even compare that to ‘the rest of us’. But multiply that by 400 million and you can see a significant amount of money.
The business model that works is not one that was revised from an existing model that fits a developing country. The models that work are developed from an understanding of the market it is intended to serve. Some of the bigger emerging markets with large populations in concentrated areas include China, India, Indonesia, Brazil, Mexico, Russia, South Africa and Nigeria.
Let me give you just one idea.
Second place winner of the $100K New Venture Start-Up Competition at UTSA was 2P3. Their prosthetic device when installed in a current body-powered prosthetic arm reduces the force needed by the user by 2/3. In other words, less tension, less strength needed to make use of the arm, more activities, better quality of life. They identified their US market as rather small, around 50,000. But world wide, there are over 5 million amputees, and 30,000 added yearly. Now that market is substantial.
One more idea. In 2009, one competitor of the competition designed a solution for clean water using a solar panel, which heats the water and the condensation creates the drinkable water. All over the world, but especially in the bottom of the pyramid, the provision for good quality water is in high demand.
The business model works. The opportunities for the entrepreneur are unlimited.
Check out the book The Fortune at the Bottom of the Pyramid by CK Prahalad.