New markets and new products: Strategies for reaching the base of the pyramid

Examines new evidence regarding the following: (1) the potential for profitability at the base of the pyramid consisting of over 4 billion people, mostly from third world countries; and (2) entrepreneurial qualities displayed by the informal sector mostly in the developed economies. A few large corporations have targeted the economically poor emerging new markets by developing new products and new technologies. There is no evidence to support the view that sustainable profitability is possible by catering to the needs of this new market segment. Multinational corporations have two options: (1) sell new products using adaptive technology to the middle income segment of the population with traditional marketing approaches; and (2) sell entirely new products at a substantially low price to the vast number of economically poor in the third world countries. This paper examines the critical factors associated with these two business strategies. Informal sector acts as “an incubator for business potential ..... and transitional base for accessibility and graduation to the formal economy.” The potential of the informal sector to develop new products and technologies is examined. Presents a set of conclusions regarding the role of the informal sector in meeting the challenges of the bottom of the pyramid.