Solve Poverty Profitably

C.K. Prahalad, a strategy guru from the University of Michigan believes that poverty can be solved while people make a profit from it at the same time. There is money to be made from the "lowest rungs of the economic food chain." In his new book, "The Fortune at the Bottom of the Pyramid", he says that businesses are missing a huge opportunity.

The poor represent "$14 trillion in purchasing power, more than Germany, the UK, Italy, France and Japan put together." More interestingly is what they need...everything..."

They need hygiene and personal-care products, and the basics of living. Historically, American companies have been created to serve the needs of the poor, including Sears, Singer and Walmart. Allowing people to break up payments allowed them to purchase items normally out of their reach.

One major incorrect assumption is that the poor don't have the money to purchase anything. However, the truth is that they can't purchase large quantities at one time. Unilever started selling single serving shampoo packets, because that's what India's population could afford, and it works.

Another erroneous thought is that these people aren't interested in new technology, but the opposite is true. Women in India have cell phones!

Thirdly, we incorrectly focus on the form of the product, instead of the functionality of it. Sanitation is a needed function, and the need can be met by marketing cleaning and hygiene products in whatever form is most practical and marketable.

Lastly, it is thought that people would not get excited over the opportunity to work in this sphere, but the opposite is true here as well. Prahalad's classes are packed with leaders who want to do something meaningful with their lives, and this may be the way to combine business with purpose.

As companies search for more markets, since their profit margins are not exactly growing, this may be the answer for them, if they can tailor their product for the poor's needs and resources. And even though companies may not be socially minded, show them a large untended market, and the project can become top of the list very quickly.

BRAINSTORM:

I think this is a wonderful way to combine social ethics with business. Stop thinking like Westerners, and start thinking like organizations truly trying to meet a need.

In "Dilbert and the Way of the Weasel" (I've been listening to this on audio, and I laugh the entire way through...), he parodies marketers who create products and then try and convince the purchasers that they need it. They have to convince them that what they have is not enough, so they will want more. But in this realm, there is no convincing needed. They already know they need everything...the trick is portioning it and charging for it in bite-size pieces to make it available and affordable for everyone. The single serving of shampoo by Unilever is brilliant. It may not make a huge killing, but they're selling product nonetheless, and benefiting an entire culture at the same time.


What basics could you offer, in bite-size pieces, payable for in bite-size payments? What technology could you make affordable that will enrich the lives of others?


In another article, it mentions an organization that sells hand water pumps for irrigation to third world people. They save up $80, and they are able to extend their agricultural reach and increase their income. Everyone benefits. Is there a product like this irrigation pump that could be used to raise their standard of living, or the reach of their businesses?


It also reminds me of an article on Celebrity Entrepreneurs. Magic Johnson moved into marketing to the inner cities when no one else would, and talked major companies into moving there. He markets there because he knew it was an untapped source of spending money. And he made millions doing it.

Where can you focus in the United States, where poverty is still rampant, and provide a product where people are willing to spend money, but other marketers haven't taken advantage of it yet?