By BOP we refer to Bottom (or Base) of the Pyramid markets. C.K. Prahalad and Stuart Hart, authors of The Fortune at the Bottom of the Pyramid, describe it as “4 billion people with an annual per capita income – based on purchasing power parity in U.S dollars – of less than $1500 dollars, the minimum considered necessary to sustain a decent life.” Essentially, we’re speaking of both the largest group of consumers in the world as well as the group with the least amount of income. Worldwide, this represents a multi-trillion-dollar market because of its size. And while this should excite companies to invest, this enormous market has largely been ignored.
So why care about the BOP? The reasons should be obvious. The BOP represents enormous opportunities for companies to invest in providing products and services to this segment as well as providing employment to its consumers. Currently, multinational companies have been considered most suitable to take advantage of the opportunities in the BOP and most capable of creating value for the same. But what about small and medium enterprises?
Colombia is a country in which approximately 32.7% of its population belongs to the bottom of the pyramid. Given the economic reality in Colombia, supporting SMEs is fundamental to ensuring more inclusive development in the country, especially given their contribution to employment (roughly 80% of all jobs). For these reasons, orienting these companies to create value in the BOP may be beneficial to both SMEs and their customers.