The financial implications of firms business model focus within the bottom of the pyramid market segment in South Africa

Abstract

The participation of businesses and major corporate companies in poverty stricken lower income markets has been met with opposing, and at times controversial views. The Bottom of the Pyramid proposition is one such idea that encourages business people to get involved in the market. However, the commercial viability of the BOP proposition has yet to be proven. The literature review from this study focuses on the ideas surrounding the appropriate business models that have been put forward through academic literature in order for companies to operate successfully in the lower income market segment. Consequently, the literature also focuses on the developments of the BOP proposition as it relates to the business proposed models. Specific attention is paid to the areas of innovation and replication as strategic focus areas within the BOP business models. The research seeks to highlight the fact that the BOP market segment is a commercially viable market for companies to pursue, and that the business model focus for companies should be centred around the dual application of innovation and replication principles as part of the company’s business model. The research study made use of interviews with expert executives and supporting documentary evidence from two case study organisations from within the FMCG industry in South Africa. The results of the research were documented and used to address the primary and secondary research objectives. The research findings ultimately enabled the author to construct a model, which companies interested in pursuing the BOP market could implement in order to operate profitably within the BOP market segment. Copyright