Innovation in distribution models at the base of the pyramid

Abstract

This study investigates how innovation in distribution models at the base of the pyramid overcomes the impact of institutional and infrastructural voids in the base of the pyramid (BOP) markets. The research was based on the qualitative assessment of successful companies currently operating in the healthcare, pharmaceuticals, fast moving consumables, beverages and financial, consulting and telecoms services space in BOP market in Africa and India. The research establishes that successful distribution is not possible without consideration of the needs and values of the lower income consumer in terms of understanding where they live, what they purchase and how they behave. Offerings to this market require the application of frugal engineering principles to address product specification, production cost and cost to access. Companies were then researched and the findings interpolated to create a distribution model that describes how companies’ route to market can take the form of either an active or passive mode of distribution. A case for best practise was then developed to describe the most innovative, successful approaches applied to the unique distribution problems in the BOP.