The biggest market is in the smallest sales
Daniel Gross, writing in the New York Times today with a very Long Tail-ish celebration (reg req'd) of big markets in small sums, mentions a book I've just started reading. Like the Long Tail, The Fortune at the Bottom of The Pyramid, by CK Prahalad, is about finding ways to effeciently address sub-economic markets. In this case, he's talking about how to sell goods and services to the world's 4 billion poor, for mutual benefit.
Don't be put off by the do-gooder tone and dry textbook style; this an important guide to finding ways to offer products at lower overhead and in lower-cost form to profitably reach markets that previously looked hopeless. For instance, take this table, which when you substitute "niche consumers" for "the poor" and "hits" for "products sold in developed countries", could apply to Short Head thinkers everywhere:
("BOP" is bottom of the pyramid; "MNC" is multinational corporation)
You can get the thrust of the argument in his 2002 article (free reg req'd) by the same name in Strategy+Business. Prahalad is setting up a San Diego-based consultancy to help companies implement his advice, and recently hired my friend and former Economist colleague Azeem Azhar to help him. Welcome to California, Azeem!
More as I get further into the book.
I've always felt that there is something illogical or unnatural about the world economy regarding this issue. For at least the past couple hundred years or so, the world's wealth has been built upon serving a tiny fraction of the market.
However, the popularization of some technologies in this "top market", which enables the harnessing of the long tail as a marketing strategy, should not be mistaken with the ability to include the rest of the world in the consumerism community, provided that the latter is believed desirable.
Posted by: jfrank | January 03, 2005 at 05:52 AM
The "BOP" market is a very old idea. In fact, the Europeans were making cars long before Henry Ford. However, they were hand-making expensive luxury cars for rich Europeans. High profit margins, but very low volume. Henry Ford understood that the "mass market", which had lower profit margins but very high volume, had far greater profit potential - IF a way of could be found of making lots of cheap cars.
The rest is history.
I think the BOP concept is nothing but mass marketing, extended from the national markets of the 20th century to the global markets of today. Oh yeah, and given a fancy new name so that people will look at it with fresh eyes, so as to clear see the old truth.
Posted by: laocoon | January 07, 2005 at 06:56 AM
Hi Chris,
Just to say, CK's firm is The Next Practice, www.thenextpractice.com.
Azeem
Posted by: Azeem | February 14, 2005 at 04:45 AM
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On your marks!
Posted by: Malianproducts | January 13, 2006 at 01:19 PM