Published: March 10, 2004 in Knowledge@Wharton To experienced marketing managers in the world’s largest multinational companies, it is perfectly obvious who their target market audiences are: The developed world and upper and middle class residents of the developing world. The rationale is simple: these are the customers who demand and can afford costly products and services, who appreciate advances in technology and who provide intellectual excitement to managers trying to capture their business. The world’s poor? They are better served by governments and non-profit organizations. Selling to them just isn’t worth the effort.

 

Or is it?

 

C. K. Prahalad, professor of corporate strategy at the University of Michigan Business School, has an entirely different perspective. In his forthcoming book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits, Prahalad argues that multinational companies not only can make money selling to the world’s poorest, but also that they must undertake such efforts as a way to close the growing gap between rich and poor countries. The book, scheduled for publication this summer, is one of the first volumes to be offered by Wharton School Publishing, a new imprint resulting from the collaboration of the Wharton School with Pearson Education, a unit of Pearson, the international media company that publishes the Financial Times.

 

At the core of Prahalad’s argument for targeting the world’s poorest as a potential market is the sheer size of that market – an estimated 4 billion people constituting two-thirds of the world’s population. More importantly, the market will grow to an estimated 6 billion people within 40 years because the bulk of the world’s population growth is occurring among the poor.

 

Despite the fact that these people subsist on annual per capita incomes of less than $1,500, this “bottom of the pyramid” represents a multi-trillion-dollar market.
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