For many organizations, a clear way to say that there is nothing extraordinary about what needs to be done is to say that it is “Business as Usual.” However, for a company that has not yet ventured into the low-income market segment, working with the BoP is as unusual as it comes. For a private organization, conducting ‘business as unusual’ means having to learn many things all over again: reaching new customers, exploring new distribution channels, retesting business assumptions and redefining how they market themselves. This can be a steep learning curve.
For example, I met with a certain company a few months ago. They had a great product to offer, well-suited to low-income markets, but they could not figure out the right distribution channel to reach the majority and so, despite strong motivation and a good understanding of its business potential, the company has not yet taken the unusual path.
Developing a BoP strategy raises a number of difficult questions. How can a company create a new product offering without moving away from its core business? How can it reach underserved communities and get them to become part of a loyal customer base? Unfortunately, there is no magic formula, although we can pass on a few tips we have learned in our work financing private sector operations with the BoP. (Look for more detail on all these and more across this site.)
1. Pick the right partners. No single organization can execute a BOP strategy alone. Creating multistakeholder partnerships that leverage the strengths of different organizations can be a key success factor.
2. Think about community organization. Don't be hesitant to reach out to organizations that work at the grassroots level as part of their core business. Most successful BoP business models have relied on the capillarity of grassroots organizations to reach low-income communities.
3. Don’t deviate from your company’s core business. Instead, share what your company does best through new distribution channels and marketing approaches. There lies the true innovation behind BoP business models. For example, tapping into existing “platforms” will enable you to reach the scale that will make the enterprise profitable.
4. Seek some extra help. If after reading this, you still have a lot of questions, some of our partners may be able to offer advice and support. For example, the Opportunities for the Majority initiative of the Inter-American Development Bank will soon launch a ‘Corporate Leaders Program for Excellence in Majority Markets’ to help private sector companies develop their BoP business plans.
