At the IDB, when we talk about the “opportunities” associated with working in majority markets, we usually mean the opportunity for those living at the base of the pyramid to get access to jobs, durable and consumer goods, basic services or financial services. The name of our initiative dedicated to encouraging such efforts in Latin America is, of course, “Opportunities for the Majority.” Such projects also offer great opportunities not only for the “Majority,” but also to the companies involved.
Traditionally many companies have targeted middle and upper income consumers, people who obviously have money to spend. And many companies have done very well by doing so. However, some companies are now coming to see that they have overlooked a large group of potential customers – people who may have less money to spend, but still have many basic needs. In addition, base of the pyramid suppliers are often overlooked in companies’ purchasing decisions.
Time and time again, I have seen entrepreneurs experience a sort of mental “click” as they realize the opportunity they have been ignoring. They get very excited and start thinking, “What could I get involved in… What sort of inclusive business model would work in my sector?” This is a business approach that can be very rewarding not only financially, but as business starts connecting with new communities it is very satisfying to have a positive effect on people’s lives. Additionally, these kinds of projects tend to be innovative and challenging, and employees and management teams are energized by and enjoy being part of something unique.
I remember being in El Salvador in 2008 and meeting with a local business leader and his team over dinner. They were so interested in the kinds of projects we were describing they insisted we come back and tell the local business community more. This led to the first Opportunities for the Majority business roundtable, at which over 200 businesspersons heard from Bank staff and from people already engaged in such projects about the challenges and rewards of working with majority suppliers and markets.
One of my favorite examples of how businesses are learning how to enter majority markets is the Colombian tile company Colceramica. They put a lot of thought into what products might be of value to low-income customers, and learned a great deal about how these customers’ buying habits may differ from what they are used to. For example, low-income families tend to buy housing materials bit by bit, expanding or renovating their homes as they can afford to. So Colceramica created a line of tiles with longer runs so customers will be able to find matching products even if they come in months after they bought their first batch. They also developed an alternate distribution system for this line. It’s challenging to rethink the way you do business, but it can also be fun and very rewarding.
I hope this site offers an opportunity for many businesses to learn from each other and share information about what they are doing as we all face the challenge of creating opportunities for the majority.
Steven J. Puig is Vice President for the Private Sector and Non-Sovereign Guaranteed Operations at the Inter-American Development Bank. Before joining the IDB in 2007, he was Citigroup’s Global Head of Trade for Latin America.
