Bottom of the Pyramid Strategy

Bottom of the Pyramid Strategy
Bottom of the Pyramid Strategy

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Arguments for and Against the Bottom of the Pyramid Strategy

              Overview

              The arguments for and against the bottom of the pyramid approach are well used in the argument. Greedy behaviours contribute to the company management taking advantage of the poor as a way of exploring new markets that have not been explored to gain more profits in return. Ensuring that the stakeholders are not only the businesses but owners is a useful strategy towards preventing these acts that might not be of use to the poor.

              Introduction

Marketing to the bottom of the pyramid is an act that is useful to customers because; they tend to get all that they require from companies that are seeking to cater to the needs of the poor people in the society (Beddewela & Herzig, 2013). Once the strategy is well used the poor benefits as well as the company; hence the aspect of Win-to-win is evident. Managers of companies working on the marketing to the bottom of the pyramid are advised not to focus more on profit making as it might interfere with their actual plan, which is providing products to all especially poor customers.  

In most cases, marketing to the bottom of the pyramid is a win-to-win strategy for most of the companies as it seeks to ensure that consumers are provided with the right products that they require catering for their needs and then company benefits in return. This paper explains the aspect of a company using the marketing to the bottom of the pyramid to its benefit and diasnatage as a bad action that does not prove to be a social act rather a way of exploiting new business grounds.

Bottom of the Pyramid Strategy

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Arguments for the Bottom of the Pyramid Strategy

Ethical behaviour

Most of the multinationals are encouraged to do business using the bottom of the Pyramid approach; because many people in the world are very poor and catering for their needs is ethical. However, there are ethical issues that are connected to this act that results from the strategy due to some of the multinational corporations taking advantage of making profits.  For success to be attained in marketing at the bottom of the pyramid strategy, CSR is very crucial in making sure that all operations are done as required.

It is true that organisations cannot make any reasonable profits from the marketing at the bottom of the pyramid, but in case they are ready and willing they can help the poor by distributing products to them accordingly. Making profits for any company that is operating using the marketing at the bottom of the pyramid only brings the issues of exploiting new markets instead of being socially responsible for helping the poor and bringing the aspect of a win to win strategy (Crane, Matten & Spencer, 2014).

Such organisations are just out to make sure that they look for new markets where they can sell their products and make money for their benefit of expansion. Individuals who earn less than $2 per day are not mostly recognised and this is the reason as to why, most of the companies are encouraged to use the marketing at the bottom of the pyramid to cater for all people in the society especially the poor (Rangnekar, 2010).  Individuals who earn very little are difficult to reach to as they have very little to spend whereby; companies that want to reach them must employ the use of the marketing at the bottom of the pyramid (Filatotchev & Dotsenko, 2015).

Bottom of the Pyramid Strategy

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Some companies have become richer by using poor agents to reach the hard-to-reach villagers who instead are entrepreneurs and only do this with the aim of making profits proving to explore new dormant markets. Searching for the villagers who are hard to find with the aim of selling products to them on a profit-making basis can be referred as a way of exploring new markets for the company, not a win-win strategy.  The case of eradicating poverty cannot be commercialised and if done so the it becomes a strategy to explore new markets under the marketing at the bottom of the pyramid approach (Garavan & McGuire, 2010).

Use of CSR

CSR will work to ensure that the stakeholders of the firm not only includes the media, but customers, employees, media, and government agencies are there to stop the act of commercialising the marketing at the bottom of the pyramid approach.  Ensuring that the stakeholders are not only the businesses but owners is a useful strategy towards preventing these acts that might not be of use to the poor. Commercialising the marketing at the bottom of the pyramid approach will only benefit the company alone, whereas; use of CSR ensures that the approach aims at helping the poor who had been forgotten in the society.

CSR ensures that all social responsibilities of any organisation are directly connected to its strategic direction as this makes its operations aim at the set purpose alone (Gond, Kang & Moon, 2011. Through doing this, success will be obtained and all activities will work as planned to achieve the win-win strategy. It is clear to state that use of CSR by any company operating at the bottom of the pyramid will make it behave ethically and reach the poor as per the requirements. The shareholders’ interest of affirming operating at the bottom of the pyramid will be interfered with and it might be hard to subject them to the issue of profit making which is a secondary deal to them.

Bottom of the Pyramid Strategy

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Most of the companies operating at the bottom of the market approach are currently reducing their rate of emissions with the aim of making more profits and saving the environment as well. Paying off a living wage to such companies helps reduce the turnover of shareholders who might not be willing to take the profit making issue. They will, therefore, get an increased morale once they start getting paid for their services and help the company to increase its productivity (Goranova & Ryan, 2014).   

Marketing at the bottom of the pyramid proves to be a more efficiency act because, better information is provided, productivity is increased and made safer to use and through doing this change will be enhanced in the whole world. It is, therefore, prudent to say that the bottom of the pyramid marketing is a great opportunity for both the seller and the buyer as they are making a lot of money in return, but exploring new markets instead of performing their social responsibility.

A company that makes profits by operating at the bottom of the pyramid is not being socially responsible as it is not catering to the needs of all the customers to their benefit. It will be providing products to customers across the globe with the entrepreneurial aim proving to be exploring new markets not helping the poor as perceived (Karnani, 2009). Any socially responsible company will be more concerned about the welfare of the poor and help them, for they have been neglected by big multinationals which only caters for the needs of the rich while forgetting the poor.

The making of profit means that a company is not socially responsible as some poor people will not afford their products, thus end up not getting that product as it was earlier planned. In some instances, a company should focus on more than just making profits that will benefit the firm alone and also focus on the less destitute in the society for they are also in need of the product as well. Doing this will save the company reputation and ensure that all plans are worked out well to attain the win-to-win strategy (Lam and Khare, 2010).

Bottom of the Pyramid Strategy

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The company will have won by saving its reputation and at the same time poor customers will have an access to the product that they could not access before. Pursuing the core of action is the right thing and has to be done by companies that are marketing at the bottom of the pyramid once they obey the set rules and regulations of operations. Companies advocating for the marketing at the bottom of the pyramid have all it takes to carry the operations without making profits and achieve their goal of providing products to customers without any stress.

Business responsibility and sustainability  

A business is responsible for making sure that it advocates for good actions that lead to a better outcome and guarantees its survival for a longer period. The only way of making such plans work out is by ensuring that the organisation does not major on profit making practices rather it engages in social responsibilities to help the destitute (Prahalad & Hammond, 2002). There are principles that are encompassed by Corporate Social Responsibility of any given firm using the bottom line of the pyramid marketing approach.

The company that is making profits by operating at the bottom of the pyramid is exploiting a new market that is not good to the citizens who are being humiliated. Profit making and poverty eradication do not mix well in a given organisation while making profits will make the management forget their aim in business that is helping the poor by proving product to customers across the globe.

Provision of products across the globe implies that making of profits will make the organization be considered exploiting a new market strategy (Vo, Karen, 2013).  Companies in developed countries tend to adopt the use of the CSR in making sure that they yield to the needs of the customers by proving their desired product accordingly.

Bottom of the Pyramid Strategy

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The poor customers in most of the developing countries will not be better positioned to buy such products; hence, the organisation will have made a very big mistake by exploiting them in the name of selling products to them while making profits. It will be prudent to say that such originations are exploiting a new market opportunity in the name of providing products to customers on a global level (Akter, Ray & D’ambra, 2013).

There have been many corporate scandals that are linked with the supply chain scandals globally and this means that organisations are using the marketing to the bottom of the Pyramid strategy to exploit new market opportunities. It is because of the advantage of taking marketing to then bottom of the pyramid for their use that CSR has been transformed to cover the mistakes of the entire supply chain.

Reputation and brand making have driven CSR, use to the supply chain in stopping the exploitation of the new market using the marketing to the bottom of the pyramid by various organisations (CPedersen, 2015). Use of CSR in the supply chain is very useful in matters of generating business benefits and as well as a driver of innovation to stop the malicious use of the marketing to then bottom of pyramid.  The marketing to the bottom of the pyramid is considered as a win to win strategy and profit making issues will make it be a win-lose strategy as the organisation will gain while the poor customers will lose the little amount of money that they have to others.

Bottom of the Pyramid Strategy

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Code of Conduct (CoC)

The profit issue has led to CoC becoming a way of managing the CSR in the supply chain. All the internal operations will be well guided by the use of CoC to prevent the organisation from making high profits that will exploit the poor in the developing countries. There are set standard as that have been employed for use through the CoC to ensure that the marketing to the bottom of the pyramid is not profit oriented. Managing of the supply chains in the right way will reduce the issue of companies operating at the bottom of the pyramid to explore new markets through providing products while making profits as well.

CSR in the supply chain ensures that companies behave ethically towards fulfilling the required need of the societies who are looking up to them for assistance and help (Berger, Choi & Kim, 2011). Companies have to provide products to customers to keep them moving and carry out activities that will bring improvements in their lives. Greedy behaviours are the ones that contribute to the company management taking advantage of the poor while exploring new markets.

They have free products, and yet they want to sell them to make money out of a business that is not profit oriented (Chikweche, 2013). Non-profit companies should not change their aim and operate like the profit oriented companies; since, they will lose focus and join the other side of the business. Abusing the power that a company holds in the marketplace is very unethical and will benefit the management while the poor will suffer. It is ethical to support communities that are in need of help and forget the issue of profit making as such communities with time will support the companies’ in various forms.

Bottom of the Pyramid Strategy

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Link between (Human Resource) HR and (Corporate Social Responsibility) CSR  

A company whose HR operations are linked to the CSR will emerge to be successful in achieving the set goal of win-win strategy. The employees concerns are well listened to under a good HRM due to better planning of job and all the organisations activities (Chipp, Corder & Kapelianis, 2012). Use of CSR in HRM guarantees equality of opportunity to all the company workers under a diversity management that aims to cater to the needs of the poor. Learning, training and development will be guaranteed and all employees will be led in the right way towards helping the poor in the society.

The employee relations will be improved under a good HRM operating under the right cover of CSR, which will guarantee ethical behaviour like catering for the poor by proving them with the products they desire. Succession planning will ensure that all the products are well distributed to customers and not issues of making profits are majored on as it is unethical to operate at the bottom of the pyramid while making profits (Habib & Zurawicki, 2010).

It is clear to say that HRM operations undergo CSR will prove to be successful in all activities undertaken by the company. HRM will not make profits at the expense of the poor if its operations are based on following the set rules in the company. CSR ensures that any company operating using the bottom of the pyramid approach attains what is required of it and avoids malicious actions that benefit the management alone.

HRM ensures that mentoring programmes are well facilitated to foster inclusion and avoid the greedy act of making profits and exploring new markets. Encouraging the employment of CSR is better in ensuring that a company does what is expected and provides the best for the poor who can’t access it due to lack of money (Majumder, 2012).  

Bottom of the Pyramid Strategy

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Managing CSR in the supply chain

Use of CSR could ensure that all the required principles and codes of ethics are followed to the latter to ensure that the marketing to then bottom of pyramid win-to-win strategy guarantees an organisation to be socially responsible and avoid exploitation of new markets (Tarafdar, Singh & Anekal, 2013). Whenever supply chain is not outsourced, it implies that organisations will major on the marketing to the bottom of the pyramid to make profits and exploit new markets. Organisations whose CSR strategies have to be aligned with the purchasing practice under marketing to the bottom of the pyramid strategy are out to exploit different markets.

Critiques of code of conduct (CoC)

CoC is not very detailed and organisations take advantage of this in carrying out the marketing to then bottom of pyramid with the aim of making profits. Making of profits depends on whether it is high or low whereby; in case it is high; it will be termed as a way of exploiting new market opportunities. Failure to monitor CoC activities and to audit them as required means that the buyers and the suppliers have the opportunity of not taking their activities seriously; hence, will focus on exploiting new markets than focusing on the win to win strategy (Nathaniel, 2013).

Buying criteria and the buyer requirements might be conflicting leading to exploitation of new markets using the marketing to then bottom of pyramid . The benefits of sharing and distribution of the required cost will be uneven as CSR requirements will not be well focused on under failure to follow the required rules. The implementation of CoC in a top-down fashion makes it possible for organisations using the marketing to then bottom of pyramid strategy to make more profits and exploit new markets. This exploitation will take place mostly in the developing countries where customers can’t access the particular products (Pervez, Maritz & Waal, 2013).  

Arguments against the use of Bottom of Pyramid approach

Significantly offering to the base of the pyramid is troublesome, yet it should be possible. It obliges relationship to concentrate on business stray pieces and begin their tries with an escalated comprehension of two key inconveniences in low-pay markets: changing the clients’ conduct and changing the way things are made and went on. Affiliations that put down these deterrents confound the preferences, change limits, and time included, and meander social events wind up efficiently orchestrated to accomplish the task set aside.

Bottom of the Pyramid Strategy

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Separate with center association

As an aftereffect of their colossal business recommendations, BoP-engineered practices all around can’t be executed by only a social event by submitted people –they typically require a huge availability over the alliance. To be possible, coalitions for change must make both on a level plane (uniting sensible regions inside and crosswise over affiliations) and top-down (joining different leveled power with center association).

This is a troublesome requesting for any alliance; however, is especially making progress toward gigantic association with noteworthy sunk expenses implanted in the present circumstance, which conveys a characteristic horrendousness for change. Coordination among affiliation levels just finds the opportunity to be judicious when the new activity fits in with the association’s qualities, strategies and date-books. The encounters thought reliably uncovered a refinement between upper authoritative levels, which push the development, and center association, which is required to execute it (CPedersen, 2015).

At another multinational, which connected with the BoP bit taking after a charge from its controlling shareholder, center association started to voice discontent 18 months into the task, when it wound up being clear the BoP endeavor was not an achievement in business terms. The affiliation had built up an alternate line of business with an uncommonly assigned course show that, in a manner of speaking, depended on upon a cross-part association with a grassroots pioneer.

In the perspective of center association, the affiliation gave a broad assortment of great circumstances and grants to the social pioneer, with no commitment in regards to comes about (Vo, & Karen, 2013). Heads’ disputes were released with the enlightenment that these deviations were honest to goodness because of the “social work” being finished. The way that the affiliation’s “social undertaking” had unmistakable qualities and rules than other affiliation errands started to undermine center association’s strengthen, producing a hole between top association’s affirmations.

Bottom of the Pyramid Strategy

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  Conclusion

 This paper explains the aspect of a company using the marketing to then bottom of pyramid to its benefit and disadvantage as a bad action that does not prove to be a social act rather proving to be a way of exploiting new business grounds. Failure to monitor CoC activities and to audit them as required means that the buyers and the suppliers have the opportunity of not taking their activities seriously; hence, will focus on exploiting new markets than focusing on the win to win strategy.

Greedy behaviours contribute to the company management taking advantage of the poor as a way of exploring new markets that have not been explored to gain more profits in return. Marketing at the bottom of the Pyramid proves that a company must focus on its goal and employ the use of CSR, which will guide the attainment of set plans ahead.

References

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Garavan, T. N., & McGuire, D. (2010). Human resource development and society: Human resource development’s role in embedding corporate social responsibility, sustainability, and ethics in organizations. Advances in Developing Human Resources, 12(5), 487-507

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Lam, H. and Khare, A., 2010. HR’s Crucial role for successful CSR . Journal of International Business Ethics, 3(2), pp. 3-15,82

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Akter, S., Ray, P., & D’ambra, J. (2013). Continuance of mHealth services at the bottom of the pyramid: The roles of service quality and trust. Electronic Markets, 23(1), 29-47

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Pervez, T., Maritz, A., & Waal, A. D. (2013). Innovation and social entrepreneurship at the bottom of the pyramid – A conceptual framework. South African Journal of Economic and Management Sciences, 16(5), 54-66

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Tarafdar, M., Singh, R., & Anekal, P. (2013). Impact of ICT-enabled product and process innovations at the bottom of the pyramid: A market separations perspective. Journal of Information Technology, 28(4), 279-295

Bottom of the Pyramid Strategy

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