he potent idea of “fortune at the bottom of the pyramid” has gained traction in recent years, especially in developing countries. This concept, put forward by CK Prahalad and Stuart L Hart, two decades ago, suggests that the world’s poorest people — billions of them — represent a vast untapped market and that businesses that can serve this market can both make a profit and contribute to poverty reduction.

In the current Pakistani context, this idea has great potential to rejuvenate economic growth in tandem with fostering inclusive development.

At the heart of the concept is the recognition that the world’s poorest people are not passive recipients of aid or charity. They are active economic agents, with needs and desires that can be met by businesses that provide affordable and accessible products and services.

By serving these consumers, businesses can not only create economic opportunities for themselves but also contribute to poverty reduction by enabling people to improve their livelihoods.

The concept, envisioned by Deep Prahalad (daughter of CK Prahalad) in 2019 emphasises the need for businesses to focus on the dynamic nature of the market, characterised by shifting demographics, changing needs and emerging technologies.

In Pakistan, where poverty and inequality remain major challenges, the concept has significant potential. A country of over 240 million with a significant population operating in the informal economy and many living below the poverty line represent a vast untapped market of consumers whose needs are not being met by the formal economy.

There are a few examples of those who have successfully tapped into this market, such as mobile network companies that have introduced a range of low-cost products and services, including mobile banking services that allow people to send and receive money, pay bills and purchase goods and services using their mobile phones.

Prominent dairy companies have also targeted the segment with customised products and developed networks of small-scale farmers, providing them with training and support to improve productivity and incomes.

However, tapping into this market is not without its challenges. The informal economy is often characterised by low levels of education, limited access to finance, and a lack of infrastructure. Companies that seek to serve this market need to take these factors into account and find innovative solutions to overcome those.

There is a need for policymakers to mainstream social enterprises in the strategic paradigm. They are glaringly missing from the National SME Policy of 2021. The focus needs to be on building partnerships with local stakeholders.

A key challenge is to build trust and credibility with low-income consumers. In many cases, these consumers are highly sceptical of formal businesses, which they view as exploitative or untrustworthy. Companies that seek to serve this market need to build a relationship of trust with their customers, often through extensive outreach and education efforts.

Another challenge is developing products and services that are affordable and accessible to low-income consumers. This requires companies to rethink traditional business models and find new ways of delivering value to their customers. This might include offering flexible payment plans, adapting products and services to local needs and leveraging new technologies to reduce costs and increase efficiency.

Finally, companies that seek to serve the bottom-of-the-pyramid need to find ways to operate profitably. This can be a challenge, given the low margins associated with serving low-income consumers. However, companies that are able to do so can create significant economic and social impact, both by generating profits and by enabling people to improve their livelihoods.

Successful examples from around the world can provide valuable insights into how businesses can best serve low-income consumers. India has emerged as a leader in this area, with many companies adapting to the evolving market. One example is Hindustan Unilever Limited (HUL), which has introduced a range of products targeted at low-income consumers, such as affordable shampoo sachets and water purifiers.

Another example is Jaipur Rugs, which has successfully tapped into the market for handmade carpets and rugs. The company works with over 40,000 artisans in 600 villages, many of them women, and provides them with training and support to improve their livelihoods. Jaipur Rugs has also leveraged technology to streamline its operations and reduce costs, enabling it to offer high-quality products at affordable prices.

In addition to these examples of success, there are valuable lessons to be learnt from failures. One example is the failure of Coca-Cola’s Cielo water brand in Mexico. Despite being affordable and accessible, the brand failed to gain traction with low-income consumers, who perceived it as being of low quality and lacking credibility.

Serving the bottom-of-the-pyramid requires more than just providing affordable products and services. Businesses must also adapt their strategies and business models to address the unique challenges of this complex market. The distinctive needs and challenges of low-income consumers warrant developing products and services that address those needs in a credible and sustainable manner. Creating a conducive environment for social enterprises to flourish can be transformative in unlocking the untapped market. Such enterprises are deep-rooted in the community with profits being reinvested in the community development.

There is a dire need for policymakers to mainstream social enterprises in the strategic paradigm. They are glaringly missing from the National SME Policy of 2021. The focus needs to be on building partnerships with local stakeholders to build trust with customers.

The writer is a Fulbright scholar with a master’s degree in international development studies and a public policy advisor. He can be reached at okhan1@gwu.edu