Report on global purchasing power released by the International Financial Corp. and the World Resources Institute
Four billion low-income people, a majority of the world’s population, constitute the base of the economic pyramid (BOP). The world’s estimated four billion people - those with annual incomes below $3,000 - who live under the poverty line represent an untapped global market worth USD 5 trillion in local purchasing power.
“The Next Four Billion: Market Size and Business Strategy at the Base of the Pyramid” is based on unique access to the household income and consumption surveys of developing and transition countries, offers a new perspective on low-income communities worldwide. This report draws on income data from 110 countries and standardized expenditure data from 36 countries across the globe.
The BOP makes up 72 percent of the 5,575 million people recorded by available national household surveys worldwide and an overwhelming majority of the population in the developing countries of Africa, Asia, Eastern Europe, and Latin America and the Caribbean -- home to nearly all the BOP.
This large segment of humanity faces significant unmet needs and lives in relative poverty: in current U.S. dollars their incomes are less than $3.35 a day in Brazil, $2.11 in China, $1.89 in Ghana, and $1.56 in India.
Yet together they have substantial purchasing power: the BOP constitutes a $5 trillion global consumer market.
According to the World Resources Institute, that these substantial markets remain underserved is to the detriment of BOP households. Business is also missing out. But there is now enough information about these markets, and enough experience with viable business strategies, to justify far closer business attention to the opportunities they represent. Market-based approaches also warrant far more attention in the development community, for the potential benefits they offer in bringing more of the BOP into the formal economy and in improving the delivery of essential services to this large population segment.
The logical next move: now that a huge market with purchasing power has been identified, businesses will begin to target these underserved countries with marketing and business strategies which will result in improved services and development.
Time will tell.
Cassandra
Source: The Development Executive
