The "Base of the Pyramid" (BoP), is a socio-economic designation for the 4 billion individuals who live below $4 per day. Living mostly in rural villages, urban slums and shantytowns in developing countries, the vast majority survives on an annual per capita income below $3,000. The underlying premise of the BoP concept takes off from the idea, popularized by C.K Prahalad in his 2005 book, The Fortune at the Bottom of the Pyramid, that the vast majority of the worldís population constitutes an under-tapped market that can be served with innovative products tailored to their needs and budgets. The market is big enough so that it is profitable for the producer, and the products are those that can improve the lives of the people in that sector.

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The BoP population is generally characterized by unmet basic needs (lack of access to basic healthcare, water and sanitation, no bank accounts) and a so-called BoP penalty that results in the BoP customer paying higher prices for basic goods and services than do wealthier consumers. The BoP penalty is the consequence of local monopolies, inadequate access, poor distribution and strong traditional intermediaries.

Yet the BoP is a thriving market. Asia, (including the Middle East), has the largest BoP market: 2.9 billion people in 19 countries surveyed or 83% of the regionís population, with an aggregate income of $ 3.5 billion or 42% of aggregate income.  In most Asian countries, the BoP is the majority of the market, representing 76% of aggregate household income in rural China, and effectively 100% in rural India and rural Indonesia. Income distribution across the BoP is far from homogenous. In Cambodia and Bangladesh, most of the BoP is concentrated in the lower income segments of the BoP population with annual per capita incomes of $500 - $1000. Thailand and India have a more even distribution, with most of their population in middle/higher income segments of the BoP with incomes ranging mainly from $1500 - $ 2000.

The BoP Approach to Poverty Alleviation

The BoP approach to poverty alleviation is a compelling argument for the development of a more inclusive and equitable capitalism. Its goal to integrate the poor into the mainstream economy comes from the consideration that the benefits of globalization should accrue to all, and that markets play a key role in this process.

The BoP approach is fundamentally the development of new products and business models to tap into the BoP market, estimated at $5 trillion globally and at $3.5 billion in Asia. It is hoped that the new and innovative products will benefit the BoP customers by addressing their vital needs and by increasing their productivity and revenues. Engaging the BoP in the formal markets will also help in lessening the impact of the BoP penalty by removing the inefficiencies in access to distribution and the suppression of local intermediaries, thereby increasing effective income for the BoP.