Almost a third of the world's population earns $2.50 or less a day.

Putting aside the extraordinary disparity in the world’s wealth – and its hopelessly uneven distribution what is clear is that this should be seen as a considerable market opportunity – rather than humanitarian crisis.

 You see it represents a market of more than five billion dollars a day. Add the next segment ($5 a day) and you can see that every single day, the poorest people in the world spend more than ten billion dollars to live their lives.

Most of that money is spent on the most basic items bought – for example rice, grains, clothes. And it costs more than the sale price to buy these, that’s because there’s lack of information, high costs because of a lack of choice, and most of all, a lack of innovation.

The bottom line?  It costs more to be poor.

So if a business in a developing economy can offer a better product, one that's more efficient, provides better information, increases productivity, is cheaper to use,  or acquire,  then  it’s pretty likely that business will not only scale successfully but will  can change their local economy in a meaningful way.

The mobile phone, for example, has revolutionized the life of billions in the developing world. In these markets when you have access to a mobile phone, you can for example determine the best price for the grains that you want to sell. You can get advanced weather warnings that will affect your crops, or you can send money instantly to your distributors. Your productivity goes through the roof.

Because of that an entire secondary economy has been created. Mobile money platforms have incubated and fostered a fully functioning eco system. If the mobile phone had been positioned as a source of aid it could not have taken off as rapidly as it has. As a result the market now competes to be ever more efficient.

If you're a tenth-generation subsistence farmer your ‘consumer needs’ are different from someone working in the Google R & D lab in Palo Alto. The Moral Economy of the Peasant makes this argument quite clearly.

 The major difference?  You have an inbuilt aversion to risk.

As a result, it's extremely difficult to sell innovation to this consumer.

A farmer isn’t going to walk 2 days to a store saying, "I wonder what's new today? I wonder if there's a new way for me to solve my problems."

In developing markets ‘shopping’ is a means to  survival.

You can't simply put something new in front of a person in this market and expect them to buy it, no matter how great, no matter how well packaged, no matter how well sold.

And here’s the flip. A new product and approach and innovation could dramatically improve the life and income of a billion people, but those people have been conditioned to survive- not prosper. Fear of loss is greater than fear of gain. Advertising is inefficient and ineffective.

The mass market approach doesn’t work here because there is no mass market in places where villages are the only market.

Take for example Vania Rivero for Sorata in Bolivia.

 Vania came up with a marketing idea which has grown out of Bolivia and is now used by hundreds of thousands of people across the US and Canada.

Her idea?  It’s an organisation called Anyi Bolivia.  Here you will find a network of indigenous artisans from across Bolivia. It helps women gain self-esteem by teaching them the skills necessary to become wage earners for their families. It also enables many artisans to remain in rural communities, thus avoiding the trap of urban poverty.

Members of the network make a moral commitment to participate, based on the ethics of Anyi — a self-help system used in pre-colonial times by Aymara and Quechuan people.

There are currently 200 full time artists and 300 who work part time. Individual and small groups of artisans produce various types of handicrafts that reflect their native cultures. These handcrafts are produced locally and sent to La Paz, where the retail and exporting business is coordinated

In addition to providing artisans access to large retail and export markets, the Ayni leadership team also teaches the artists small business skills, helps with the production of their crafts, and gives them ideas about how market themselves locally.

Ayni produces a range of products that include the use of intricate embroidery, traditional weaving and the production of finger puppets in unique knit carrying bags.

It means Anyi has had to find the early adopters, market to them, offer top quality products and service to them, support them.

Anyi has had to be patient yet persistent.  It means that the traditional way of mass marketing that the West is so engaged in cannot and will never work in these conditions. Marketing is done by word of mouth, by a gradual acceptance over a lengthy extended period of time. It means winning trust and respect in an old fashioned way, where being valued is more important than the value .

And if you are a Western company marketing into these economies it means that you have to be prepared to wait for a long while to see the rewards from your efforts.

It’s a wait worth doing.

Tags: Marketing, Bottom of the Pyramid, Services that Matter

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