Untapped Market: The Poor

I found this on the AMA's site. Very interesting. ~ Curt

While the world's 4 billion poor people are a market that has been largely overlooked for many years, that might not be the case for much longer now that some of the world's largest corporations are beginning to tap into the market, according to a recent article in The New York Times.

Companies such as Unilever sell individual packets of soap in rural villages and urban open-air markets in South Africa and Brazil. And in the telecommunications sector, the biggest growth area is among the poor. C.K. Prahalad, author of the book, “The Fortune at the Bottom of the Pyramid,” recently said at a presentation he was giving, “We have to get away from thinking of the poor as a problem … people have not had a full understanding of the size of the opportunity.” Prahalad, a business consultant and professor at the University of Michigan, says that the purchasing power of poor people might seem small in dollars, but carries more clout in emerging market economies, where goods cost less.

The world’s 4 billion poor are estimated to have $5 trillion of annual purchasing power parity, according to the article. Experts say, though, to tap into the market, innovation is important. Firms have to develop new, affordable products and invent new ways of selling them.