Segmenting the Base of the Pyramid

Segmenting the Base of the Pyramid

Last week I had the privilege to attend the course Building Businesses in Emerging Markets at Harvard Business School. That was great! One of the take-outs was the segmentation at the Base of the Pyramid. We easily talk about a large group of potential customers at the base of the pyramid with roughly an income below $2.- But that is too simple in terms of who needs what.

We can identify 3 segments
A very clear segmentation was made by V. Kasturi Rangan, Michael Chu and Djordjija Petkoski in the Harvard Business Review. If you look at the world population they divided the plus 4 billion people at the base of the pyramid in 3 groups based on income:
Low income from $3-$5 a day
Subsistence from $1-to $3 a day
Extreme poverty below $1 a day

Differences per segment
Segmentation is nice but the relevance in this case is the value creation strategy you need, to be successful in a segment.
The low-income group has in general a couple of years of secondary education and skills to enter the job market. They look for relevant and affordable products like a cheap but qualitative bicycle. The subsistence group has very limited education an irregular income, in general one meal a day and malnutrition is a problem. This group strives for regular work and inexpensive items fort their day-to-day living. Products in sizes and volume in line with their needs (small packages). The group living in extreme poverty is vulnerable in every aspect. Food, health, education and housing.

The segment to which Women on Wings contributes
If we look at the above segmentation we are happy that Women on Wings and her business partners are committed to create regular work and thus a sustainable income. From hardly any income at all the women enter at once the Subsistence segment. The precise income level varies based on the number of hours the women like to work per day or week that is a personal decision they make.

“Women on Wings is a success with a tremendous ambition for the future. We may think it might be tough, but the team will make it!”

Wout Dekker
Former Chairman of the Supervisory Board at Rabobank Nederland

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