An Assessment of the Potential Role of Business in Reducing Poverty and Marginality in Rural Ethiopia
III. The demand side of BoP markets: the marginalized poor as consumers and producers
III-1 Introduction: the people at the bottom of the economic pyramid
The Bottom of the Pyramid (BoP) is often praised as a huge untapped market. A lot has been written about strategies for companies to explore and capitalize on this market (see e.g. Prahalad, 2010; Karamchandani et al., 2011; Elaydi and Harrison, 2010 to name just a few). Despite some criticism on these approaches (Karnani, 2009b; Simanis, 2010; see also Section I-2), the debate is not anymore about whether the private sector should engage the poor but about how to do so best (Reficco and Márquez, 2012).
The basic idea of recognizing poor people as market opportunities was introduced by some influential business thinkers, first and foremost by Muhammed Yunus and C.K. Prahalad (see e.g. Hamel and Prahalad, 1996; Prahalad and Hart, 2002; Prahalad, 2010; Yunus, 2007) who were then followed by many others (see also Section I-2). The main arguments for bringing the private sector and the poor together can be divided into two lines of argumentation: one is the societal necessity for getting the private sector on board of poverty reduction efforts since traditional development cooperation has a role to play but has not redressed the problem of poverty (Polak and Warwick, 2013; Prahalad, 2010). An important argument in this context, besides the big amount of knowledge and money that is expected to be made available to the benefit of the poor, is scale. Whether initiatives started by single entrepreneurs or...
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