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7554554 
Journal Article 
Segmenting the Base of the Pyramid 
Rangan, VK; Chu, M; Petkoski, D 
2011 
No 
Harvard Business Review
ISSN: 0017-8012 
89 
6 
113-+ 
English 
CCC:000290694700041 
The bottom of the economic pyramid is a risky place for business, but decent profits can be made there if companies link their financial success with their constituencies' well-being. To do that effectively, you must understand the nuances of people's daily lives, say Rangan and Chu, of Harvard Business School, and Petkoski, of the World Bank. Start by dividing the base of the pyramid into three segments according to people's earnings and related personal needs: Low income: 1.4 billion people, $3 to $5 a day Subsistence: 1.6 billion people, $1 to $3 a day Extreme poverty: 1 billion people, less than $1 a day Next, consider the roles of various groups in the value-creation relationship: consumers, coproducers, and clients. Specific strategies work best with people in certain roles and at particular income levels. Success requires appreciating the diversity at the base of the pyramid and the importance of scale in undertaking ventures there. Witness Manila Water's success in the Philippines and Hindustan Unilever's in South Asia. Failure to appreciate those elements can foil base-of-the-pyramid ventures, as Microsoft and Procter & Gamble each discovered. 
Business & Economics