The more current usage refers to the people living on less than $2 per day, as first defined in 1998 by Professors C.K. Prahalad and Stuart L. Hart. It was subsequently expanded upon by both Prahalad in 2004 in The Fortune at the Bottom of the Pyramid and by Hart in 2005 in Capitalism at the Crossroads.

Prahalad proposes that businesses, governments, and donor agencies stop thinking of the poor as victims and instead start seeing them as resilient and creative entrepreneurs as well as value-demanding consumers. He proposes that there are tremendous benefits to multi-national companies who choose to serve these markets in ways responsive to their needs. After all the poor of today are the middle-class of tomorrow. There are also poverty reducing benefits if multi-nationals work with civil society organizations and local governments to create new local business models.

As The Economist reported on August 11th, 2005, one example of “bottom of the pyramid” is the growing microcredit market in South Asia, particularly in India. With technology being steadily cheaper and more ubiquitous, it is becoming economically efficient to “lend tiny amounts of money to people with even tinier assets”. The firm discussed in the article, Sa-Dhan, argues that the availability of credit to the poor “helps the poor but allows banks to increase their business.

Emergence of the Bottom of Pyramid

The Bottom of the Pyramid (BOP) has emerged as a dominant concept in business, propelled by C.K Prahalad’s (2005) The Fortune at the Bottom of the Pyramid. Given the enormous attention the concept has attracted, it has the potential to impact the world’s billions of poor people—as well as the managerial practices of multinational corporations. This double potential makes it important to analyze how large corporations can serve low-income customers profitably