Innovating for the Middle of the Pyramid in Emerging Countries

Abstract

A typical view of income distribution in emerging economies is of countries composed of two types of consumers, a tiny wealthy elite and a massive poor class. This was typified in the metaphor of “Belindia,” which although used to describe Brazil as consisting of two countries, a wealthy one such as Belgium and a very poor one such as India in the 1970s, it is still being applied to other emerging countries. One outcome of this polar wealth distribution was managers of advanced economy multinationals directing their firms toward serving the wealthy classes with the same products they sold to consumers in their home countries. The introduction of the concept of the base of the pyramid changed this attitude. Even though the large segment of the population at the base of the income pyramid could not afford the products offered by foreign multinationals, they were nevertheless a potentially profitable market if only multinationals would locally adapt and innovate their products to make them very inexpensive. The result was a reinforcement of the bimodal segmentation of consumers in emerging markets: a small wealthy segment that are global consumers, and a large poor segment that are local consumers.

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