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Nokia And Bop Markets Essay

5786 words - 24 pages

Supplemental In-Depth Integrative Case

Nokia Targets the Base of the Pyramid
One of the most widely used clichés in the world of business is the so-called 80/20 rule. In the realm of sales, the rule is sometimes interpreted as “80 percent of our sales come from 20 percent of our customers.”1 One recent business theory that has challenged this rule is the so called BOP or Bottom of the Pyramid perspective, developed and popularized by C.K. Prahalad.2 It refers to the around 4 billion people at the bottom of the economic pyramid with a purchasing power of US$2,000 per year or less. Prahalad and colleagues have proposed that these low-income consumers represent great potential but require a ...view middle of the document...

1 billion of the world’s BOP population. The total BOP household ICT market in these four regions, including 3.96 billion people in all surveyed countries, is estimated to be $51.4 billion.5 But the ICT sector has been growing explosively in developing regions in the interval since countries were surveyed, with Internet services and especially mobile phone companies adding customers at rates that may well have doubled BOP sector spending since that time. Moreover, rapid market growth is expected to continue for some time:

In both Africa and India less than 15 percent of the population has mobile phones.6 Asia has the largest measured regional BOP market for ICT, $14.3 billion, reflecting the region’s significant BOP population of 1.49 billion. Its estimated total BOP market for ICT (including the Middle East) is $28.3 billion, including the spending of 2.9 billion people. Not far behind is Latin America’s measured BOP market, $11.2 billion, accounting for the ICT spending of 276 million people. The region’s estimated total BOP market is $13.4 billion (360 million people). In Eastern Europe the measured BOP market for ICT is $3.0 billion (148 million people); the estimated total market is $5.3 billion (254 million people). In Africa the measured BOP market is $2.0 billion (258 million people), and the estimated total BOP market $4.4 billion (486 million people). Though smallest, the African ICT market is the most rapidly growing one—and it has already generated very profitable companies and significant wealth.7 The BOP share of the total household ICT market in measured countries varies across regions. In Asia the BOP share is about half of the total market, 51 percent; in other regions it is smaller though still substantial: 36 percent in Eastern Europe, 28 percent in Africa, 26 percent in Latin America. Africa shows the greatest disparity between the BOP share of the population (95 percent) and the BOP share of ICT spending (28 percent)8. At the national level there are wide disparities in the BOP share of ICT spending. These disparities stem in part from regulatory differences affecting the pace at which mobile phone networks expand. They also reflect national differences in urban-rural demographics, since mobile networks start in urban areas and only then spread to rural areas.9 In Asia the extremes are represented by Pakistan and Bangladesh, where the BOP accounts for more than 89 percent of the ICT market, and Thailand, where the BOP population, though substantial, accounts for only 29 percent of the market. In Africa the extremes are Nigeria (98 percent) and Burundi (12 percent). In Eastern Europe the extremes are represented by Belarus and Kazakhstan (74 percent) and FYR Macedonia (21 percent). In Latin America and the Caribbean, only in Jamaica does the BOP account for more than half of total ICT household spending (71 percent); the other extreme is Colombia, where the BOP accounts for only 12 percent of ICT spending.10


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