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The idea is that even though individual consumers in poorer countries may not be able to afford much by way of discretionary spending, in aggregate they do form a tempting market.

Therefore, if you were able to create products that made sense to them, packaged in ways that they could afford, you might open up a whole new class of consumers. It turns out that many of the world's potential consumers - and certainly India's - fall into this category. And firms which succeeded in reaching out to them have demonstrated that these are viable customers.

Examples include Arvind Eye hospitals, Madurai, the famous Jaipur foot, Cavin care sachet for hmpoos, Nirma in detergents, and others who have created tiny one-rupee sachets of health-and-beauty products, which would fall into the discretionary spending power of even relatively poor people.

Prahalad was the prime mover behind the idea that large firms including multinational companies could profitably target these customers: a version of "doing well by doing good". There has been criticism in some circles who maintained that Prahalad over-estimated the profits that could be made; others suggested that there was something unethical about the very idea of, as it were, exploiting the poor.In his most recent work, Prahalad combined elements of the BoP idea with work on innovation. With 'the innovation sandbox', he showed how imposing constraints often engenders creativity of the first order.

For instance, there are the success stories of Aravind Eye Clinic, Narayana Hrudayala and the Jaipur Foot, all of which offer uncompromising world-class services and products at a fraction of the prevailing cost, through astonishing process and product improvements.

Well-to-do Indians are charged the higher fee, which partially subsidizes operations for the poorest. But the key to keeping costs down is the huge volume of surgeries and the efficient system the doctors have developed. At Aravind's three hospitals, 80 doctors perform 50 surgeries a day. At any one time in the operating room, four doctors are working on patients side-by-side. Patients are returned to their village the next day, where paramedics complete the postoperative care. In technical jargon, this is "process innovation." India seems to excel at it. "Process innovation is a critical step in making products and services affordable for the poor," according to Prahalad. The Centre has developed inexpensive cataract surgeries for $50 to $300, compared with just over $2,000 in the U.S. The procedure's price even includes the cost of a locally made intraocular lens, inserted during surgery to restore sight.

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* Contributed by: -
Prof. M. Guruprasad is Senior Faculty for Economics, Finance and Research, with AICAR Business School Raigad / Mumbai. He has more than 15 years of experience in research and educating / training management students. He was research scholar with the University of Mumbai. Worked as Executive in the Marketing research industry. Also Conducted Workshops and Training programmes. He has published articles in various industry magazines, newspapers and has initiated many discussions on academics.