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Executive Summary

Today in India, we have two huge but vastly different markets that are growing simultaneously. On one side, we have Middle Class, which every company is chasing, while on the other hand, we have Bottom of Pyramid - the market where most of the consumers live on less than $2 a day.
This market was completely ignored till Dr. C. K. Prahlad, a top management thinker all over the world, and Harvey C. Fruehauf, Professor at University of Michigan Business School, brought the focus of world on this huge untapped market. They showed the way that even this market could be hugely profitable. But still, barring a few like LG and HLL, most have burned their fingers.

The paper deals with understanding the dynamics of growth in Indian market and has tried to evaluate both of these highly attractive markets in India - the burgeoning Middle Class (MC) and Bottom of Pyramid (BOP) - on various parameters in terms of challenges, present scenario, characteristics, and future growth potential. Under the circumstances, where differences exist between equally lucrative markets, where should companies venture? Which sectors are suitable to make BOP venture successful, and which are not? One approach is to move along the path they have followed till now, i.e., cater to middle income group, and the other approach is to cater BOP and move in un-chartered territory.

In this paper, we have identified each market, its attractiveness, size, potential and challenges, and mapped the parameters which determine the success and failure of any company in either of these markets. There cannot be one answer, which is applicable to every company and every industry. The mantra of success is SWOT analysis, which companies need to do before taking strategic decisions. Both markets are attractive to bring profits to company provided it ventures with its core strengths.

Introduction

In India, we have two markets - Middle Class and the Bottom Of Pyramid, people who are at the bottom of income pyramid. Most of these people earn less than $2 per day. Based on various segmentation parameters, broadly we can further divide middle class into two segments: -

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* Contributed by -
Abhishek Gupta, Computer Engineer from Delhi College of Engineering,
Saurabh Jain, Civil Engineer from Jamia Milia Islamia University, Delhi,
Both are currently pursuing PGDIM (Post Graduate Diploma in Industrial Management) from NITIE, Mumbai.