Innovating for the Middle of the Pyramid in Emerging Countries
The transformation of emerging markets in recent decades has generated a new, growing, and very large middle class market, also known as the middle of the pyramid. This market segment, which is middle by the standards of emerging markets yet low by the standards of advanced economies, is extremely attractive for firms, but still understood and underserved. This volume presents detailed analyses of exemplary firms that have innovated products, services, and business models to fulfil the needs and desires of these new middle classes. It provides useful insights for managers, consultants, researchers, and students interested in emerging economies, and actionable lessons on how to innovate for a new and expanding market segment.
In this chapter, we present business opportunities emerging from the problems faced by the large number of the unbanked in the middle-income population of LAC. We continue by elaborating the challenges facing companies tackling these opportunities, and we provide a series of case studies presenting innovative solutions used by successful companies as solutions to these challenges. We complete the chapter by providing constructive conclusions and recommendations for practitioners, with emphasis on the opportunity in attending to the unbanked, who lack access to credit to make the purchases they aspire to and need but don’t have the means.
In this chapter, we dissect a series of case studies of MNCs who developed innovative business models overcoming geographical, infrastructural and social-cultural challenges and exploiting the opportunity reflected in the social-commercial connectedness of the middle-income customers and the largest and most lucrative retail channel in the LAC emerging market – the traditional one. With our analysis we display how innovators incorporate previously ill-collaborating players, such as financial institutions, technology companies, (none)-governmental and (none)-profitorganizations,in their models producing benefits primarily for the MoPcustomers and retailers as crucial partners.Their models expand company´s value chains to the traditional retailers increasing their productivity gains through the provision of technology and modern retail practices, yielding a powerful impact on them and their communities. They employ and train locals with deep knowledge about the needs and aspirations of local communities, as well as access to rural, lower-income consumersout of reach of modern retailers, contributing tojob creation and MoP member´s income and improved quality of life. Innovative enterprises, thus, master multiple distribution schemes to bring an optimal range of products and services to those communities efficiently achieving distribution and overall business excellence as well as social impact.