Harvard Business Review Publishes Article by Member of Johnson’s Center for Sustainable Global Enterprise
Article by Erik Simanis explores challenges and solutions to selling products and services in low-income, emerging markets
The June 2012 issue of the Harvard Business Review (HBR) features an article titled "Reality Check at the Bottom of the Pyramid," by Erik Simanis, PhD, managing director of market creations strategies at the Center for Sustainable Global Enterprise at the Samuel Curtis Johnson Graduate School of Management at Cornell University. Simanis' piece outlines key challenges and solutions to profitably selling products and services to the four billion low-income consumers across emerging markets--often referred to as the "bottom of the pyramid."
Simanis argues against conventional wisdom, which has long-held that these low-income markets require “low-price, low-margin, high-volume” business models. Drawing on his research and experience leading ventures in Africa, India, and other emerging economies, he demonstrates that high margins and price points are needed to offset a high-cost, slow-growth operating environment and the volume constraints imposed by poor quality infrastructure.
Simanis shows how companies can solve this difficult challenge by building a “margin-boosting platform.” He uses as a case study based on his current work in Ghana, on a project that partners Johnson’s Center for Sustainable Global Enterprise, the Bill & Melinda Gates Foundation, and S.C. Johnson, the global manufacturer of household cleaning, pest control, and air care products. That project, which resulted in a December 2011 launch by SC Johnson of a new product concept, aims to reduce malaria among the rural poor, through a sustainable business model.
In addition to being published in the HBR, Simanis’ recent work has appeared in The Wall Street Journal, Sloan Management Review, and the journal Innovations. His applied research focuses on advancing innovation and business development strategies for creating new markets and commercializing new product categories.
Simanis’ article is available online, along with two follow-up blog entries, “Businesses serving the poor need to get over their unease about profit,” and “The smart way to make profits while serving the poor.”