The base of the pyramid as we knew it ten years ago has changed tremendously. Latin America and the Caribbean’s economic growth between 2000 and 2013 benefitted everyone in the region, from top to bottom. Millions of people emerged from poverty, and the segment of those living on $4-10 grew considerably. As their earnings increase, people at the base of the pyramid (BOP) start to consider health a priority expense, opening the door to businesses interested in serving this market. In celebration of World Health Day, here are a few ideas for health companies and service providers in search of new opportunities:
1. BOP-oriented businesses should target women. According to the World Bank study Work & Family, nearly 70 million women have entered the work force (informal and formal) since 1980. Additionally, girls today are more likely to be enrolled in school than boys. As more women, including those at the base of the pyramid, are better educated and earning an income of their own, their health and that of their children will be an expense over which they have a say. This is a social development that health companies should take into account if they want to succeed at the BOP in the long-term.
2. There is an opportunity for infant-oriented health services. Focus groups held by the Inter-American Development Bank’s Opportunities for the Majority department with BOP households in Peru and México in 2014 showed that BOP parents prioritize their children’s health and are willing to spend more money to go to a private doctor if necessary. Interestingly, this changes after the kids reach the age of five. There is a huge opportunity for companies to provide health services to the infant population. Business can certainly leverage the willingness of BOP parents to allocate resources to their children’s health by providing better, affordable services as well as investing in prevention.
3. Pharmacies in BOP neighborhoods are crucial for market penetration. Pharmacies in low-income neighborhoods in Latin America and the Caribbean have become key distribution channels of generic drugs and basic health services. BOP-oriented pharmacies sell generics per unit as opposed to in bulk, which suits BOP families that plan their budgets on a weekly or daily basis. Purchase of generics is mostly an out-of-pocket expense for these families. Pharmacy clerks are trusted members of their local BOP communities and customers follow their advice regarding cures for minor diseases and the purchase of basic medications. Focusing on the role pharmacies and pharmacy clerks play in these communities offers a roadmap for companies interested in better, effective market penetration at the BOP.
These are only a few of the many business insights and ideas that can help business better understand the BOP market and the consumers in this segment. The IDB’s Opportunities for the Majority upcoming flagship report on BOP markets will provide more insights on the BOP’s preferences and ambitions during the BASE III Forum in Mexico City on June 29-July 1, 2015. Don’t miss it.
One Response
Hi Lina – pharmacies are an underutilized resource in some developing and emerging markets, particularly as they can play such an important role for communities in very rural areas who often lack access to essential medicines. A recent systematic review of PPMVs in Nigeria highlighted the valuable role they can play in this particular country (Beyeler, Liu and Sieverding, 2015). The report also picked up on the higher educational achievement many of these shop owners have, with a “substantial” number even being trained health professionals.
There is some evidence to suggest that interventions and training programmes focused on the demand-side aspects and supporting supply chains can make a difference. However, fully understanding how pharmacies can and do fit into the wider health system, which needs to provide comprehensive coverage and not just support a few diseases, is going to be an important next step.
Anna