The Bottom of The Pyramid: What is Your Target Market?

I have received an interesting email from Seth Godin which really made me evaluate the way I think about business.

Seth writes about marketing to the bottom of the pyramid and makes this point.

“Almost a third of the world’s population earns $2.50 or less a day. The enormity of this disparity takes my breath away, but there’s an interesting flip side to it: That’s a market of more than five billion dollars a day. Add the next segment ($5 a day) and it’s easy to see that every single day, the poorest people in the world spend more than ten billion dollars to live their lives.”

What is Your Target Market?

It is easy for anyone in business to look at a target market at get it wrong. It is true that you will be hard pressed to sell mobile phones, TV’s and iPods to these very poor people but someone is selling rice, pots and pans and other essentials. As sad as this situation may be for these very poor people there is still a business market.

For businesses in the more affluent parts of the world we can learn a lesson from this. Are we pursuing the middle or upper ground where individuals may have more spending power and yet are missing out on a huge market lower down?

Perhaps we need to start to examine the bottom of the pyramid.

What are your thoughts on this subject? Please leave your comments in the box below.

Roland Millward
The Entrepreneur Club


One thought on “The Bottom of The Pyramid: What is Your Target Market?

  1. I’ve read a couple of Seth’s books, the last of which was the ‘Meatball Sundae” and he is undoubtedly a marketing genius. He is also the creator of Squidoo, for those of you who may have heard of this.

    I am going to be controversial however, and give you some reasons why you should not go after the lower wage earners so-to-speak…

    1) More price resistance: If you target those at the bottom of the food chain, you are more likely to have to reduce your prices or offer a ‘budget’ service. This leads you to trying to compete with others on price, which is a dangerous game to play, unless you have deep pockets.

    2) You need more customers to make the same amount of money: Imagine having 10 clients all paying you £1,000 per month, so that’s £10,000 per month. If you now charge only £250 per month you’ll need 40 clients to make the same amount of money – and it’ll be a lot more work too.

    3) You make less margin: The less margin (profit) you make the more susceptible you are to recessions, lean periods and expanding your business.

    As always, there are two sides to the coin but I thought it might be interesting to see why (in my opinion) it is more advantageous to go after clients with more money, than those who are on the bread line.

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