Do such assumptions represent ethical challenges? Why, or why not

Many legal standards exist that businesses are required to meet in order to ensure product safety. These standards tend to be well defined, and adherence is a generally accepted risk mitigation strategy. Less quantitative risks exist, often in the area of ethical behavior, and Table 2.2 enumerates assumptions often made about the large portion of the world living at or below the poverty line. 

Do such assumptions represent ethical challenges? Why, or why not?

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TABLE 2.2 Challenging assumptions about the bottom of the pyramid

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Assumption

Reality – and opportunity

The poor have no purchasing power and do not represent a viable market

Although low income the sheer scale of this market makes it interesting. Additionally the poor often pay a premium for access to many goods and services – e.g. borrowing money, clean water, telecommunications and basic medicines – because they cannot address ‘mainstream’ channels like shops and banks. The innovation challenge is to offer low-cost, low-margin but high-quality goods and services across a potential market of 4 billion people.

The poor are not brand-conscious

Evidence suggests a high degree of brand and value consciousness – so if an entrepreneur can come up with a high-quality, low-cost solution it will be subject to hard testing in this market. Learning to deal with this can hep migrate to other markets – essentially the classic pattern of ‘disruptive innovation’.

The poor are hard to reach

By 2015 there are likely to be nearly 400 cities in the developing world with populations over 1 million and 23 with over 10 million. 30–40% of these will be poor – so the potential market access is considerable. Innovative thinking around distribution – via new networks or agents (such as the women village entrepreneurs used by Hindustan Lever in India or the ‘Avon ladies’ in rural Brazil) – can open up untapped markets.

The poor are unable to use and not interested in advanced technology

Experience with PC kiosks, low-cost mobile phone sharing and access to the Internet suggests that rates of take-up and sophistication of use are extremely fast amongst this group. In India the e-choupal (e-meeting place) set up by software company ITC enabled farmers to check prices for their products at the local markets and auction houses. Very shortly after that the same farmers were using the Web to access prices of their soybeans at the Chicago Board of Trade and strengthen their negotiating hand!