Attracting the BIG to the small- what is the best strategy.
Attracting BIG business to the grass roots - How?
Large corporations will say they engage grass roots via corporate responsibility programmes, but as a small organisation, how do get their attention/
Traditionally big business caters to people with high incomes, attempting only to engage with the grassroots through their giving and donations and sometimes even with staff volunteering to carry out chores such as cleaning or painting. But are these big businesses missing out on the profit they could make by catering to the possible market at the grassroots which they ignore?
C., K Prahalad, (2004) thinks they are. Prahalad describes what he calls the ‘Fortune at the Bottom of the Pyramid’. He posits that big corporations miss out on p long term sustainable profit by focusing on the small richer market at the top of the pyramid. He says that there is a large untapped mass market at the bottom of the pyramid and that corporations make a mistake by ignoring this section of society.
Prahalad’s position is justified by organisations like Nestle who operate successful business models in poor rural community in countries like India. In these communities they do not produce massive boxes of clothes washing powder. They produce them in small sachets which people can buy at lower prices and at regular intervals. This ensures a constant turnover in the supply of the product.
Not only does Nestle’s model of selling smaller sachets work but they encourage entrepreneurship by supporting local people to retail these products themselves and earn money.
These models have not become an economic loss for Nestle. The share scale of the numbers being catered to at lower prices makes it profitable. A model worth emulating for other bigger corporations.
Looking at UK retail, we see shops like House of Fraser, Debenhams and lately Waitrose struggling to survive as the numbers at the top of the Pyramid to which they cater begin to get squeezed themselves. Shops like Lidl, Sports Direct and Primark, which cater to the masses, however continue to thrive and grow, and in some cases take over the bigger, more exclusive shops. These newly thriving businesses appear to understand the economic value of not ignoring the ‘Fortune at the Bottom of the Pyramid’.
Is the future of big business then to cater to the larger less privileged masses?
Not necessarily so; There will always be room for niche high brand high value products such as Rolls Royce and Harrods, but corporations, in particular retail will do well to revisit their models in order to develop sustainable models if they want to become part of the future retail landscape.
This revisit of their economic model would also apply to housing development organisations who want to cater to the high end of the market. With the economy changing rapidly and full of uncertainty and millennials struggling to get on to the property ladder, could cheaper, but more houses be built to cater to this need? Could this turn out to become a more lucrative option providing both medium and long term economic value.
For small business, trying to get the attention of large organiations can be difficult. Their business models as described above are not designed to support small business. Therefore, small business and organisations themselves need to start to investigate how they can tap into, and harness the ‘Fortune at the Bottom of the Pyramid’ to sustain their own growth from the grassroots.