Where was the market for Solae's protein in rural India? It needed to be created.
On Monday, the Wall Street Journal published an article by my colleague Erik Simanis about our work developing new markets in the base of the world's income pyramid. Erik is a pioneer in business development methodologies for the BoP.
The Base of the Pyramid is not actually a market. True, those billions of low-income people have a lot in common. But they don't have two of the vital characteristics you need to have a consumer market. They haven't been conditioned to think that the products being offered are something one would even buy. And they haven't adapted their behaviors and budgets to fit the products into their lives. A consumer market is nothing less than a lifestyle built around a product.
Erik uses a range of examples including bottled water in the U.S., P&G's PUR water cleaning powder, KickStart's MoneyMaker pump, and our own work with Solae in India to demonstrate that companies should think twice before assuming a market for their products exists, even if those products are well designed. And if a market doesn't exist then traditional market entry approaches - the kind that most companies use and most managers are taught - are largely ineffective. Instead, companies need to learn to create markets.
Since the first BoP Protocol pilot in 2005, our work has focused more and more on the challenges of creating new markets and building the enterprises that enable them. Over the years, we have learned a number of hard, but handy, lessons. Three of those lessons are described below.