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Some authorities believe that when people with little disposable income are squeezed with profits, it is not exploitation, which is capitalist in nature. On the other hand, other authorities believe that it leads to economic growth. In this case, the latter is true as from the evidence, which has been provided. When one is marketing products to people who have low incomes, they are making profits. At the same time, people with low disposable incomes are profiting from the products, which are on offer. This means that both the seller and buyer are gaining from the transaction, which takes place. An example of how this is possible is in India, where Unilever products are available to the rural people (Prahalad, 2004). The latter can easily obtain Unilever products, which are sold in small portions. At the same time, the company profits, as it has made its products become available to people who would not have afforded. In turn, the economy of a country grows as people are buying products, thus a rise in the Gross Domestic Product.
Most times, the authority may be a government, which has the responsibility of taking care of citizens. This is regardless of how much people earn, even those who have low disposable incomes. Governments come up with fiscal policies, which are meant to ensure that the economy grows. The disposable income of households is lowered by taxes, making it possible for people to purchase products. Governments usually work with large companies, so that the taxes of certain products can be reduced. For example, a company, which sells laptops, can agree with the government to lower the taxes of the products. This means that consumption and spending levels will be increased. An economy’s growth rate is often calculated according to the amount, which people spend (Kotler, & Lee, 2009).
Those with little disposable income thus stimulate the growth of the economy since they feel that they have the ability to spend. According to a publication by Professor Prahalad, those people who are the pyramid’s bottom do have a lot of profitability (Prahalad, 2004). The target group in this population is estimated to be people totaling four billion in number. Furthermore, they earn at least two dollars a day or less, thus known as people with little disposable income. Moreover, their purchasing power is at fourteen billion dollars. This means that their needs should be known so that marketing products to them will be easy. In turn, the large corporations will offer them products of high standards, but at affordable prices. This is often known as a ‘win-win situation’ all the parties gain.
When there are many products in an economy, it means that people with little disposable income can purchase products. Manufacturers of products will ensure that the products that they produce are affordable. For example, most phones are normally high priced, and the poor cannot afford. In turn, Motorola took advantage of this in order to gain profit from the people at the bottom of the pyramid. They made phones, which have features, which are suitable for people with little disposable income. In this case, Motorola targeted people living in rural areas whereby, the supply of electricity is minimal (Prahalad, 2004). The phone could stay for long periods of time, as the cells were made to have this needed feature. In turn, people who have this phone and are living in rural areas can communicate with others. The latter is especially beneficial for farmers and business people living in rural areas. It makes it easy to order for products and even sell farm products easily. When such activities take place, the economy of a country improves as it earns a lot of revenue from the dealings.
It is not proper to claim that when companies are making profits they are squeezing off the poor people. The aim of any business venture is meant to make profits if it does not do so then it loses its purpose. People at the bottom of the pyramid are consumers who need products just like those with high disposable income (Kotler, & Lee, 2009). In order for any economy to be successful, everyone should be able to offer products. Demand is a contributing factor towards improvement and economic growth prosperity. Companies often know what consumers with little disposable income earn, and thus create services and products, which suit them. An example is whereby Nestle introduced new ice cream flavors in China. It included flavors such as green tea and red bean, which are common flavors in the country’s cuisine. Nestle knew what its lower bracket income earners needed and took advantage and made the products available. In turn, the introduction of new products into a market stimulates the growth of the economy (Prahalad, 2004).
In conclusion, in order for a company to be successful while marketing to people at the bottom of the pyramid, some issues must be addressed. Chose a target market and find out what they need most. Afterward, develop a product, which can be afforded by them and market the product through easily accessible channels. The government should be involved in this matter so that it can cut down taxes. This will be a sure way of ensuring that people with little disposable income buy affordable products. At the same, the economy of a country grows significantly.
Work Cited
Prahalad, C.K. (2004). The fortune at the bottom of the pyramid. Philadelphia: Wharton School Publishing.
Kotler, Philip. & Lee, Nancy. (2009). Up and Out of Poverty: The Social Marketing Solution. New York: Pearson Prentice Hall.
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