Introduction

A significant body of the literature has been dedicated to examining wide spreading of poverty and its gradual explosion issues together with pioneering steps in research and practice towards poverty eradication have created an unprecedented outburst of studies about business literature for poverty eradication. The following section is a review of literature about how multinationals attend low-income markets where poverty occurs on a large scale. The review is carried out with a concern about poverty alleviation and some implications and appropriate frameworks for MNC’s executives to help to alleviate poverty while selling to the poor. From this viewpoint, the literature review is divided into three main sections: BOP inititiative, buyer behavior and marketing strategies. It examines some key elements of the BOP initiative – companies’ motivation; the BOP business model; the role of micro finance. With a number of successful stories acknowledged in the literature, the section also reviews how to adopt MNC’s marketing mix to attend the BOP profitably.

Poverty in Business Perspectives

Billions of people living in the extreme poverty, who are in many cases denied access to proper services, energy, water, health, and above all the opportunities to improve their economic and social outlook, is a significant societal problem. Even though the high economic growth of large-population countries, such as China and India, has brought about many job opportunities and brought down the overall poverty level, it is still not sufficient to reach other targets in the Millennium Development Goals (MDGs) (World Bank, 2004). Along with the increasing concern of NGO’s and other non profit organization towards poverty alleviation, business perspectives have been gradually positioned as a useful tool in contributing to poverty reduction. Such interest has appeared to become much more worldwide through being catalyzed by pioneer approaches, both in practice and theory, which have awakened business attention to the problem of poverty.

Indeed, there is an abundance of academic literature on the. It appear to have been dissected from all imaginable angles Poverty in business perspectives has a diverse appearance, such as the vast majority of 4 billion people living on less than $1 or $2 a day (Prahalad and Hammond, 2002), poor producers (Karnani, 2007), gender (Thierry, 2007), self-employed poor people, micro entrepreneurs, micro franchisees (Gibson, 2007), employees, business owners, etc. Within these much attention is lately placed not on poverty as a whole but on its attributed and its causes.

Companies’ Motivation to Attend Low-Income Markets

Much of the debate about poverty alleviation has been provoked by suggestions that multinational corporations (MNC) with extensive financial resources are in the best position to lead the process of selling to the poor. The construction of a new image of poverty in business perspectives, for example, is much contributed by the pioneering idea of Prahalad and Hammond (2002) who focus on the large buying power of 4 billion people earning less than $ 2000 each per year at the lowest tier of the economic pyramid €“ ‘Bottom of the pyramid’. Prahalad and Hammond (2002) advise private companies to view poverty as a potential of serving an unexploited, multitrillion-dollar market and alleviating the level of global poverty while still earning a profit. By infusing the profit motive into value creation, the hope is that private companies will take the leading role in serving the BOP and, thus, the purpose of alleviating poverty will more likely succeed. From this follows/Keeping this in mind, the main two motivations for profit seeking companies to attend this market is:

1. The opportunity to covert BOP segment’s purchasing power into profits; and
2. The ability to bring prosperity to the poor, and thus alleviate poverty.

Purchasing Power and Profitability

A key component surrounding literature is that even poor people could be profitable customers.

a) Creating New Business Opportunities

Such strong view rests on the idea that the potential growth for many multinational (MNC) and medium sized companies does not rest on the low-income market in the developing countries. Instead, its source is the immense size of potential market of $13 trillion at purchasing power parity (PPP) that the two-thirds of the world population with unmet needs are supposed to represent. Projections and demographic trends also indicate that by 2050, more than 85% of the world’s population will fall within this category. This portends an abysmal decline in effective demand. By empowering the poor, businesses naturally create new business opportunities by raising effective demand and consumption levels.

b) Corporate Social Responsibility (CRS)

since it will help to reduce poverty and more importanlty for the company, it will be crucial to their long-term competitiveness and success. One of the most interesting implications of BOP is the radical impact it can have on a company’s core business model. .. for instance, claims that organizations which set out to empower poor communities by providing basic education and skills acquisition, improving local human capital, protecting the environment, and developing the culture of accountability and transparency, are practicing some components of CSR which is essential for the long-term sustainability of any company. Indeed, many large corporations have announced CSR benefits that impacts on their profitability and claim it to be a key element of development.

Besides, adds that a comprehensive set of CSR policies, practices and programmes incorporated in company’s business strategy can increase productivity, contribute to competitiveness, improve staff recruitment and retention rates and create a more positive corporate image.

c) Government support & Political Capital

It is obvious that businesses that empower the poor strike a compelling partnership with the government. Most of the time, politicians take undeserved credit for attracting such private investments etc.

Poverty Alleviation and Prosperity to the Poor

a) Job Creation

Businesses whose products and services address basic and common needs can enter the bottom of the pyramid market segments more effectively, and with a deeper social impact through partnerships with highly innovative community groups. They can scale their impact significantly by leveraging their expertise and experience in developing skills and engaging such community