1.
The expression “Bottom of the Pyramid” refers to:
Correct Answer
B. The lowest income earners of the global society
Explanation
Bottom of the Pyramid refers to the 4th tier of the population as divided by financial demographics. BoP members earn as little as $2.50 a day or less! They are mostly found in rural areas in developing nations and work mostly in the agricultural industry.
2.
Approximately how much does someone living in the fourth tier of the economic pyramid live off a day?
Correct Answer
A. Less than $2.50 USD
Explanation
Earning $2.50 a day really puts a cramp in your style, doesn't it? Most BoP members already struggle to afford basic needs such as food, water, and clothing. They have even much less to spend on vitamins, education and other goods to improve their current situation. Usually, it becomes a matter of prioritization if they are to acquire everything they need. Money doesn't solve everything, but there's a lot that big companies can do to help innovation at the BoP.
3.
What inhibits innovation at the bottom of the Pryamid?
Correct Answer
D. All of the above
Explanation
Sadly, this is a money-making world and a lot of things exist that inhabits innovation at the Bottom of the Pyramid. Research into BoP is still on going and there exists a lot of assumptions and prejudices created by both sides. Also, the scale of investment needed is huge, investments such as: creation of new, cheap products or simply investing into new processes to make products available to BoP.
4.
Which of the following is NOT an example of a feasible innovative product, service of process at the BoP market?
Correct Answer
E. Research into nanotechnology by BoP members.
Explanation
Innovation at the Bottom of the Pyramid usually involves lower levels of technology, and buying, selling and lending on small scales. On the S-Curve, they would be on the lagging stage of adopters of technology, simply because of the cost. As technology becomes more common, the cost comes down, and the BoP benefit from this. Small-scale trade is easier to manage by BoP entrepreneurs because it costs less and requires less effort to oversee.
5.
For whom does microcredit represent an opportunity?
Correct Answer
C. For people at the bottom of the pyramid that want to start a business or improve living conditions and for financial institutions.
For people at the bottom of the pyramid that want to start a business or improve living conditions and for financial institutions.
For people at the bottom of the pyramid that want to start a business or improve living conditions and for financial institutions.
Explanation
Microfinancing can benefit both parties. Borrowers are able to avail of small amounts of money interest-free whilst lenders can get tax-breaks on their donations. Banks and financial managing institutions are able to earn interest from the pool of money they manage from donors.
You can get involved in micro-financing entrepreneurs at the BoP level. If this interests you, check out: http://www.kiva.org
6.
Water purification powder of Procter&Gamble became a big profitable success.
Correct Answer
C. Yes, it succeeded, but only as a philanthropic activity.
Explanation
Proctor and Gamble had tried to enter the BoP market but decided to treat it's members as consumers of a product. This product that they created was the water purifying filter powder. They invested $10m to its research, production and cost minimization in hopes that the BoP market would purchase it a lot. However, only 5% of the market was interested. After all, regardless of its low cost price, there were other FREE ways to filter water (like, not filtering it at all..) Free is always going to be cheaper. In the end, P&G relegated this project as a philanthropic activity and gave the powder away to non-profit organizations.
If this interests you, check out: http://business.financialpost.com/2011/01/07/pg-hunts-opportunities-at-the-bottom-of-the-pyramid/
7.
Why should we encourage innovation at the BoP?
Correct Answer
B. There are many problems to be solved at the BoP level and many needs to satisfy, and sometimes it can be a profitable endeavor.
Explanation
There are heaps of reasons to support innovation at the Bottom of the Pyramid. The biggest reason is SOCIAL RESPONSIBILITY! Also, as Prahalad outlined, the market at the BoP is huge, simply because they do have a lot of needs given the situation. Whether or not a company makes money out of the venture, ingenious ideas and innovative products that provide for a better life will always serve as a step forward for all mankind. Read our wiki for Pros and Cons!
8.
How can innovation at the Bottom of the Pyramid be positive?
Correct Answer
E. B and C
Explanation
Supporting innovation at the Bottom of the Pyramid can be a win-win solution for all parties involved, if the factors are right for the opportunity and situation. Read our Pros and Cons page for more information!
9.
What forms of innovation will suit the people at the Bottom of the Pyramid and thus be successful in that respective market?
Correct Answer
D. All of the above.
Explanation
All of the above: Because each form of innovation has its own benefits and will help the people in that market in some or the other way. For example: A product innovation in the form of a small sachet of shampoo instead of a big bottle of the same (which suits the demands of people in that market) Similarly services innovations such as healthcare are important and benefactory to everyone
10.
What is meant by the term diffusion with respect to innovation (and thus innovation at the bottom of the pyramid)?
Correct Answer
A. The rate at which innovations are adopted and used by customers
Explanation
Diffusion is the rate at which innovations are adopted and used by customers at the bottom of the pyamid (in this context). Diffusion describes the way in which innovations catch on and become popular and thus the rate at which they are adopted and used by customer varies
11.
Amongst the theories of innovation, which of the following options refect the best way to monitor the progress of the innovation and predict the impact that the innovation will have?
Correct Answer
E. Depends on the innovation and its type in question
Explanation
Different theories of innovation assist in identifying patterns of innovation which will be linked to the types of innovation, thus it depends on the innovation and its type in question