Digital Transformation = The fortune FOR the bottom of the pyramid
C. K. Prahalad’s economic Pyramid did inspire a lot of marketers in India for pushing tons of products like shampoo in single-use pouches selling millions of pieces, and yes it’s more profitable than selling a 200 ML shampoo bottle. but that is not the only thing we learn from the pyramid.
The Pyramid is a great model of different economic classes, and a great tool to study, analyze and even sometimes predict, how different sections placed at various levels of the pyramid react to the market.
The difference between AT and FOR:
C. K. Prahalad’s article talks about the fortune AT the bottom of the Pyramid, I am just Picking up the Pyramid model. And this article aims at exploring if Digital Transformation can Bring in some Fortune FOR the bottom of the Pyramid.
Here is an attempt to understand how different section of the pyramid will benefit from the ‘wave of Digital Transformation’
What is Digital Transformation?
Digital transformation is the change associated with the application of digital technology in all aspects of human society. (Wikipedia) I love this simplest definition having three important words on the ‘Change’ brought up by application of ‘Digital Technology’ in ‘Human Life.’ The ultimate purpose of ‘Technology’ is to bring about ‘Positive change’ in the quality of human life. Making life more comfortable, effective, and yes enjoyable. Digital technology like every other technology is not an exception. Computers were invented to make humans life more comfortable. and till date, every new gadget, and technology aim at improving the quality of life.
Digital adoption across the pyramid.
Here is my interpretation of Digital penetration across the tiers
Tier 01: The Rich Class
Technology is expensive, and obviously, the rich class who can afford it get it first. Following journey I am depicting is an adoption of digital devices. as a representation on adoption to digital.
Tier 01 in India could afford personal computers (PC) and started buying for home use during 1990-95. PCs were costing around INR 1,00,000 or more and only small businesses could afford them, and only the ‘rich’ people could buy one for home. PCs at home were mostly used for games, or just learning ‘how they work.’
The PCs also needed ‘dust free’ preferably ‘air conditioned’ environment. A lot of graduate students during that time (1990-95) saw this ‘expensive infrastructure’ locked in A/C rooms, and students were not allowed to use. Primary adopters were educational institutes apart from businesses. Tier 01 families would have started home PCs in India during those years
Rich class in India started buying laptops for home around 1995-2000. PCs were mostly for everyone at home, but, Laptops belonged to one Person. around the same time, Internet became ‘personal’ and fast adoption of social media, hence the need of one laptop per adult in the house. For work or home use, most Tier 01 families now have one laptop per Adult in the house.
Tier 01 families started buying iPads roughly in 2010 – 2012 timeframe, for their kids mostly for playing games, and sometimes peer pressure. Artists using iPad pro for their hobby artworks and even for the official use has been the trend since 2010. C-level executives using iPad should be in a position to see the dashboard of the Key Performance Indicators of their company, has been a fairly common design brief in the industry in last few years.
Like Laptops, we rarely see one tablet per user.
Tier 01 started using Mobile phones sometime in 1995-2000 timeframe, but ‘Smartphones’ started making their entry in the market little later. Blackberry came in sometime in 2000 and ruled the business world for 5-6 years. First Android phone launched in India during the 2008-2009 and changed the way people look at mobile phones. Tier 01 being always the early adopters, adopted early on from ‘Multimedia’ phones to Smartphones which were actually personal computers in your pocket.
Today, in 2017 every member of every Tier 01 family age 12 years plus owns a Smartphone. (probably faster and powerful that some of the Pcs 10 years back) The number of Internet-connected devices at a Tier 01 home today could be easily double the number of family members.
Smart Devices and the next wave of digital gadgets:
Wearable technology has already started making inroads in our homes, Connected personal voice assistants, Smart TVs, VR Goggles, smart home solutions have started making an entry in select Tier 01 homes now, and as usual this tier will keep on upgrading their digital life.
Tier 02 and 03: The Middle Class
The middle class is the most interesting lot in India. Tier 02, and 03 families bought personal computers immediately after the Tier 01. The driving force was, ‘My children’ should be exposed to the latest technology, I need a PC at home. Overall, the middle class has a peculiar spending pattern in India. They would spend more on education, technology, as they believe that is the greatest investments for the next generation. Personal computers started coming in almost immediately after Tier 01 bought computers. Stories of PCs, Laptops gifted to the children at the age of 14 and above are still common.
Tablets have been seen more as a ‘luxury’ item for ‘kids to play games, but, many Tier 02, and 03 families by 2017 have one tablet or the other at their homes. Mostly used for games, light browsing, and exploring apps. still, does not replace the Laptops.
Smartphones made their way in Tier 02 families around the same time of their arrival, Actually, there was little delay in the smartphone adoption from Tier 01 and Tier 02. Housewives and Children in Tier 01 families would have received Smartphones a couple of years earlier than Tier 02, that’s all. At large I do not see a major difference in technology adoption at Tier 01 and Tier 02 families in India, Just a little.
Most of Tier 01 and Tier 02 family Members have Facebook profiles, and interestingly they adopted to ‘Whatsapp’ even later than Tier 04 and 05 family member. Of course, there is ‘Tech Savviness’ factor that I have not considered here.
Tier 04: Lower income group
I think, spending pattern wise, In India, Tier 04 families also spend a sizeable portion of their income, for education and technology. I have seen Parents buying PCs with hefty bank loans for children’s future are still seen here, though rare.
Tier 04 Families adopted to the digital life mostly with smartphones. most of them do not still own a personal computer, but they will all have an internet connected smartphone. Roughly from the year 2012, a digital revolution has actually kicked off simply because one can enter digital space with an affordable device at INR 5000 or even less. With the internet Data connection getting affordable, and the applications getting extremely easy to use, Tier 03 came into the digital wave with Whatsapp on their phones. Quite a few of them do not have facebook profiles but use WhatsApp extensively.
Tier 04 working professionals are very smart, and you will meet many professionals making amazing use of digital technology to make their work life easy. Whatsapp, Mobile camera, SMS communications, video calls, and a ton of apps that help them get their work done are now available virtually free of cost, are making their work smarter, faster and much more efficient.
Tier 04, may not even buy a PC, may not invest in the wearable technology, or smart home gadgets, but keep on updating their smartphones, and pay for their data plans; because now on their ‘Life’ depends on this technology.
Tier 05: The Poor people
For the Tier 05, the digital life has just begun. Some of them already have smartphones, and spend a significant share of their yearly income on the device, and the data plans. Tier 04, and Tier 05 actually are buying the digital life in small packs, (Shampoo in pillow pouches) Haven’t you seen a talk time, data packs worth INR 10, or INR 20 in the shops?
Tier 05, in my opinion, is yet to taste the fruits of the Digital transformation, but I am sure the Digital transformation for them will come in small Pillow pouches. Most small towns have telephone networks, and the digital ICT (Information Communication technology) is reaching this tier very fast.
Fortune FOR the bottom of the pyramid:
Tier 04, and Tier 05 is the largest market from sheer number perspective. even for mobile and ISP providers. with the Governments digitization drive, The last two tiers will get onto the digital channels much sooner. The best part is, the people in the ‘bottom of the pyramid’ look forward to getting the digital technology to improve their life. I have personally met many Cab drivers who think, their economic progress comes through their ICT, the smartphones.
It’s not only the smartphone ownership; but it will be good to observe, how fast the does the people in the bottom of the pyramid, embrace new technology, make an appropriate use of technology in order to improve their working style. Digital Technology alone can not change the life of humans, but can Digital transformations shape the future at the bottom of the poor people?
The context of the bottom of the pyramid, from the marketers perspective, is how much wealth that can be created, by selling to the bottom of the pyramid, Mobile phone manufacturers, Telecom providers have anyways made their fortune by selling to the bottom of the pyramid, I have seen people spending significant amount of their monthly income for mobile internet, mobile phones always wondered is that the right spending pattern for them? The digital drive, poses an amazing opportunity for the Marketers, app developers, Businesses, start-ups, for sure.
Digitization of transactions, an increase of the share of Service industry, Government focus on digital governance, and an overall optimistic outlook of the citizens will largely decide the benefits of the Digital transformation to the Bottom of the Pyramid in India.
On a positive note, I trust, Digital Transformation could be the means for the people at Bottom of the pyramid to build their fortune.