Excluded groups

Those parts of the world that have successfully changed their fortunes from being poor to being dynamic and prosperous have principally done so through economic development – successful enterprise meeting market needs, and at the same time creating a home market of empowered consumers. 

If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up.

However, in many parts of the world, and even within even the wealthiest societies, there are groups of potential consumers that are ignored because servicing their needs is seen as too difficult or too expensive. This process keeps within a downward spiral of decline rather than an upward spiral of economic activity, creating wealth creation and prosperity. A number of factors lie at the heart of this, including:

• The fact that many basic services to the poorest people cost much more than they do for wealthier people.
• Poorer people are more likely to suffer from the consequences of corruption in developing countries because they lack a strong negotiating position.
• They may lack access to capital, that would help them to invest in equipment and that enables them to start a business, or to make other costs more manageable.

In many countries, the distribution and retail infrastructure does not exist to distribute products cost-effectively. However, a number of companies have begun to see the potential for creating viable markets from such consumers, and have tried to produce approaches that will work. For example:

• Hindustan Lever (part of Unilever) has, which has developed low-cost, single-use soap sachets that are affordable to the poor in India, along with village distribution systems and school-based education.
• Grameen Bank, recently was awarded the Nobel Peace Prize in 2006, for its pioneering status in providing micro-credit loans to the poor. and showing that, contrary to received wisdom, this model provideds better improved performance in debt repayment, not worse. The model has been widely copied across the world.