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Tier 4 Market: Definition

Posted on Monday, Apr 4th 2005

The End of Poverty is an article in a recent Time magazine issue. About 1.5 Billion people, according to the article, live on less than $1 per day. According to CK Prahlad’s Fortune at the Bottom of the Pyramid 4 Billion people live on less than $2 per day.

THIS is the bottom of the pyramid – a population of consumers currently not quite participating in the market economy, but if they could, then a great economic force could be set in motion.

Dr. Mohammed Yunus, founder of the Grameen Bank, invented the Micro-finance model, now serving 3 Million women in villages of Bangladesh, offering very small denomination loans to micro-entrepreneurs.

I would like to invite readers to brainstorm with me on ideas to tap into this potential market.

A few important technological developments are happening right now: the notion of mobile micro-payments is emerging as a First-world phenomenon and a payment infrastructure necessary for Mobile content, gaming, ring-tones, and a whole lot of marginally useful (mostly useless), but hugely profitable products is now becoming a reality.

Needless to say, this product suite is not anywhere in the realm of purchase requirements of the 4 Billion consumers in question. The infrastructure, however, with minor modifications, could become immensely relevant and important.

The Village Phones, if they could process payments, now stand to become Village Banks. All on a sudden, it even becomes affordable for major banks and credit providers to provide a micro-finance service for this enormous volume market, world-wide.

My interest, in this thread, is to explore what are the possible variations and nuances of this development.

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[…] Tier 4 Market Definition : I invited discussion on this thread, but at the time, I did not have the readership I do today. So I would like to reiterate the invitation, now. […]

Sramana Mitra on Strategy » Blog Archive » MicroFinance and Rural Development Monday, April 9, 2007 at 5:09 AM PT

hi, its a brainstorming session right so i am putting my two cents here…
i feel the village entreprenuer has two main problems
2>red tape
lets see how can we remove this through mobiles
1>info shud not be problem if we can get some free sms info type services ..our mighty gov can step in here
2> red tape- this is the crux and here are solutions
a>device a system for encashing mobile balance in banks, thus if the entrepreur gets some subsidy or assistance credit the amt in his mobile let him encash it anytime he wants and any bank
b>device systems for making payments to govt deppts through cell , the deptt wll then give a permit on sms n a speicifc no.. this may work as temp permit till original is given

hope i am talking sense

sourav das Thursday, April 12, 2007 at 11:33 AM PT

You are thinking in the right direction, Sourav. The “mobile terminal” – cell phone or $100 laptop – would be able to play a very key role, something to be learned from the Smart Card industry. Mexico’s foodstamps, for example, have long been administered by smart cards.

Sramana Mitra Thursday, April 12, 2007 at 2:05 PM PT