How to Cut Costs (For customers at the bottom of the pyramid)

Ø Customer at the bottom of the pyramid are more price sensitive, hence slight reduction in price of goods (lower margin, new technology) can significantly increase demand at the bottom of pyramid

Ø Significant part of cost of goods is attributed to inventory. Hence, reduce inventory holding costs, by eliminating demand uncertainty (thereby inventory at various points of supply chain)

Ø Customer can wait for some time depending on the price reduction offered for waiting

Conclusion – Remove uncertainty in demand by taking advance orders and passing on the benefit borne out of this early information flow, to the consumer itself (reduced prices)

(Courtesy - Ashish Jain and Jagdish Mohan)