Purchasing power at the bottom of the pyramid: differences across geographic regions and income tiers

The purpose of this article is to examine the purchasing power at the bottom of the pyramid (BOP), i.e. of low‐income consumers.

The authors analyze secondary data on income, population, and expenditure at the BOP from different countries, and apply the buying power index (BPI) methodology to assess the purchasing power of low‐income consumers.

In developing countries, more than 50 percent of the purchasing power resides in the BOP segment. Asia is the region with the greatest purchasing power, relative to Africa, Eastern Europe, and Latin America and Caribbean. On average, the greatest BPI is in the lowest income tier, and consumption concentrates mainly in food, housing, and household goods.

The article provides useful information to companies interested in reaching low‐income consumers about the relative purchasing power at the BOP across geographic regions, income tiers, and product categories (or industries).

The research proposes the BPI as a key indicator of purchasing power at the BOP, and shows how this purchasing power breaks up among geographic regions, income tiers, and product categories (or industries).