The largest market in Latin America is comprised of people who earn less than US$3,000 per year. These 360 million people, out of the region’s 550 million, represent the Base of the Pyramid (BoP) market. While the purchasing power of any one family at the BoP may be low, in aggregate the market is estimated at US$510 Billion. In Mexico, where IGNIA is headquartered and where its initial investments are projected to be, the BoP market represents US$130 Billion and, similar to the rest of the region, accounts for over 70% of the population.

(Data on population and market size referenced in this paragraph are from the World Bank Group report)

Multiple reasons, often present for various generations, have resulted in a population at the BoP that accesses goods and services at a significant disadvantage. This is the case whether the low-income person is acting as a consumer of goods and services (for essential items such as healthcare) or as a member of a productive chain (where the need may be for credit, equipment or logistics). Many factors cause, and then help perpetuate, the disadvantages faced by low income people. As Professor V. Kasturi Rangan of the Harvard Business School has observed, among these are:

• Lack of Complete Information
• Lack of Perfect Competition
• Entry Barriers
• Lack of Property Rights
• High Transaction, Search or Switching Costs

This has resulted in two signature characteristics at the BoP:

• Goods and services reach the poor with extremely deficient value propositions
• The poor pay prices that are often substantially higher than in conventional markets (the “poverty premium”)

Learn more