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The Next Billion

2007 by Janmejaya Sinha, James Abraham, and Arvind Subramanian
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  • JanmejayaSinha
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  • James Abraham
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  • Arvind Subramanian
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  • If they were a nation, the next billion consumers would be the tenth-largest economy in terms of GDP.

  • Companies that embrace the next billion stand to win a disproportionate share of a massive pool of revenues and profits.

 

In the fifteenth century, Portuguese explorers were venturing into uncharted waters, searching for a sea route to Asia. When Vasco da Gama berthed the São Gabriel at the Indian port of Calicut in 1498, having safely rounded the Cape of Good Hope, he opened up a new pathway for profitable trade—an alternative to the costly and precarious Silk Road. Da Gama blazed a trail that led to a wealth of new opportunities for traders and helped establish Portugal as a leading European power.

The lure of new markets seems just as powerful today as it was then. Caught up in their own Age of Discovery, companies from around the world are charging boldly into Brazil, China, and India, as well as Africa and other parts of Asia, in search of new growth opportunities.

However, reluctant to push beyond the familiar affluent fringes, most companies have overlooked the next rung of consumers. Across these markets, a billion people are virtually invisible as potential buyers. They haven’t opted out of formal markets as much as they have been excluded, kept out by a dearth of appropriate offerings and business models. Converting them into profitable customers isn’t going to be easy, but companies that succeed will have found the real buried treasure.