When a Fortune 500 corporation says something, people listen. When the Fortune 500 company in question is Citigroup – in 2007, the world's largest firm – people REALLY listen. So when I received a phone call from Citigroup analyst Stuart Block earlier this year, I was all ears.

Stuart – with fellow researcher Richard Reid – was calling because he had undertaken an ambitious base of the pyramid project. He and Reid set out to examine the market and share their findings with Citi's audience of expert analysts and customers. Naturally, I was intrigued. I know that the base of the pyramid concept has become mainstream over the past few years, but here I had a Citigroup researcher on the line, asking me how we came up with the figures in The Next 4 Billion report. This was the real deal.

After a number of conversations with Stuart – who should be commended for his careful analysis and unending patience – he and Reid published a new Economic and Market Analysis report just last month. Entitled The Pyramid of Consumption: Who Gains Now?, the paper – available as a PDF file – presents a remarkably balanced analysis of the global economy from a BoP perspective.

Unlike many other base of the pyramid-focused reports, Block and Reid talk about the middle and top of the economic pyramid as well. After all, one cannot think of the low-income market as existing within a bubble – trends like higher energy and food prices impact all market segments, albeit differently. As far as this particular trend is concerned, the authors suggest that middle-income segments will be hit the hardest, as low-income consumers are less dependent on fossil fuel purchases and high-income markets exhibit relatively inelastic demand for energy (i.e., people in the United States are still driving about the same number of miles with $4 per gallon gasoline as they were with $1 per gallon gasoline.)

The report recommends BoP experimentation and strategy as a kind of diversification play:

For the corporate sector, given the current saturation of US & European markets (organised retail is c 80% of total, and the listed corporate sector has relatively high market share), and the downside risks to industrialised world consumption, the motive to take advantage of trends lower down the economic pyramid…are all the more pressing.

Block and Reid are not BoP zealots, though. Paul Collier would probably agree with this paragraph, which implies a strong need for development assistance alongside market-based strategies:

Firstly, as these consumers move up the pyramid, it is likely that the mid-tier will enjoy faster growth rates of both the number of consumers and per capita income growth (the number of consumer in the BoP will shrink…Secondly, the size and absolute $ growth of ‘purchasing power’ (number of consumers multiplied by per capita income) of the BoP is ultimately relatively limited and, over the longer term, could be dwarfed by changes further up the pyramid.

Translation: there will always be a base of the pyramid, and the market may not be the most suitable mechanism for reaching them.

The report includes sector-by-sector analyses by Citi specialists in a range of areas (healthcare, autos, telecom, etc.) and concludes by suggesting that larger firms might be best served by acquiring successful BoP ventures instead of starting their own:

Crucially, this gives companies the opportunity of creating 'entry-level' brand loyalty as consumers then move up the pyramid, as well as enhancing their own reputation through helping eradicate poverty through sustainable, market-based solutions. However, research suggests that traditional business models currently serving industrialised countries are not necessarily appropriate and thus we expect corporate restructuring to play a significant role as companies adapt and profit from these shifts in global income and consumption patterns.

Take a look at The Pyramid of Consumption, and stay tuned. Personally, I’m interested to see how this report influences Citi analysts and other members of the finance community as far as strategy is concerned.