An overview of the 5D's
The premise of the fortune at the base of the pyramid (BoP) is based on the notion of how to profitably do business with the poor. But few such endeavours have become sustainable businesses, falling prey to bad assumptions, misguided marketing, or poor research. Ken Banks of kiwanja.net wrote recently:
Progress in the social mobile field will come only when we think more about best practices in the thinking and design of mobile projects and applications, rather than obsessing over the end products themselves. By then most of the damage has usually already been done. In my experience, many social mobile projects fail in the early stages. Lack of basic reality-checking and a tendency to make major assumptions are lead culprits, yet they are relatively easy to avoid.
I would argue that this observation can be applied for any product or service meant for the BoP in the developing world, not just for the mobile industry. So how can we apply this understanding in order to design strategies to serve these untapped markets far more successfully?
Buying behaviour and decision-making criteria imply that those in the lower income strataparticularly in the developing worldare not 'consumers' but in fact extremely careful 'money managers' for whom an expense is often an investment whose return must be maximized.
The tacit mandate for companies interested in the BoP market is that your product or service must either fill an 'unmet' need (of which the poor have many), or provide a way for them to enhance their livelihood or quality of life. Why else would they divert their limited and hard-earned cash for your product or service? So the fundamental consideration before design would be to focus on the benefit to the BoP: Is there an opportunity for social or economic development?
Next, the solution must be well designedcontextually relevant, appropriate, and of course, affordable. But the best designed product or service in the world will not sell if your customer is unable to find it. Since logistics and transportation is as much of an infrastructural challenge in the developing world, distribution becomes critical in ensuring the availability of the product. The entire supply chain might have to be built from scratch.
Once you've made the right product and got it out to where its needs to be, are your customers aware of its existence, what benefits it may provide for them, and the reasons why they should think about purchasing it? Is there a demand for this product, or can one be created? Does the value proposition of your offer resonate with the value system and worldview of those at the BoP?
And finally, the whole offering must cohesively hinge upon preserving and ensuring the dignity of your new customers. The poor are not looking for handouts, but rather opportunities; providing them with such products or services through a filter of 'charity' or 'social work' serves no one.Our work in the field observing those at the base of the pyramid had led us to conclude that their life of adversitymanaging in challenging conditionsevidenced a very different value system and worldview from what is commonly considered mainstream consumer culture. Their buying behaviour and decision-making criteria imply that those in the lower income strataparticularly in the developing worldare not 'consumers' but in fact extremely careful 'money managers' for whom an expense is often an investment whose return must be maximized. They tend to be risk averse and seek greater value from their purchases.
So an integrated strategyone that looks beyond the design of the product or service for the other 90% but also takes distribution, demand, development and dignity into account while touching the core values of the BoP customercould be considered a framework for best practice. Let us look at each of these elements in turn:
What good is it, as Aneel Karnani asks in his paper, "Stop Romanticizing the Poor," to sell alcohol and tobacco to the poor simply because there are profits? What the poor need are solutions that allow them to increase their incomes or raise the quality of life for themselves and their families. Every decision to spend money made by those who manage on uncertain incomes at the base of the pyramid can be said to be analogous to making a strategic investment decision. This needs to produce tangible value in their immediate future, in some way or the other. Whether the decision is a trade-off between purchasing shoes for a school-going child and meat for a meal, or choosing to buy some airtime instead of a meal, each of these is an investmentin the child's future, in future income if work is dependent on being accessible by phone, or in simply ensuring the next meal is on the table
It is this aspect of developing future potential that leads Microsoft's Unlimited Potential Group to seek innovative solutions that can provide opportunities for education, employment and well being in some of the most disadvantaged parts of sub-Saharan Africa and India. They don't worry if these people can purchase MS Office or a Windows PC today; they're looking far ahead to a future when, trained in Microsoft's development centers, they will become customers or advocates for their brand. MS knows that to grow their market at this point, given their global saturation, they have to create their new customers and market themselves.
Oorja Stove (Photo: Margot Cohen)
Another example, the innovative Oorja stove designed by BP as a sustainable, healthy alternative to smoky wood-burning cooking fires so prevalent in the BoP, integrates the local community into its business model. The product is sold by local women trained by BP as part of their rural sales network, and provides a sustainable income source both from the sales of new stoves as well from the supply of the healthier smokeless fuel pellets. By incorporating both environmental as well as economic sustainability into the design of their solution, they offer a holistically beneficial solution to the community as well as a profit making strategy for their saleswomen and themselves. (Nonetheless, contextually appropriate design is a must; even the humble stove has faced criticism for the lack of user testing in the field.)
While the design industry has numerous examples of products created specifically for the "other 90%" of the world's population, few have become market successes to date. "Design for the next billion customers" looks at the ways customers at the bottom of the pyramid evaluate and choose products, their value systems and worldviews, and how this influences the design of products and services meant to address their needs.
Companies conceiving of new products or services for the emerging markets in the lower income demographic assume that one basic premise or value proposition can serve all; just the pricing needs to differ according to income available. But they're missing a lot of the story. Literally.
But there is a commonly held assumption by large global brands with millions of customers across the world: Believing, quite rightly, that human beings are the same no matter where they are and how much money they may have, companies conceiving of new products or services for the emerging markets in the lower income demographic assume that one basic premise or value proposition can serve all; just the pricing needs to differ according to income available. But they're missing a lot of the story, literally: The BoP customer has not been bombarded by mainstream consumer culture and all the trappings of 'consumerism' that come with it.
An interesting example of this difference in perception is the ASUS eeePC. Designed for the next billion customers or first-time users of a computer, it was created on the premise of being "Easy to learn; Easy to work; Easy to play" and ended up disrupting the laptop market and creating an entirely new categorythe netbook. Of course, ASUS's competitors focused on the obvious when attempting to design a competing productsmall form factor and low price. But had ASUS made this the criteria for their initial design, they may never have come up with the rugged, affordable, elegant solution on the market today.
Instead, their hardware and software solution placed the core value of "Easy" as the primary criteria in their design brief. The first-time user in emerging markets is less likely to be making such a purchase based on stylish good looks, an unusual form factor, or the brand's 'cool'and more likely to apply a far more rigorous product/price evaluation and selection process. The original eeePC's user interface is icon-based and very familiar to someone already accustomed to the interfaces available on mobile phonescommonly the first exposure to ICT devices in the developing world. This sense of "Oh, I bet I could learn to use this, easy," coupled with the price, makes the ASUS netbook a no-brainer, where perhaps the far more intimidating and complex desktops of leading operating systems might make a first-time buyer think twice. Indeed, research has found that over 50% of consumer electronics are returned because the consumer found them too difficult to understand and use.
The greatest invention cannot change the world if it does not get manufactured and distributed. KickStart builds a supply chain from the existing private sector. Kickstart.org
One of the best examples of good design that addresses the very real needs at the base of the social and economic pyramid is Martin Fisher's Kickstart Moneymaker pump, but its history shows that the organization learnt from the challenges of doing business in a sustainable manner under the infrastructural constraints and conditions of the developing world. The entire market had to be created from scratch; there was no existing supply chain, distribution network or marketing and promotional reach among the rural population who are the pump's target audience.
Nokia's significant success in the vast hinterlands of rural China, where there is uneven development and infrastructure, can also be attributed to an unexpected distribution network. In addition to the more conventional chain of dealers and retailers, they saw intrepid local salesmen cramming their products into backpacks and hopping on buses out to the remotest villages to sell. Can these local entrepreneurs be incorporated into their sales and distribution network, increasing their reach but also lowering their distribution costs and raising the income-generating ability from end to end?
Such "piggybacking" has been attempted on an existing tried and tested global distribution network as a way to distribute medicines to the neediest. Simon Berry has launched a scheme called colalife.org, an award-winning social media campaign launched this year to demonstrable success that sought cooperation from The Coca Cola Company in order to leverage their extensive and highly visible supply chain in the remotest parts of the developing world to distribute critical life-saving medicines such as 'oral rehydration therapy' for common waterborne diseases. A status report from their Flickr group discussion board:
Before the Facebook group I was getting nowhere at all. The group has changed everything and is the reason we've made such rapid progress... Continuing support for the idea is vital if we are to turn this idea into a reality and actually save some lives.
Research and development of the campaign continues to evolve. The next objective is to get an international NGO to engage with the campaign. Meanwhile research is underway in East African into Coca-Cola's distribution system and the feasibility of the idea is being investigated and reported in Simon's blog.
But in these new markets, under the radar of mainstream consumer culture, advertising, and promotions, simply getting the products out there is not enough. Communication must resonate with the audience's value system and worldview. Does a demand exist at the BoP? Are people aware of the benefits? And are they able to understand why they should part with their limited and often unpredictable income for it?
Sunlight detergent advertisement
For the great majority of consumer products, the challenge to prove their value and relevance remains. Take Unilever, for example, another brand that has established prominence among the lower income demographic. Crossing the chasm of the values gap, their advertising focuses on establishing the return on the buyer's investment in their products. Rather than the more conventional advertising message focusing on perfumed laundry detergent that might make your sheets smell of spring flowers or the morning breeze, their communication clearly demonstrates, in no uncertain terms, why buying Sunlight makes sense for the careful housewife on a very limited budget: "Nothing lasts longer."
Grocery store merchandising
An even more obvious example is this "point of sale" promotion in a village grocery store in rural South Africa, where the shopkeeper clearly displays exactly what the customer will get for their money (photo above). For every budget there is a pile of goods, in the actual size and quantity offered, allowing the purchaser (who may or may not be numerate or literate) to ascertain what their limited funds will buy. This allows them to plan their monthly shopping accordingly. Does this need for clarity somehow imply that those at the BoP are simple or naive; that they need clear messaging or unsophisticated advertising? Or does it point to their very sensitive 'bullshit meter'one that makes them reluctant to part with their hard-earned funds?
Does this need for clarity somehow imply that those at the BoP are simple or naive; that they need clear messaging or unsophisticated advertising? Or does it point to their very sensitive 'bullshit meter'one that makes them reluctant to part with their hard-earned funds?
The biggest hurdle to success in the BoP market has been a lack of understanding that this market is very different from the mainstream consumer culture prevalent in the developed world. Producers immersed in mainstream consumer culture (elements of which include easy credit, buy now/pay later terms, and style obsolescence) tend to consider those at the base of the social and economic pyramid as having a very similar or same worldview and value system as their existing consumers; that they simply have less disposable income. So the value propositions of the products, services, and programs introduced for lower income marketsparticularly in the developing worldare still based on elements of the value system prevalent in global consumer culture. There is a gap here, and its most commonly reflected in the marketing messages, advertising and communications which tend to emphasize benefits or value that may not be relevantmuch less contextually appropriateto the BoP customer's life. When the value proposition of the seller has little or no resonance with the value system of the target market, it will most likely be ignored.
(Photo: The Economist)
The Sammaan Foundation ("sammaan" means dignity) is one such example of bringing opportunity and hope back for the downtrodden by adding some creative innovation. Founded by Irfan Alam, a 27-year-old from the Indian state of Bihar, his idea is to systematize the working of all Rickshaw pullers by bringing them under one roof, and to modernize the cycle rickshaw pulling sector (which contributes 30% in urban transport) with small but creative changes. This not only makes it easier for the rickshaw pullers to drive and increase their income through outdoor advertising, but also through additional services such as the sale of bottled water, juices, mobile recharge, courier collection, and bills collections. The Sammaan Foundation is one of the 30 Indian enterprises shortlisted in a competition to find the country's "hottest" start-up.
Nokia design for illiterate users
But dignity implies far more than simply a brand name. For too long the poor have been the invisible, the overlooked or the simply ignored, particularly as discerning customers for goods and services. Product managers still tend to perceive solutions as dumbed-down, cheap versions of products meant for more "lucrative" markets, or conceive of services primarily for the rich world and then go through the motions of localization for the emerging markets at the BoP. The poor may have shallower pockets than their wealthier brethren, but they're no fools and can smell patronizing good works a mile off. Nokia's most recent entry-level phone acknowledges that many of their BoP customers may be illiterate, but also finds a way to respect their needs and respond with sensitive design solutions. Using icons along with the text in their menus communicates the essentials, while retaining the look and feel of a typical phone.
Each of the points above emphasizes the importance of individualpoor though he or she may berather than a faceless, mass market consumer or a member of the "4 billion" across the world. And using the 5D'sdevelopment, design, distribution, demand and dignitycan provide a roadmap for a cohesive, human-centered strategy for well-designed products that sell, services that are successful, and programs with low drop-out rates. Observation and user research conducted to understand your new target audience is critical in establishing the relevant value propositions, of course, since statistical data and quantitative market research simply tells you their incomeor lack of itand literacy levels. (Such details, while important, do not convey the difference in mindset that a life of adversity in uncertain conditions creates, nor do they reveal the how misguided some basic assumptions can be.)
And ultimately, the real needs to be met at the bottom of the social and economic pyramid are the ones for respect, dignity, and an opportunity to improve their quality of life, ensure their children's future or increase their ability to provide for themselves and their families. That's a design challenge for us all.
Niti Bhan is the founder of Emerging Futures Lab, a small multidisciplinary research and consulting studio focused on improving the design of new ventures, products and services for those at the base of the social and economic pyramid by emphasizing exploratory research, understanding and insights in the field. She is currently on a grant funded research project to understand how those who live on irregular and unpredictable incomes manage their daily expenses and plan their purchases.
(All photos courtesy of the author unless otherwise noted)
Niti Bhan focuses on offering strategic insight for growth opportunities and revenue generation in the rapidly evolving interstitial space between design and business. Her 15 years of experience include employers such McCann Erickson Worldwide, Hewlett Packard India, The Second City and most recently, the Institute of Design. She is an engineer and an MBA whose most significant achievement in the field of design has been dropping out of two graduate design programs on two continents in two centuries - the National Institute of Design, Ahmedabad and the Institute of Design, Chicago. Her areas of interest are business intelligence and trends, business strategy as well as creating a compelling user case for design as force for increasing value.