Perspective 2.0

2010: Pondering the future…

Niti Bhan — Tue, 05 Jan 2010 13:29:44 +0000

Four years ago in first week of January 2006, I set myself the goal to give voice for the user at the very bottom of the social and economic pyramid, so that she too could be heard.

Having experienced the first gold rush into India’s emerging market, with its attendant fiascos and the shifting tide of cookie cutter consumerism, someone, I thought, should look closer and deeper at understanding her, in the context of her own life and conditions, as a person, not just a dollar denominated demographic.

Today, she’s one of the most visible people around even as we all scramble to figure out what she wants and needs, aspires and dreams so that we can find a better way to serve her.

She has found her voice, albeit a tad crackly with the static over the overloaded wireless network, so what need is there for me?

Even the question that I asked so many years ago, “Where is the
venture capital, the product development support and the marketing
opportunity for the innovations that rise UP from the bottom?” has been
answered by the stars…

Demanding savvy customers at the BoP

Niti Bhan — Tue, 05 Jan 2010 09:53:12 +0000

Probably the most successful global BoP consumer product today is the mobile phone and its attendant services. While there's fodder for a separate post to follow contained within that specific sentence, this one looks at the reasonably maturing market as a frame of reference by which to evaluate the last point made in the previous post about considering the BoP as your most demanding customers. Some snippets from the news before I summarize the lessons learned from observing those at the BoP up close and personally for a couple of years now.

From The Phnom Penh Post dated December 17th, 2009,

IT can't be easy being a mobile-phone operator in Cambodia, one of the world’s most competitive markets, with nine operators chasing just 14 million people. The Post tagged along last week on a sales push in the coastal resort town of Sihanoukville, where a vanload of chattering employees from Metfone took the trip from Phnom Penh to set up a sales kiosk in the coastal resort. The setup is a familiar one across the country, with bright advertising hoardings slung everywhere and music pouring from speakers to entice the locals in for a closer look.

Interest was strong, with price appearing to be a key consideration. The hottest sellers were low-end mobile phones retailing for US$14 and $17, as well as the firm’s $25 Methome device, which looks like a landline but runs off a mobile network. Many customers displayed intimate knowledge of tariffs and handset prices, quickly spotting any change from the last promotional visit. Though many sales seemed to hinge on these price points, most customers also seemed to have a solid grasp of comparative network quality. Many more had an eye to the future, looking for advanced products and 3G connectivity. Plenty for the customers to think about, and the operators, too. ~ JEREMY MULLINS

And coverage from the abs-cbn news from 20th December 2009 aptly titled "Getting to know the sophisticated prepaid user",

Prepaid subscribers currently account for more than 95% of mobile phone users in the country (The Philippines). (They) may usually belong to the low-income segment of the market, but they are actually very sophisticated, according to Globe Telecom Inc. CEO Ernest Cu. With the wealth of bucket-priced offerings at their reach, he said these users have learned to shop for the cheapest call and text promos, posing a challenge to profit-seeking telecommunications firms.

And why just rely on remote news articles, recall my rental car driver in New Delhi firmly dismissing the much advertised telco 'price wars' offering him prepaid plans at just one paisa a minute by saying he had a plan which cost only 50p a minute, thus saving him 10 whole paise.

What we're increasingly beginning to see is that regardless of varying levels of education or numeracy, language or culture, urban or rural or Asian or African, the BoP customer is savvy, demanding and an extremely sophisticated financial analyst in a manner that most of us – dazed by the clever pricing strategies in supermarkets – can only dream of being in our everyday lives.

Summarizing the observations made on the buying behaviour of this demographic, we can say that they tend to:

Maximise the return on their investment (every purchase is considered such)

and

Minimize their risk by
- Choosing reputable and/or proven brands
- Relying on a number of trusted recommendations and other's experiences
- Waiting to purchase until proof of performance and commitment is demonstrated

The trickle-up influence of design for the bottom of the pyramid

Niti Bhan — Sat, 02 Jan 2010 11:25:14 +0000

The most common question posed by designers (at the Design Factory, in Finland) has been “What is different about designing for the BoP from the way I already design for mainstream consumers?”

Its a good question to ask, because it takes a systemic view of the user centered design process and methods being taught to them rather than focusing only on differences in features and attributes of tangible artifacts. This post is an attempt to grapple with developing a possible answer to their question and starts with CK Prahalad’s framing of the traditional MNC approach vs his suggestions for the BoP approach.

The quality, efficacy, potency, and usability of solutions
developed for the BOP markets are very attractive for the top of the
pyramid. The traditional MNC approach and the approach suggested
here—top of the pyramid to BOP and from the BOP to the top of the
pyramid—are shown (above)

As the (foregoing) examples illustrate, the demands of the BOP markets can lead MNCs to focus on next practices. The BOP can be a source of innovations for not only products and processes, but business models as well. Let us start with the growth opportunities in local, stand-alone BOP markets first. ~ CK Prahalad via

Interpreting this in the context of design:

1. Consider the design of the entire ecosystem in a holistic manner rather than the product alone

The majority of industrial designers in studios and corporate departments around the world are tasked with the design of a specific product or application, isolated contextually, for the most part, from the larger ecosystem of the market primarily due to their experience of and immersion in the existing sophisticated marketing infrastructure. They have the luxury of access to information flows on packaging, distribution, supply chains and retail outlets as well as competing designs and this lets them focus on refining a particular product, package or UI.

This situation is almost reversed when it comes to the BoP consumer and the BoP markets. The paucity of information does not only hamper the BoP themselves but also those who seek to serve them. Furthermore, much of the market infrastructure is non existent or of a vastly different quality than that experienced in richer markets. Factors such as income streams that are irregular and lack of financial
tools such as consumer credit available for outright purchase are
issues rarely considered during the design process but can and do influence
the final outcome. Products designed in isolation may win awards but may never quite
impact the quality of life in the manner they were designed to do so if
their business model, pricing or payment plans, much less distribution
or usage do not reflect the conditions of the operating environment.

2. Price as a rigorous design constraint, not simply a data point or the sole criteria for reverse engineering

The issue of pricing then, becomes mission critical in the design brief but not as a reason to compromise the design. That is, if the traditional MNC approach is top down, stripping features and degrading quality and lifespan achieve no purpose except risking the brand’s reputation. Instead, maximizing the constraints while minimizing utilized resources can be seen as a way to innovate for this demanding consumer segment by providing value through elegant design solutions that appeal yet offer a return on their investment.

3. Being aware of and questioning assumptions made

Whether its as basic as availability of electricity and running water or as subtle as the design interpretation of such underlying value propositions as “convenience”, the assumptions made about consumer buying behaviour, purchasing patterns and decision making or choice of brand or product cannot go undebated or unquestioned. A challenging environment, conditions of uncertainty or scarcity and the hardships of daily life managed on irregular incomes all serve to influence the value system and mindset of the target audience in ways we are not always able to immediately discern if we don’t flag our implicit assumptions as a potential stumbling point.

4. Nuances of local culture and society matter

These markets are not the already saturated mature ones of the “global village” with a blase attitude towards such throwaway things as the use of religious iconography on lunchboxes and t-shirts, still preferring to stand on their dignity and self respect over the sophisticated acceptance of perceived disrespect. Thus, nuances observed during user research that may be overlooked when
considering different regions within the developed world may in fact be far more important in the context
of BoP consumer markets and influence the user acceptance and adoption
rate of the product or service. Choice of colours, features, tone and style of communication are some of the design elements so affected. Choosing to tread as delicately as a newcomer never hurts.

5. Think of them as your most demanding customer, not the helpless poor in need

Coping with variations in language and literacy

Niti Bhan — Fri, 25 Dec 2009 06:25:53 +0000

Christmas Eve 2009, Singapore

This cleaning station next to the petrol pump caught my eye last night. With the increasing numbers of migrant labour available affordably in Singapore these days, one can't predict their educational background or language skills – you can see workers from mainland China, Bangladesh, Indonesia etc The use of pictograms is a simple and easy way to ensure communication regardless of whom you choose to employ.

Food for thought: Marshall McLuhan interview, Playboy March 1969

Niti Bhan — Thu, 24 Dec 2009 03:26:10 +0000

From “The Playboy Interview: Marshall McLuhan”, Playboy Magazine, March 1969. © Playboy

PLAYBOY: To borrow Henry Gibson’s oft-repeated one-line poem on Rowan and Martin’s Laugh-In — “Marshall McLuhan, what are you doin’?”

McLUHAN: Sometimes I wonder. I’m making
explorations. I don’t know where they’re going to take me. My work is
designed for the pragmatic purpose of trying to understand our
technological environment and its psychic and social consequences. But
my books constitute the process rather than the completed product of
discovery; my purpose is to employ facts as tentative probes, as means
of insight, of pattern recognition, rather than to use them in the
traditional and sterile sense of classified data, categories,
containers. I want to map new terrain rather than chart old landmarks.

But I’ve never presented such explorations as revealed truth. As an
investigator, I have no fixed point of view, no commitment to any
theory — my own or anyone else’s. As a matter of fact, I’m completely
ready to junk any statement I’ve ever made about any subject if events
don’t bear me out, or if I discover it isn’t contributing to an
understanding of the problem. The better part of my work on media is
actually somewhat like a safe-cracker’s. I don’t know what’s inside;
maybe it’s nothing. I just sit down and start to work. I grope, I
listen, I test, I accept and discard; I try out different sequences —
until the tumblers fall and the doors spring open.

Via NextNature, read full interview

“It seems that destiny has taken a hand” ~ casablanca

Niti Bhan — Fri, 18 Dec 2009 19:12:43 +0000

My little netbook, the 10" eeePC that has been my workhorse in Helsinki for most of this year, was dead on arrival here in Singapore a couple of days ago. Driven by a deadline to submit final documentation to the iBoP Asia Project, I was able to complete it with their assistance using my old desktop still operational here in my parent's home. Turned it off before I went to sleep only to wake up just now and find that it mysteriously refuses to work – the CPU is dead as a doorstop.

I guess its the universe's way of letting me know I need to take a break since nothing else would have made me stop going online everyday. Mind you, I'm currently borrowing mom's machine to type this but that's not a real solution. The bottomline is that I'm now officially on vacation except for occasionally checking email for the next week or two, some omens are best not ignored. I'd hate to imagine what else might break down if I don't heed this very clear message …

India’s telco price wars; a street view

Niti Bhan — Thu, 17 Dec 2009 17:22:25 +0000

This issue of Businessworld caught my eye on the flight from India, with its accompanying cover story full of informative graphs and numbers. Anecdotal evidence from the rental car driver tells me that some gaps exist between marketing and the end user, he said he prefers the 50p per minute rate for his prepaid account rather than the 1p per second rate because that adds up to 60p per minute. I wonder if the per second rate billing is rounded off to the nearest minute? If not, they have some communication challenges ahead if your average Ram, Jeet or Hari doesn't get it.

Here are my attempts to capture this ongoing "war" to and from the airport during my 10 hour stopover in New Delhi on the 15th of December, 2009.

And, as we whizz by these marketing campaigns that apparently signal the 'price war' for the BoP customer, one assumes, I thought I'd add a photo of the driver's time pass, a book whose title transliterates as "Rapidex English Speaking Course". A gift from a disgruntled customer since he confessed to poor language skills. No, he hadn't heard of that well known Finnish solution for learning English via his phone either…

All photos taken in New Delhi, India on December 15th 2009.

Human foresight

Niti Bhan — Thu, 17 Dec 2009 08:13:59 +0000

Priya Cinema Complex in front of Fact & Fiction bookstore, New Delhi, December 15th 2009

Can big business save the world? It depends…

Niti Bhan — Mon, 14 Dec 2009 09:34:00 +0000

Jared Diamond's op ed in the NYT
struck me with the question he posed, which is whether big business can
save the world. Diamond went on to use Walmart, Chevron and Coca Cola
as examples. I leave it to you to decide, but my preferred choice of three in
answer to that question would be Tata, Nokia and the brand called you.

You wouldn't be reading this otherwise.

But
I'm not a big business you'd say… true, by the metrics used by the
behemoths above, but all of you out there (whether you read this or
not) working to save the earth add up to the biggest business of all,
dont you?

I sure hope so.

This is a design revolution

Niti Bhan — Sat, 12 Dec 2009 19:32:55 +0000

Reading Helen Walter's review of Emily Pilloton's book Design Revolution in Businessweek titled "This is a design revolution?" made me wonder what would happen if we approached doing business with the BoP without the filter of "social impact" or "doing good" or other fuzzy wuzziness etc? What if the design of a product or service was simply considered the same way one would for any other demographic? And metrics of profitability, viability and sustainability of the revenue model applied to the decision to enter a new market, regardless of whether they were "the poor" or simply humans? How does this influence the success of the product or service in the market and, critically, how does it influence design?

It seems to me that this is what Tata is doing when they consider the overlooked and the underserved that comprise the majority of their domestic market. This week, Ratan Tata launched the Tata Swach, a water purifier designed and developed to serve the base of the pyramid market in India. A snippet from the news,

“The whole group has been fired with the view of how can we create
products which were earlier not within reach of the vast number of
people through innovation and technology, not just stripping down the
value of the product,” Tata Sons chairman Ratan Tata said.
[...]
The Swach, a pet project of Ratan Tata, is the group's bet that the
private sector can offer a better, consumer-based solution to one of
the world's most persistent health problems than most governments in
the developing world can.

This is interesting because the product is one which is not really in line with any of the TATA Group's current line up, and the water purifier market in India is currently a battleground. Hindustan Unilever, yet another firm with no history of consumer products of this sort has its Pureit – the first mover in the BoP segment, is facing challenges from the incumbent water purifier maker Eureka Forbes, who only recently woke up to the potential of the lower income demographic. One would think that in this situation the timing of the Tata Swach's launch would be a disadvantage but apparently not if this input is anything to go by,

Tata will sell two versions of the 19-litre Swach container, priced at
749 rupees ($16.11) and 999 rupees ($21.48), depending on the material.
The filter itself costs 299 rupees ($6.43). It will purify 800
gallons (3,000 liters) of water – enough for a family of five for a
year – before it automatically shuts down.

Hindustan Unilever's Pureit filter, which also does not require
access to running water or electricity, costs 2,000 rupees ($43.01),
with a replaceable battery kit that costs 365 rupees ($7.85) and can
purify 1,500 litreof water.
[...]
The Tata Swach – Hindi for “clean” – meets U.S. Environmental
Protection Agency standards, and doesn't require running water,
electricity, or boiling, executives said.
It's cheaper than boiling water, cheaper than bottled water, and 2.5
times less expensive than Hindustan Unilever's low-cost Pureit filter,
according to data provided by the companies.

This implies that Tata has applied the lessons learnt from developing the Nano, as well as approached the whole market entry strategy as carefully and as rigorously as it would in any segment. Their primary criteria – as a business – for the design and development of this product was to take the concept of the Bottom of the Pyramid as a viable demographic to serve, setting the design criteria and constraints for both the product itself as well as their revenue model and pricing structure accordingly. The fact that it will "do good" or "improve life" is as important but this aspect has not been permitted to overshadow the need for the product to be competitively priced and attractive to the consumer, offering value for their hard earned rupee, even as it prevents their children from suffering from diarrhea.

This interview with the product's designer, award winning NID alum, Satish Gokhale, quotes him accordingly,

"Once the technology was finalised and tested, we were mandated to design the container and other features," recounts Satish Gokhale. "The most important part of our brief was the target selling price of Rs 999. The design had to therefore be simple in construction, easy to manufacture and easy to use.''

Most details about the materials and methodology that went into manufacture of Swach is under wraps, but Gokhale said there was the dual need of using right priced material without compromising on the strength of the unit and its usability with the ultimate aim of making it affordable to everyone who drinks water in the country.

This sounds more like design for a demanding client, no aspect of "social impact" or "doing good" being allowed to overshadow business needs. After the three year long project has finally seen the light of day, Gokhale's wife is quoted as saying,

"It was a
tiring journey of dozens of sketches, and renderings and e-mails going back and
forth," Falguni Gokhale told TOI, adding that Tatas wanted a perfect product and
nothing half-baked would do.

Meanwhile back at the ranch, Unilever's response to the "water purifier for the BoP market" marketing war, from the previously linked article throws up this interesting nugget,

HUL says it has subsidised the machine as it knows it can bank on
making money through the replacement of battery kits that cost Rs 365.

Compare the difference in approach and in framing of the problem (market entry strategy for low income demographic) between Tata and Hindustan Unilever (HUL). No subsidies for Tata, no compromises and from all that one can read and find, greater value for the rupee offered to the discriminating investor that is the BoP consumer. To quote our own marketing ;p "Price is simply a design constraint, not the sole criteria".

Yet one can already see that when the market awareness and education of the poor user has created the demand, this latecomer to the product category will walk away with the lion's share of the sales. Tata is a global brand, poised apparently to become the Nokia of drinking water, since their next goal is entering the African market with the Swach.

Now bringing this whole blather back to the questions posed in the beginning of the post, what if "BoP Design" was approached from the same perspective as design for business and not design for social impact or doing good or any number of heart warming phrases that seek to imply improving the lives and livelihoods of the poor.

Is there any doubt that better quality water would do all of the above? And is there any doubt that this shows all the signs of being a successful commercial product for Tata?

This is just good design doing its job – making stuff that people want to buy. (For the BoP are people too)