This post has been inspired by reading Rob Katz’s recent post “Market creation at the Base of the Pyramid; it isn’t easy” over at nextbillion.net. I’d been ruminating on pricing strategies and new transaction models designed to suit the challenge of irregular and unpredictable incomes these past few days for a small grant competition and Rob’s post was a timely reminder of the larger challenge of BoP marketing as a whole.
We’re in the dark and its a wholly unknown market. We don’t even know which rules from standard marketing texts apply since the conditions and the constraints of the environment are so very different from traditional consumer markets.
There’ll be more writing along these lines but here’s a thought to start off with, an articulation of the essence of what we believe to be the biggest hurdle – the inherent conflict between ‘marketer’s’ value propositions and the ‘customer’s’ value systems due to lack of knowledge and understanding aka the value gap.
Basically, producers immersed in mainstream consumer culture (elements of which include easy credit, buy now, pay later, style obsolescence etc) tend to consider the BoP as being very similar or the same as their existing consumers; they simply have less disposable income. So the value propositions of the products, services, programs introduced for lower income markets, particularly in the developing world, are still based on elements of the value system prevalent in global consumer culture.
However, since the majority of the BoP has either never been the target of mainstream media and advertising or only on the periphery, their values (not to mention the limitations of their unpredictable and irregular incomes) have been relatively uninfluenced by the messaging and the value propositions behind them. “Throwaway and replace” being one of them.
When the value proposition of the seller has little or no resonance with the value system of the target market, it will be ignored. Take the fact that the mobile phone has rapidly become a fashion item in the developed world and the upper income strata across the world. The average replacement time for a phone is 9 months. Compare that to the culture of repair, refurbish and reuse, often until the end of the product’s life among the BoP in the developing world. From Jan Chipchase’s “Cultures of repair, innovation“, I’ve bolded some phrases here.
But in the spirit of the Future Perfect let’s start with a very basic question – why do these informal repair cultures exist at all? What is so different between London and Lhasa or Helsinki and Ho Chi Minh?
The informal repair services that are offered are quite simply driven by necessity – highly price sensitive customers cannot afford to go through more expensive official customer care centers and even if they could their phones are unlikely to be covered by warrantee – having been bought through grey market channels, been sent as gifts from friends and relatives abroad, or were locally bought used, second or third+ ownership. In many cases these users cannot afford to be without their mobile phone, not in the social sense of being out of touch (which is valid enough), but in many instances because their livelihoods depend on it. On the supply side there is a ready pool of sufficiently skilled labour, ready access to tools, components and above all knowledge.
When the seller’s value proposition – in the form of their products and services, their advertising and communications – fails to bridge the gap to match the values and mindset of the intended audience it leads to failures in the marketplace or at best, ad hoc adoption and mediocre sales figures. There are no real successes. There are exceptions of course, Nokia, Tata, Coca Cola being some of them.
Designing from the user’s point of view, in this case, becomes far more challenging. The environmental conditions, the mindset, the quality of life, much less the disposibility of income are so vastly different from the average mainstream consumer in the developed world that there remains a gap. And while field research allows us to observe the differences, until now its been for specific products or services or an industry. It raises the question “Are there are any general principles that can be identified?”
Marketing becomes even more challenging, not to mention all the elements of standard marketing strategy including supply chain, distribution, pricing and promotion. More on this topic in forthcoming posts.
The next 4 or 5 billion customers are not going away any time soon, and this understanding of what value propositions resonate with them will go beyond helping Nokia or some such sell another few million of their products. If understood well, the insights so derived might even be able to improve the efficacy of various programs that focus on social and economic development, including what is now beginning to be called ‘design for social impact’.
Reference: The value gap between mainstream consumer culture and the BoP market