The fortune at the bottom of the pyramid begins with understanding

The challenge for marketers of consumer products and services, or retailers for that matter, is to develop a robust methodology that can continuously anticipate and meet or exceed these rapidly changing consumer expectations relating to products and services (which products or services, and what functional attributes), product design (the emotional attributes), product (or business) branding (to create differentiation and help the consumers in taking purchase decisions), and finally which channels (from where to reach out to the consumers, and then how to sell it from there). ~ Arvind Singhal, KSA Technopak, Business Standard October 25th 2007

The field of human-centered design  provides a rigorous methods based approach to innovation and planning. At the intersection of business and design, leading international consultancies such as Doblin, part of The Monitor Group and IDEO, the world’s most innovative firm, draw upon these methods, tools and frameworks from the designer’s toolbox as a powerful resource by which to address the fuzzier business challenges faced by companies such as Proctor & Gamble, Hewlett-Packard, McDonalds et al

Also known as user-centered innovation or design thinking, the search for insights and inspiration begins by observing your intended audience in order to understand them. The goal is to discover unmet needs or opportunity gaps where existing products, services or business models leave their customers unfulfilled. This reduces the ‘hit or miss’ gamble of new product introductions and increases the rate of diffusion of an innovation in the market.

The challenge now is to address the increasing needs at the bottom of the social and economic pyramid around the developing world. These emerging consumer markets are the great unknown, never having been studied at a consumer market in their own right, unlike the decades of research and metrics available for the more sophisticated mainstream consumer culture.

Nokia is the best example of this participatory approach to reach new markets, grow market share and capture the hearts of their customers worldwide. They have fulltime inhouse resources to conduct continuous ongoing exploratory research in order to inspire and inform not only their future product design and development but also their future direction as a global company and leading brand.

For example, field observations in Uganda demonstrated that entry level customers of the mobile phone at the bottom of the pyramid segment could rarely afford their own personal handsets. Often an entire family would share one cellphone. In response to this observation, Nokia launched a sharedphone device in emerging markets, one that permits upto five separate profiles, contact directories and other personalization features so that each user can have their “own” phone. Over time as income permitted, people would purchase the brand and phone they’d already become accustomed to using, increasing Nokia’s sales.

Observing how people live and behave with mobile phones particularly at the bottom of the pyramid in developing nations, how they’ve enhanced and shaped communications and age-old social networks, information access and entertainment in many different locales and socioeconomic segments around the world also provides the “weak signals” or early indicators that permits Nokia to anticipate future trends and emerging needs and behaviour. Recently, they have reinvented themselves as a mobile computing company, focusing on services and on creating the internet experience on the mobile platform.

Understanding the “now” of a particular industry, product and its usage or new customer demographic not only provides competitive intelligence for effective strategy planning and NPD but also uncovers the “weak signals” or early indicators of future trends – the anticipation of how customer expectations or needs will evolve, as mentioned by Arvind Singhal in the quote above.

Integrating business tools and metrics with the empathetic user-centered design process provides a robust methodology for addressing the business challenges in our rapidly evolving, fast growth economy in the emerging markets of developing nations. As traditional markets saturate in the developed world, it becomes even more crucial for companies seeking growth through new and emerging markets like the ‘next billion customers’, the ‘bottom of the pyramid’ and the rural hinterlands to observe and understand the peculiarities of their intended customer base.

These have been overlooked and underserved until this point in global economic growth as companies focused on lower hanging fruit in the premium categories. How many different products can be ‘sachetized’? Relevant, appropriate and contextual innovation in business models, products and services is required.

There are three key business challenges in emerging consumer markets   –

The last mile problem

You are seeking to enter a new market with an existing product or service – it could be geographic – a different country; socio economic – the price sensitive bottom of the pyramid segment or even cultural, rural versus urban, regardless of income category. The challenges of environmental conditions, constraints and customer preferences vastly different from your existing customers can make this a daunting task if you have not understood their aspirations and needs in the context in which they live and your product or service will be used. How do you adapt or redesign your existing business model or product or service in order to best fit this audience’s needs? What are the value propositions that best resonate with your new market? What are the pitfalls?

Insights and Innovation

You’re looking to identify opportunities for growth. Maybe you already know which industry or product platform but are looking for an innovative product or service, or you know you’d like to enter a new market but don’t know what would capture the attention and walletshare. This is the challenge that Lenovo faced with peasant farmers in rural China – they knew that simply stripping down an existing PC to make it cheap would not lower the barrier to technology adoption amongst this segment so different from the sophisticated urban consumer. They’ve finally launched a personal computing device that hooks up to a television – a product that is already familiar to the peasant farmer and that works with simplified remote control rather than a mouse.

Visualizing the larger ecosystem at the bottom of the pyramid – systems thinking and framing the problem correctly

The tools available for understanding users and identifying the insights that lead to the effective design of products and services that meet their needs are also a powerful source of information to shape systems and processes in order to improve performance.  Often the biggest challenge in such intangible areas of study, when faced with a lack of performance or a bottleneck, is identifying the problem to be solved.

Traditional methods focus on streamlining cost and efficiencies, not on the people involved in the system. Transformation design begins by applying the same tools and methods with the participation of the people involved in the system in order to identify and frame the problems in context and then cocreating solutions that work effectively and empathetically in the real world to solve them. An interesting example is that of Colalife, Coca Cola’s attempt to use their extensive distribution network as new supply chain for the BoP.

What can we do for you?

  • Exploratory field research and user insights that lead to clear articulation of opportunity spaces
  • New product design; service design and strategy for a vastly different market than your own, when you’re crossing cultures, countries and economic strata
  • Concept design visualization including new business and transaction models appropriate to the needs of the lower income markets where incomes are often unpredictable and irregular.
  • Market and competitive design analysis of your target markets
  • Workshops on understanding the BoP customer – an introduction to core values, buyer behaviour and mindset
  • Sustainable strategies that integrate corporate social responsibility to society while offering opportunities for advancement of education, income and dignity at the base of the social and economic pyramid.

Note: The Emerging Futures Lab conducts both primary research published under the Creative Commons license as well NDA compliant, proprietary research for corporate clients in consulting engagements.

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