Friday January 31 2014
“Precisely because (poor people) have so little, we often find them putting much careful thought into their choices: they have to be sophisticated economists just to survive,” Abhijit Banerjee and Esther Duflo wrotte in 2011’s Poor Economics.
With that in mind, how do you influence what choices low-income people or those living at the base of the pyramid make? And how can you give them the information to make informed decisions?
SolarAid faced the same challenges that many organisations do when bringing a new technology to a low-income market. But this post discusses some of the ways that we are engaging with our customers, are building a market, and providing choice with the goal of more successful solar companies and more satisfied customers.
SolarAid is a UK charity that set up a non-profit social enterprise, SunnyMoney, to provide access to clean, bright, safe energy for those living off-grid in rural Africa. We’re attempting to build a market for small solar lights. And since we’re the largest distributor of these lights in Africa - and we’re so far only working in Kenya, Malawi, Tanzania and Zambia, with a new project in Senegal - we’re making a good start. We know that once that market is self-sustaining, alternative and renewable energy sources will be available and accessible. With the competition that the market brings, it also will encourage players to invest, improve quality, push down prices and deliver products that meet the needs of those living at the BoP.
Here is our action checklist, which we hope is helpful for other social entrepreneurs or NGOs engaged in market building.
- Respect quality: Quality often costs more, but it’s a false economy not to respect the benefits of providing access to quality goods. SunnyMoney only sells industry-approved solar lights. By ensuring that we’re only distributing quality products we help to build trust and confidence in this new technology. We also make sure that it’s worth the investment for a rural family; which can often be a significant proportion of their income. This is mostly the first personal interaction rural families have with solar lights and if we don’t get the products we’re offering right then we will struggle to build demand and interest in this technology. SolarAid is product neutral; you can see which lights we sell at www.sunnymoney.org.
- Raise awareness: We give presentations, workshops and hold meetings to let people know about the products we distribute, how they work and why they’re relevant for low-income families. While solar innovations may seem ubiquitous to those in the sector, we don’t assume prior knowledge because it remains a new technology to many and our baseline research shows there is little awareness for these types of products. Through our work with schools, we give head teachers a sample light at they can take back to their community; they can use it, show it to people and test it out before committing to investing in their own.
- Build trust: Engaging trusted leaders (in our case head teachers) to spread the message about your product/service means that people hear about this opportunity from a trusted source. They often include other thought leaders who influence peoples’ decision-making. We encourage the head teachers we work with to include village leaders/chiefs in the discussions and activities at their schools as we know their opinion matters to our ultimate audience. Plus, by giving a sample light to these trusted leaders people get to see the product themselves and how it actually works – they can start to imagine if it will fit into their life and bring benefits. That’s hard to do with an abstract concept that you can’t see or feel. This is where quality comes back into it: It’s hard to build trust if quality is low, as word of mouth and recommendations will soon spread, leading people to avoid such ‘risky’ spending decisions.
- Build partnerships: We build partnerships for reaching people, which means that we can deliver on our last-mile distribution promise. Building partners also helps to provide a network; a way of getting into the BoP which at times may seem impenetrable. That's in part because the BoP is an abstract concept, and is in actual fact a diverse group of people with differing interests, priorities, and opinions.
- Research-feedback-adapt: How can you possibly learn if you are meeting the needs of your intended customers if you are not talking with them, seeking their opinions and asking for their feedback? We make sure we’re conducting useful, usable and relevant research on the opinions of users. We feed this back to staff working in strategy design, programme delivery and also to manufacturers of the products – we believe we have a responsibility to deliver what those we’re working with tell us they want, not deciding for them. As economist Amartya Sen says, "development is about enlarging people’s choices"and we’re doing our best to give people that opportunity.
- Be patient: Your early-adopters need to use the products for a while before others see how beneficial, useful and/or interesting it is and make the decision to buy – that’s how a market forms, but you can help it along by building trust, building partnerships and having strong feedback mechanisms that result in action not just recording/storing of data.
SolarAid and SunnyMoney have a long way to go to reach our goal of eradicating the kerosene lamp from Africa by 2020 and there will be failure and learning along the journey, but someone has to lead the way and we’re there to try and do just that. The best thing about market building? Because it’s an untapped area, there’s so much scope and opportunity for creativity and innovation; this is where the best ideas are born and with that the needs and desires of the BoP will be met.
After all, the sophisticated consumers of the BoP, just like in any other market, vote with their feet and you’ll soon learn what is or isn’t of interest to them if you’re ready to listen and learn.
 Lighting Africa is a joint initiative between the World Bank and IFC, which has laboratories to test the quality and durability of pico-solar lights entering the market.
 Everett M. Rogers' Diffusion of Innovations (1962)
Kat Harrison is Director of Research & Impact at SolarAid.
This post was first published by NextBillion.