How can you build a profitable business selling detergents, prosthetic limbs or financial services to consumers in developing countries who live on less than two dollars a day? In The Fortune at the Bottom of the Pyramid, C.K. Prahalad identified global and local companies that pioneered concepts like single-serve portions and micro-loans.
For companies used to serving middle-class customers in developed markets, these innovations do not come easy. Just trying to make existing products cheaper does not work, not only because of the huge income gap, or totally different conditions for distribution and support, but also because existing product features do not meet local needs. People need to store foods around the world, but a refrigerator is not the best solution if your region suffers regular black-outs – assuming there is a power grid and you can afford the utilities bill.
Successful innovators, Prahalad mentions, put established notions aside and go out in the field to work with local consumers to design relevant products and services, applying techniques from user experience design and lean innovation. In one example, to develop a biomass stove for the rural poor in India, British Petroleum set up a co-creation platform, co-opting consumers, NGOs and the Indian Institute of Science. In another, an FMCG company found out that while consumers at the bottom of the pyramid cannot afford maxi-bottles of shampoo, they still want to wash their hair, and single-serve packages allow them to buy the product in accordance with their daily income.
With consumers struggling in stagnating developed economies, similar innovations are needed here too, and they are being introduced, in the form of e.g. pay-per-view online movies and newspaper articles, in-app purchases, pre-paid phone cards, and products in dollar stores. That is where Peel can help: we get you out of your comfort zone, and bring stakeholders together to co-create opportunities for the world of tomorrow.
By Wim Putzeys