Thoughts from the Last Mile Welcome to the VillageReach Blog
04.29 2010

Cultivating Markets Part 3: Developing a business model and toolkit for the BoP

I’m sure many of you browsing this blog are familiar with C.K. Prahalad’s groundbreaking book,The Fortune at the Bottom of the Pyramid. In his book Prahalad offers us insight into the vast, potential wealth that exists among consumers at the Bottom of the Pyramid (BoP). In fact, he’s talking about over 4 billion people and a multitrillion-dollar market. Although the “poor” are often categorized in a single group, he argues that they are just as – if not more – conscious about price, quality brand image, and accessibility as the “rich”. He believes that if a company/organization intends to succeed in tapping into the fortune at the BoP, it must study and understand the varied needs of the “poor”.

One of our goals with the USAID-VidaGas project is to develop a business model and toolkit that can be replicated for other BoP products around the world (not just LPG!). We’re using this opportunity with VidaGas to find out how one can successfully learn about and reach clients at the BoP level. LPG, as a new technology with significant benefits, provides us with a great product to find out how we can design an effective BoP model.

We begin with surveys among households to get a better idea of their current fuel usage situation, the perception of LPG, and to identify certain areas of the bairro (or neighborhood) that would be more open and financially capable of purchasing LPG. This is an important step in our marketing campaign as it gives us a better idea of the types of market segments that exist within the bairro. Not everyone is a potential LPG customer and our job is to sift through this diverse market to identify those that fit our client profile.

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We follow the surveys with promotional events such as local demonstration of around 10-20 attendees and Big Events of over 200 attendees to further spread the word about LPG and VidaGas. Not only do these events allow us to demonstrate the benefits of using LPG but they also provide an opportunity to answer any question or concerns about LPG. (Often time’s people think that using LPG is very dangerous, too expensive, or difficult to use.) These events also initiate word of mouth among households which is a crucial aspect in the BoP market as traditional mediums of advertisements often do not reach these households. Our final step is follow-ups among households that attended the demonstrations and Big Events. We want to find out whether or not they decided to purchase an LPG kit, and why they made that specific decision. It also gives us an opportunity to make another pitch to use LPG as people often attend the event but forget about it soon afterward.

Throughout the steps shown above, one of our main goals is to learn. As mentioned earlier, the “poor” are not simply the “poor” but conscientious consumers who want to get the best deal whether it be in price, quality, brand image, or accessibility. Eventually all this learning will help us develop a robust yet flexible model and toolkit that we can apply to other BoP products!

Peter Nakamura, Project Administrator

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