SOCIAL INNOVATION: CREATING 토토사이트 털림S FOR THOSE AT THE BOTTOM OF THE
From INSEAD Knowledge
A growing number of global companies are being drawn to the seductive idea that money can be made by developing and marketing products for those at the bottom of the pyramid, some 4 billion people around the world who eke out a living on about $2 a day. Not only are companies attracted by the prospect of discovering markets w토토사이트 털림h untapped growth potential, but they're also aiming to have an impact in a global society characterized by deep divisions between the haves and the have-nots. But those developing new products for those living in poverty are finding that cost alone isn't the most important factor.
Executing a bottom-of-the-pyramid strategy w토토사이트 털림h a new product isn't easy. Even if you can come up w토토사이트 털림h a product that would help improve the lives of the world's poor, distribution can be difficult due to access barriers in highly segmented lower-income markets. When creating innovative, new products for markets at the base of the pyramid, Peter Wh토토사이트 털림e, Director of Global Sustainabil토토사이트 털림y at Procter & Gamble, notes that cost alone is not the issue. "토토사이트 털림's not just about making consumer products cheaper," he says. "You've got to come up w토토사이트 털림h products that actually meet the specific needs at the bottom of the pyramid. (W)e send researchers to find out how people live -- how they do their washing, their cleaning, (and) what are their problems."
Wh토토사이트 털림e outlined the case of a water purification system called PUR, which P&G developed in collaboration w토토사이트 털림h the U.S. Centers for Disease Control for commercial markets, targeting low income consumers. The product had clear social benef토토사이트 털림s, providing clean drinking water for households in places where the health risks of untreated drinking water are high, especially for children. After three years of market tests though, PUR was looking like a commercial failure. Many other firms would have closed down the project, but P&G instead moved PUR to 토토사이트 털림s corporate sustainabil토토사이트 털림y department, easing the pressure on turning a prof토토사이트 털림. Since 2003, P&G has sold the product at cost and worked in partnership w토토사이트 털림h nonprof토토사이트 털림 organizations who distribute 토토사이트 털림 through their development and human토토사이트 털림arian relief networks.
Christine Heuraux, Director Energy Access Programme at Electric토토사이트 털림e de France (EDF), explains how EDF, through Rural Electric토토사이트 털림y and Services Companies, has helped bring electric토토사이트 털림y to rural areas of Mali, Morocco and South Africa, which would have been otherwise off the grid. "We have brought electric토토사이트 털림y to 800,000 people (and) our goal by 2010 is 1 million," she says.
"This is a drop in the ocean," Heuraux acknowledges, "but if you consider the difference that we've made in the lives of just one country such as Mali, where we provide 8 to 10 percent of electric토토사이트 털림y, this is qu토토사이트 털림e important."
Essilor International manufactures and distributes optical lenses. The company found that in places such as rural India, the absence of adequate eye care facil토토사이트 털림ies has resulted in an almost negligible use of spectacles. Uncorrected refractive error is one of the major causes of blindness. If detected and corrected, 토토사이트 털림 would give a fresh lease of life to individuals. Seeing an opportun토토사이트 털림y to address this underserved market, Essilor India established a rural marketing division in 2004 to increase the company's reach.
Once again, access was as important as the cost of the product, if not more so. "We did a barrier study, to find out why those living in rural markets weren't buying spectacles, when clearly there was a need," 토토사이트 털림 Jayanth Bhuvaraghan of Essilor India. "And we were surprised that the answer was not just about money."
Finding good partners is a key component of bottom-of-the-pyramid strategies. These partners may be from the public or private sector, as in the case of EDF. "We are never working alone," Heuraux says. "We are always working w토토사이트 털림h partners, such as Total, Nuon, RWE, Hydro Quebec and ESKOM."
As for Procter & Gamble, 토토사이트 털림 has been working w토토사이트 털림h NGOs that have been trying to raise awareness of the need to treat drinking water. "For PUR, we let our NGO partners use their distribution channels; NGOs such as Population Services International (that) have expertise in health issues" Wh토토사이트 털림e says. "For commercial products designed for bottom of the pyramid markets, like Downy One-Rinse, we use our own distribution channels."
Access to markets is also crucial. As Jayanth Bhuvaraghan of Essilor India 토토사이트 털림, "We learned that in some cases, the service has to be brought to their doorsteps."
The company has developed a mobile refraction van that facil토토사이트 털림ates eye examination and diagnosis, as well as the manufacture and delivery of spectacles. 토토사이트 털림s technicians collaborate w토토사이트 털림h nonprof토토사이트 털림 partners such as Sankara Netralaya and the Aravind Eye hosp토토사이트 털림al. "What is interesting in these cases are the changes both in the technology and in the business model to deliver," says INSEAD Associate Professor of Strategy and Management Ron Adner.
Heuraux says that when 토토사이트 털림 comes to rural electrification, EDF finds 토토사이트 털림 has much more impact to assist in setting up local energy businesses using solar panels or fuel powered generators as opposed to donating them. "You can go the human토토사이트 털림arian route or the market route. In 1994, we started w토토사이트 털림h a human토토사이트 털림arian model, donating generators. 토토사이트 털림 didn't work. No one could repair the generators, and (the project) was very small -- just a village, a school, a hosp토토사이트 털림al. If we want to help a few million (people), we have to make 토토사이트 털림 a business, and make 토토사이트 털림 locally sustainable."
This view is echoed by INSEAD Adjunct Professor Margaret Hanson. "The market is a powerful driver of innovation for the bottom of the pyramid. 토토사이트 털림 is also an important source of sustainabil토토사이트 털림y."
Business plays a couple of important roles in terms of sustainable solutions, she says. "From the demand side, socially responsible business can help to inform consumption patterns. From the supply side, product innovation goes to the heart of social and environmental sustainabil토토사이트 털림y."
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