Posts Tagged ‘household consumer research’

Introduction to rural household energy consumption behaviour in East Africa (1 of 3 parts)

The following is extracted from a six month study during 2012 on household energy consumption behaviour in rural Kenya and Rwanda among the lower income demographic, that led to an understanding of some of barriers hampering the sales of client’s solar products in this market. This first part is an overview of household financial management in conditions irregular and unpredictable income streams from a variety of sources. The 2nd and 3rd part will focus on fuel usage and consumption behaviours for cooking and for lighting separately. Users sampled for this study were selected based on varying fuel consumption patterns, ranging from a single homestead to a rural hotel catering for more than 12 hours a day.

Aspirational ownership and tangible evidence of savings in prepaid purchase model of solar panel, as seen in Chuka, Kenya (Photo: Niti Bhan, February 2012)

Rural Kenyans are not very different from rural Filipinos or Malawians or Indians when it comes to the way they manage their daily household expenses. Similarities in decision making, in purchasing patterns and in observed consumer behaviour, all stem from the same underlying need to plan and manage on irregular incomes from a variety of multiple sources in harsh environments of scarcity and uncertainty. The underlying driver is always to stretch the limited shilling, rupee or peso to the maximum while keeping one’s head above water.

With the exception of the salaried schoolteacher, who managed on fixed amounts of cash paid predictably on a calender schedule, the rest juggled an irregular cash flow against required expenses, attempting to minimize the differences over calender time and as a planning mechanism across the natural year’s seasons of abundance and scarcity. Even cash croppers like Mama Grace, who received end month payments from the tea factory, coped with the significant difference in the quality and quantity of tea harvested during the wet and the dry seasons with a variance of as much as 300% between high and low payments.

Rural homesteads manage their household finances rather like a “portfolio of investments” that mature over varying times such as cow’s milk which can be sold daily for cash, while a chicken takes less time than a field of maize to be ready for harvest and sale. Thus decisions are made based on timing of the expense and the choice of ‘investment’ to liquidate on what was ‘ready’ as well as the amount of cash required. For example, in Kilala livestock market it is a known fact that livestock prices always drop in January as its time for first term school fees and everybody needs to sell to raise the necessary cash. Similarly, major purchases or cash outlays are planned for known times of abundance such as right after the seasonal harvest.

Unlike those on a fixed salary who are able to plan ahead, those on irregular incomes need greater control and flexibility over the timing – that is the frequency and the periodicity; and well the amount – in cash or kind; of their cash flow, as a planning mechanism for financial management. In fact, the greater the span of control the customer has over their time and money, as articulated above, the greater the success of a business model or payment plan. This is why prepaid airtime is the preferred model for 96% of the African continent’s 700 million mobile phone users and also why kerosene has been so hard to dislodge. It can be purchased by cash amount (say 40 Kes worth) or quantity (half a litre or 5 litres) on demand or in bulk, and then frugally used for as long as possible, allowing consumers control over their “time” and “money” with great flexibility.

Observations on household fuel and energy use reflect these purchasing patterns and consumer behaviour. Cooking and then lighting are the most important needs, and the two elements of time and money as discussed above, show up in the form of duration and location. While duration of use has a direct relationship to the amount of time and money required, location has a critical bearing on behaviour in rural Kenya as will be seen in forthcoming posts.

 

Part One: Introduction to Household Energy Consumption Behaviour Study in East Africa (2012)
Part Two: Cooking
Part Three: Lighting & Concluding Remarks

Convenience as a service

Shredded cabbage for sale, Wote, Kenya 3rd February 2012

Convenience can mean different things to the household consumer, depending on their location. In urban Chicago, its stocking up the freezer and pantry with a trip to a megastore like Costco while in Singapore it might be the ubiquitous neighbourhood hawker stand where rice, meat, two veg can be had for as little as $2.50 per person. Here in the mostly rural, arid Makueni district of Kenya where the concept of leftovers is moot and only bars and restaurants tend to have a refrigerator, convenience means stopping by the cabbage lady for just enough for tonight’s meal.

Kerosene sales, Wote, Kenya 4th Feb 2012

Purchasing patterns observed previously among those on irregular income streams have been clustered into  four major categories:
1. Prepaid or pay as you go
2. Bulk purchases of non perishables
3. Sachetization or as its called here in Kenya, kadogo
4. On demand, for immediate use

The shredded cabbage, being sold by weight or “amount” (half a cabbage or quarter) is a clear example of the last pattern and common across the world while the way kerosene is being sold could be said to be closer to a ‘sachet’ or small purchase as it tends not to be a daily or on demand purchase.

Interestingly, here I saw bulk purchasing for firewood or charcoal rather than foodgrains since most families have some land where they grow maize.  The maize is first and foremost for household use and only the surplus is sold.

So why have I called this ‘convenience as a service’?

There is a premium one is paying for the convenience – whether its the shredding being done for you or the difference in price of kerosene between the town and the village.  Someone has saved you the time and effort thus it costs money. There’s an entire economy around water and its supply chain that I’ll be taking a closer look in a forthcoming post.