Posts Tagged ‘market’

“Cheap is expensive.”

Kitchenware stall at open air market outside Kibera, Nairobi Kenya 23 Jan 2012

Kitchenware stall at open air market outside Kibera, Nairobi Kenya 23 Jan 2012

Mama said something very profound when I asked her which of those kerosene stoves she would purchase for herself,

“Cheap is expensive,” she said, making a moue at the low cost imports jostling for space in her kitchengoods shop on the outskirts of Kibra.

While the limitations of cash in hand may drive her customer’s choices, they know full well the trade off they are making when they choose a less sturdy, possibly unreliable product that they can immediately afford over a better quality though higher priced one.

Low Income Household consumer research in rural Kenya

Roadside clothing shop, somewhere between Emali and Wote, Kenya Nov 2011

In a couple of weeks, I’ll be starting a whole new set of fieldwork in rural Kenya.  This time we’re doing something closer to the better known applications of our human centered design approach for increasing our understanding of people. It will be among rural ‘BoP’ households on behalf of a consumer product that’s retailed in leading supermarkets. While our previous client project allowed us to delve deeply into a topic that interests us both – mobiles, internets and cyber cafes – I’m looking forward to the opportunity being made available to me to finally be able to do something approaching the ‘prepaid economy project‘ from two years ago.

That is, I’ll have the chance to find out how those on irregular income streams manage their household finances and share this openly on the blog. Since it is also a rural location, it maps on almost exactly to the criteria of the previous locations in The Philippines and in India thus permitting an excellent opportunity for contrast and comparison. What’s exciting me however is that this will be in Kenya, home of the mPesa mobile money transfer system, and I want to see if it will be mentioned by any of the respondents in their answers to the same set of questions I’d used previously.

That is, without any mention of it from my side, I want to see if MPesa has made any difference to the way rural folk deal with emergencies or planned expenses or any other aspect of their daily life.  If there’s anything of note, my hope is to be able to write a comparitive paper on it and extend the findings from the previous research. Of course, our current client will also receive what they have asked us to find out for them – its just that its all under an NDA.

This series will be categorized under the Project category titled “Prepaid Kenya series” and I’ll be using “prepaidkenya” as a tag to all relevant posts, if you’d like to follow along.

Visible sign of market creation for a product designed for social impact

Moneymaker pump, Nairobi Kenya June 2011

It struck me when I saw this Moneymaker pump by Kickstart on a street corner matatu stand in Nairobi while wandering around a market with Muchiri who was shopping for shoes. I’m giving this level of detail so you can see the context in which we spotted this classic and oft quoted example of a product designed for the ‘bottom of the pyramid’ (BoP or base of the pyramid) aka the lower income demographic. Its meant to assist in the alleviation of poverty by increasing the output of smalltime farmers.

We stopped to ask the man waiting with the pump what he was doing there – he was wearing a branded t-shirt with the product logo. Turns out he was on his way to deliver it to a new customer who had just purchased it.

This random sighting on the street to me is one of the best indicators of a product’s penetration and/or popularity. So often it happens, particularly in the design for social impact sector that the press release is often all there is to see or the product is showcased as a pilot program. I know that I’ve yet to hear about LifeTools in India via any mass media or notice its usage or mention by someone (and I’ve asked around in the target population segment in a couple of different locations) for example.  And that’s a huge company with a big marketing budget and India a major market.

Market creation (supported by customer education) is the biggest challenge/opportunity in these market segments.

Kenya’s Kadogo Economy

Charcoal seller Margaret Nyambura, a widowed mother of four, used Sh100 we had given her to shop for food and household goods that would last her family three days.

Her priority was cooking oil and maize flour, which cost her Sh20 and Sh10 respectively. Each was measured in portions to fit her money. She bought twenty spoons of sugar worth Sh15, although in lean times she can get a small ration for Sh5. She bought tea leaves worth 15 and Rice worth the same amount, then left the rest for sukumawiki (kales), tomatoes and onions.

Everything is sold according to the amount of money one has. Things that go for one shilling include one slice of bread, five match sticks, a spoon of tea leaves and sugar, half a spoon of cooking oil, a quarter candle stick and a slice of bar of soap. Indeed, one bakery based in Industrial area now supplies half and quarter loaves of bread to Mukuru slums. ~ Every coin counts in slum ‘kadogo’ economy, The Standard, Feb 2010

When I read this detailed description of Mrs Nyambura’s shopping behaviour, I was immediately reminded of the way customers would shop in Ma Fe’s little sari sari shop in the Filipino village, right down to the ‘finger’ of sugar they would buy for 2 pesos. Intrigued by the similarity, I dug up a little more about the so called Kadogo Economy of Kenya and here’s a 3 minute video from the news as well as a few more articles from last year.

Whats interesting is that The Philippines is the other country well known for having pioneered a successful mobile money platform in GCash although their airtime tends to expire at the smallest loads within 24 hours.

The next question then is, what would be the buyer behaviour and decision making amongst this demographic when it came to purchases on the mobile platform or made via the phone? And thus, how does it map on to the insights derived from the original rural research on the prepaid economy that could influence the design of more relevant business models and payment plans meant for this mass majority market?

Something that I would like to follow up on while I’m in Nairobi next month. Watch this space.