Gratis inspiration til dine overvejelser om verdens vækstmarkeder. Din guide til adgang på udviklingsmarkederne. Udviklet og udgivet af BOP Learning Lab

1. MARKET
CREATION
TOOL BOX
Your guide to entering developing markets
DESIGNWITHPEOPLE

2. Authors
Marie Louise Møllebæk Larsen
Andreas Flensborg
Acknowledgements
Sara Ballan, Prosper Nyavor, design
Patricia Richter, Louise Koch, branko bobić
Copyright © Peter Helk, Christian Friis Bach,
DI International Business Birgitte Holst-Jensen, H.G. print
Development 2011 Muriuki, Lilian Odhek. kailow express

3. Pick the correct answer.
Yes!
Do you want a share
of tomorrows
markets?
No.
Are you ready to challenge business as usual? Yes! No.
Does your compa
ny have an entrep
renurial drive? Yes! No.

5. If you answered this Toolbox Yes!
will help you get started!
7 Business 15 Toolbox 10 Participatory
Model Dimensions Activities Market Research Cases
Understanding the market Getting on the ground Making the link
The Business Model Dimension section Developing appropriate products and busi- To help you understand how the activities
will help you understand how markets in ness models requires local market informa- can be applied in the real world, the Cases
developing countries challenge your tra- tion, primarily from future end-users. The section shows you how different types of
ditional business model and inspire you to Toolbox Activities will guide you through companies used the activities to develop
generate new and better business models. hands-on activities that can help you ob- their business models.
tain this information.

6. PREFACE
Jacob Kjeldsen
Director
DI International Business Development
The words of Kishore Mahbubani, the Singaporean pro- nies are often unsure about the specific potential for
fessor, can make alarm bells go off “Europe just doesn’t their business – and as importantly – how to get start-
get it. It does not get how irrelevant it is becoming to ed. . The ambition of the Market Creation Toolbox is to
the rest of the world. And it does not get how relevant help your company get started!
the rest of the world is becoming to its future. The world
is changing rapidly. Europe continues to drift.” In many cases getting started is not a complicated pro-
cess. It often comes down to applying sensible busi-
Not only is Europe faced with this brutal reality, but in ness approaches and ensuring a strategic fit between
particular companies are failing to look into the mar- the objectives of your company and the market.
kets of tomorrow – more specifically, the markets found
in Asia, Africa and Latin-America. Companies must po- DIBD and our many partners in the markets of tomor-
sition themselves at an early stage in these markets to row have extensive experience in developing business
secure competitive advantage. projects for developing markets, and we hope that the
Market Creation Toolbox will inspire and guide your
However, developing markets are unchartered territory company to take part in the rapid change.
for many companies. It is our experience that compa-

7. TABLE
OF CONTENT
INTRODUCTION 8 52 ACTIVITY TOOLBOX
THE MARKETS OF TOMORROW 8 54 FACILITATION ADVICES
TOOLBOX ABC 10
Background of the Market Creation Toolbox 12
STRUCTURE OF TOOLBOX 13
BUSINESS MODEL DIMENSIONS 14 58 TOOLBOX ACTIVITIES
RAPID MARKET ASSESSMENT 16 58 DEEP DIALOGUE
CUSTOMER BASE AND END-USERS 20 60 SELF-DOCUMENTATION
INCLUDING END-USERS 24 62 ACTIVITY MAP
DISTRIBUTION SYSTEM 30 64 SOCIAL MAP
PRICING AND FINANCING 36 66 RESOURCE FLOW
MARKETING AND COMMUNICATION 42 68 FOLLOW AND OBSERVE
SERVICE AND MAINTENANCE 46 70 LEARNING BY DOING
72 CUSTOMER SEGMENTATION
74 CREATING SCENARIOS
CASES 18 76 RANKING VALUES
78 PRICE MAPPING
AAK (AarhusKarlhamn) 18 80 DESIGNING VALUE PROPERSITION
VESTERGAARD FRANDSEN 22 82 PROTOTYPING
NGOs 26 84 CONCEPT ASSESSMENT
INNOAID STREET FOOD 28 86 PRODUCT IN MARKET
DANISCO 32
COPENHAGEN BUSINESS SCHOOL 34
WORLDBARROW 38
ARLA 44
GUNDFOS LIFELINK 48
INNOAID AMBULANCE 50

8. THE
MARKETS OF
TOMORROW
Growth! This is the
keyword for the
emerging regions of the
world, as the low- and
middle-income classes
rapidly evolve.
Think of Rwanda, Cambodia or Peru, and for many,
images of helpless poor people waiting for handouts The CSR potential
come to mind. For years, low-income regions have
8 had the image as a worthy destination for corporate
donations and as non-viable commercial or unethi-
Making a difference
cal markets where companies strip the needy of their Many companies engaging in BOP-markets find that prioritizing
last cents. The strong images of despair are real, but sustainability creates more durable business models. They are
show only a small part of life in developing countries. able to leverage this value in the short term as part of their CSR
A growing number of companies no longer consider profile. Development impact is difficult to quantify and seldom
those in developing countries as helpless poor people, black and white. However, many agree that companies can play
but as active consumers with needs, desires and sig- a necessary and positive role supporting economic and social
nificant collective purchasing power. Three key drivers development. Poor people often face a “poverty penalty,” which
are motivating these corporate first movers: the mar- means they pay high prices due to market inefficiencies. By le-
ket potential, the innovation potential and the CSR veraging technology and knowledge, companies can develop
potential. products and services that make a difference and challenge mo-
nopolies.

9. The market potential
Growing by the day
While markets at the top of the economy pyramid are largely
saturated, markets in developing countries are often under-
served. At the same time, developing countries are enjoying the
most spectacular growth in history.
Annual economic growth 1980 - 2016
10
9
8
7
6
5
4
3
The notion of BOP (Base Of the Pyramid)
markets was first coined by C.K.
IN FOBOX
2
1
0 Prahalad in the book The Fortune at the
-1 Bottom of the Pyramid. He argued that
The innovation potential -2
-3 companies should sell to the poor since
-4 the world’s economic base consists of
A space for -5
T HE BASE OF T HE PYRAM ID CONCEPT
1980 4 billion potential customers that live
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
in underserved and inefficient markets.
innovation, research World As a response to this book, a number
Advanced economies of authors have debated the theory,
and disruption Emerging markets questioning both the size of the market
and the ability for multinationals to
Source: www.imf.org 9
While growth rates are undeniably high, so are entry costs. Prod- alleviate poverty. Since Prahalad’s
ucts, services and business models need to be adapted to the initial work, the debate has evolved
realities and needs of developing markets. This process is not People living at the base of the world’s economic pyramid (BOP) continuously, resulting in an identification
only a sunk cost, but can constitute a vital innovation driver that make up 72% of the 5.6 billion people recorded in national
of best practice and pitfalls newcomers
benefits new and traditional markets. For example, GE Health- household surveys. Collectively, these people are estimated to
care has successfully developed a low-cost electrocardiogram represent 51% of global gross domestic product (GDP) in 2014. can learn from.
machine for the Indian market, which has subsequently been At the same time, the middle-income class is growing fast in
marketed in the U.S. with great success – and done this without many developing countries. Shaping the preferences of today’s
losing substantial revenue on their existing products in this cat- low-income consumer is an investment in the middle-income
egory. In other words, they have taken advantage of reverse in- class of tomorrow. The speed at which these developments are
novation. This challenges conventional wisdom that innovations happening is a force to be reckoned with, as it represents a devel-
originate in rich countries and are then sent downhill to develop- opment of markets that unquestionably holds an opportunity for
ing countries. companies willing to take a look and rethink business as usual.

10. TOOLBOX What can I use the Toolbox for?
While entering new markets always requires tough learning and
adaption, it is our experience that many of the obstacles and
ABC misunderstandings that make the difference between success
and failure are avoidable. Often the problems occur far away
from the target markets in corporate headquarters where well-
meaning business professionals develop products and business
models that look great on paper, but seldom work on the ground.
A key reason is that rarely are developing markets merely en-
tered; instead, they need to be created. This Toolbox will help you
Is this toolbox for me? understand how this is done.
Where do I start and Based on best practice from successful business ventures, the
Toolbox stresses the importance of on-the-ground business
Until recently, few Kenyans would have
known how to answer a market survey
IN FOBOX
how do I use it? This model development involving local stakeholders. In short: par- about mobile banking. However, a huge
ticipatory market research. Depending on the company, type of
chapter introduces the product and time frame, this can be either a long or short pro-
number of Kenyans have leapfrogged from
not even having a bank account to using
toolbox basics. cess, but it will probably require you to leave your comfort zone
and seek information and ideas directly from and with your tar- technology that is more advanced than
FROM MAR KET EN TRY TO MAR KET CR EATION
get market. This Toolbox is designed to help you with this task. in many developed countries. Through
brave innovation, mobile operators and
Who can use the toolbox? banks have created a new market from
scratch. This ability is key to many BOP-
The Toolbox is designed primarily for business professionals who
are entering developing markets for the first time. The activities business ventures. Large companies, such
are relevant for business professionals across industries and as Procter & Gamble (P&G), Johnson &
10
company sizes, B2B as well as B2C. However, companies that Johnson and Philips have failed because
directly or through local businesses reach low-income end-users they focused on perceived “needs,” such
will benefit more than companies who, for example, invest in as clean water, but failed to understand
large-scale infrastructure projects through governments or inter- how a market for clean water can be
national organizations. created. In other words, how the value
proposition for clean water translates into
BOP projects are typically initiated in one of the three areas in-
something people are willing to pay for.
dicated on the figure on the opposite page. However, objectives,
as well as company stakeholders, often change along the project One of the main ambitions of this Toolbox
process. is helping your company understand these
dynamics.

11. Idea
Sales and business development Generation Concept
Projects often focus on generating a short-term return. The Development
Project
projects typically involve minor adaptations and are based on Definition Pilot
introducing products or solutions to existing markets. The Tool- Project
box can be used to understand current market dynamics and Market
Launch
develop appropriate business models.
Innovation and R&D
Projects focused on generating a medium to long-term return.
The projects typically involve considerable innovation and R&D
efforts, such as new products or services. The Toolbox can be
used to understand the needs and demands of local markets,
which feeds into the innovation process.
Sustainability department
Projects focused on short-term and long-term return. The Tool- This Toolbox can help you on the
box helps companies understand how CSR objectives can be ground, but it does not elaborate about
IN FOBOX
linked with business objectives. creating a supportive internal framework.
However, this should be a high priority!
While understanding and operating
in a foreign and complex market is
YOUR OWN WORST
challenging, it is our experience that
When do I use the toolbox? BOP-projects are often challenged as
y
ilit
To reap the benefits of the Toolbox, it is suggested that it is used much from within. In many instances,
sib
in the initial stages of the project development process and when BOP-business development does not fit
on
additional information needs to be obtained and ideas gener-
into the company’s usual structure and
esp
ated. The Toolbox is primary developed for you to use at the
processes. Often BOP-projects require
Sa
lR
stage where you already have an idea or product as a reference 11
les
cia
BOP point, which could have a potential in the emerging market of a more patience, explanation and resources
So
Business developing country. than normal projects. To justify these extra
e
requirements at the management level, it
rat
Development
ENEMY
rpo
Project Once you have your reference point, it is time to decide how you is often necessary to highlight the short-
Co
are going to explore the potentials for your idea or product and term value (e.g. related to innovation,
consequently develop an appropriate business model. This is CSR, employee retention) and to ensure
where the Market Creation Toolbox comes into play. that the project group has enough internal
Research and Development leeway to adapt and adjust the business
model along the way.

12. The BOP Learning Lab was initialized in 2007
Background of the
IN FOBOX
and focuses on engaging Danish companies
in development markets, with a specific
focus on low- and middle-income markets.
Market Creation The BOP Learning Lab has assisted a number
of companies in developing BOP strategies
CONF
from conceptualization to implementation in
Toolbox different developing countries of the world.
DI International Business Development (part
EDERATION OF
of the Confederation of Danish Industry or DI)
runs the BOP Learning Lab. Since 2007, the
Learning Lab has build up unique competences
The information and knowledge of the Market Creation design and innovation projects. Research, stakeholder and delivered high-quality results for a number
Toolbox rests upon research and practical experience. workshops and pilot tests were undertaken in Denmark,
of large Danish companies exploring the
The description of the Business Model Dimensions is the Asia and West Africa to assess methods and guidelines
results of numerous of observation from working with within participatory development work, BOP projects
potential of low- and middle-income markets.
The BOP Learning Lab draws on the expertise
DANISH
companies in the field, as well as a review of the body of and market research. Conclusions from the analysis
knowledge on BOP business models. The description is highlighted a need for a set of well-described activi- of DI International Business Development, a
not exhaustive, but provides companies with inspira- ties that could support companies with practical business consultancy unit with +15 years of
INDU STRY ( DI)
tion and highlights of how well-known dimensions of guidelines on how to undertake market research in expertise in developing and emerging markets
a business model differ in developing markets. developing countries with a strong inclusion of tar- and offices in India, China, Brazil and Russia.
get groups.
The Toolbox Activities have been designed based on re-
search and analysis conducted in connection with several Besides the research and analysis, a number of design
and business consultants have tested the Toolbox Activi-
ties, and their relation to the Business Model Dimensions,
in actual field research. Through their professional work DESIGNWITHPEOPLE offers consultancy
they have conceptualized, tested and assessed the Tool-
services to NGOs and businesses in planning
IN FOBOX
box Activities to ensure their relevance and applicability
for market creation projects. Therefore the Toolbox Ac- and undertaking participatory field research
12 tivities have been created by combining best practices and design activities in low-income countries.
and methods from participatory development work and The organization offers professional
design with market research activities already known
consultancy services to NGOs and businesses
DESIGNWITHPEOPLE
and used by many businesses. This ‘methodology’ of
the Toolbox has been labeled as ‘participatory market based on several years of experiences in
research’, which defines the approach companies managing and undertaking participatory
should apply to develop successful commercial proj- design and innovation activities in both Asia
ects in developing markets. and Africa. Experiences include both local and
global activities to develop and assess new
innovations for NGOs and private companies.
Through the voluntary organization InnoAid.org
new networks and innovative methodologies
are continuously created through student
involvement and local co-creation to facilitate
innovative aid solutions.

13. Structure
of Toolbox
The Toolbox should not necessarily be read chronologically
from the first to the final page. When reading the Business
Model Dimensions or cases, you can access the Activity Tool-
box to enhance your understanding of how to apply the Tool-
box Activities to your own projects.
It is important to note that the Toolbox is not an A-Z guide,
but aims to help your company get started. This also means
that the Activities are meant as inspiration and need to be
adapted to the specific conditions of your company.
13
e d Lin k elf
Get Inspir Make The Do It Your
s
You can use the section on Business You can use the case section You can use the Activity Toolbox get
Model Dimensions to get inspired on to understand how the Toolbox advice on facilitation and access a
what to include in your participatory Activities have been used in actual large variety of tools that can produce
market research participatory market research valuable information and knowledge

14. BUSINESS
MODEL
DIMENSIONS
AND CASE
COLLECTION This section will inspire you
on topics that can guide your
participatory market research
Photo to the right, shows the Toolbox Activity
14 Price mapping taking place in participation
BUSINESS MODEL DIMENSIONS CASES with a group of farmers.
RAPID MARKET ASSESSMENT 16 18 AAK (AarhusKarlhamn)
CUSTOMER BASE AND END-USERS 18 22 VESTERGAARD FRANDSEN
INCLUDING END-USERS 20 26 NGOs
DISTRIBUTION SYSTEM 22 28 INNOAID STREET FOOD
PRICING AND FINANCING 24 32 DANISCO
MARKETING AND COMMUNICATION 26 34 COPENHAGEN BUSINESS SCHOOL
SERVICE AND MAINTENANCE 28 38 WORLDBARROW
44 ARLA
48 GUNDFOS LIFELINK
50 INNOAID AMBULANCE

15. 15

16. World Resources Institute: Large online collection of ar-
RAPID
INFOBOX
ticles, blogposts and debates on BOP.
UNdata: Access to useful databases such as OECD Data,
FAO Data, WHO Data, International Financial Statistics and
MARKET UN Procurement Statistics.
WHERE TO FIND YOUR MARKET INFORMATION
Doing Business Index (World Bank): Provides objec-
tive measures of business regulations for local firms in 183
ASSESSMENT economies and selected cities at the subnational level.
Growing Inclusive Markets (UNDP): Case study bank of
120 inclusive business models from over 40 countries and
collection of 1,000 inclusive business models from all re-
Visits to small shops, gions and sectors.
To successfully design your although some are hard
to find, can provide
Index of Economic Freedom: Covers 183 countries across
10 specific categories of freedom, such as trade freedom,
Business Model Dimensions, useful information
business freedom, investment freedom, and property rights.
you need to understand This means that traditional approaches and relying on
desk research will not get you very far, as access to market
Corruption Perceptions Index (Transparency Index):
Measures the perceived level of public sector corruption in
the existing market and information and knowledge is typically very poor. However,
as with any other market study, the process will begin with a
178 countries.
Global Peace Index: Measure of global peacefulness by do-
get access to the right consultation of secondary information sources, but you must mestic and international conflict, safety and security in soci-
be aware of the constraining factors that limit the reach of the
information and knowledge. secondary information.
ety, and militarization in 153 countries by taking into account
23 separate indicators.
A predominant reason for the poor access in developing Asian Development Outlook and African Economic Out-
countries is the informal economies. The size and structure of look: Comprehensive analysis of macroeconomic and devel-
As illustrated in the introduction, the use of the Tool-
the informal economy is a factor of considerable proportions, opment issues of the two continents.
box focuses on the initial part of the project develop-
ment process. The rest of the chapters in this section which contributes to an inherently different business Various sources of information: BOP Learning Lab
environment. Typically, the informal economy is not taxed, Denmark,Center for Sustainable Global Enterprise at Cor-
on business model dimensions are actual dimensions
monitored by government or included in the GDP, unlike the nell University’s Johnson School of Management, William
of a business model, whereas this chapter will show formal economy. In some cases, 70% of the workforce earns Davidson Institute, Gapminder, Endeva, World Governance
you how to take the very first step, making it possi- their living in informal markets. Indicator, Journalists Without Borders, Eurostat.
ble to initiate the development of a BOP project. The
16 rapid market assessment will give an overall estimate The benefits and drawbacks of an informal economy are
of how to proceed with the project, as it will provide many, and your company must understand the markets in
you with the knowledge and information you need in this informal economy to achieve success. As you will see in
the decision-making process. the description of the next business model dimension, the
population living in the informal part of the economy can be
included as part of your business model with great advantages.
The informal economy is often one reason why information
and knowledge can be very difficult to access.
Where to start?
When your company has decided to go into a new market or Even though many developing countries have national bureaus
country, the process typically begins with a market assessment, of statistics and other information agencies, the availability of
feasibility study or market entry analysis. Applying such tactics sector-specific data concerning production value of certain
can produce efficient results in developed markets, but in BOP goods can be very low. Due to these factors, the rapid market
assessment focuses on supporting the limited available data Visits to specific stores, for example local pharmacies,
markets, investigating and gathering information and data can during field research can produce valuable knowledge
be a very complicated task. with on-the-ground participatory market research.

17. ViewWorld is a smartphone- based app that easily and
INFOBOX
and store data and information, but due to constraints on effectively collects and reports text, data, photos, video,
On-the-ground understanding resources, the information is never disseminated. sound, barcodes and GPS coordinates. The approach is
of existing market to use the ViewWorld web interface to create, import and
To develop your successful BOP business model, it is very Therefore, it is highly recommended to meet with government export data forms to and from smartphones. The ViewWorld
important to understand the existing market at an in-depth offices (e.g. statistical bureaus, information offices of App can be used for market research allowing better and
OPTIMIZE YOUR DATA COLLECTION
level. A comprehensive understanding of the existing market ministries, research centers, etc.) and NGOs as these types easier collection of data and knowledge.
will help you to understand how existing problems and needs of organizations typically run large programs with monitoring
are addressed, thereby allowing you to position your solution. and evaluation requirements, making it necessary to collect the ViewWorld is developed in cooperation with DanChurchAid,
The most effective approach in establishing this understanding needed data and information. Danish Red Cross, CARE Denmark, International Media
is to be present in the market, making it possible to see the Support and Rockwool Foundation. ViewWorld is a system
conditions on the ground and meet the different stakeholders, Meet the end-users on their home ground thatcan help organizations, associations and businesses
especially those in your designated target group. Perhaps the most important reason as to why you and collect, aggregate and present data.
maybe an entire team should go to the market is to meet
However, local presence is not only important in relation to the potential customer of your products or services. As
meeting your designated target group. At times, you need to mentioned, information is difficult to access. So for knowledge
go to the to the source to acquire secondary information and about consumer preferences, etc., which stresses the need for
data, as the availability varies to a very high degree and often companies to go to the market at a very early stage, it otherwise
cannot be acquired on the Internet. At times, countries collect becomes very difficult to conduct enlightened decision-making.
ACTIVITY TOOLBOX SELECTED ACTIVITIES THAT YOU CAN APPLY TO THE RAPID MARKET ASSESSMENT DIMENSION?
The target group Deep dialogue is vital when Selling the product literally Resource flow can be used Follow and observe is very Ranking values can be used
segmentation is useful in arriving to an emerging means that you sell your to generate an estimate useful when you want to to understand how people
documenting your visits and market, as it supports the product or put it up for of the input and output get a better understanding perceive the characteristics
talks with various target first contact with your target sale to get an immediate at a general level of an of the informal market. of products when they 17
groups that could become group. This activity assists in response from potential organization, such as a rural As it is very difficult to must prioritize them. This
potential consumers. Upon “getting the ball rolling” as buyers. The activity health clinic, allowing you obtain specific data and approach is very useful
returning from the rapid the interviews and contacts generates important to acquire some numbers information on the informal for creating a platform for
market assessment, the you make are bound to knowledge, not just in about available medical market, this Toolbox Activity dialogue. The exercise could
segmentation will help you spread and grow. relation to consumer supplies and staff (inputs) is used in situations such state something that is
decipher between different feedback, but also from and treated patients as visiting different types of obvious, whereas people’s
groups. shop owners, as they will let (outputs). This could be sales outlets, asking about real opinion is revealed in
you know whether there is a valuable information in pricing and distribution, etc. the subsequent dialogue.
market for your product or assessing the potential
service. market.
Customer segmentation Deep dialogue Product in market Resource flow Follow and observe Ranking values
Page 72 Page 58 Page 86 Page 66 Page 68 Page 76

18. CASE
CASE:
RAPID MARKET
RAPID MARKET ASSESSMENT
ASSESSMENT
This case focuses on how AAK
(AarhusKarlshamn) made a
rapid market assessment of
an edible oil market.
This case will highlight:
The ability to conduct a rapid market assessment to esti-
mate the potential for a company in a market.
How you do a rapid market assessment using the Toolbox 1 2
Activities: Customer segmentation, Follow and observe and
Ranking values.
FOLLOW AND OBSERVE
Market overview Based on research prior to the field research, it was very
Based on desktop research, the overall market potential evident that the informal market had to be examined closely,
for edible oils was established. UNdata, such as FAOstat, as the majority of the consumers were represented in this
proved to be a reliable source and general internet research market, especially wholesale vendors. An important part of
generated a list of relevant stakeholders, such as private the rapid market assessment focused on identifying the mark-
companies and government research institutions. A number ups every time an edible oil product changed from one market
of telephone interviews provided further insight, especially participants to another.
18 concerning the informal market, which is essentially what
attained the largest potential. By following and observing the different actors in the market, it
was possible to establish how many times the product shifted
hands 1 , and by using the Toolbox Activity Deep dialogue
Digging into the informal market
in different shops, the mark-up and different products were
As the largest potential was estimated to be in the informal identified 2 . This means that a rough estimate was generated
market, it became apparent that participatory market in terms of the product’s value when entering the country
research, using the Toolbox Activities, was required. The (established from desktop research and visiting the National
Toolbox Activities assisted in collecting the necessary Bureau of Statistics) until it was in the hands of the end-user.
information and knowledge. To effectively do this would
require an involvement of the future end-users of the product, As the product in focus was edible oil, the follow and observe
which meant that valuable insight on how to generate the method also permitted the research to ask operators of
business model could be collected at the same time. Prior street kitchens and restaurants about how they used different
to the study, the team selected a number of suitable Toolbox products.
Activities and made the necessary preparation, such as
developing different focus materials, e.g. picture cards for
ranking the characteristics of a product.

19. CUSTOMER SEGMENTATION
An expected output of a rapid market assessment is an
identification of multiple customer segments. As noted earlier,
the primary customer segment, wholesale vendors and
street kitchens, were examined and detailed information was
collected and compiled into “personas.” The different personas
then represent a typical customer from the examined segment.
The most attractive customers identified, were female middle-
4 5 class consumers 9 and street vendors 8 .
6 7 Important as it is to visit the street vendors at the shops, it is
equally important to invite them to a location where they are able
to share their thoughts and ideas with similar shop owners 3 .
The persona description also contains the preferences of the
different consumers based on the ranked values, e.g., what is
the prioritization of the different product characteristics. An
important part of the customer segmentation is that it is an
ongoing, cross-cutting activity, which involves a combination of
notes and photos over time 7 .
3
8 9
RANKING VALUES
Another important part of the participatory market research
was the prioritization of product characteristics, especially in
relation to the nutritional value of different products in the
market. The three largest customer segments, street kitchens
and low- and middle-income households, were presented
with 20 different picture cards 3 , all indicating different
characteristics of edible oil, such as taste and durability.
19
Furthermore, a number of local products were used at the
focus group 5 , including the locally manufactured red oil 6 .
The groups prioritized very differently, with the street kitchen
initially focusing on nutrition, but ultimately deciding on price
8 . Middle-income consumers heavily emphasized the need
for nutritional value 4 . However, the researchers remained
skeptical, as later research on brand preferences showed a
bias toward a very unhealthy national brand. An interesting fact
was that the low-income households perceived edible oils with
added vitamins or no cholesterol as something exclusively for
the rich people.

20. CUSTOMERS decide to bid on government tenders, you can typically gain
an advantage by getting acquainted with the World Bank’s
tender processes, as the majority of all governments have
AND END-
implemented the procurement processes of the World Bank.
The need for end-user education
USERS The rapid market assessment will assist you in understanding
the different customer bases your company can target.
Regardless of which customer base your company decides to
focus on it will entail a certain degree of education of the end-
user. In the case of Grundfos LIFELINK, the company needed a
plan for how to educate their target group on how to use their
Select your customers and/ product.
or end-users and understand The need for education is tied to the importance for companies
when people are willing to The rapidly evolving middle income class: Lives in brick
to ensure that the end-users perceive the value proposition the
right way. An imperative step in the development of the value
pay to solve a need. houses, dresses nicely and has a daily job proposition is to understand the difference between needs and
markets.
Concerning the selection of markets and potential consumers,
past experiences have shown that companies selecting the
Identifying, building and maintaining a customer most impoverished target groups in rural areas encounter a
base among lower- and middle-income classes is a more difficult start-up process. Contrary to this, you have a
daunting task, but it can yield substantial returns higher chance for success (also towards the people living at
for a company. When you are faced with the task the very base of the pyramid) if you choose peri-urban and
of selecting and building a customer base, and the urban areas and integrated resourceful local organization, such
as co-operative groups. However, this depends on your sales
subsequent development of the business model di-
strategy, as the choice of sales channel will determine the type
mensions, you can use this chapter for inspiration on of end-users that your company will address.
how to navigate safely through the development. A
key factor to keep in mind is that the basic needs of
your target should not be misinterpreted as market
Different types of customer bases
20 demand. As in any other market, your company can sell the products on
a business-to-business (B2B) or business-to-consumer (B2C)
basis; however, other relevant approaches exist.
Identifying and selecting your customer base For instance B2N, also referred to as business-to-NGO,
exemplifies the opportunity of selling to NGOs, such as The Visiting local communities can change your perception
When highlighting the potential of BOP markets, the huge and enhance your understanding of future end-users
number of people is typically emphasized and this leads to the International Committee of the Red Cross, e.g. the company
conclusion that tremendous opportunities exist. It is true that Grundfos LIFELINK, establishes an agreement with Red Cross
opportunities exist, but you must remember that companies concerning the delivery of the water service provision system. Unmet need is not a market
operating on these markets use different sales channels and Besides the large number of NGOs, the United Nations At times, companies misunderstand and confuse the needs
very seldom sell directly to the consumer. Although many supplies to developing countries throughout the world, which of the consumers and interpret this as market demand. The
companies do not sell directly, it can be very important to makes the UN a very attractive customer. problem arises when you translate basic needs, such as lack of
establish a direct relation to your company’s end-users. medical services, water, food, etc. As noted in the introduction,
This relations is equally important from the initial contact is Another example is B2G, or business-to-government, which is many companies have failed even though they used sensible
established to the go-to-market strategy is launched. typically based on tender issues by local governments. If you strategies. However, it is typically not a question of which

21. strategy to apply but spending the necessary resources in Quality standards: Consumers and workers conduct their in their everyday life. This approach has been well examined by
developing the appropriate value proposition. lives with dignity and demand both respect and quality from Erik Simanis (2010) in his work with the Solae Company, which
To do this, you need to get an in-depth understanding of the service providers and employers. was part of the BoP Protocal project.
people living at the base of the economic pyramid. Below are
Financial constraints: Low and fluctuating incomes and
a number of aspects that companies must bear in mind for a For this to be successful, you must submerge yourself in the local
limited access to credit or insurance drive the consumers to
better understanding of their target group: community and include your target group. The next chapter will
be smart shoppers and risk-adverse investors.
provide you with inspiration on how this can be done.
Trap for the altruistic: Companies tend to confuse need
with demand (who can use the product, rather than who can
buy it). Process of developing an
Cash flow blindness: Products that appear inexpensive by open-ended value proposition
Western standards cost two weeks’ salary in a developing To get an in-depth understanding of your target group, you
country. should apply an open-ended process. The process is open in
the way that you, in close collaboration with your target group,
“It’s-being-sold-on-credit-so-they’ll-buy-it”: Company allow them to define the value proposition, thereby encouraging
sales and profits are realized on the basis of increased debt
them to establish a perception of how the product makes sense
and loans for the consumer.
ACTIVITY TOOLBOX SELECTED ACTIVITIES THAT YOU CAN APPLY TO THE CUSTOMERS BASE AND END-USERS DIMENSION?
Follow and observe can be Deep dialogue is very useful Activity map is used to map a Learning by doing follows Designing the value Concept assessment is
used to get out among our in collecting the insights typical day of your end-users. the idea of submerging proposition to include the used when you have an
future customers. Go to a of people regarding their You develop a set of pictures yourself in the community potential customer in the idea or product that you
local community and talk perception of a product and illustrating the typical to better understand design of your product or want to present to your
or observe people in their whether they would actually activities of a day. (You the way people perceive service. Prepare different designated target group. 21
everyday lives. If you are pay for it. The activity is will have gained additional and understand things materials, such as pictures The assessment activity will
developing a business model important in determining insight after following and around them. This is an or prototypes, to facilitate provide you with information
for a new food product, it if the company can offer observing, as well as deep explorative task and does feedback from the target and knowledge, which can
can be useful to observe anything of commercial dialogues.)Then your target not necessarily focus on group. Recognize the be used in the iteration of
how people prepare their value to potential end-users. group maps out their day and any research questions or importance of an open- your idea or product.
food or how they shop. you will have a platform for products, but is an activity ended value proposition
dialogue, which can provide designed to make you where people develop
valuable insight in how value understand the living in the their own perception of the
is created. local community. product’s value.
Follow and observe Deep dialogue Activity map Learning by doing Designing value proposition Concept assessment
Page 68 Page 58 Page 62 Page 70 Page 80 Page 84

22. CASE
CASE:
CUSTOMERS
CUSTOMERS AND END-USERS
AND END-USERS
This case focuses on how
2 3
VestergaardFrandsen’s 4 5
strategic partnerships ensure
inclusion of the end-users.
This case will highlight:
The need to establish close relations with your end-users
although they are not the customer base.
How strategic partnerships can ensure inclusion of the
1
end-users through the activities “Learning by doing” and
“Designing of value proposition.”
LEARNING BY DOING
VestergaardFrandsen (VF) has turned corporate social re-
In the focus country, a rural community was selected as a re-
sponsibility into their core business of creating life-saving prod-
search site. A local company that ran a malaria control program
ucts for the most vulnerable. Innovative products and concepts
provided the access to the site. The product development con-
are developed under their unique Humanitarian Entrepreneur-
sultant from VF was welcomed to the community by the village
ship business model, such as a thin sheet of woven shade cloth
chief. The consultant expressed interest in staying overnight two
impregnated with insecticide that is installed on the walls of
days in the community during the first week, showing full re-
a house to offer protection against diseases like malaria and
22 spect for the local conditions, and the chief honored the re-
dengue.
quest by handing over a local abandoned house 2 3 that was
then renovated. The house and a few overnight stays did not
While the end-users are people living at the BOP target, cus-
only create direct access to the community but was further
tomers are primary public agencies (government agencies,
useful for the research to undertake most of the initial tests of
NGOs, etc.) or larger private industries interested in running
community-based malaria control programs. fixing methods 12 13 and acted as a local storage facility. In ad-
dition the possibility to stay overnight provided an opportunity
Strategic partnerships are formed with potential cus- to test other VF concepts and products with target-users and
tomers during the early research and development to prove potential customers, as well as discover new opportunities by
the safety of the product and create evidence of impact spending time in the community in the evening, observing
on malaria. While the marketability of the products depends the local behaviors at the time when the malaria-infected mos-
largely on the ability to prove the life-saving advantages, Vester- quitoes often bite.
gaardFrandsen also undertakes local field research to address
the product’s usability and acceptability among the end-
users – key factors for the actual ratio-of-use.

23. CONCEPT ASSESSMENT
In addition to the textile technology, a second design challenge
was to ensure that the durable lining product would be fixed on
the walls throughout the expected efficacy period of three years.
A large variety of fixing and adhesive products were purchased
in the U.S. and locally, and tested systematically on a variety of
rural walls 12 13 .
To assess the textile, end-users were presented with small mate-
7 8 rial samples 6 and pictures of the installation during interviews.
They shared initial skepticism because the textile was similar to
9 10 that used in grain bags. Later, full room-installations were under-
taken locally to assess the training needed for locals to manage
the installation 5 8 . The full-room installations were also used
so that the community could assess the product in use and for
VF to observe the local adaption 14 .
An “Acceptability, Durability and Impact on Malaria” survey was
developed to guide later product assessment trials through sec-
ondary partners. The survey was tested before being finalized.
6 The test included surveys with households that were intentionally
given non-impregnated durable lining. The test answers proved
11
DESIGNING OF VALUE PROPOSITION inefficient in producing the correct answers. To avoid misleading
answers the survey now includes observations and activities that
Bed nets are frequently used inappropriately by the end-users
can reveal insight beyond people’s answers, including the use of
who instead catch fish with the net, decorate with the packag-
locals in the community as assistant researchers to tap into local
ing or get cash from selling the bed net on the market rather
than using it as intended to cover their beds. This behavior chal- knowledge and attitudes 15 .
lenges the value proposition of the product, especially the way
end-users experience the product must be attractive so misuse
is avoided. Misuse is particularly problematic if health awareness
is low.
To design the durable lining product VF needed to create attrac- 23
tive experiences for the locals. A number of local research and
design activities were undertaken: samples of the durable lining
product were “forgotten” in the village and later people were ob-
served using the durable lining product to screen their windows 12 13
for insects 9 ; many houses were visited to identify that if the
wall lining was blue, it would have great aesthetic value for those 14 15
who could not afford painting 7 ; developed acceptability and
durability surveys after the first pilot tests revealed that the du-
rable lining killed and physically screened for other rodents; 11
and that the transparency of the textile enabled personal paint-
ings on the wall to still be seen 10 . These local experiences are
now part of the product’s design and used in marketing to appeal
to the locals.