International Development Enterprises (iDE)

PANEL 3. THE IMPORTANCE OF DEVELOPING DEMAND

Images iDE.

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

INTERNATIONAL DEVELOPMENT ENTERPRISES (iDE)

Mission to create income and livelihood

opportunities for poor rural households.

iDE delivers Market Systems Development

through:

- Technology commercialization

- Institutional commercialization

- Product design and innovation

Focused on:

- Agricultural Markets

- Food Security & Nutrition

- Water, Sanitation & Hygiene (WaSH)

- Technology & Innovation

• Founded in 1982

• iDE currently operates 12 country

programs in Asia, Africa, and Latin

America

• Delivered more than 250 projects in

market and private sector developed

valued at over $150 million in over 20

countries worldwide

• Funding from more than 90 donors,

including USAID, the Bill and Melinda

Gates Foundation, DFID, CIDA, and the

World Bank

• Recipient of over 10 international

development and design awards since

2004

• Employs over 500 staff worldwide

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

INTERNATIONAL DEVELOPMENT ENTERPRISES (iDE) in BANGLADESH

242 fulltime staff

14 active projects

25 active districts

Partnerships across development,

public, and commercial sectors

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

UNDERSTANDING NEED AND DEMAND (1)

Big numbers do not necessarily mean

a market – sometimes these are assumed to

represent demand but in reality they represent

need…

In the case of emerging economies it is not

straightforward to sell products and services to

this need as…

‘… the lives of low-income people are […] full

of priorities and boundaries that must be

renegotiated to adopt a new product’

‘… a company must first create a new

consumer market, a new lifestyle. It must

transform the need into a value proposition

worth valuing, and it must embed that

product into people’s lives’.

www.unwater.org

Quotation from Simanis, Erik Needs, Needs, Everywhere, but not a BOP market to Tap, in Next Generation Business Strategies for the Base of the Pyramid, London and Hart eds. FT Press, 2010

This need can be more accurately

considered as latent demand.

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

Maselow’s Hierarchy of Needs (1943) – meta-

motivation to strive for the highest needs…

Demand can be understood as what the BoP

will invest in based upon how a product or

service meets these needs/ desires.

‘The most effective way [to commercialize

products] to get someone to desire a new

value proposition and consumer offering

and to then invest the time and effort to

learn new routines and behaviors is to have

him or her feel a sense of ownership for it’

We need to understand BoP desires and

purchasing behaviours…

UNDERSTANDING NEED AND DEMAND (2)

Quotation from Simanis, Erik Needs, Needs, Everywhere, but not a BOP market to Tap, in Next Generation Business Strategies for the Base of the Pyramid, London and Hart eds. FT Press, 2010

Belonging-Love

Friends, Family, Spouse

Safety

Security, Stability, Freedom from Fear

Physiological

Food, Water, Shelter, Warmth

Self-Actualization Pursue Inner Talent, Creativity, Fulfillment

Self-Esteem Achievement Mastery, Recognition,

Respect

Basic

Nee

ds

Des

ires

Adapted from McLeod, S. A. (2007). Maslow's Hierarchy of Needs. www.simplypsychology.org

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

DEMAND CREATION AS VALUE PROPOSITION

Belonging-Love

Friends, Family, Spouse

Safety

Security, Stability, Freedom from Fear

Physiological

Food, Water, Shelter, Warmth

Self-Actualization Pursue Inner Talent, Creativity, Fulfillment

Self-Esteem Achievement Mastery, Recognition,

Respect

www.saverscart.com

www.wonderfulengineering.com

www.coolspotters.com

Adapted from McLeod, S. A. (2007). Maslow's Hierarchy of Needs. www.simplypsychology.org

www.examiner.com/

Developed consumer

markets – clear

understanding purchasing

behaviours

BoP Consumer Markets

– purchasing hierarchies

and drivers often no

reference points for

market creation

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

iDE believes that to embed products you need scale-able

and sustainable means to develop consumer markets

amongst the BoP

CREATING MARKETS AT THE BOP – CONNECTING NEED AND DEMAND

Government/

Development

activities

typically focus

on needs of BOP

populations in

technology/

product

development and

deployment

activities

Commercial sector

focuses on what is

already demanded

by existing

consumers at all

socio-economic

levels. Tend not to

invest in demand/

market creation

Consumer market not

developed for the

technology/ product

Figure adapted from World Bank Working Paper No: 138: Accelerating Clean Energy Technology Research,

Development, and Deployment: Lessons from Non‐Energy Sectors. World Bank, 2008.

Projects, R&D,

Government provision

Marketing and promotional

activities, R&D

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

HOW CAN WE DO THIS? (1) BUILD DESIREABILITY INTO THE SOLUTION…

Approaches such as HCD enable us to

understand the perception of a

community towards a product or

service so it can be adapted/

contextualised.

These approaches help us to understand

the demand dynamics, customer

segmentation and the aspirations of these

segments in the community.

Enabling us to conceptually arrive at the

right solution for both the product design

and the business model...

Understanding desirability

increases the market

readiness of the product or service

solution

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

HOW CAN WE DO THIS? (2) ANALYSE AND DEVELOP THE MARKET SYSTEM…

Ongoing analysis of the market

system ensures that weaknesses are

identified and interventions designed

This is the operational lens – how you

are going deliver the conceptual solution… Springfield Centre: www.springfieldcentre.com

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

HOW CAN WE DO THIS? (3) DRAW INVESTMENT INTO DEMAND CREATION…

Investment is required to drive

demand creation activities to

develop the consumer market for

the product or service

Who will invest continually in

demand creation activities?

Sources of investment ROI/ SROI

funding can be leveraged through

making deals (JVAs).

This is to support the

sustainability of

investment into the consumer

market created…

Stock image from http://iap.esa.int/c/sme/news/183; others iDE, 2013

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

Increase Market Readiness

of the technology

Draw investment into

the system

Analysis to overcome

systemic constraints

COMPLEMENTARY STRATEGIES TO SUPPORT A CONSUMER MARKET FOR BOP TECHNOLOGIES

Figure adapted from World Bank Working Paper No: 138: Accelerating Clean Energy Technology Research,

Development, and Deployment: Lessons from Non‐Energy Sectors. World Bank, 2008.

Consumer market can be

developed for the

technology/ product

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

TWO EXAMPLES OF IDE’S WORK IN BANGLADESH

Building Consumer markets amongst the

BoP for…

Micro-irrigation equipment

(Treadle Pumps)

Hygienic latrines

(using the SaTo® Pan)

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

EXAMPLE 1: CREATING DEMAND: DEVELOPING A MICRO-IRRIGATION MARKET IN BANGLADESH

iDE identified a need – that affordable

small plot irrigation could reduce poverty

and hunger for small farm families in

Bangladesh.

iDE had the right product: when farmers

reported a strong preference for the

Treadle Pump over the Rower Pump

(cheaper, easier to operate and produced

more water) – iDE chose to refine this for

mass-manufacturing and distribution.

iDE was committed to developing a BoP

consumer market for the product…

Gunnar Barnes, a Norwegian engineer who developed the Treadle Pump. It took several years, and contributions from many individuals, like Mr. Dev from Kurigram and Dan Jenkins from USAID, before the design work could be completed.

Adapted and images reproduced from Heierli, Urs., Polak, Paul, 2000. How iDE Installed 1.5 Million Treadle Pumps in Bangladesh by Activating the Private Sector: The Practical Steps. In Poverty Alleviation as a Business by Swiss Development Co-operation, Berne, Switzerland 2000

In small-scale micro-irrigation…

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

EXAMPLE 1: CREATING DEMAND: DEVELOPING A MICRO-IRRIGATION MARKET IN BANGLADESH

iDE branded the product ‘Krishak

Bandhu’ (Farmers’ Friend) with a

brand linked to a quality control

mechanism…

Branded the product to provide a quality marker

Adapted and image (right) reproduced from Heierli, Urs., Polak, Paul, 2000. How iDE Installed 1.5 Million Treadle Pumps in Bangladesh by Activating the

Private Sector: The Practical Steps. In Poverty Alleviation as a Business by Swiss Development Co-operation, Berne, Switzerland 2000; image (left) from iDE

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

iDE focused marketing on

promoting an aspirational

value proposition… the life

changing value of the Treadle

Pump

Supported demand-creation

through mass-marketing

campaigns and product

demonstrations to support

local dealers…

EXAMPLE 1: CREATING DEMAND: DEVELOPING A MICRO-IRRIGATION MARKET IN BANGLADESH

Image (below) shows a village drama about an ugly moneylender who wants to marry the beautiful daughter of a small farmer. The treadle pump allows a “happy

end”. 200 performances were attended by 5’000 farmers each: more than a million farmers were “entertained”. Reproduced from Heierli, Urs., Polak, Paul, 2000.

How iDE Installed 1.5 Million Treadle Pumps in Bangladesh by Activating the Private Sector: The Practical Steps. In Poverty Alleviation as a Business

Marketed the pumps through an ‘open’ value proposition

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

EXAMPLE 1: CREATING DEMAND: DEVELOPING A MICRO-IRRIGATION MARKET IN BANGLADESH

iDE developed the skills of mistris

(masons) in order to develop the

installation services for treadle pumps

– played a vital role for market promotion

(farmers trusted them)

iDE built an effective private sector

distribution service by selecting

dealers based upon criteria including

how respected they are locally…

Moved from enterprise model (iDE sold

the pumps) to facilitation model

developing private sector distributors

over time…

Strengthened key services in the market system

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

EXAMPLE 1: CREATING DEMAND: DEVELOPING A MICRO-IRRIGATION MARKET IN BANGLADESH

1.5 Million Treadle Pumps

adopted… (2003 figure)

Around 1200 dealers sold treadle pumps

through 3800 mistris.

Sales peaked in 1995 at around

180,000/ year.

Around 4-5000 sold in 2013.

Images iDE. Figures from Final Evaluation Study of The Marketing

Appropriate Technology Program for Treadle Pumps in Bangladesh 1984-

2003, Mehta, Roda for iDE and SDC, 2004.

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

EXAMPLE 2: HCD AND DIVERSIFICATION OF PRODUCT LINES FOR ASPIRATIONAL DEMAND PURCHASING

iDE identified a need – that CLTS

has led to high incidence of fixed

point defecation but often latrines

being used are unhygienic.

People need hygienic latrines…

iDE sought to develop a hygienic

latrine that BoP customers would

want to buy. Extending this

means creating a consumer

market for improved latrines…

Developing a consumer market for improved Sanitation Products…

Images iDE, 2012-3.

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

EXAMPLE 2: HCD AND DIVERSIFICATION OF PRODUCT LINES FOR ASPIRATIONAL DEMAND PURCHASING

HCD in Product Design and Marketing Package

Simple hygienic design in the key component –

the SaTo® Pan (developed with American

Standard Brands)

Packaged product into aspirational and

upgradable product range – the Family Friend

Toilet (built upon the same core product)

Selected price points to engage ALL local

consumer levels USD $10-$50

Through HCD iDE developed a desirable product offering with a basic needs focus

Images and figures iDE, 2013-4.

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

Sales representatives

worked in conjunction with

Local Government on

commission from the

latrine producers to engage

consumers in demand

creation sessions

Harnessed local

government subsidy

program of the and

focused it upon FFT sales.

Generated active demand

creation that can be

driven by the lead firm…

Through the lead firm iDE is building strategic demand creation into the value chain

EXAMPLE 2: HCD AND DIVERSIFICATION OF PRODUCT LINES FOR ASPIRATIONAL DEMAND PURCHASING

Figure iDE, 2013.

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

Harnessed the power of a private firm

RFL Group

• Leading manufacturer of cast iron,

PVC, and plastic products.

Agreement with RFL Plastics Ltd.

• 12,000 employees, 17 associated

companies (including agro-

dealerships, tubewells and plastics).

• ≈$300m revenue (2012). Dealer

network and distribution channels.

Partnership adds value

Strong brand identify and

recognition

Well known with BoP consumers in

Bangladesh

Can drive investment into demand

creation

Images: http://www.rflplastics.com/

EXAMPLE 2: HCD AND DIVERSIFICATION OF PRODUCT LINES FOR ASPIRATIONAL DEMAND PURCHASING

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

EXAMPLE 1: CREATING DEMAND: DEVELOPING A MICRO-IRRIGATION MARKET IN BANGLADESH

20,695 beneficiaries have access to

an improved, upgradeable latrine –

this represents 206% achievement

of the key end of project (EOP)

target

Budget of BDT 12.7 million/ USD

164,000 spent across 3 Upazilas in

Rajshahi district and two fulltime,

field-based staff… USD8/

beneficiary…

Pilot resulted in 4,139

households directly purchasing

an improved latrine in nine

months…

Images iDE, 2014

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

1. Diversity of approaches often

being employed in the field

2. Engaging private investment can

be tricky – requires negotiation

and deal-making skills

3. The development sector role must

be clearly defined (Enterprise,

facilitator, designers etc.)

4. Garage (small-scale) thinking will

not create viable solutions in the

long term.

KEY LEARNING AND CHALLENGES

Some challenges in developing demand…

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Richard Rose, iDE Bangladesh. The Importance of Creating Demand, Challenges and Learning. CODESPA Conference: Technologies

and services for the Base of the Pyramid. Challenges and keys to maximize its social impact, Madrid, Spain, 6th November, 2014

1. Understand the contextual role of

development organization

2. Brand recognition cannot be

understated

3. Value propositions must match

latent needs with desirable aspects

4. Marketing must target the upper

portion of the ‘pyramid’

5. Demand creation must be delivered

with market systems analysis and

private sector engagement

KEY LEARNING AND CHALLENGES

Some learning from our work…

GRACIAS

Richard Rose Technical Director – Programs International Development Enterprises – Bangladesh richard.rose@ide-bangladesh.org

Images iDE.