NextBillion.net - Blog: Consumer Products

Video Games for the Next Billion?

Wed, 25 Mar 2009 11:30:00 +0000

Authored by: Rob Katz

In an Associated Press article posted yesterday, Qualcomm announced its backing of a videogame startup targeting BoP markets. I heard about it in an e-mail from my father, who wrote under the subject line "tacky! tacky! tacky!".

While my first instinct was to agree with his assessment, I've been thinking about it more and more. No, video games are not basic goods and services, nor do they have much of a "development" impact if you're looking to NextBillion.net for your development-through-enterprise news coverage.

But the very idea of selling a new product (modern videogame consoles) into an underserved market (the approximately 800 million people making $7 to $10 per day) is the definition of a bottom-of-the-pyramid strategic approach, at least as defined by C.K. Prahalad.

Then again, if I keep writing about videogames, I'll open myself up to criticism from Aneel Karnani, who has rightfully pointed out that simply selling things to poor people does not necessarily improve those people's lives.

The bottom of the pyramid concept is not black and white; nor is the next billion (as a market, a business strategy or a term). It's foolish to lump drip irrigation systems (positive development impact) in the same pile as videogame consoles (negligible development impact). But it's also dishonest not to celebrate Qualcomm's move here - they see an underserved market and look at poor people as customers, not aid recipients.

One step at a time, right?

Guest Post: Cornell Students Working with Natural Food Products Business in Botswana

Tue, 13 Jan 2009 13:49:00 +0000

Authored by: Francisco Noguera

We received the following story via e-mail from guest blogger Gretchen Ruethling, a first year Master of Public Administration student focusing on international development at Cornell University. She has worked as a journalist and for an environmental organization and an agricultural research organization in the U.S. and Latin America. She is interested in the private sector's role in development and capacity building among small and medium enterprises.

By Gretchen Ruethling

Entrepreneur and self-described "ideas man" Frank Taylor moved from Cape Town, South Africa to Botswana seeking a challenge, trading game skins and leading archaeology, ethnology and botany exhibitions for a museum in South Africa. "I was living on the smell of an oil rag," Taylor said. "A jack of all trades, master of none."

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Pop!Tech: MobileMetrix Makes the Base of the Pyramid Visible Again

Thu, 06 Nov 2008 15:46:27 +0000

Authored by: Rob Katz

"Who are they?" Melanie Edwards asks us. Frankly, we don't know – and neither does the government. These are the people of Morro de Macacoes – Portuguese for "Hill of the Monkeys" – and they are among the 1 billion people worldwide whose existence has no official record.

Imperfect or non-existent information characterizes base of the pyramid markets worldwide. When Edwards began working in Morro de Macacoes (a slum near Rio), she asked government officials how many people lived there. The answer ranged from 5,000 to 60,000. She saw this disparity as a business opportunity; after all, how can businesses, banks, governments and NGOs serve people's basic needs if they don't know who they are? Edwards' company, Mobile Metrix, is founded on a simple principle: that accurate information on the invisible is the first step to solving poverty. Or, as she told me, "[We are] not just about changing lives and counting lives, but about making those lives count."

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Pop!Tech: Keeping It - Your Medicine - Real with PharmaSecure

Sat, 25 Oct 2008 03:20:36 +0000

Authored by: Rob Katz

You're sick, so you go to the doctor. He prescribes you drugs. The medicine makes you better, right? Unfortunately, that's not always the case – especially for the billions of people living at the base of the economic pyramid.

Taylor Thompson and Nathan Sigworth are on a mission to make sure medicine makes patients better, every time. They are the co-founders of PharmaSecure, a for-profit startup targeting the problem of global pharmaceutical counterfeiting – which kills millions each year. PharmaSecure will soon launch a cell phone-based system that allows healthcare professionals and consumers to easily confirm the validity of purchased drugs, bridging the information gap that allows counterfeiters to sell more than $50 billion worth of fake drugs every year.

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Social Capital Markets: The Future of Fair Trade

Thu, 16 Oct 2008 23:11:31 +0000

Authored by: Rob Katz

Guest blogger Champa Gujjanudu is an 1st-year MBA student at the Haas School of Business at UC Berkeley with an emphasis in social impact consulting and community development. Prior to Haas, Champa was a Strategy Consultant with BearingPoint in the Bay Area and in New Zealand. She has held consulting positions in various industries such as Financial Services, Healthcare and Technology. She graduated with a degree from the University of Auckland with degrees in Computer Science, Mathematics and Business Information Systems.

By Champa Gujjanudu

Today, I was privileged enough to attend not one but two great panel discussions on a topic close to my heart, Fair Trade. While being familiar with some of the local and regional Fair Trade associations and retailers, I was blown away by the breadth of experiences and the passion that the various panelists brought to the discussions.

The first panel addressed one of the major challenges in the mainstreaming of Fair Trade - how do we influence the large untapped proportion of consumers to affect long lasting change in preferences? The other important question was how do we compete in the market with other non-Fair Trade products?

The next panel was focused on attracting investment in Fair Trade - tracing the supply chain of Fair Trade and discussing some of the key attributes of Fair Trade that deter traditional financiers and limit micro-financiers such as lack of collateral and the scale of Fair Trade.

Regina Connell, the founder of SaltCellar Productions, a non-profit strategy consultancy, highlighted the issue of product quality parity - the critical requirement that Fair Trade products be as good as other similar non-Fair Trade products if not better. World of Good's innovative entrepreneur, Priya Haji expressed a similar sentiment while addressing the issues of marketing Fair Trade to attract investments- her biggest challenge is seeking retailer support. She believes that Fair trade has to compete on all parameters that all other products do such as style, quality, and price. It's the ethical "fair trade" portion of the model that drives brand loyalty.

A key determinant to mainstreaming Fair Trade will be the perceived value from a consumer's perspective. Cate Baril from Transfair USA commented on this perspective - Consumers are self selecting and a brand that sells really well at your retail co-op might not have the same kind of effect on the customers at a large retailer. In many ways, Fair Trade has evolved into a niche market that will have to go through the evolutionary process that Organic products or eco-friendly products went through in the last few decades.

Two great success stories were shared by Scott Leonard of Indigenous Designs, a leader in high quality apparel and Edouard Rollet co-founder of AlterEco, a French Fair Trade retailer, who has expanded to the US since 2005. Scott's story is worth noting, particularly in light of his scaled model around supplying products to mainstream high-end retailers such as Neiman Marcus. Indigenous Designs continues to stay close to their fairly traded roots by investing in their producer communities and being committed to quality by subscribing to standards such as GOTS (global organic textile standards). Rollet provided a brilliant insight into the high degree of awareness for Fair Trade products in EU vs. the US. 50% of the bananas sold in supermarkets are Fair Trade and there is a significantly higher rate of commitment amongst the retailers in the EU.

Unfortunately, these success stories don't automatically translate into investor confidence. Greg Steltenpole, founder of Adina talked to his challenges in the capital process. What to Fair Trade consumers might seem as heartwarming stories about small scale farmers in Columbia and Guatemala providing the ingredients for exotic and healthful beverages were the exact stories that drove many investors away. William Foote from Roote Capital shared his perspective as an investor- their biggest challenge is that the businesses they invest in are not maximizing profit and given the mission critical nature of their purpose, they can't really charge a high rate. So the solution is to SCALE. He believes that any business that has a cash flow is bankable - this cash flow and the ethically minded business model are the primary sources of collateral.

"Scale" and "Marketing" have been some of the common themes I've heard across the various sectors of the social capital markets. This most certainly reigned true in the context of the Fair Trade sector. One parting thought is that, the trends of mainstreaming, retailer support and growth of the Fair Trade sector continue to require customers to "pull" the products onto the shelves - a consumer driven proposition. We need to continue to use multiple touch points for marketing and educating the consumers. I like Regina's idea of educating children to become champions of the cause by throwing tantrums requesting Fair Trade products - Fair Trade CoCo Puffs anyone?

Social Capital Markets: Design in the Developing World

Wed, 15 Oct 2008 06:27:23 +0000

Authored by: Rob Katz

Jocelyn Wyatt leads the Design for Social Impact initiative at IDEO (a global design consultancy). Prior to IDEO, Jocelyn worked as an Acumen Fund fellow in Kenya and served as Interim Country Director for VisionSpring in India. Jocelyn has an MBA from Thunderbird and a BA in Anthropology from Grinnell College. She blogs (periodically) on www.jocelynwyatt.com.

By Jocelyn Wyatt

Fully admitting my bias here, I did think the Design in the Developing World panel was an especially interesting conversation between a top-notch set of designers and practitioners. Caroline Balerin launched the panel with the question "What would it look like to design for the other 90%?" I fully expected the panelists, who have traditionally designed products, to respond with something about appropriately designed technologies. I was pleasantly surprised to hear each of them respond with the need to design not only the products, but the systems around them.

Paul Polak noted that the design of tools is trivial compared to designing how to mass market them. Tim Brown followed up with the need for us to design the distribution channels, supply chains and marketing strategies to ensure they get to market and scale. "Breakthrough innovation in the developing world is happening by designing systems." Kristen Peterson built on this with a story about how Inveneo started by designing hardware, but realizing that wasn’t enough, has moved to building partnerships with local entrepreneurs who can distribute the IT services.

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Market Creation at the Base of the Pyramid: It Isn't Easy

Sat, 30 Aug 2008 07:27:08 +0000

Authored by: Rob Katz

"...you can have the very best technology in the world, and if you don't get it out there and market it, if you don't have a distribution network, then it doesn't have any impact."

Martin Fisher, Co-Founder and CEO, KickStart

Creating markets at the base of the pyramid is hard work. This theme that has resurfaced again and again in my recent work, whether at a gathering of budding BoP-focused entrepreneurs or during a conversation with established social innovators.

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Barefoot Optometry for the Base of the Pyramid: The VisionSpring Interview

Wed, 20 Aug 2008 13:43:44 +0000

Authored by: Rob Katz

Last week, I had the opportunity to sit down with Jordan Kassalow, Graham Macmillan and Miriam Stone – three staff members at VisionSpring – to conduct a long-form interview. Formerly known as Scojo Foundation, VisionSpring is the pioneering base of the pyramid-focused enterprise working to provide access to eyeglasses in low-income communities around the world.

NextBillion.net readers will be familiar with VisionSpring's basic story; after all, our team published a What Works case study on the company back in 2007. We've followed their progress for a long time, up to and including their recent name change and announcement of a 5-year fundraising prospectus.

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Chinese Activity in Africa, Part 2: The Path of Least Resistance

Thu, 14 Aug 2008 16:43:08 +0000

Authored by: Grace Augustine

This post is the second in a two part series exploring China’s role in Africa’s development. Part 1 focused on the breakdown and impact of African exports to China, and Part 2 focuses on the role of China’s investment and imports into Africa.

Investment

It is no surprise that most Africans are welcoming Chinese investment and products. The history of traditional Western aid and investment in Africa is one of a nagging "I correct you because I want what's best for you" parental-like stronghold over the continent. Tired of "the politically motivated, finger-wagging approach of western governments," Africans have welcomed China’s emphasis on pure business. Numerous sources quote the lack of political motivation, as well as societal or environmental demands, as one of the primary reasons that Africa is welcoming the Chinese investment.

Sahr Johnny, the Sierra Leonean ambassador in Beijing, was quoted as saying the following regarding China's projects in Africa:

The Chinese are doing more than the G8 to make poverty history. If a G8 country proposes a project for Sierra Leone, there is an environmental assessment and evaluation of the human rights and governance situation. The Chinese just come and do it.

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"Business and Poverty: Opening Markets to the Poor" - An Analysis of the Report

Tue, 24 Jun 2008 18:34:05 +0000

Authored by: Joseph Bornstein

A key issue that the BoP development world currently faces is generating a tangible connection between markets, enterprise and the poor. After all, if we are going to alleviate poverty through enterprise, we require effective strategies that enable the BoP to participate in profitable business endeavors as well as markets that serve the BoP's needs sufficiently.

In light of this difficult obstacle, WBI has taken steps to provide insight into how BoP development can be engaged successfully through its release of the special report "Business and Poverty: Opening Markets to the Poor." The report's 18 chapters-each about eight pages long-analyzes various effective strategies, obstacles and prospects for NGOs, non-profit organizations, corporations, banks, MFIs, and local enterprises working to serve those who are most marginalized and impoverished-the BoP.

Though the World Bank report does not provide comprehensive statistical analysis explaining clear steps that can be taken in order to address barriers to serving the BoP, it does offer numerous case studies regarding successful business models. It also offers supplementary analysis, which details how and why each example project was effective, and outlines what will need to be overcome in future years.

This report gives its readers the chance to learn from exemplars of corporate social responsibility programs that really make a difference, BoP entrepreneurship that accesses its market effectively, and NGOs as well as IFIs, NPOs, MFIs etc. that launch initiatives which greatly increase the quality of millions of people's lives. It is an excellent snapshot of business and organizational models that work well and offer clues for where we should head next. Here is a brief summary of the report's findings:

Connecting Businesses and Poverty: there needs to be a cultural shift in the business world toward serving the poor. Part of what businesses need to start doing is increase productivity and income for poor people, increase employment opportunity either through their products or through direct employment, and move away from "traditional" customers and to the four billion people that have been ignored until recently.
Collaboration Amongst Stakeholders: the best success stories come from collaborations between communities and businesses as well as other organizations such as NGOs, IFIs, and NPOs (the report provides several long anecdotal success stories on this note).
Keys For Success In Serving The BoP: Companies like Unilever, Nestle, CEMEX, Shakti etc. all provide clues for how we can generate viable markets and enterprise for the BoP. A powerful lesson to be learned from these examples is that businesses should emphasize synergistic cooperation between local communities and corporations in order to ensure social sustainability-a model which requires patience and substantial investment in research and consultation. These success stories also illuminate the importance of businesses' thinking being grounded in the BoP perspective rather than the "traditional" clientele. Goods and services such as mobile banking, voice operated ATMs, direct-to-consumer marketing, nutrient-rich soy sauce, and affordable independent LED lighting systems are all examples of product development that thought from the right BoP perspective and made significant changes as a result.
In order to address poverty we need to provide access to finance and markets for poor people by creating an economic and social environment conducive to their entry into the business-world. This requires a network of financial institutions (cooperative banks, local banks, and non-banking financial companies) that could develop low cost financial structures, which serve the poor as well as investment opportunities focused on the BoP. Lastly, to fully generate access to finance and markets for the BoP, we need to generate education programs that provide the BoP with business and management skills.

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