April 25, 2013

How solid design supports good social marketing: reports from Shell Foundation and HYSTRA

Marketing is the dirty word that can sink or sail a device that improves lives in developing communities. Two recent reports dissect the marketing efforts of major social enterprises and organizations to distill from them the basic lessons that could, if employed well, foster success.

Clean-burning cookstoves like this one save cooks’ lungs by smoking less than open fires. Social ventures have a hard time convincing their customers, however. Now, if she would just replace that kerosene lamp with solar LEDs… Photo courtesy of Envirofit

The people who build and sell clean-burning cookstoves know that their products can save money and extend people’s lives. The stoves burn less wood and they are easier on the lungs and less smoky than the open fires that often burn in kitchens in emerging economies worldwide. The problem is in how to convince the people who would benefit from the stoves.

Broadcasting that message requires social marketing. In fact, it is one definition of the term. A few social ventures and non-governmental organizations are struggling through this unfamiliar territory, and they seem to be succeeding.

Two reports released this year have examined some of those efforts and drawn general principles for successful social marketing. The Shell Foundation’s Social Marketing in India describes the lessons learned from a campaign to educate people in southern India about the benefits of cookstoves. And Hybrid Strategies Consulting (HYSTRA)’s report, Marketing Innovative Devices for the Bottom of the Pyramid, examines 15 businesses and organizations worldwide that distribute devices for sustainable development.

As we suspected, a good marketing campaign probably begins with a good product. And good product design starts with enlightened thinking about the people who use it. But, of course, there are probably more nuances that those. With caveats in mind, we looked at these reports from a design point of view.

Customers, not beneficiaries In 2008, the Shell Foundation launched a campaign to inform the 61 million residents of Shimoga, a district in the southern Indian state of Karnataka, about the benefits of clean cookstoves. Indoor air pollution takes a toll on 70 percent of the population in this area, but it is not seen as a problem, the report says.

We asked Pradeep Pursnani, Acting Deputy Director of the Shell Foundation, about the role that design plays in marketing.

“They have looked at the user as a customer rather than a beneficiary… As a result, their products are well designed, durable and perform well,” said Pursnani.

“From an engineering perspective, if I use the experience of Shell Foundation partners D.light orEnvirofit, they have been successful in getting new products into use at scale because they have looked at the user as a customer rather than a beneficiary, albeit a customer with very limited finances,” Pursnani told E4C.

“As a result, their products are well designed, durable and perform well, as well as being cost-effective and justifying the user wanting to pay for the goods. Their approach has been distinctly different from that of giving things out for free, where there is often a budget constraint based on the availability of donor funding and compromises are made on quality or volumes, resulting in products that do not take the users’ needs into consideration sufficiently well,” Pursnani says.

Open cook fires like this one contaminate indoor air. Clean-burning stoves can help, but how can stove distributors let people like this woman know that? Photo courtesy of Envirofit

Holistic businesses and sustainable supply chains Successful organizations take a holistic approach to their business, merging their design tweaks with market research, user feedback, consumer education and advertising, Pursnani says.

When they have a product that people would buy, these companies manufacture and deliver it in the cheapest ways possible. That requires a sustainable value chain with enough profit at every link to cover the full costs of getting the product to the consumer.

Convince the customer of the long-term savings When customers realize that a product will save them money, they will decide if the investment is worth it to them. And many decide that it is. That was a key lesson from the Indian campaign and also from the HYSTRA report, Pursnani says.

Partnerships are key Another key is the need to forge partnerships with other players in the area.

“For example NGOs [non-governmental organizations] have a great role to play in raising awareness, as they are credible in the communities. Having them endorse a product or an issue is helpful in the initial stages. The same goes with Micro Finance Institutions that are already embedded in the communities, and that in some cases can also offer consumer financing, therefore tackling the affordability problem,” Pursnani says.

10 lessons from the HYSTRA report

These 10 lessons emerged from HYSTRA’s research, as quoted from HYSTRA’s online presentation.

1. It’s about economics! Investing in innovative products offers very attractive economic returns to BoP [Bottom of the economic Pyramid] families.
2. Risk-free solutions, not cheap products. A risk-free, holistic solution is what customers want.
3. Financing is best done in-house In-house financing can provide value to customers, reduce operating costs, increase revenue and reach more clients.
4. Below the line marketing works better. Effective marketers excel at village-level tactics and shy away from investing in expensive awareness-raising campaigns.
5. Responsible and effective marketing occurs after the sale. Despite the fact word-of-mouth is key, few systematically measure and manage customer satisfaction.
6. Serving the BoP is a high gross margin business. The 15 organizations we analyzed face different degrees of marketing challenges, yet all require relatively high gross margins to sustainably serve BoP customers.
7. Sales force churn can and should be avoided. Competitive compensation and close management can reduce undesirable sales force churn to 30 percent or less.
8. Four emerging effective sales & marketing models. Four methods of solving the sustainability equation (enough customers and sales per customer to cover sales force costs).
9. It is worth investing in a modern sales force for the BoP. A full-time, mobile sales force, with referrals, CRM tools and close management, can be more loyal and effective.
10. The overhead curse: too much or not enough! Investments in overhead should be temporary.

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