Project on Product Solar Lamp Essay Example for Free

Project on Product Solar Lamp Essay Abstract of the Project Given India’s size and the sheer number of its farflung or remote villages, rural marketing is always a challenge. And when the product is relatively new, like solar lighting devices, the challenge gets even bigger. Yet the Jaipur-based Frontier Markets, or FM, founded by Ms. Ajaita Shah, has taken up the task and despite the odds to reach out to villages in state of Rajasthan, and seems to be succeeding with their strategy of marketing the new product. * Frontier Market conducted marketing sessions to build demand for products in BOP (Base of Pyramids) households. * Frontier Markets developed a peer-to-peer marketing strategy that is a creative, below-the-line marketing technique that are most likely to succeed among peri-urban and rural consumers. * Frontier Markets gauged the potential of the products through market assessments, and feedback to determine whether market entry for the new product like Solar lamps is viable to enter in the rural areas. Based on the market survey, FM targeted the mass people of the Base of the Pyramid (BOP) which includes 732 million people living on less than Rs. 150,000/year in villages and urban slums throughout India where majority of the people live in darkness without having any light in their house. In order to reach out to people with clean energy products , FM introduced the product SOLAR LAMPS with a concept called â€Å" Spreading Light† with a slogan â€Å" lets light our home this diwali† Later on FM came up with a brand name â€Å" Saral Jeevan† where in they source the solar product in bulk from different manufacture and selling in the brand name of â€Å"Saral Jeevan† . FM also used their trump card for selling the product in villages by Village-level c ommunity workers. The Company has sold already 700 solar lighting lamps in 350 odd villages in Chomu district in Rajasthan. In the detailed case study, it would cover how FM selected the product based on the segments in specific to the BOP population (Base of Pyramid) and target market area and acceptance level of the product in the remote villages and the challenges faced with the following tough nuts : a) Solar lamp are relatively new and explaining their use to Rural Folks is a challenge b) Village dwellers have fickle cash flows dependent as they are on an agri-based economy c) They are extremely price and value conscious d) They have very low brand affinity Introduction * Market Survey The Base of the Pyramid (BOP) includes 732 million people living on less than Rs.150,000/year in villages and urban slums throughout India. The great majority of men and women work in agriculture, animal husbandry, factories or own rural shops.* * Rural consumers total 45% of the country’s total GDP. * Approximately 72% of the total India population live in 600,000 villages; and, about 8% of the total population live in 4,738 semi-urban towns * The median age group is is 27.5. * Average household size is 4.8. * An average of 2.72 children are born to every adult woman. * At 61%, the overall literacy level in India is well below Unesco’s target threshold of 75%. Literacy among women is just over 50%. * There are over 112 â€Å"mother tongues† with more than 10,000 speakers; and, 33 languages spoken by one million or more persons. * Indicators of human poverty suggest that 16.8% will not survive past the age of 40; and, 47% of children between the ages of 0-5 are underweight for their age. * Ernst and Young, The Retailer, October 2009 The BOP customer refers to the estimated 4 billion people around the world who are poor by any measure and have limited or no access to essential products and services such as energy, clean water, and communications. Globally, people in this socioeconomic group earn Rs. 50 to Rs.400 in purchasing power parity (PPP) per day. Yet these households often pay higher prices than wealthier consumers do for lower-quality goods and services because of uncompetitive markets. The rural Indian BoP market as households spend less than INR 3,453 Indian rupees on goods and services per month. This definition represents a market of 114 million households, or 76 percent of the rural population. (CDF/IFMR â€Å"Power to the People† Study). Marketing * Frontier Markets’ marketing field staff conduct marketing sessions to build demand for products in BOP households. * Frontier Markets developed a peer-to-peer marketing strategy that is a creative, below-the-line marketing technique that are most likely to succeed among peri-urban and rural consumers. Market Entry and Product Feedback * FM collects data about its consumers to understand their product demands as well as understand which products to introduce into the market. * FM collects consumer data to provide feedback on products like Solar lamp and its usages. * Frontier Markets also gauge the potential of their products through market assessments, and feedback to determine whether market entry for certain product is viable in urban and rural consumers. Product Concept FM with their market survey and feedback, came up with selling and distributing the Solar lamps in the segment i.e. BOP (Bottom of the Pyramid) segments where there is a need of clean energy in the rural villages. They targeted the base of Pyramid segments which as geographically wise spread in the remote village areas where there is need of the product. Market Segment FM CEO Ms. Shah, said â€Å"Reaching out to rural markets requires a bottom-up approach,† she says. â€Å"they had to identify what rural people need, the price points they are comfortable with, demonstrate the use of the product they are selling, and show them why it is relevant to their lives.† Having earlier worked with microfinance institutions, Ujjivan Financial Services and SKS Microfinance, Shah reveals her expertise that there are many products for which there is latent demand in rural areas, but they do not sell there simply because of distribution problems. With solar lamps, she saw the opportunity to fill a vital gap. FM sources solar products in bulk from different manufacturers and retails them under the brand name ‘Saral Jeevan’. FM’s trump card is the profile of its agents, whom it pays a commission. These are village-level community workers, who are already familiar faces in the region, since they also provide some other service. â€Å"People trust these village representatives as they are known to them,† says Shah. In order to create the demand and to reach out to people in villages, FM worked on the people which include krishi mitras (farmers’ friends) who are employed by the Krishi Vigyan Kendras, an Indian Council of Agricultural Research project, to keep farmers informed about latest agricultural technologies; workers in government-run anganwadis (creches); as well as employees of a privately-owned dairy, which sells milk in rural areas. FM’s current network is confined to Chomu district of Rajasthan, adjoining Jaipur, but it hopes to expand much further in the coming years. Bhagwan Sahai Yadav is one such krishi mitra, who also sells Saral Jeevan products. In a testimonial to the product he sells, he bought one himself. â€Å"I bought a solar lantern from Frontier Markets so that my granddaughter could study in the evening,† he says. The company has 30 such agents and has sold 700 solar lighting products in 214 of Chomu’s 350-odd villages. FM now chasing a target of selling 500 products a month,† says Shah. The plan is to reach out to two other districts, Alwar and Bassi, and all of Rajasthan by the end of 2013. They have also tie-ups with companies making clean energy products such as D.light and Duron Energy in Bangalore, Intelizon in Hyderabad and Greenlight Planet in Mumbai. â€Å" FM CEO Ms Shah wants to replicate the model across three to five other states in the next five years. No clean energy company has yet been able to establish a pan-India presence. Some have tried to rope in microfinance companies to help with the distribution, but the effort has usually failed. And while distributing through village-level community workers seems a viable method, bottlenecks remain. While FM was busy in developing the concept for selling Solar Lamps, following feedback were also gathered: 1) does a customer in a far-off village go if the battery of his solar lamp turns out to be faulty or the switch malfunctions ? 2) One such is product servicing. â€Å"Where does a customer in a far-off village go if the battery of his solar lamp turns out to be faulty or the switch malfunctions. 3) Community workers do not have the specialised knowledge to repair lamps if they stop working. But at least they can, and do, provide corrective feedback to FM and, through it, to the manufacturers. Duron Energy, for instance, stopped production of one of its solar lamps called Duron Pro following reports from FM that its light, though very bright, was too focused and did not cover an entire room. In order to overcome the above issues and FM after 6 months of operations in Rajasthan, Frontier Markets, Saral Jeevan opened up their first retail store as a part of Frontier Market’s channel in Chomu Rajasthan. This retail point will be a concept store providing sales and service for local consumers in and around the Chomu area. Frontier Markets is an exclusive partner to Saral Jeevan, or â€Å"Easy Life,† an Indian branded retail channel created to better relate to low-income households in rural areas near Chomu. After months of understanding villages, and areas, Frontier Markets helped Saral Jeevan build market presence and chose Chomu as a central location for a retail point to ensure accessibility and accountability in service for households. â€Å"Though the model is very scalable, given the huge market at the bottom of the pyramid, execution remains a major challenge,† Case Study 1) FM came up with selling of Solar Lamp targeting the huge market at the bottom of the pyramid. 2) Product selection / Concept : Solar Lamp – need of the people in the remote villages as A clean energy. 3) Market Segment : Rural areas / Villages 4) Strategy and Market Concept : FM launched the product with a different brand name â€Å"Saral Jeevan† or â€Å"Easy Life† as the people in Rural Areas look for local brand as they are not so Brand Consensus. 5) FM also used the local channels such as krishi mitras (farmers’ friends), Angan-wadis for distribution of their product. 6) FM also opened up Branch office concept store providing sales and service for local consumers Prepared by J.K.Nanda Yogi Ballani Suraj Gaikwad Exhibit – I Study on Indian Energy Market India’s growth story is astounding, and has spread into the interior at a rapid pace. Current estimates put the rural market collectively at $425B USD in 2010-2011 (CII-Technopak, November 2009). This estimate doubles the 2004-05 market size of $220 USD. These are collective figures. % Growth in 2006 over 5 years: National Readership Studies Council (NRS) Color TV: rural = 235%, semi urban = 91% Motorcycle rural = 113%, semi urban = 90% Refrigerator: rural = 52%, semi urban= 20% Air cooler: rural = 86%, semi urban =29% The energy market is additionally astounding: US $75 on goods and services per month (known as ‘Base of the Pyramid.’) About 40 percent of India’s rural households do not have access to electricity, and more than 85 percent must depend on â€Å"dirty† kerosene for lighting and firewood for cooking. * Estimates vary, but about 500m poor entrepreneurs need access to finance; while only just over 150m have access (Source: State of the Microcredit Summit Campaign Report 2009) * Less than 500k clients of MFIs have access to energy loans (Source: Using Microfinance to Expand Access to Energy Services, 2007) * 1.7 billion people globally have no access to electricity and 2.4 billion people rely on traditional biomass for cooking and heating, producing millions of tons of CO2 (Source: The Next 4 Billion, 2008) A recent study conducted by the Center for Development Finance (CDF) at the Institute for Microfinance Research (IFMR) examined the market size of the social durable market for solar lights and fuel-efficient stoves. The purpose of the study was to develop a more comprehensive understanding of the market. CDF’s initial finding suggest a more conservative estimation for the solar light and fuel-efficient stove market than other previous studies. * The present solar lantern market is estimated to be around $18.5Milion USD (annually, nationally). * The fuel-efficient stove market, $24Million USD (annually, nationally). These numbers were based on the following equation: (Price of least expensive product available in the market) (Number of Households) (Adoption rate) / (Average product lifespan) Previous market sizing estimates may be larger due to errors / differences in calculating and methodology such as ignoring the adoption rate and product longevity variables. Additionally, as adoption rates increase due to lower product cost, customer education, and consumer financing options, the market will naturally become more mature.