Musings on market-oriented approaches to International Development
Despite similar low levels of income, low-income households have different product preferences and different shopping styles. Do development practitioners need a reminder of this?
Different folks, different strokes
While working in Bangladesh, with BRAC, one of the world’s largest NGO, on a Microfinance initiative 7 years ago, I met 15 women. All were clients of BRAC’s Microfinance initiative, however each had different uses for their loans, different comfort levels of sharing these plans with their colleagues, and different ways of tracking their spend.
Travel to a different country – Ghana – in 2016, while working with a local business selling consumer products, a similar sentiment about variations in supposedly similar groups of consumers struck me. ‘Kwame,’ ‘Sarah’ and ‘Jack’ belonged to the same economic classes – yet they had very different preferences about where to shop, what to buy, and how to pay.
For me, my take away from these experiences is hardly the stuff revelations are made of: consumers –rich or poor – have different preferences and, as such, should be treated differently. Yet, it feels like effectively applying this principle might be a surprise to some in International Development.
A world of preferences and channels
First, even within one economic class, consumers have multiple product preferences.
In a presentation on approaches Social Enterprises use to sustainably serve low-income households, Erik Simanis, recalls the story of a low-cost eyewear producer that expanded their product range of glasses to (successfully!) adapt to different consumer preferences (largely driven by demographic traits) while maintaining prices.
Second, a variety of channels is helpful in any initiative to successfully adapt to the different consumer preferences. This is not simply about a brick and mortar presence complemented by an online platform. Particularly with low-income households, the question is how to reach consumers in the deepest of rural areas, while crucially and successfully managing costs.
All of these points come together to mean that, like any kind of consumer, low- income consumers are not one cohesive mass, but instead require a nuanced strategy to address a myriad of preferences and shopping styles. More importantly, the implication from this is that offering one product through one channel for low-income consumers is unlikely to be a recipe for success.
There is no one ‘BOP’.