July 31, 2012

"Some NGO gave us a mosquito net"

Kitui, Eastern Province, Kenya July 2012

Serem, Western Kenya, June 2012

July 28, 2012

The continued curse of Cargo Cult marketing in emerging markets

The concept of Cargo Cult marketing is not unknown yet its impact and influence in the emerging markets in which I operate, can be and is, much worse. The so called "Bottom of the Pyramid" (AKA the BoP) markets have conditions that are even more likely to give rise to this blind adherence to conventional wisdom, particularly since they are still the frontier lands, untapped and not fully established or formed, unlike the sophisticated mainstream consumer culture in which the rest of us are immersed. Additionally, they lack the supporting information mechanisms for effective and accurate feedback from the market on the effect of any monies invested in activities.

What is Cargo Cult thinking?

The best known derivation of the basic concept of a Cargo Cult is Richard Feynman's speech on Cargo Cult Science, from which all other applications have flowed. In a nutshell, unquestioningly recreating the look and feel of an action in order to cause an equivalent result, without comprehending the 'why' behind the 'what' is what this is about. That is, the underlying principles are not understood and the form overshadows the substance. From the Wikipedia entry:
An example of cargo cult science is an experiment that uses another researcher's results in lieu of an experimental control. Since the other researcher's conditions might differ from those of the present experiment in unknown ways, differences in the outcome might have no relation to the independent variable under consideration.
Similarly, in situations which I will describe in greater detail below, a standard set of marketing actions are applied, regardless of whether the conditions may be the same or very significantly different. Conditions, in this case, include not only the very different operating environments between developed nations where most of these techniques and strategies were evolved, but also such elements as product categories, consumer demographics, media reach and consumption behaviour, not to mention cash flow, purchasing patterns and access to consumer credit.

Cargo Cult marketing in the informal economy

While the sachetization of everything is a great example of Cargo Cult marketing in the informal economy, the problem is deeper than simply a cosmetic change to the packaging or size of an SKU. Its the unquestioned application of a preconfigured set of activities that form the part of a marketing plan or strategy in a context and situation wholly different from the original.

Take Coca Cola for example. It is a fast moving consumer good (FMCG), an impulse buy or luxury, not a critical need for human survival, it is a ubiquitious global brand with the marketing firepower to pay for advertising on every single media available in every single country they are in and yes, in the commodity category that is sugar water, it is a brand that must be continuously hammered home and built.

Demand creation, market creation, distribution channels and consumer awareness are long established even in the untapped or underserved markets of the lower income demographic or the BoP or the rural customer in Africa or Asia. Directly or indirectly, the world has heard of Coca Cola.

"Build brand", "Push a single message", "Radio spots", "Banners, stands and marketing collateral" are the elements of the Cargo Cult that are then replicated for any other product regardless of category - is it an FMCG or consumable like a soft drink? or existing demand - is it a brand new product category or do people even know this product exists and how it might benefit them?

These questions and others like them are overlooked in the belief that if we follow a Coca Cola's steps exactly, we too will have a brand just like them (in far less than a 100 years) and consumers will come ask for our new product introduction by name (for far less than the billions of marketing dollars spent annually).

But wait, we developed this strategy following the textbook exactly

Kotler's operating environment is Chicago. I have met with and spoken to him at NorthWestern. The decades of consumer insights leading the development of marketing principles and approaches were not developed in isolation from the information flows and experience that the context of a generations old and extremely sophisticated consumer culture provides.

Price, Product, Promotion and Place are the 4Ps that may not change as elements to be considered when looking at the marketing strategy for a new product introduction in the informal economy, but if we overlook the vast difference in context and thus leave questions of whether what we are blindly replicating is relevant, appropriate or even, affordable, unanswered, we are doing no better than the original South Sea islanders whose Cargo Cult religion led them to build a facsimile of an aeroplane landing strip in the hopes that flights bearing valuable cargo will arrive.

You can build a brand all you like, throwing thousands of dollars in plastering your name across the village or town but if its relevance to your customer's lifestyle is unknown, will they ever even notice it or care?

You can play around with price and the psychology of price, but if all the principles you learn about and apply emerged from studying behaviour in a consumer market where disposable income and consumer credit cards are implicitly assumed, what difference will it make to subsistence farmer Joe whose cow will be kept unsold until its time to pay school fees for his children?

You can place yourself in hundreds of supermarkets across the country but your if intended target audience shops in their own informal and traditional markets, your efforts will only lead to a very expensive last mile problem.

You can continue to throw more and more money at the problem but without understanding who your customer is, how they shop and the decisions they make, in the context of their daily lives and environment, you will still feel the gap of an overwhelming lack of response. At that point, remind yourself of what Einstein once said,
"The definition of insanity is doing the same thing over and over and expecting different results."
Marketing without understanding the basic principles of what and why and thus, how best to reach one's customers, is Cargo Cult marketing.

If you must copy Coca Cola slavishly, then copy their willingness to be inspired by what their customers were actually doing, not what they thought the customer should be doing or imagined they were doing.

July 27, 2012

The ubiquitious rural computer

Bargaining for bananas in rural Rwandan market could not have been completed without the use of the mobile phone's calculator function. While a combination of broken Swahili, Kinyarwanda and English was used by the customer and the shopkeeper, the transaction's clarity was increased by piling goods on the table and then using the clear numerals offered by the phone.

Branded travel

Vehicle to reach deep into the interior of rural Rwanda. Did tend to overheat on the steep sections of the mountainous country's roads.

Kigali International, built by China Star

Kigali, Rwanda - the airport still has the construction company's banner visibly promoting their contribution to the International Airport.

Bujumbura International Airport, Burundi

The beehive look of the airport building caught my attention in Bujumbura, Burundi, last week.

July 22, 2012

For Norway, today.

Surrounded by enemies, go into your time.
Within a bloody storm - devote yourself to fight.
Maybe you ask in fear, uncovered, open:
With what shall I fight?
What is my weapon?

Here is your shield against violence, here is your sword:
the belief in our life, the worth of mankind.
For all our future's sake, seek it and cultivate it.
Die if you must,
but increase it and strengthen it.

Then the weapons sink powerless to the ground.
By creating human worth, we create peace.
Those who with their right arm carry a burden,
precious and priceless,
cannot murder.

This is our promise from brother to brother:
We will be good to the earth of mankind.
We will preserve the beauty, the warmth,
as if we carried a child,
carefully on our arm.

July 15, 2012

New Product Introductions in Informal Markets

"What's new?" I asked Peter who runs this mari mari shop in a makeshift market just yards from Nairobi's famous Kibera, and he proudly showed off the various features of this television set cum DVD player that can run on a small battery if need be. Yours for just $100. Don't miss the bright pink amplifier on display or the rest of the 'shiny shiny' that Peter brings from the wholesalers in the Central Business District.

China made goods flood the informal markets across rural Africa while mainstream media turns itself inside out wondering how they're doing it, so easily, so cheaply and so well, even as global brands and well meaning social enterprises struggle to get their life changing products to market.

For a sure signal of the emerging global 'middle class' and their aspirations, just take a careful look at what entrepreneurs like Peter are stocking for sale. Unsold inventory is a luxury he cannot afford and will work to minimize risk when it comes to new products and innovation. The Chinese manufacturers know this so they offer good on commission to the wholesale shops, leaving stock on display and returning to visit weekly to collect cash and check up on what's moving fast and what isn't of interest to customers like Peter.

Warranties? Return policy? Customer service? That's the tradeoff the informal economy makes in return for affordable luxuries.

July 6, 2012

Marketing principles for the informal economies of the emerging world

This will be the working title of the book I plan to sit down and start writing the latest by January 2013. And I can't start earlier than November this year because I need to see the results in the market start to come in first before I can pontificate on the topic, but naturally as they say.

I was mentioning to someone on a call just yesterday that we cannot define the informal economy, or rather it has been our attempts to do so that have led to more barriers between the formal and the informal. Why not try to describe it, give it some characteristics and possibly propose a principle or two that underlays the design?

I think that the seeming chaos of the informal economies across the rural and peri urban parts of less developed regions seems to imply automatically to those more accustomed to neat and clean systems that work in their home locations that there are no rules to this economy nor any commonly agreed standards or measures i.e. economic anarchy

This is so not true.

This old post of mine illustrates different types of "socially agreed upon" weights and measures in the informal market, not only is the variety astounding but the quantities and measures are similar across the country. Every single cyber cafe, big or small, across the country charges a shilling a minute as standard rate unless they have high competition in the neighbourhood that might make them lower it but I've only seen it twice in all the cybers we covered in last year's Village Telco project.

Flexibility is the key to understanding how this economy works, and its carefully crafted hyper local "guidelines" rather than rules, as in they are socially enforced rather than through formal channels available to consumers elsewhere more privileged.

In your tiny social network/community/income source pool, you cannot afford to gain a bad reputation in transactions, work will be hard to come by. This is the basis of the naturally evolved checks and balances prevalent in the 'systeme D'.

And so on and so forth, as you can see, it apparently seems I do have a lot to say but I'm waiting for all the anecdata that qualitative research relies upon to come in.