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Design for Microenterprise Helps Target Emerging Markets

Nokia 1100 entry-level cell phone

Nokia 1100 entry-level cell phone (Nokia Corp.)

Engineers at Massachusetts Institute of Technology in Cambridge recommend designing products for small entrepreneurial businesses as a strategy for success in large emerging markets, such as India and China. Graduate student Jesse Austin-Breneman and engineering professor Maria Yang describe their findings in a paper delivered last week at the International Design Engineering Technical Conference of the American Society of Mechanical Engineers in Portland, Oregon.

Breneman and Yang reviewed four case studies to uncover best practices for identifying key factors in successful product design for emerging markets. Their study aims to offer guidance to Western businesses for avoiding pitfalls in designing products that fail to meet quality, reliability, or cultural expectations, often revealing a failure to understand their customers in these markets.

The authors focus on small, informal mom-and-pop businesses in these markets that represent a large segment of the economies in emerging markets. These microenterprises generally have five or fewer employees and operate on a shoestring. Their analysis suggests, however, that designing products to help these entrepreneurs make money will get their attention.

One case study investigated a line of entry-level cell phones, the model 1100 by Nokia, made for short-term rentals, as a form of mobile pay phone. The phones support multiple contact lists, which supports sharing the device by giving each phone users his or her own contact list. The phones also have a visible length-of-call and usage-tracking displays that makes it easier to charge for each call. In addition, Nokia designed the phone for reliability and offered traveling maintenance teams to service the devices.

Service was likewise a key factor in the decision by farmers to purchase drip irrigation systems that use smaller amounts of water than sprinklers, but deliver the water under low pressure directly to plants or crops. The authors found features beyond the basic system were attractive to customers, such as servicing plans, and identification of seeds that work best with drip irrigation. Modular systems, that allow the grower to add on more units as needed, rather than investing in a larger system than needed immediately.

Breneman and Yang investigated solar lighting products designed for small shops to provide illumination at night in places where the local grid could not deliver reliable electric power. The devices are made by the companies Greenlight Planet, Nokero, and D. Light. The authors found durability to be a key factor in choosing one of these products, along with the ability to use the product for multiple functions, to move the light to different places in the shop as needed. The shop keepers could also rent out the solar lights as chargers for cell phones.

The researchers studied efforts by a company and non-government organzation to build cookstoves that reduce the health threats — e.g., emphysema, heart disease — from open fires or inefficient kerosene stoves used for cooking in the developing world, particularly by women. The German company BSH Bosch and Siemens made a cleaner cookstove model for homes fueled by plant oil that they tried to market in Indonesia, but eventually discontinued. The product, say the authors, had limited success because it was designed only for home use and was not backed up by a supply chain or service network.

A project with more success highlighted by the authors was run by the green energy non-government organization Grameen Shakti, part of the Grameen family of NGOs in Bangladesh. The group makes a cookstove burning biofuels for the home, but also larger units for commercial customers such as restaurants and hostels. While Grameen Shakti is an NGO, its manufacturing suppliers are entrepreneurs and the organization is training local service technicians, which are expected to open their own businesses.  As of December 2012, says Grameen Shakti, the group installed nearly 600,000 of the units in rural areas, with new cookstoves being installed at a rate of 14,000 per month.

Breneman and Yang plan to look into more of these cases, but also look deeper for best practices that can apply to start-ups as well as established enterprises and organizations.

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