For social enterprises looking to scale their impact in the developing world, reaching new customers in Last-Mile markets is consistently a challenge. For these companies, especially in the area of Energy Access, much of the initial focus is on "pushing" products into new market geographies. This post examines the limitations of PUSH marketing and emphasizes not only the advantages of adapting PULL marketing strategies for the developing world, but also points out the critical need for integrating such strategies into long-term planning in order to successfully survive and scale in the face of extraordinary logistical challenges.
Pull strategies are intended to create a buzz and leave lasting impressions which transport the customer further along in the buying process. This is achieved by finding ways to spread promotional messages faster and farther than the reach of product distribution, so that potential customers feel motivated by the valuable social signals which they project by connecting with a brand, above and beyond the functional benefits of purchasing a product. It is important to recognize that this behavior consistently appears among ALL consumer demographics, everywhere in the world.
Pull Marketing takes less effort, costs less, and generates sales more effectively.
SocEnts may feel more comfortable pushing a single product through field agents and feel less inclined to focus on developing intangible value for the purpose of creating long-term customers. This is precisely where near-term tactics for racking up impact metrics can falter on the way creating a bridge to the long-term vision. Customer loyalty is essential for ensuring that individuals never return to kerosene, which is ubiquitous and cheap. More importantly, building a company which can successfully attract loyal customers is the best method for attracting new customers from across the last mile.
(Disclosure: this discussion is based on direct observations of the market for product sales in India and on field results reported by others in the energy access community.)
Quick Background - Understanding Push Marketing's function and limitations
All companies launch new products via pure Push marketing, with focus on selling directly to the customer at point of sale. It naturally makes sense to introduce the product to the market by finding or establishing retail points of sale as near as possible to the target customer.
SocEnts naturally excel at presenting their products and solutions, so they tend to over-rely on the basic premise of pushing product to market. This forces all marketing efforts to be dependent on product supply, with associated production and distribution overhead, which drives up marketing costs. Furthermore, since a company can not reasonably expect to send products to every village, the fact that Push marketing only reaches customers as far as the product can be sent means that marketing costs per unit sold will remain steady, despite expansion of territory and customer volume. This neutralizes the major benefits of economies of scale.
Push marketing artificially imposes a time pressure to sell products quickly, which may act in opposition to conditions in prevalent in Last-Mile markets. As soon as products reach the village, the company will depend on sales to start paying back all the delivery costs in a timely manner. Push strategies work well for low-cost items such as FMCG, for which customers make quick buying decisions on the spot. For solar lighting solutions, this typically will not apply. Energy access products are disruptive to generations of kerosene consumption patterns, so we can expect prospective buyers to take time to consider a purchase for any durable products above 5 USD. The customer's instinct to wait-and-see will be further increased if a financing model is involved, as other complex considerations, such as risk assessments and securing co-signers for a loan, must be considered. Therefore, it is safe to predict a low and/or slow return on the initial expense of pushing product directly to the customer across the last mile.
Inherent advantages of Pull marketing
A more attractive alternative is PULL marketing, in which the company uses direct promotion to stimulate demand. Not only does this give the company more control, it also reduces the risk of delivering product to the point of sale prior to confirming customer intent to purchase.
Pull marketing is usually associated with web-based content, as companies use blogs, white papers, and targeted forums to deliver messages about their products and services direct to their target customers. This approach engages the customer in locations where they are likely to be searching for information on what purchases to make for their specific set of needs. As a result, in addition to taking less effort and incurring less cost, Pull strategies are more effective than Push strategies at generating sales.
Pull marketing can be creatively retooled for Last-Mile markets in the developing world!
Consumers in the developing world may not be able to regularly browse web content (yet!), but the case for Pull marketing is extremely compelling if we allow ourselves to examine the possibilities for Last-Mile markets. Let's examine how the strategic framework can be constructed through the use of 1) Word of Mouth and 2) Promotional Content to
project buzz-worthy Social Signals which spur consumer demand:
1) Word of Mouth
It might be easy to assume that these customers are unaffected by buzz, but nearly all published research on rural marketing (see works by Pradeep Kashyap, the founder of MART
) emphasizes the major role of Word-of-Mouth (WoM) in influencing purchasing decisions. The other overlooked benefit of WoM is that it is (nearly) free, and it moves farther and faster than product distribution, so from the standpoint of a lean startup, it should not be disregarded as critical asset. But WoM can also prove fatal to business growth if customers become dissatisfied. Therefore, any responsible marketing plan should START with an examination of how positive WoM can be activated and maintained to create desirable buzz. 2) Promotional Content
The Last-Mile analog for the use of web content in Pull marketing is, perhaps unsurprisingly, mobile content. The cost to develop and distribute ringtones, audio/video files, images, games and apps is low, while the evergreen potential via replication is relatively unlimited. Local retailers can distribute such content, along with informational or educational videos on a range of topics related to issues energy savings and lifestyle improvements. Another proven method for customer engagement is the missed-call option, where the company can respond with a call from a customer service rep. These methods are important because they enable the rural customer to gauge the quality and credibility of the company to appropriately address their needs and wants. These customers, as Seth Godin
points out, have a much lower tolerance for risk than consumers in established markets. Connecting with customers before undertaking to deploying product in any volume saves cost and reaches much farther than basic point-of-sale Push marketing. Creating Attractive Social Signals
Pull marketing works because it provides a framework for businesses to align themselves with the greatest chance of making customers feel satisfied. By creating meaningful and relevant customer-centric content, social enterprises can help rural consumers visualize the potential to <span "font-size:11.0pt;line-height:115%;="" font-family:"calibri","sans-serif";mso-ascii-theme-font:minor-latin;mso-fareast-font-family:="" calibri;mso-fareast-theme-font:minor-latin;mso-hansi-theme-font:minor-latin;="" mso-bidi-font-family:mangal;mso-bidi-theme-font:minor-bidi;mso-ansi-language:="" en-us;mso-fareast-language:en-us;mso-bidi-language:ar-sa"="">make a smart investment in aspirational improvements to their daily standard of living. As a result, a product purchase represents an act of positive determination on the part of buyer, sending strong social signals throughout their community. This feeling is a much stronger motivator of consumer behavior than the macro-scale benefits of replacing biomass energy.
Kerosene, as a commodity, creates no social signals This leaves opportunities wide open for energy access providers to engage consumers in creative ways that they have never experienced from an energy provider. The key requirement for SocEnts is to establish that they deliver more positive value to the customer than simply providing a clean drop-in replacement for basic lighting.
The takeaway: using Pull to manage addressable market demand in your favor
Ultimately, this discussion of marketing strategy is not suggest a choice of either/or, but rather illustrates the need of establishing a clear roadmap for marketing strategy shifts. As social enterprises aim to scale impact, they must not overlook how to scale marketing effectiveness. Each dollar (or Rupee) spend on marketing should fit a strategy that reaches the most customers, generates the most buzz, and returns the most purchases possible. The spectrum diagrammed below illustrates how Push-Pull strategies can be visualized on a sliding scale:
Clearly, when a business enters a new market at the left of the scale, their first priority will be to set up traditional hub-and-spoke distribution via a pure Push model. But the more rapidly a company can integrate Pull strategies and shift to the right, the more cash they can simultaneously save AND generate through increased customer reach. This is an essential condition for any company looking to successfully scale and maximize impact.