Digitalization at the Bottom of the Pyramid


By Rijul Nadkarni ( RBG )

 

Base of the economic pyramid provides a great opportunity for any start-up to come up with an innovation as it is easy to find lot of untouched segments in it. A simple solution for a basic problem will make you a hero in this segment. In spite of such huge opportunities why are the big giants not tapping their innovations into this segment is a point worth debating . One of the biggest hurdles here is how you make your innovation reach the larger set of customers. In other words, are there enough means to make your innovation visible to people in this segment and to attract them to use your services or product? The answer to this question is definitely a starting point for any Start-up to innovate in the base of economic pyramid.

Unlike the big marketing companies, startups don’t have enough marketing budgets at the beginning to extensively promote their products. So the lack of huge funds is a major hurdle for startups to push their innovation to the feet of customers in base of economic pyramid. In addition , lack of proper digitization facilities is pushing the problem further down   that even though some of the startups are willing to spend more in this segment they can’t get juice out of it.

The major digitization challenges faced by these startups are:

1. Availability of Devices

Base of economic period include most of the rural population where the education levels are significantly low. So developing affordable devices that are easily available to poorer sections of this sector with ease of use is a challenging task. In spite of ‘Jio’ launching its ‘Jio’ phone which is affordable , yet not so easy on the hand is debatable. Most of the people in this section have a normal key pad based mobile which is not useful for any of the Digital Ads except for few SMS Campaigns. So developing an economic device with basic functionalities and facilitating Internet access at affordable prices is very much necessary to improve the digital scope and reach of new products innovated by Startups.

2. Lack of proper Telecommunication Network

Internet is the backbone of all the digital marketing strategies. Telecommunications network coverage is the major thing that is lacking in the base of the pyramid. Without enhancing this, it is very difficult to make internet reach every device present in hands of the customers. Enhancing the network includes lot of development and infrastructure costs. This is the main reason why many big players are not relying on internet but relying only on making calls or asking people to give a missed call to explain and create awareness about their products. Startups are looking eagerly at Government initiatives and investments into developing the telecommunications especially in the rural regions in order to increase their reach using internet as backbone.

3. Content creation and Applications

Most of the customers in this segment are more specific towards local culture and traditions. So in order to reach them appropriately, customized content needs to be created in their local languages which suits their culture. Also the Apps that are designed for this segment should be designed in such a way that they are easy to use and relevant to their culture. This is a huge challenge for startups because in order to overcome these challenges startups had to incur huge development and customization costs.

4. Bullwhip effect

When the Ads are thrown to people of this segment, due to lack of awareness on how to use the device, sometimes they try to interact with each and every Ad without any real purchase intention. This might backfire on the startups because of the virtual demand that is recorded in their CRM , which would not be actual demand but the demand created due to lack of awareness commonly referred as Bullwhip effect. So, in addition to exploring digital space they have to maintain proper algorithms to remove any unwanted demand data created by this kind of behavior. This is very crucial to reduce their remarketing costs and retaining costs.

5. Software compatibility

As most of the people in this segment have significantly low education levels they cannot be targeted through lot of English content, which most of the campaign software are compatible of. So startups need to come up with their own solution to tackle this problem or request the existing providers to provide additional packages for them to meet the local needs of customization. As India is a vast diverse country with multiple languages it is very difficult for the software manufacturers as well to develop special packages for each region. This would also be one of the biggest challenges for the startups to reach digitally to different regions of the country.

Conclusion

To reach any customer in the base of economic period through digitization requires huge investments from both the private and public players. Process has to be implemented efficiently on both demand and supply side. On supply side creativity is required to come up with outstanding innovations to out play the competitors and reduce the costs. On the demand side willingness of the customer to spend on digital products needs to be improved along with delivering great experiences without compromising on ease of use. This can only be done when the companies start thinking from the customer perspective and start creating solutions from their side commonly referred as “reverse innovation”. So Promotion through the right channel is  extremely important for any startup to grow bigger as a simple idea cannot be turned into revenues unless it reaches the minds of the customer and sticks there .