Marketing Channel Strategies in Rural India: Lessons From

d.light Design
By Benjamin Neuwirth, Kellogg School of
Management
Agenda
Background on d.light Design

Framework for Marketing Channel Success in Rural India

My Internship: Enabling a New Marketing Channel
Base of the Pyramid Markets
If we stop thinking of the poor
as victims or as a burden and
start recognizing them as
resilient and creative
entrepreneurs and value-
conscious consumers, a whole
new world of opportunity will
open up.

- C.K. Prahalad 2006
Affordable Products to Alleviate Poverty
Affordable devices like treadle
pumps and drop irrigation
combined with a last mile supply
chain has helped 20 Million
people move out of poverty as a
result of IDEs work alone.

- Paul Polak 2011
d.Light Designs Founding
Many people in rural
Africa and India do not
have access to grid
electricity

Kerosene is expensive,
dangerous, unhealthy,
and provides weak light

Founders burned hand
in rural Africa

Inspiration







Affordable, bright lights for rural
consumers to promote health and
livliehood

Founded out of the Stanford
d.school by Sam Goldman and Ned
Tozun
Product Solution

S10
Great performance for cost
Perfect to light a room at night
$15 USD

d.Light Products

S1
Ultra-portable and ultra-affordable
Designed to appeal to children
$9 USD


S250
Powerful spotlight
Mobile phone charger
$35 USD

d.Light Products for Health and Livelihood
Benefits of d.light products for rural Indian
consumers
Safer cooking
More effective studying
Increased time for business activities
Central Question for d.light
How can a company attempting to enter a rural
region in an emerging market with a new product or
service and an unknown brand create a sustainable
business?
Agenda
Background on d.light Design

Framework for Marketing Channel Success in Rural India

My Internship: Enabling a New Marketing Channel
Customer
Activating Customers
Affordability Education
Brand Trust
Delivering Products
Distribution Network Design
Distribution Network Logistics
Maintaining Customers
After-Sales Service
Product Purchase
Framework for Marketing Channel Strategy in Rural India
Customer
Activating Customers
Affordability Education
Brand Trust
Delivering Products
Distribution Network Design
Distribution Network Logistics
Maintaining Customers
After-Sales Service
Product Purchase
Framework for Marketing Channel Strategy in Rural India
Distribution Network Design
Low Density of Demand
Leads to Slow Inventory
Turnover
Aggregate Consumer
Demand to a Point Required
by the Product
Challenges Solutions
Distribution Network Design: Example
Aggregating Consumer Demand
Consumer Durables: Aggregate demand in cities
and hypermarts
FMCG Products: Aggregate
demand in villages
Distribution Network Design
Low Density of Demand
Leads to Slow Inventory
Turnover
Poor Transportation
Infrastructure Raises
Transportation Costs
Aggregate Consumer
Demand to a Point Required
by the Product
Use Hub-and-Spoke
Transportation and Rural
Entrepreneurs
Challenges Solutions
Distribution Network Design: Example
Hub-and-Spoke Model
Coca-Cola
Hub
Small
Villages
Independent
Entrepreneurs
Autorickshaw Delivering Coca-
Cola in an Indian Village
Distribution Network Design
Low Density of Demand
Leads to Slow Inventory
Turnover
Poor Transportation
Infrastructure Raises
Transportation Costs
Consumer Expectations for
Availability and Variety
Aggregate Consumer
Demand to a Point Required
by the Product
Use Hub-and-Spoke
Transportation and Rural
Entrepreneurs
Gain Insight Into
Consumers to Meet Their
Product Delivery
Expectations

Challenges Solutions
Distribution Network Logistics
High CapEx/OpEx required to set up a distribution
network in rural India
Fragmented distribution and logistics
industries

Corporate Partnerships
Challenges
Solution: Distribution Network Piggybacking
Potentially low chance of legal recourse if partner
contracts are violated

Distribution Network Logistics: Example
Corporate Partnerships
Both Sara Lee and Proctor & Gamble entered into joint
ventures with local Indian companies to more effectively
distribute their products.
Distribution Network Logistics
High CapEx/OpEx required to set up a distribution
network in rural India
Fragmented distribution and logistics
industries

Corporate Partnerships
Challenges
Solution: Distribution Network Piggybacking
Potentially low chance of legal recourse if partner
contracts are violated

Local Non-Profit
Organizations
Distribution Network Logistics: Example
Local Non-Profit Organizations
Hindustan Unilevers Project Shakti
Unilever uses womens Self Help Groups to reach small
villages deep in rural India
The women buy the products with cash from Unilever, and
then distribute them in nearby villages
Project Shakti currently employs over 40,000 women
entrepreneurs
A women entrepreneur delivers Unilever products in rural
India Information and picture sourced from MART internal presentation
- 2005
Distribution Network Logistics
High CapEx/OpEx required to set up a distribution
network in rural India
Fragmented distribution and logistics
industries

Corporate Partnerships
Challenges
Solution: Distribution Network Piggybacking
Potentially low chance of legal recourse if partner
contracts are violated

Local Non-Profit
Organizations
Business-to-Business
Sales

Distribution Network Logistics: Example
Business-to-Business Sales
Carrier
Compan
y
Rider
Compan
y
Sales
Distributio
n
Pros
Bulk Sales to carrier company
Manage fewer relationships
Cons
Low visibility into end customer
sales and product reception
Agenda
Background on d.light Design

Framework for Marketing Channel Success in Rural India

My Internship: Enabling a New Distribution Channel
Area of Operation: Uttar Pradesh
Location of Uttar Pradesh in India
Facts about Uttar Pradesh:

Population of 200 Million people

Half the size of California

Annual per-capita GDP of $294 USD
per year

Most residents do not have access
to grid electricity
d.lights New Distribution Partner
2009-2010:
d.light set up a custom distribution network in Uttar Pradesh to
supply solar lamps into small retail stores in villages.
The network failed due to high distribution costs and low
consumer demand.

2011
d.light forms a piggybacking relationship with Bharat Petroleum
(BPCL), the second largest oil-product distributor in India, to
distribute solar lamps in Uttar Pradesh.

My Internship
Analyze the BPCL distribution network
Recommend strategies for successfully selling d.light products
through the BPCL network
Analysis of BPCL Distribution Network
BPCL has 281 cooking gas retail stores in Uttar
Pradesh. Each stores serves thousands of
consumers, effectively aggregating demand for
d.light.
BPCL also sells FMCG and consumer goods in its
retail stores in order to have other non-oil revenue
stream. D.light products will be sold as part of this
program.
Each store is owned by an independent franchisee.
While the owners felt good about d.light, they were
not highly motivated to sell d.light products.
50% of BPCL customers come to the retail store to
pick up their cooking gas. While at the store they
may buy other products or schedule their next
cooking gas pick-up.
The other 50% of BPCL customers have their
cooking gas delivered to them. The delivery men
are a true last-mile link to rural consumers in India.
The delivery men are often poorly educated and
have little or no sales experience.
Analysis and Recommendations
Analysis of the BPCL Distribution Channel
Pros
Consolidates demand into central retail points
Established and successful warehousing and logistics network
BPCL is a very trusted brand with Indian consumers
Cons
Retail store owners not motivated to sell d.light products
BPCL end customers may not need d.light products

Recommendations
Incentivize BPCL management and retail store owners to sell d.light
products
Piggyback off of the BPCL brand to establish the d.light brand
Educate consumers in Uttar Pradesh who use kerosene for light
about solar lamps, and drive sales at BPCL retail stores
Establish d.light distribution centers in Uttar Pradesh to provide for
better product restocking time