The first step to building an effective marketing and sales capability is the initial assessment of the market in order to better understand market opportunities and challenges around product distribution. Market assessments can be done internally or contracted to third parties who specialize in market research. The main objectives of a market assessment around a cookstove product include, but are not limited to, answering some of the key questions below:
Market assessments help organizations to understand the preferences, practices, and drivers of target end users to inform an organization’s marketing and sales strategy, and to ultimately drive end user adoption and long term usage. The market assessment methodology discussed here outlines concrete applications of consumer insights research and how it relates to energy products such as cookstoves. These methods can help project developers to understand key barriers to adoption, and from there create solutions to address them. A blend of qualitative and quantitative measurements is best. Effective qualitative methods include interviews with potential users, interviews with experts, and Focus Group Discussions.
Below are some key questions to guide the process:
- What do customers desire most from a cooking product?
- What are their greatest frustrations about their current cooking practices?
- What do they like and dislike about the stoves that are currently available on the market?
- What kinds of fuels do they normally use to cook?
- What kinds of stoves do they normally use to cook?
- What are the main foods that customers will be cooking? (try to determine whether the foods cook quickly or slowly, whether significant stirring is required)
- How many meals per day do they cook, and for how many people?
In order to discover as much as possible about the target customer population, questions should be open-ended. It is recommended that project developers gather a blend of participants: those who are considered “ideal constituents” and those who are considered “extreme users,” or those who represent one end of spectrum or the other. Analyzing the information you gather from these methods will enable key insights into the preferences and behaviors of your target user groups.
An effective approach to market research involves Human-Centered Design, which draws its strengths from a deep understanding of the cultural and societal environment of a specific group of users (often Extreme Users). Solutions are relevant to the unique set of users, and while they often can be generalized to a larger population, it is important to recognize that a solution that works in one context may not be appropriate elsewhere. Tension exists between customizing for specific populations and creating a “one-size-fits-all” product.
There are multiple formats in which you can gain insights into your market and begin to answer some of the questions outlined above. The diagram below outlines some suggested tactics for conducting market assessments. Each tactic is described in more detail in the sections below.
- Focus groups are often organized by demographic. For example it is often recommended to conduct gender specific focus groups so that women feel comfortable voicing their opinion. Focus groups may also be organized by age groups or income class. Focus Groups can be anywhere between 6-12 people; smaller focus groups are often more insightful than larger sessions because you can dive into specific perspectives and issues with individual participants.
- Topics such as likes / dislikes of a product, current cooking practices, what people wish was different are common and valuable topics to explore in a focus group.
- Focus Groups should be conversational; it’s important to ask “why” a lot in order to dig deeper into questions; yes/no questions should be avoided.
- There should be both a moderator and a note taker in all sessions so that one person can focus on the conversation while another person records findings
In Home Testing:
- Allowing target customers to use the product and then following up with them is an extremely valuable way to understand how people respond to your product.
- You can often use the people that participated in the Focus Group and let them trial the product for at least 2 weeks. It is recommended that the trail be at least 2 weeks so that the novelty of the product wears off and the more regular usage patterns emerge.
- Appropriate user manuals and training should be provided to participants prior to the trial. These should be similar to manuals and training that will be provided to future customers, so that you get an accurate understanding of how people will use your product, essentially testing out your end user documentation and training in this step. For example, if during follow up you find that people assembled the technology improperly, then the user manuals would need to be further developed.
- Questions asked in the follow up interview should be focused on the likes and dislikes of the product. It is important to have multiple choices to as many questions as possible so that you can analyze the data of your respondents, while also leaving room for free flowing comments in order to capture any additional insights.
Willingness to Pay (WTP):
- Willingness to pay assessments can be done in a variety of ways, among groups or individuals, depending on the desired complexity. It is important to remember that these assessments, while useful, only provide a range of willingness to pay and may not always be accurate. It should be expected, for example, that people will tend to underbid for the product, and that actual WTP may be higher than the reported WTP.
- For groups, it is common to use an auction-style format, as it is an efficient way to collect WTP information from many people in a short period of time. Common examples include:
- Sealed bid auction: This method asks people to write what a bid on a piece of paper. This is done in a way such that no one can see each other’s bids. In some cases, if participants are not able to write, they can tell their bid to the enumerator. The top bidder wins and is able to purchase the product at the price that he or she wrote down. Generally, in this format people will underreport their true willingness to pay significantly; this should be accounted for when evaluating the data to set a price.
- Vickrey auction: This method, also known as a 2nd price auction, is more complicated, but theoretically achieves a more accurate picture of true willingness to pay. In this auction, people are asked to write their bids down. The top bidder wins, and is able to purchase the product. However, rather than paying the price that he or she wrote down, the buyers pays the price written by the second-highest bidder. This approach was employed by Impact Carbon to ascertain WTP in Uganda during USAID TRAction funded research around the drivers of cookstove adoption.
- A common approach to assessing WTP on an individual level is the Becker-DeGroot-Marschak (BDM) method. In this approach, a participant is told that the price of the product is recorded in a sealed envelope, and will be kept a secret until the end. The participant is then asked to say how much they would be willing to pay for the product. If their WTP is higher than the price written in the envelope, he or she may purchase the unit for the price written in the envelope. If the participant says a price that is below the price in the envelope, he or she will not have the chance to purchase the product. In this auction people will still generally reduce their bids, so even if their bid is lower, when the price is revealed they may still be interested in buying it.
- It is recommended to combine WTP assessments with demographic surveys to facilitate greater understanding of the characteristics that drive different WTPs. It is also encouraged to record incidents where people are eligible to pay and then do not, as well as incidents where people underbid and then are still interested in purchasing the product after hearing its price.
- Sales trials can be conducted in a number of formats depending on the product sales strategy. This is a means to trial the success of future sales so mirroring the expected distribution channels as closely as possible is recommended.
- Options include:
- Door to door sales, whereby a sales agent knocks on people’s doors during the day and attempts to sell the product. This may be difficult during week days if men are working and women do not feel empowered to make purchasing decisions without their husband’s home. In that case, it is advised to inquire what time is best suited for the target demographic.
- Group sales: it is beneficial to have a sales person work with either a community official or a respected member within the community to organize a group of people at a specific date and time, where they can explain and demonstrate the product to the whole group. This is often less costly and less time consuming than selling door to door.
- It is recommended that during these small scale trials data is collected on both purchasers and non-purchasers so that the drivers of purchaser behavior can be understood. For example: if someone didn’t purchase, it is important to record why (price, man was not home, did not like the look, not useable for their cooking patterns, etc). If someone did purchase then it is equally important to record what was most appealing to them. Demographic data should also be collected at all times to enable analysis of target customers.
A market assessment is critical as an organization embarks on marketing and sales of a product. Further understanding the target users is invaluable as an organization develops all aspects of a marketing and sales program. These findings will provide input into strategic elements including, but not limited to, product design, marketing and communications, and distribution and pricing – all of which are critical decisions to ensuring adoption and uptake of market-based cookstove sales.