Market size estimation in uncharted rural economies

Posted on by Bart Doorneweert

Agriculture is the main driver of the rural economy in developing countries. Realizing product and service innovations targeted at these agriculture-based markets holds tremendous potential for creating new growth engines for business, as well as achieving social and economic development.

While this is a market with huge opportunity, it is also very difficult to navigate. Much of the rules and patterns of behavior are based on informal solutions to irregular and low incomes, semi-literacy, and social and environmental uncertainty.

Estimating your market in such an economy is not a likely task. Insights are yet to emerge on the radars of formal market intelligence approaches, like the chamber of commerce, or Google analytics, etc. And, if there’s little else to target specific customers by, than referring to them as a number of 2 billion or so people who grow crops on small pieces of land and rear animals, your business is likely to fail.

Needless to say, emerging rural economies require different market estimation approaches. We need to be more creative and develop proxies, which are more sensitive to picking up signals of upward market dynamics.

The water tank indicator
I recently had an idea for such a signal, based on some photo’s I took of water tanks during fieldwork. I still need to validate this thought, but I’ll write it out here, for sake of argument (I’m open to your comments!).

A water tank located near your home provides a lot of convenience. You can collect rainwater in substantial volumes that can be accessed from your own premises. Also it could help you eek out your water supply during the dry season.

The very common alternative to the water tank, is to walk to the water pump or the lake with a jerry can, for which you often need to cover substantial distances. Water tanks thus create a considerable saving on time and effort dedicated to fetch water. Time that can be freed up for other activities on your farm or on someone else’s farm.

Water tank in North Buganda Region, Uganda
Water tank in North Buganda Region, Uganda

Occasionally you will find a household that has invested in a tank, and my experience is that these are relatively well-off people, because water tanks are a big investment (or an NGO has dropped by with a program…). Could water tanks be a soft signal for upward mobility?

Now correlate this line of thought with a photo I made in Kagio in Kenya below. What would such an inventory of water tanks signal about the overall wealth dynamics of the area around this town? 

Water tank inventory in Kagio, Kenya
Water tank inventory in Kagio, Kenya

What we could do with such insights
I don’t know whether the water tank story will hold up if I try to validate it. But if it does prove to be relevant, it could be a very interesting indicator. It could help determine great locations for piloting or launching a new product or service for an emerging market segment with purchasing power. I think you could also use remote sensing data to locate such water tank inventory points, as they’re pretty conspicuous. This market sizing indicator might even be brought to scale!

The big question is whether it would be worthwhile to invest in digging up more of these insights. If we can create a validated set of such context-rich indicators that can be brought to scale, then we can inform the emergence of new growth pockets in a very resource extensive way. I think it might be worth a shot! Do you?

Take-aways:

  • It’s hard to estimate the size of your market in an economy that is yet to emerge
  • If you want to take a new group of 2 billion non-customers online, then you need to become smart about your targeting methods.
  • It might be easier to infer purchasing potential from a water tank, than through formal survey methods that filter out the demographic that has that extra dollar per day to spend.

Agriculture meets Design

Posted on by Bart Doorneweert

In one way or another, we’re all linked to agriculture. Food availability is the basis for building any civilization. But what we’re also hearing is the challenges that agriculture has to meet. The world population is expanding and soon we’ll have to sustain 9 billion people. There is pressure on critical natural resources, like water, soil, fuel. And this is all happening amidst unprecedented change in the global political and economic landscape.

The good news is that this challenge to agriculture is widely recognized. Issues on agriculture are climbing up the agenda’s in an increasing number of fora. The bad news is though that agriculture is stuck. And by stuck I mean that key players in the field are not reaching the level of dialogue that is needed to meet the challenge at hand. It’s industrial agriculture vs organic agriculture, pro-GMO vs non-GMO, omnivores vs vegans., agronomy vs farmers’ intuition, etc vs etc.

With this form of conversation, solutions remain isolated as foreign languages and don’t connect. They’re caught inside the buildings where agriculture is professed, while the facts and answers to our problems are outside, where farming is practiced. Such a conversation landscape overemphasizes differences between tribes, aggravating opposing views, rather than enabling recognition and utilization of mutual strengths and gains from trade. Only conservative, incremental tweaking can come from this, while what the world acutely needs is a fundamental rework of how we produce and distribute food.

What can we do about it?
Despite the negative effects of polarities in the system, you can also look at it in another way. Wouldn’t it be great if we can use this diverse body of experience and knowledge available and leverage complementarities, rather than allowing the usual patterns of interaction to emphasize disconnect? Wouldn’t that enable a broad sensemaking inquiry into the problems at hand in our agricultural system, rather than remaining at refinement exercises within our own disciplines? Wouldn’t vested views on problems then turn into challenging assumptions that are to be examined and tested?

We need to create an enabling space where these new conversations can be started, conversations with ideas that will fire innovation; discipline to discipline, people to people. Ideas that progress from such conversations will likely create new paths of solution development, lowering barriers to adoption of new, game changing ideas by nature of having traversed that path. This is, I think, what we can expect when we build a space where agriculture meets design.

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Me and my colleagues will be active on the Agri Meets Design platform at the Dutch Design Week in October in Eindhoven, working with farmers and multidisciplinary design teams on experience and business model design. There will be many more equally excellent or even better events given by the partners who made Agri Meets Design possible!  I hope to also see you there! Ping me on twitter if you’re interested to connect!