Tom Harrison

Following a number of management roles in NGOs and the tea sector, Tom became an independent consultant focussing on private sector development and cross-sector partnership. He has completed assignments for, among others, DFID, GIZ, the World Bank and UNDP. For a decade Tom had a lead role in management of the Business Innovation Facility (BIF) for which he was Technical Director for which he supporting BIF’s work in Myanmar he was involved in supporting large companies to develop innovative business models that benefit people on low incomes. This year Tom has led new partnership development for the Work and Opportunities For Women (WOW) Programme and has undertaken a review of a market-systems programme in Zambia and an evaluation of a partnership between Oxfam and Unilever.

Editor's choice, June 2015: Changing the Rules of Engagement with Low Income Consumers

Corporates in Inclusive Business
Partnerships
India
South Asia
8. Jun 2015

My editor’s choice this month is a case study based on work done by Firmenich, a large privately owned company in the fragrance and flavor sector, in India. The case, entitled ‘Changing the Rules of Engagement with Low Income Consumers’, was written by Dr. Djordjija Petkoski of Wharton School, University of Pennsylvania, and published by the World Council for Sustainable Business (WBCSD) on their website.

The case study

The case study was prepared for learning purposes to prompt a class discussion, based on interviews from staff from a team in Firmenich called the ‘Shared Senses’ team. It is framed around a meeting that has been called to review progress over a 2 year period, and a discussion of how best the project in India can meet Firmenich’s strategic needs.

The initiative itself is a response to perceived pressure to increase the company’s engagement with low income people. Even though Firmenich is a company that produces ingredients for consumer-facing companies and will never make direct sales to low income consumers, it is responding to its client’s interest in BOP markets. The idea that Firmenich decided to explore was to develop a better understanding of low income customers taste and smell preferences that it could share with its clients.

The case study describes how this initiative was positioned inside the company to have strong ownership in a team, but also be able to access skills from across the company. They decided to start with small pilots in India, and their focus was on co-creation of products with low income people. They then started a larger project with a soap product.

As is often the case with large companies starting to engage with low income people, partnership is a key part of the approach. In this case Firmenich worked in partnership with a local NGO, Naandi. Firmenich realized that they needed the trusted relationship with people at the base of the economic pyramid that the NGO could bring to the partnership. They were also wise enough to understand that traditional marketing techniques would not be enough in this context, and designed a more sophisticated approach that took into account the fact that people would have a different experience of using the kind of product that their ingredients went into than their usual consumer segments.

Results of the project

The case study then reviews the results of the project. The most important outcome was that the Firmenich team, and their clients, gained an excellent understanding of the preferences that people living on low incomes in India have for fragrance in consumer products. Firmenich’s strategic goal, which was to position itself with its clients as a company that understands the needs of low income consumers, was therefore achieved.

The case study also notes benefits that also accrued to the local people who undertook the interviews, to the NGO partner, and also some reflections on the responses of the people in the communities where they ran the project. The case study ends with some larger questions that the initiative posed for Firmenich management, and for the students who will be exposed to the case.

I enjoyed this case study because it provides an insight into the way that a large company is seeking to respond to the opportunity created by the Inclusive Business agenda. The project itself is relatively modest, and firmly linked to Firmenich’s commercial needs as a business to business operator. It is also very creative, and demonstrates that IB doesn’t just need to involve direct sales to, or procurement from, low income people. As with a business activity for any market, IB initiatives need careful attention to every step of a value chain, and engagement from their suppliers.

Finally, this case study places the low income communities alongside any other groups of consumers. Firmenich understands that people on low incomes have wants and preferences that are different from that of another market segment, but places no value judgment on that beyond the need to make sure that these preferences are understood and accounted for in product development. I have written before about the danger of making assumptions about what people at the BOP want and need. Congratulations to Firmenich for actually going to ask them.