Getting Started as an Entrepreneur/Market/Profile: Marketing to the Poor
Marketing to the poor: International Development Enterprises (IDE)Edit
Paul Polak didn’t have to do any of this. At age forty-seven, Polak was a successful Colorado psychiatrist with a wife, three daughters and $3 million in real estate. But in his extensive world travels Polak witnessed more and more the debilitating effects of extreme poverty on the world’s rural poor—who often make less than one dollar a day—and became curious about ways to help. Gradually it became clear to Polak that in order to improve the lives of hundreds of millions of subsistence farmers, there was only one place to start: water.
“You could see how essential water was to alleviating poverty,” says Polak. “If you wanted to do anything, you had to start with these small farmers and irrigation. The power to control water is absolutely crucial to them. That fact should shape all development policy.”
Inspired to help however he could, in 1981 Polak formed International Development Enterprises (IDE), a nonprofit that develops and facilitates the sale of affordable, simple, income-enhancing products to the poor, with a special expertise in water technologies for small-scale irrigation and safe drinking water. Over the years IDE has helped millions of rural farmers in the world’s poorest countries increase their agricultural productivity, providing them with a basis for food security, income generation, integration with markets, and the beginnings of an upward spiral out of poverty.
Needless to say, IDE would be nowhere if they couldn’t sell their products. But how do you sell to the world’s poorest people? How do you design products for them, and then get them to buy them? As with any business, marketing is essential to IDE’s success and at the same time comes fraught with challenges.
The first challenge, according to Polak, is molding IDE’s products around customer need—that is, making them so cheap that the world’s poorest people can afford them. Says Polak, “We focus on people who make less than one dollar a day. If things aren’t extremely cheap, they can’t afford them. Affordability is the key issue; it’s the absolute bottom line. In just about every product we sell to the poor there seems to be a threshold point of about one-fifth the conventional price; when we reach that threshold, sales take off.”
To reach that threshold, IDE develops products that can be made inexpensively by using locally available materials. An example is the IDE treadle pump, two million of which have been installed worldwide since its introduction in 1985. The pump consists of two metal cylinders with pistons operated by a natural walking motion on two treadles, like a stairmaster; the individual walks up and down on the treadles and in the process brings water up to the surface. The pump is manufactured locally in simple metalworking shops, and the treadles and support structure are made of bamboo or other inexpensive, locally available material. The unit sells for $25-50, and enables farmers to generate more than $100 a year in extra income.
A second challenge has to do with the attitudes and inclinations of the poor themselves. Many poor people aren’t willing to cough up what is to them a large sum of money for devices they’re not sure will work. Says Polak, “We feel that the best way for poor farmers to prosper is by growing labor-intensive, high-cash crops. But if the farmers grow rice like they usually do, they’ll have enough to eat; they’re averse to risk because they want to avoid going hungry. Poor farmers are very risk averse. So we have to lower the risk—find ways to show them that moving to a high-income crop is a good thing.”
IDE goes about this in a variety of ways. “First, we don’t ask them to give up rice and move straight to high-value crops right away. We start off by helping them improve their yield on staple crops through procedures like the use of urea granules planted in the ground between rice plants, which give them bigger yields and cost less than fertilizer because they don’t wash away. Once they’ve seen that we can help them grow enough rice to feed their family, they’re much more open to growing higher-value crops.”
Another IDE risk-mitigation strategy involves the marketplace itself. Because a poor farmer can never predict the market price of any crop she grows, IDE doesn’t promote just one high-value crop, instead promoting packages of four or five. “That way,” says Polak, “even though you can’t predict the final value at market, farmers can play the odds. Maybe on one crop they’ll make out like bandits, three will do OK, and one they’ll feed to the pigs.”
And what about getting the word out? How do you make poor rural farmers aware of your product? When it comes to promotional techniques and advertising, IDE takes the only route available to them: they get out in the village streets and push the product. “Let’s say that we want to sell treadle pumps,” says Polak. “We’ll put on a demonstration in a village fair that draws a lot of people. We’ll have a three-rickshaw procession: I’ll be on the first rickshaw, and I’ll have a microphone and will shout, ‘Come see this demonstration!’ The second rickshaw will have someone demonstrating how to work a treadle pump, and a third rickshaw has somebody handing out leaflets.”
“In Bangladesh we sometimes use a troubadour group. It’s a little three-person orchestra that plays a song about a treadle pump. And also in Bangladesh, because there’s a very big market there, we made a ninety-minute movie with the treadle pump as the main part of the story. We played that movie to an audience of over one million in a year.”
Indeed, numbers in the millions frequently come up when talking about Polak and IDE. IDE’s efforts around the world are estimated to create more than $200 million of additional income each year for the rural poor, and the number of lives touched reaches the tens of millions.
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