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d.

light
MBA 2016-18 Design:
Marketing
Channel
Strategy
Sonali Sitoshna Nayak

Case Note

Introduction and Background


With a broader future vision of empowering individuals to afford
and improve their quality of living, and a mission of reaching out
to each and every households, d.light have always worked on
how it can transform the world in terms of energy consumption.
Started off in 2007 by two young business school graduates- Sam
Goldman and Ned Tozun expanded their sales over emerging
markets like India and China as these are the areas where the
rural areas are densely populated having low economic values
and devoid of basic amenities. Their mission helped them to
figure out the market segment they aimed to penetrate during
2009 when they entered India.

Key Points
Benefits of using d.light:
D.light came up with 2 product categories :
- S250, which acts like a spotlight as well as a mobile
charger that can provides six hours of light.
- S10, which is a solar lamp that can provide bright light
for eight long hours.
D.light gained popularity among consumers as it helped
them work for longer time which resulted in increasing
income.
Even children preferred to study for longed time than
previously.
Rural market was their segmented target because:
70% of Indian population dwells in rural areas
D.light wanted to benefit the livelihood of the people in need
which would in return benefit them in getting recognized as
a brand
Environmental and Health Awareness of Goldman which
resulted in his thinking of doing something economic as well
as environmental friendly products delivery to the people.
This was because most of the rural population are devoid of

electricity in India. They depend upon kerosene lamps.


Kerosene is very dangerous as its volatile and explosive in
nature.
Looking at the household consumption of rural and urban
population it was figured from exhibit 2 that- rural
population earned through agriculture, farming and animal
husbandry which gave them a seasonal income distribution
of their income. Whereas the urban population are more
inclined towards the jobs and business which provides them
regular salaries.
Implications:
- As the rural population fall into debts because of their
uneven income distribution so if d.light is targeting rural
areas for sales then the price of the product must be kept
lower so that they can easily afford.
- From exhibit 1 we can notice that the rural population
have very low household income level.
- From exhibit 3 also we can figure out the per capita
consumption of rural population is Rs. 773 which is lower
than urban consumption of Rs. 1283.
- From exhibit 7 we can see that the rural population are
less exposed to mass media which would create a
problem for d.light while marketing its product.
Strong points in favor of concentrating on the rural market
are:
- The type of consumption of the urban and rural
population which can be seen from exhibits 4A and 4B.
- The rural population is more reliable on kerosene and
devoid of the electricity facilities than urban.
- Even though there are facilities for electricity, yet there
would be long power cuts during the required time which
upsets the people because they spend a lot on getting
electricity for their homes yet couldnt use it properly.
- In rural areas the average hours of accessibility for
electricity is found to be around 9.79 hours and in urban
areas its 17. 61 hours.

Then looking at the desirable requirements of Indian rural


market of having a reliable, affordable light and power
solution, d.light next challenges were how to create a
demand, creating trust for their products i.e. creating a
brand value and trust, what pricing strategy they should
follow i.e. pricing strategy and what can be the best way to
reach out to the consumers i.e. distribution strategy.
1. Creating product demand
Constraints for creating demand:
o Rural population is devoid of the basic education
facilities. They need to be educated and the proper
information about d.light and its advantages should
be propagated in such a manner that they would
understand it.
o Rural consumers used kerosene for lightening lamps
and there dont want changes or alternatives for it.
o As the consumers are not educated, they least know
about the solar lights. Hence making them least
interested to buy d.light products.
Ways that can be adopted to avoid these constraints:
o By providing education to the rural consumers. This
is not possible as it would incur investment in
building up a team for spreading the advantages
about the product.
o Propagating the disadvantages and health issues
related to the use of kerosene all the time
o They have to build trust among the rural consumers
throughout all the generations. As mostly they follow
blindly their old generation and succumb to
changes. It is necessary to break their belief for a
good cause.
o By introducing the promotional channels which
should reach the rural consumers.

o As the rural population do not have any expose to


the mass media, so hands-on trials and demos
should be shown them.
o It is believed that when demos are shown to them
along with proper reason to switch their usage of
products, then only rural consumers gets convinced.
o So the only thing d.light can do is to have some
campaigns wherein it can show demos to the
consumers about the usage of the products and
educate a little about the solar lights to them.
o This can also be done through the retailers, but it
depends on the retailers whether they are
comfortable enough to spend that much on a
campaign.
2. Building Brand trust
Constraints:
o As d.light is new in Indian market, it lacked proper
brand recognition. Then it becomes difficult for the
rural consumers to believe on a new brand that too
when the product prices are high.
o Due to the presence of some local poor quality
brands of solar lights in rural market, the product
type is not reliable among the consumers. So it
becomes very difficult for d.light to convince the
customers to purchase their product.
Ways through which d.light can achieve trust among
the rural consumers:
o First and foremost is spread of the positive word of
mouth. This can work wonders for a d.light which is
new in the market place.

o Association with some other trusted brand in the


rural market place.
o They can associate with NGOs, farmers etc. who can
properly advertise their product and make it usable
among the consumers. Once the consumers starts
knowing about the product and its advantages then
only they would spread the positive word of mouth
and penetrate the market.
o Association with farmers and women self-help
groups would help d.light in building a trust factor
among the rural consumers.
3. Pricing Strategy
Constrains:
o The product must be affordable for the rural
consumers. As the price of S250 is around 1699 and
S10 is 549, it becomes very luxurious for the rural
population to purchase it. This is mainly due the low
and uneven purchasing power of the rural
consumers. Also due to the fact that d.light is a new
company which hasnt built a trust among the
consumers.
Ways through which the rural consumers can get
convinced:
o Like FMCG products, d.light can lessen the power
and size of the solar bulbs so as to lessen the selling
price. But this requires heavy investments in R&D.
o By providing loans to the consumers or by providing
flexible payment modes to the consumers. But this
also involves risk when the rural consumers couldnt
pay back the money in time. So there should be a
scheme like they can avail the product only when
they have made the full payment in parts.

o This would not be helping the poorest consumers as


they cannot even risk of buying the product even
d.light cannot risk to give them loan or flexible
payment offers.
o So d.light can only penetrate into the rural
consumers category who has a minimum amount of
income level so as to spend some on livelihood.
4. Distribution and Product placement strategy
Rural Entrepreneurs
Village Retailers
Advantages:
Advantages:
Hub and spoke method
Stocks would be present
where the RE would take
at village level.
Shop owners have the
the charge of selling the
products, so less risk on
responsibility
of
the
d.light about getting the
movement of product
revenue out of sales.
Payments can be received
REs would be a village
on time
person, so he can easily
Shop owner can influence
propagate the usage of
the villagers
the product and motivate
Shop owner would be
them to buy if he is given
having knowledge about
a proper training.
the product which he can
clearly propagate to the
villagers
Disadvantages:
Disadvantages
As RE would be someone
Rural people rely more on
from village, so his
big outlets than the small
income also would be
shops nearby them for
lower at first. Giving him
making big purchases as
solar lights at loan in the
they have limited varieties
beginning would be risky.
at nearby shops
The
REs
are
not
Also the prices at rural

professionally trained.
They do not respond to
any incentives as they do
not have any. So at any
point of time they can
drop the job.
Not sustainable over a
long run.
Cannot inbuilt the trust
as the rural population
has no access to the TV
and radios.

shops increases due to the


redemption
of
the
distribution charges
Push
marketing
is
required for selling the
durable products

Centralized shops and


Partnering with nonprofit
Distributors
organizations
Advantages:
Advantages:
This
means
large
Thought the independent
retailers, who are well
organizations formed at
known among the rural
village levels d.light can
consumers. So the sales
work with and make the
are possible through this
sales possible.
channel.
There is a trust factor
within the retailers and
consumers
Centralized shops during
village haats invite more
consumers to atleast get
knowledge
about
the
product.
Approached by a govt. oil
company
which
was
spread
across
many
towns and cities
Disadvantages:

Disadvantages:

Risky as the retailers


may
not
agree
to
demonstrate
the
products
Monopoly of the local
retailers

The
SHGs
mainly
consisted of women. From
the data, it is revealed
that in villages the literacy
of women is too less. This
might create a problem
for d.light in spreading the
awareness properly.
Corporate partnerships

Advantages:
This is a cost effective way of distribution
Establishing local partners can also increase the varieties
provided to the consumers
Disadvantages:
No firsthand experience in selling the products
Risk with the fact of the partners loyalty

Proposed Solutions:
Looking at all the advantages, disadvantages, I would have
suggested d.light to opt the following:
For creating the demand for product:
- D.light can follow the advertisement strategies which
would attract the consumers both rural and urban).
- For rural consumers, they should organize some CSR
activities which would serves as a medium to educate
them about the energy limitations all over the world and
how one can save the non-renewable energy and
effectively use the renewable energy available for daily
consumption. These activities should be conducted at

village haats especially which attracts large number of


people.
For Building brand trust:
- D.light must create a brand association with farmers and
the most consumer FMCG product so that the brand
would get recognized by people then only the awareness
can be spread.
For making the product affordable:
- Discounts should be given on the first purchase.
- Lowering the cost by shrinking the product size should be
a secondary option as this would lead to the
compensation of some functional features of d.light solar
bulbs which is not acceptable as a manufactures point of
view.
For proper distribution channels and placement of product:
- At the beginning, multiple channels should be preferred.
In my opinion, Rural entrepreneurs, Centralized shops
and Distributors and partnering with non-profit
organizations would help most.
- REs can effectively reduce the transportation cost for
d.light and can easily motivate the rural consumers.
There would be no legal issues related to REs serving as
a medium for the sale of the product as d.light would not
be involved directly. It would be the responsibility of the
RE to sell the product. This involves no cost to be
incurred from d.light point of view, hence effective.
- Centralized shops and Distributors can be taken into
option as they are the better means of marketing the
products involving higher prices. The rural people who
would visit the centralized shops would have some
purchasing power so they can take the risk of buying the
solar lights and experiment. Even the centralized haats
where d.light can reach a number of consumers can help
in propagating the idea behind the use of solar lights

instead of kerosene lamps. The awareness through the


village haats would be very cheaper as only
demonstrations would be done by some of the internal
employees. It only requires ample time of the employees
to visit some of the villages and spread the positive word
of mouth.
- Non-profit organizations mostly include some health
management groups or common people involved in
charity or getting charity. So here d.light can join with
one medical group which would check the health issues,
especially related to lungs and state the reason as the
Carbon emission from the kerosene lamps. This would
create awareness among the rural consumers as well as
improve the sales.