D.Light: SELLING SOLAR TO THE POOR Case Solution
D.Light was one of the leading manufacturers of solar powered light technology. The success of the organization resulted in an increased attention from media and venture capital funds. Despite the increased sales of the lights; the rate market penetration rate of the organization was less than 1 percent.The products offered by D.Light mainly includes lamps. The product was mainly designed to be safe, durable and functional. The developing countries, least developed countries and Sub-Saharan Africa are expected to be the place for the product sale. The target market represented relatively lower income, illiteracy and inexperience in purchasing as retail customers. Current position of the organization is not highly competitive, because despite low pricing, the customer base of the organization is limited. D-light lacks marketing and distribution skills. The organization is recommended to consider the options as an alternative strategic approach i.e. conducting a customer survey and social media marketing.
One of the leading manufacturers of solar powered light technology – D.Light was launched in the year 2017. The corporate headquarters were located in San Francisco, but the manufacturing of products took place in China and its products were mainly sold in Asia and Africa. The solar-powered lighting technology was mainly designed for use by the poorest customers across the world. With a significant growth in the population across the world; the availability of grid electricity has turned out to be a basic need in terms of a standard living.
Lack of infrastructure and the ability to generate electricity in underdeveloped countries had led the idea of developing lamps at low cost. Similarly, around 2 million deaths each year were attributed to the use of Kerosene for lighting or cooking purposes. In addition to this, the use of kerosene oil also led to an increased health risk. Such increased probability of health risks had represented a link that led to the development of tuberculosis and cancer. Due to this reason, the purpose of D-light was to provide its customers with a great and safe product.
D-light had around four regional offices which set the diverse set of people living in different areas or regions. The organization followed a simple culture for the management and hiring practices in order to address the issues faced by the organization. The culture was primarily based on three core principles like open collaboration, integrity, and customer focus. Integrity, the organization was concerned about being clear in its goals, aims and objectives.
Despite the presence of D.Light among top leading manufacturers of lighting fixtures innovation using solar energy, the company led the development of solar energy lighting to be used by the poorest people of the world i.e. the bottom of the pyramid clients. The company had offered around 7 million lights since its establishment and represented effective sales. But, the sales of lights to the poor clients had not been penetrated at the preferred levels of supervisors. Due to this reason, the company had been facing issues regarding the selection of marketing strategies or identification of techniques to target the potential customer segment.
- light experienced strong and continuous sales, which represented a robust growth of the organization even during the period of global recession.
- The designing of the lamps to be sold were not only safe but also functional and durable.
- The prices of the lamps offered to the base of the pyramid customers was low based on the social status of the customers.
- The success of the organization resulted in an increased attention from media and venture capital funds.
- The sale operations were successfully scaled from selling a few units to around 100,000 to 150,000 units per month.
- The two factors of the products like energy and lighting served as the strong value proposition to the potential customers.
- A significant increase in the sales allowed the organization to expand its business operations and product offerings in around 40 countries across the world.
- One of the potential strengths of D.Light products was the use of light as the source of energy despite the use of Kerosene.
- light faced many challenges regarding leadership skills i.e. inability to market their products to the target consumer base.
- Despite the increased sales of the lights, the rate market penetration rate of the organization was less than 1 percent.
- Due to a rapid expansion in the market, the organization faced issues in the management of the complex structure of the organization.
- The approach to build a consistent organizational culture has turned out to be a challenge because of a highly scattered international team.
- Conducting a customer feedback would allow the organization to better understand the needs and demands of the customers.
- The development of consumers’ understanding would provide an insight to bring particular change in the product offering.
- Increased satisfaction of customers would assist in experiencing improved sales and brand awareness in the market.
- The identification of a particular segment of the target market would assist in easy targeting of customers.
- Continuous offering of cheap products would allow a competitive edge in the market increasing the probability of business expansion to other regions of the world.
- It has the ability to generate inclined demand and growth of the products offered by D.Light.
- A significant improvement in the marketing channel would allow the organization to bring reduction in cost.
- Social culture of the potential customer base might badly influence the approach to bring change.
- Decreased brand awareness in the rural segment was due to the low literacy rate and media limitation.
- The organization might experience declined sales despite offering low-cost products to the base pyramid customers.
- Consistently low purchasing power of customers would hinder the growth opportunities for the organization in other regions.
- The shift of other players to the efficient utilization of bio-fuel might lead to the offering of cheaper products.
- Increased entrance or transformation of organizations would increase the threat to competition.
- The products offered by D.Light mainly include lamps. The product was mainly designed to be safe, durable, and functional.
- Because the life spending without conventional spending was heavily based on candles and kerosene lamps for light.
- The use of such fuel-based sources were relatively dangerous, very dim, and expensive in comparison to the solar energy lighting technology.
- The D.Light’s lamp was efficient in light production and contained a rechargeable lead acid battery.
- Due to the unreliable power infrastructure of the regions the products were offered, D-Light introduced solar-power recharging in the lights.
- The products were offered in around 40 countries across the world and two of the regions include Asia and Africa.
- China was considered as a manufacturing hub for the manufacturing and production of its lamps.
- Similarly mecca was also considered for manufacturing because of low manufacturing cost.
- The developing countries, least developed countries and Sub-Saharan Africa are expected to be the place for product sale.
- Because a large percent of such countries lack access to electricity.
- After successful market penetration in such countries, the organization had the opportunity to expand its services in various regions across the world.
- Despite a significant increase in sales over the past five years since the establishment of the organization, D-light lacks marketing and distribution skills.
- Due to this reason, the organization had been facing issues in determination of appropriate marketing skills or methods to rapidly penetrate in the market.
- Some of the marketing strategies that can be significantly used by the organization in terms of promoting the product mainly include social media marketing and public relations.
- The pricing strategy used by D.light was a low pricing strategy. This allowed the organization to offer products at affordable prices to the customers.
- The product price was primarily based on the design of the lamp and efficiency of the manufacturing process adopted by the organization. The price of the product was as low as $8.
- The use of low-pricing strategy was based on the segmentation of the target customer base i.e. the people of developing and least developed nations.
- Still, the organization is demanding on price because of the requirement of low-priced products rather than affordable products.
- The target customer base of the organization mainly involved people based on the development status of the nation.
- The developing nations had the percentage of population at around 28 percent, least developed countries 79 percent, and sub-Saharan Africa 74 percent.
- Based on these percentages, the highly populated area with lack of electricity access was least developed.
- Currently, the organization has been operating for its sales in Asia and Africa.
- The potential customer base for D-light lamps were i.e. around 1.4 billion people across the world, according to the 2010 estimation of the United Nations.
- Around 15 to 20 percent of the income of impoverished households was primarily spent in the purchase of energy sources which mainly include biomass and kerosene.
- The products even priced at relatively $8 were still a matter of substantial investment for millions of people with earnings of around $1 to $2 each day…………………..
- This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.