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Uncovering practices

Pepsi Research Implications and Themes. Uncovering practices. In Underserved Markets. Date: 26 October 2004. Prepared for: World Bank. Authors: Name: Maria Flores Letelier. Prepared for: Client or contact name Title or additional names. Date: 00 Month 2004. Authors: Name

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Uncovering practices

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  1. Pepsi Research Implications and Themes Uncovering practices In Underserved Markets Date: 26 October 2004 Prepared for: World Bank Authors: Name: Maria Flores Letelier Prepared for: Client or contact nameTitle or additional names Date: 00 Month 2004 Authors: Name Additional names

  2. Contents • Introduction • CEMEX “Patrimonio Hoy” overview • Research process steps in “Patrimonio Hoy” • Potential Steps For Country Research, Mexico © Cheskin 2004

  3. Why Research Low Income Communities? • Understanding cultural practices provides competitive advantage to private business seeking to create differentiation in underserved markets. • Understanding incentives, both tangible and intangible, and aligning them in a culturally relevant way, can produce market creating offerings. • But, do not research people as consumers primarily. Understand how people are actively producing identity in their lives. © Cheskin 2004

  4. Patrimonio Hoy

  5. Patrimonio Hoy: Context • Key insight 1998: CEMENT bags were being purchased by customers in marginalized regions that CEMEX did not reach directly. Estimates revealed that the end users in these regions could make up to 40% of CEMEX’s share. • Objective: To learn about end users in marginalized regions and develop a program, service, or products that would position CEMEX and it’s brands with these end users. © Cheskin 2004

  6. Patrimonio Hoy: Understanding The Main Barrier • Ethnographic observation revealed lots of unused, wasted materials in front on people’s lands, and badly constructed, half made rooms. • Question arose: Is this an issue of a lack of wealth, lack of savings practices, or lack of expertise in constructing? • HH income ranged from $150-$400/month. • Spoke to several people throughout community and listened to their home building stories. Hypothesis formed: the main barrier to building home is committed saving for the entire set of materials required for one, complete room. © Cheskin 2004

  7. Patrimonio Hoy: Understanding Main Barriers • Do-it-yourself homebuilder market defeated the best intentions of the good marketing research • Do-it-yourselfers had difficulty transporting building supplies. • Mi Casa: APASCO, CEMEX’s competitor, set up sales locations closer to customers’ building sites. • Customers did not like additional pressure to build. • CEMEX’s smaller bags • Customers liked putting cement bags in front of sites as a matter of pride. • Smaller bags hurt pride. • Lesson: It’s not about convenience; it’s about dignity. © Cheskin 2004

  8. ….But Savings Practices Did Exist • Still, deeper exploration into savings practices revealed that people did in fact save large enough quantities. • Only they did this through informal, yet highly visible, group lending practices called Tandas, where participants felt they would lose face if they did not make a weekly payment. • The tanda system is generations old in Mexico and is practiced across the country. Tandas means to take turns. • Upon further probing, we learned that most people entered tandas with the goal of saving for construction materials. © Cheskin 2004

  9. Identifying Points of Tension For Home Savings As Values In Conflict Cultural Values Coming Into Conflict © Cheskin 2004

  10. ….Tanda as a “Bridging Practice” • We diagnosed the tanda as a bridging practice, i.e. a practice that people engage as an attempt to resolve seemingly conflicting values. • While 70% of the Tanda’s members saved, only 10% actually spent money on their homes. • Most of the money is spent on short term emergencies, loans to friends, fiestas, or savings for big items like quinceaneras • Conclusion: positioning with this market is not soley a product improvement issue. A new service must be designed that is culturally appropiate, based on existing and emerging values, and based on the tanda bridging practice. • Tandas bridge the values of community status with that of getting ahead one’s family ahead. © Cheskin 2004

  11. Bridging Theme: Patrimonio Hoy • Garden: First 50 set of customers. • In depth interviews that sought to reveal the word of mouth or stories regarding participants experience uncovered: First set of 50 leading edge customers spoke about the experience of “patrimony”, and the experience of doing something “today”. The team chose Patrimonio Hoy as the bridging theme. • Patrimony refers to something of value passed down to future generations. Hoy means today. The new experience: you can make the future happen today. • “Grow Your Home, Grow Your Patrimony, Today”. © Cheskin 2004

  12. Key Elements of PH offering • Redesign tanda. • Recruit local leaders in the community and train them on offering, make local people central point of contact. • Recruit social workers to work with local points of contact. • Piloting revealed that groups of 3 vs. 10 were more effective for producing group bonds. Today, for every $1.00 peso contributed, $4,00 of credit. • Most Tanda’s in Mexico last for only 10 weeks, but the team designed a program for 70 weeks-86 weeks, the approximate time it takes for a complete room (approx. 110 square feet) • Shift relationship with local intermediaries to increase their wealth. CEMEX purchases from them vs. other way. • Provide services such as warehousing, technical advice to give people a complete picture of room, frozen materials prices during time of constructing. © Cheskin 2004

  13. Customers build at 1/3 regular cost. Accelerate construction four-fold. 99.6% payment rate. Approx. 100,000 families have built homes with program. Excess of USD$38M in “savings/loan” Over 50 locations in 30 cities throughout Mexico. CEMEX local brands in regions w/ PH achieve a brand index differential of more than twice that of closest competitor. Patrimonio Hoy: Results Before After © Cheskin 2004

  14. Role Of Research

  15. But….Needed To Constantly Learn From Research • Some people understood the offering right away. Others did not. • Some people gave PH positive word of mouth; others accused PH members of not being charitable. • At the beginning, some people constructed several rooms at a time, very quickly, others would drop out. • Who was target? What would penetration strategy be? • Needed to align social values to demographic, identifiable barriers and create a segmented word of mouth strategy. © Cheskin 2004

  16. Planning and aspiration creep • Success comes when dignity is clearly enhanced; achievements in dignity must drive aspiration for more achievements. • We asked do-it-yourself builders how many more rooms they sought to build. • Findings: • No matter how much building experience, the vast majority of builders plan 1, 2, or 3 rooms more. • Most people who have between 0 and 2 rooms plan to move into the 3 to 5 room category. • Most people 3 to 5 room category also plan to add 1, 2, or 3 rooms and move into the 6 - 7 room category. • Most people with 6 to 7 rooms aspire to more rooms or to help other family members build more rooms.. • Hence, as people increase their number of rooms, they also increase their aspirations. © Cheskin 2004

  17. Age Rooms* TOTAL 17 - 25 26 - 35 36 - 45 46 - 55 56 + 300 44 97 106 33 20 % % % % % % 6 6 6 + 11 9 6 12 23 3 5 13 9 9 11 9 4 9 22 12 19 13 13 11 3 12 6 13 13 15 15 2 17 7 19 24 1 15 11 44 14 7 NADA 54 24 27 17 15 PROMEDIO 3.28 3.50 2.78 3.31 4.48 3.06 6 * CUARTOS: RECÁMARA, COCINA, BAÑO, SALA Y COMEDOR. Key Variable: Number of Whole Rooms People Already Have Constructed. • 31% of members have more than 4 rooms. • 54% of members have between 0 and 2 rooms. © Cheskin 2004

  18. Other Key Variable: How Long It Took To Construct Existing Structure WITH MASON IN FAMILY 135 % NO MASON 165 % TOTAL 300 % 1 a 3 YEARS MORE THAN 10 YEARS 4 - 6 YEARS 7 - 9 YEARS PURCHASED, INHERITED, OR O Average # of years. 5.6 5.7 5.5 © Cheskin 2004

  19. Patrimonio Hoy Segments Length of Time To Construct What Exists # of Rooms 7 + Years 0**- 6 Years “SLOW STARTERS” 0 - 2 Rooms “RESIGNED” This segment is starting to construct little by little. They perceive PH as a relief, as a resolution to getting their homes built faster, but they lack practices for mobilizing. 66% of people ages 17-25 are in this segment. Aprox: 70-150 weeks/ room This is the segment that has taken very long to construct anything. Although they some see the possibility of the impossible, sales cycle is longer, and more handholding is required. 84% are older than 26 years. Aprox: 200-500 weeks / room 34% 21% This segments has shown that they are worthy of receiving help from families and friends. They construct one families home at a time, and they best understand the importance of social reputation, and recurrent savings practices. They also are the one’s that give PH the best word of mouth.. 63% are in or have been in “caja populares” Aprox: 30-100 weeks / room “ORGANIZED” “LIFE IMPROVERS” 3 - 5 Rooms This segment sees PH as the impulse to achieving their dream/”illusion” of a bigger and nicer home for all family members. They also see the opportunity of helping other family members. 76% of people are over 36 years old Aprox: 150-200+ weeks / room 19% 15% Aditional Segment, “Established”: 6 or more rooms = 11%. Magnanimous, Generous, Exemplars of Community **O años: Purchased or Inherited. 7% if total. © Cheskin 2004

  20. Patrimonio Hoy Segments Trendy, Word of Mouth 7 + Years 0**- 6 Years Negative Word of Mouth “SLOW STARTERS” 0 - 2 Rooms “RESIGNED” 0-1 room in 7+ years Aprox. 30% Of segment or 6% of total This segment is starting to construct little by little. They perceive PH as a relief, as a resolution to getting their homes built faster. 66% of people ages 17-25 are in this segment. Aprox: 70-150 weeks/ room This is the segment that has taken very long to construct anything. Although they some see the possibility of the impossible, sales cycle is longer, and more handholding is required. 84% are older than 26 years. Aprox: 200-500 weeks / room 34% 21% This segments has shown that they are worthy of receiving help from families and friends. They construct one families home at a time, and they best understand the importance of social reputation, and recurrent savings practices. They also are the one’s that give PH the best word of mouth.. 63% are in or have been in “caja populares” Aprox: 30-100 weeks / room “ORGANIZED” “LIFE IMPROVERS” 3 - 5 Rooms This segment sees PH as the impulse to achieving their dream/”illusion” of a bigger and nicer home for all family members. They also see the opportunity of helping other family members. 76% of people are over 36 years old Aprox: 150-200+ weeks / room 19% 15% Community Focused-Positive Word of Mouth **O años: Purchased or Inherited. 7% if total. © Cheskin 2004

  21. Research Focused Patrimonio Hoy’s Offering (pictures coming) • Solidarity Word of Mouth Strategy • Target “organized” as word of mouth ambassadors, to recruit others in community. • Create a brand that represents social values. • Spend marketing dollars on community involvement. • Highlight “contractual” practices within groups, ask participants to take “test” in front of each other. • Create a club experience that motivates productive behavior and gives access to special services, ongoing support/motivation in local offices, a la weight watchers. • Give importance to local, physical offices. • Play a role in strengthening weak ties through events and local community recognition/rewards. • Include celebration budget every time room is completed. • Create laddered offerings for developing customers, allowing customers to become productive: “Te Impulsa”. © Cheskin 2004

  22. Testimonials After Redesign • “Now I believe that PH is to trust, because they have made a physical commitment to our communities. I see people go there and make their payments all the time. And they are always kind in the offices, everyone seems to be working so hard.” (Senora Benita, El Coli, Jalisco, 2001) • “I see it as a club, but not a charitable one. It is our money. It is like a financial group, but made for this type of community. It is difficult to explain, it is the closest thing to a bank here. And they are human, they treat us well.” (Leonal Lucas Hipolito, San Gaspar, Jalisco, 2001) • “You all gave me an opportunity no one else had given me. I want to conserve my credit history with you. You have opened my eyes” ( Jose Angel Herrera, El Coli, Jalisco, 2001) • “They allow me to stay as a customer because I am responsible. I am distinguished as responsible in my community because I pay.” (Rosa Maria Sepulveda, El Coli, Jalisco 2001) • “My entire family, 8 of us, were living in one room. With Patrimonio Hoy, we now have 7 rooms, and we are building more. More importantly, we are unified. All of us are working towards a common goal, we work more hours, take on extra jobs. We are brining my mom to live with us.” (Senora Emilia, Queretaro, 2004) © Cheskin 2004

  23. CEMEX Overview: Degrees of Dignity • Research analysis needed to be directed at question: what would stimulate further aspirations for dignity increase? • In these communities, dignity comes from: • Size of home • Speed of Construction • Degree of Activity in the Community • Good Attitude Regarding Sacrifice of Work (Echarle ganas) • Capacity to help other members of family primarily, and neighbors in community • Being seen as someone worthy of being helped by others in community. © Cheskin 2004

  24. Based on Pilot, CEMEX Has A Data Gathering Process Today Based On Themes of “Aspiration Creep” and “Solidarity Building” • Review of Mexican census data for marginalized communities. • Identify # of rooms • Identify type of materials room made of. • Identify whether folks have “services” (electricity, water) • Identify the community leaders. • Speak to community leaders first to gain buy in, and for their recommendations on initial recruits. • Recruit from “organized” segment, learn from them about community, prepare them to be intermediaries. • Interview local distributors/retailers and identify those that serve as best intermediaries. • Train local field staff to conduct ongoing basic “Tell Me About Your Dream Home” survey that includes questions regarding # of years to construct existing structure, # of rooms they already have, # of families that will live in home today and future, aspirations for constructing. © Cheskin 2004

  25. Implications for Mexico Country Study

  26. Implications For Designing Mexico Survey on Access to Finance/ Existing Financial Practices Locate Regions w/Large Differences Identify Financial “Services” Available. Review Census or Housing Data Review Labor Data, Small Business Data Hypothesize: Salaried Workers Entrepreneurs w/receipts (e.g. Taxi Drivers) Entrepreneur w/o receipts “Social exposure” of labor type. (INEGI) Determine # of rooms/home, services available, materials build out of (IAGEB, SEDESOL, INFONAVIT, FOVISTE) Select mix of semi-urban and semi-rural, marginalized areas Distinguish driving historical influences in selecting # of regions. Speak to community leaders, local chambers, mayors and identify types of formal financial services available for whom (E.g. “caja populares”, loans from work) © Cheskin 2004

  27. Implications For Designing Mexico Survey on Access to Finance/ Existing Financial Practices Train Same Field Team On Language, Trust building Identify community leaders, exemplars. Identify Themes For Design & Analysis Conduct 10-15 “focal groups” Per region Obtain basic language, orienting values. Determine role of local, informal leaders in financial intermediation,. Train in practices for Producing credibility, Trust, and local Language. Train to probe, direct questions. Interview a wide range of people in various sub-groups. Identify main forms of employment and social exposure. Determine language, social value, existing bridging practices for savings and loans, views of future. Analyze ethnographic and qualitative data for social value change, what is becoming important, what is starting to matter. Design Survey Based On Inputs From All Stages © Cheskin 2004

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