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This blog gathers the latest technical and energy advancements and discoveries important to emerging markets and poverty alleviation.

Thursday, March 28, 2013

EcoZoom on Building a Market for Clean Cookstoves: What it takes for consumers to invest for long-term savings

By Emily Youatt

 

Three billion people – half the world’s population – need a safer way to cook.

According to a new World Health Organization review, 91 percent of people in the world's least developed countries are without access to modern fuels. Instead, they primarily cook with biomass or coal on open fires or unimproved cookstoves, causing major problems for themselves and their environment.

EcoZoom is a for-profit certified B Corporation based in Portland, Oregon, and a client of Mercy Corps Northwest, working to solve this problem by making clean cookstoves accessible and affordable in developing countries. 

Global Envision interviewed Chief of Operations Phil Ferranto on the challenges EcoZoom faces in convincing people to invest in clean cookstoves, developing a market for cookstoves in developing economies, and what sets EcoZoom apart as a socially-minded for-profit business.

EY: EcoZoom’s mission is to get clean cookstoves into the hands of cooks in both the developing world and developed markets. Can you tell us a little about how EcoZoom’s business model manages to market cookstoves to consumers who regularly choose to spend money on other products? Who are these consumers?

PF: Our business model is to partner with key stakeholders throughout the value chain by setting up a sustainable commercial market. As I see it, there are three main categories of stove users: relief, development, and commercial stove users.

Sometimes we’ll start with somebody in a refugee camp whose life has been uprooted. Usually in that case we’ll work with an NGO who really knows the camp and its dynamics to make sure we find the right product for the camp - something that’s durable, something that makes sense economically for the NGO, and something that can be distributed to enough stakeholders within the refugee camp to avoid inner conflict.

Our second focus is on development markets, which are usually in rural settings where people are either finding fuel or wood, or maybe using a traditional [wood-fired] stove or a mixture of cooking, heating and lighting solutions. In these cases individuals may not have a constant income stream or aren't spending enough money on fuel to justify the purchase of a cookstove outright. In many cases, these individuals aren’t aware that improved cookstoves are an option. In this case we work with either NGOs, carbon finance organizations or local distributors to craft a message about the benefits of improved cookstoves to reach end consumers.

Usually it’s hard for consumers in developing markets to justify spending $20 or $30 on a cookstove when they could have a cellphone, TV or something with a quicker payback in their eyes. Once they use our stoves the consumer often sees health and time benefits.

Our end goal in the developing world is to build sustainable commercial markets. We work with distributors and retailers to reach consumers, who, in developed countries like the United States are a big part of our market. We’ve marketed the company to this crowd by bootstrapping--we distribute our stoves to influential bloggers, have them try it out, review it and then raise interest among their followers. We target survivalists and people interested in emergency preparedness, but also more casual people like car campers.

EY: How do you advertise your cookstoves in such vastly different markets?

PF: Where we like to focus as a social business is in the impoverished commercial markets, where people are spending upwards of a dollar to two dollars per day on charcoal or wood. Our products can cut that outlay by over half, and up to 70 percent by those who are really good at using the stoves. In these cases you can find a very motivated sales force, so we’ll work with distributors who really know the local market and the distributor can really own the training and education about the stove.

In the more developed markets, we highlight the versatility and ease of use of our stoves. For example, you don’t go home from camping at a state park with everything smelling like smoke. The stove still produces smoke, but not as much as an open campfire. Cleanup is also easy, and if there are kids around you don’t have to worry about safety because it’s a contained fire. You also cut down on fuel, so people who are interested in sustainability can use the stove for recreational purposes.

EY: What are the specific ways EcoZoom convinces people in developing economies to choose a clean cookstove over a cell phone or a TV?

PF: I think people in a developing world context are pretty skeptical that their investment is going to be sound. If they’re going to spend $20 or $30 on a cookstove they need to know it’s going to last a long time. From the consumer’s standpoint it’s hard for them to look at a cookstove and say, “this cookstove is going to save me $800 throughout its life, so a $40 investment is a no-brainer.”

Things like integrating a warranty into the purchase experience are important. Having a maintenance and repair program is also important. Consumers want to know that someone is there to help them if something goes wrong with the stove.

A lot of the time it’s really about finding sales agents who truly believe in the product. When we were in Nairobi, we passed a couple of guys working and they came up and said, “A jiko!” which is Swahili for cookstove. In Kenya, everyone has a "Jiko”-- they’re like refrigerators to you and me. So two guys came over to us and started stopping people who were walking by and telling them about the stove. They were so excited about the product that they started selling it for us, and we were there just testing the stove to see if it was working!

There is also a consumer finance piece that can be integrated--like a microfinance loan, microbanking, or the use of mobile money. These reduce the barriers to someone making a cookstove purchase. In the past, some groups have been pretty creative about finding incentives for using cookstoves. Our cookstoves have been used in carbon-credit projects, where each year the stove will mitigate two or three tons of carbon. This also has great marketing potential for some crowds.

The last piece is marketing to potential consumers where there is already a high demand, where people spend up to 20 percent of their income on fuel. In these cases the education process and market awareness are a lot easier to do. A person who has been cooking over an open fire all of his or her life will realize the benefits a lot quicker than someone like you or I would. In these cases we will partner with a distributor on crafting an educational program. We focus on the ways the stove makes life more convenient and how the stove ends up saving the buyer money in the long run.

EY: Has EcoZoom modified its product to tailor to specific geographic regions or climates?

PF: Yes. For the project we have ongoing in Nigeria we looked at the size of the family, which is important: Bigger families tend to cook in larger pots. So we made a bigger cast iron top for the stove. We worked on keeping the science of the stove the same, but looking at what we could do to cater to the market.

Another example of a change we made for consumers was La Mera Mera. In Latin America, families will cook tortillas, but then they’ll also cook rice, beans or a soup simultaneously. There was a big need for fuel and a lot of the time cooking was done inside the house - so adding a chimney to our stove in this case made a lot of sense. We also learned that some communities cook 24-inch tortillas, but in other regions they’ll cook a five-inch tortilla. For the group that cooks the larger tortilla, even the biggest stove we brought to market was almost too small. So we changed the stove.

We always have to look at the possibilities of what our product can be. We’ll always make sure that our stove is right for the market.

Where do you think the business of clean cookstoves is headed?

PF: I think the industry as a whole is working to catch up to have an answer on what happens once a stove is given, sold or subsidized and what the lasting effect will be. The cookstove itself has been around for many years. The wood-fired cookstove has been around for centuries. But the cookstove industry is still in its infancy and I think it’s becoming more commercialized. I think we’re at the point where we’re starting to capture good data and over the next few years you’ll really start to see the benefits that clean cookstoves have to offer.

Are there any unique partnerships or exciting developments on the horizon for EcoZoom?

PF: Right here in Portland we’re part of the Social Innovations Incubator alongside Portland State University, which just became an Ashoka Changemakers campus. They’re on a great track and it would be great to foster more of a focus on social innovation here. We’re also working with several other partners--designers, manufacturing. From our perspective we would love to see more international development happen in Portland. We’d love to see Portland be made into a “hotbed of change!”

What’s the most inspiring part of your job?

PF: The most inspiring moments for me are when I’ve gone into the field and seen the impact that we’re making. When you’re in the field it’s like night and day when compared to selling a stove here in the states to someone who will use it recreationally, where most of the time it will sit in someone’s garage.

At least from my family’s context, food and just being around the table was always an important part of growing up, and that’s universal. If you cut the pain of cooking by over half, it makes a big difference in people’s lives. Seeing the tangible health benefits and seeing the way people have the ability to really improve their lives is really what inspires me.

 

 

This post was first published on Global Envision, a blog focused on market-based solutions to poverty managed by Mercy Corps, a NextBillion Content Partner. 

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