Monday
January 13
2014

Lina M. Salazar Ortegón

NextThought Monday: Three Assumptions You Should Avoid When Working with the BoP

“I like working in something I love, where I receive compliments and I manage my own time,” said Carlos, a 43-year old man, father of two, who earns less than U$360 per month. He was one of the 10 men and women we gathered in Villa El Salvador in Lima, Peru for a focus group on the consumption preferences of low-income people. His response to the question about the advantages of a formal, stable job made me realize people and organizations (me included) working with those at the base of the pyramid tend to make subtle assumptions about this segment of the population – assumptions that impact the effectiveness of our projects to benefit this population.

My goal in Villa El Salvador — an urban, residential district on the outskirts of a desert area in Lima —was to supervise a focus group with inhabitants of this neighborhood that will be part of a broader study that IDB’s Opportunities for the Majority is developing as part of its 2014 knowledge production strategy. We wanted to learn more about how families at the BoP weigh the different products or services they consume or access. We wanted to know what determines their decision making when they consume financial services, education, or health. Many of participants in the focus group, which to some extent represented the BoP in Latin America and the Caribbean, surprised me with some of their answers as they went against many of my rooted preconceptions.

Not one of the men and women we chatted with would move to an apartment, for example. “I prefer to live in a house with my family. There is more freedom. Apartments are too small and expensive,” said Delia, a 61-year-old woman who sells Esika cosmetics products for a living and lives with ten other family members. Most of these houses are home to at least two generations of the same family.

Also interesting was that with the exception of investing in the future education of their children, the people we invited to the focus group didn’t consider long-term ramifications of short-term decisions. For instance, most did not see the value of preventive health, for example, and they go to the doctor only when it is an emergency. “I never get sick,” said Jose, 29, to which Carlos added “I don’t have time or money.” This short-termism—a mentality imposed by their survival mode—was even more evident when they said they didn’t make household budgets. They plan on a weekly and even daily basis. There’s no such thing as setting aside money at the beginning of the month to pay for electricity; that’s paid with what is earned the week before the payment is due.

(Above: The streets of Villa El Salvador. Image credit: Flickr/jeferonix).

As I was leaving the dusty streets of Villa El Salvador, I understood we have a lot to learn from this segment of the population if we want to serve it with quality and effectiveness. We often assume low-income people are unhappy with their condition; that they desire the things people with higher income have; or that saving is a priority to secure a comfortable future. The more we discover, the better business models that serve the BoP will respond to actual needs and aspirations.

Lina M. Salazar Ortegón is a research fellow at the Inter-American Development Bank’s (IDB) Opportunities for the Majority Initiative (OMJ).

Categories
Entrepreneurship
Tags
Base of the Pyramid, consumer products, IDB, Opportunities for the Majority