Philips provides lighting in Africa
The Base of the Pyramid (BoP) refers to the people in developing countries with the lowest incomes. Nearly 4 billion people have an annual income of less than USD 1,500, while 1 billion people have less than 1 dollar a day to spend. Philips wants to provide modern lighting to the poorest people in African countries south of the Sahara. Berenschot helped Philips gradually transform a challenge into a success.
Rather than considering these people as helpless and needy, they are viewed as consumers. Obviously they are consumers with very limited individual budgets, but together they represent a huge group of consumers with specific (common) wishes. Market development at the bottom of the pyramid provides an opportunity to improve the economic situation of poor people, while giving companies an opportunity to expand their consumer markets.
Concentrating on the base of the pyramid
In 2006, Philips' CEO Gerard Kleisterlee emphasised the need for the multinational to concentrate on the base of the pyramid. At the time, Philips had already acquired considerable experience in India and then asked Berenschot for support in developing a BoP lighting approach for Africa. Special products as well as specific marketing and sales strategies are required to target the market at the base of the pyramid. The product that Philips initially developed for Africa was a solid, reliable and reasonably priced solar lantern with a CFL lamp. The product range has since been expanded to include other lanterns, with more lanterns in the pipeline.
In terms of marketing and sales, Philips opted to partner with local companies, NGOs and development organisations. This enables Philips to help local entrepreneurs develop a sales and after-sales network, by giving them access to micro financing facilities for example, while the products and services are accessible to people in the remotest regions.
Berenschot helped Philips Lighting convert the BoP approach into a concrete pilot, found local partners in Ghana and supported the implementation and monitoring of the pilot project. During the initial phases of the pilot project in Ghana, Berenschot also helped Philips develop a partnership with the Ministry of Foreign Affairs. The aim of this partnership was to provide millions of poor people in Africa with modern lighting and to establish commercially sustainable distribution channels for lighting products. On 7 July 2008, the CEO of Philips Lighting, Mr Provoost, and the Minister of Development Cooperation, Mr Koenders, signed a partnership agreement aimed at rolling out the Ghana project to 10 African countries.