CleanTech products for rural markets - Top five challenges on the field

Lot of cleantech products companies are targeting rural customers today in India. CleanTech products like solar lights, clean cooking stoves, water filters etc have following challenges:

1. New category of products: Because they are new category of products, their is lot of customer education which needs to be done. This means that these products require "High-touch" marketing which means that there needs to be physical demonstration of the product functioning before these companies can convince the customer to buy. This marketing cost is usually is the least understood but most critical challenge for companies in this space.

2. Product positioning: What I have seen is that only products which enhance income (like BT cotton seeds) or which are critical for income generation (like drip irrigation, pumps etc) will be sold in rural areas or have aspirational value (like phones etc). All the products which claim long term cost savings (with upfront capital investments) and health benefits will have tough time communicating that to the customers. It is important to target income enhancing products/service therefore rather than rely too much on cost savings/health benefit aspect.

3. Wide geographical distribution: A wide geographical distribution setup along with a robust after sales network is the third biggest killer for cleantech products companies targeting rural customers. This increases their distribution cost a lot and makes it very tough to manage it. Therefore important to take a portfolio of products to the rural customers rather than take a single product.

4. Ability to pay: The lack of ability to pay for cleantech products (which usually are not very cheap) is the fourth challenge. Price therefore becomes critical in selling the product. Also how a company can leverage MFI relationship for financing can be important in this context. Relying too much on MFI for selling your products may not be good for the company since MFI have their own set of challenges in marketing and financing such products.

5. Cultural diversity: Managing language barriers and cultural diversity is one of the challenges which one usually understands only once when you are start selling on the field. This increases the complexity since you will need to hire local people and usually the challenge then becomes how to communicate and manage these employees. Also usually these companies need to build local relationships for example with local NGOs, dairy cooperativecs, coop banks, sugar cooperatives etc. Language and cultural barriers effect that too.

Manoj