Consumers

Untapped - Creating value in underserved markets, by John Weiser, Michele Kahane, Steve Rochlin, Jessica Landis; Berrett-Koehler

Welcome this publication without reservation. Too little is written about the economic element of the triple bottom line. Too much writing on corporate responsibility repeats what has been done, too little examines what there is still to do.

In developed countries we live in an age of contentment: low inflation, high employment, cheap air travel and every luxury and service imaginable only a mouse click away. Yet this is not the whole story. Billions outside developed countries are not part of this twenty-first century version of the Coolidge prosperity. Developed economies show increasing evidence of inequality. Many are not fully served by the market.

A practical guide for managers

Untapped looks at successful company strategies for reaching those that modern capitalism misses out. The book is presented as a practical guide for managers. Consequently it has more to say about underserved communities in developed economies, particularly in the US, than it does about the excluded in developing economies.

The authors examine the underserved markets from four different angles:

• the underserved as potential consumers
• the underserved as potential employees
• the underserved as potential suppliers
• and how underserved communities can assist in product and process innovation

The primacy of consumption

Untapped would be stronger if a greater contrast had been drawn between the underserved as potential consumers and the other aspects of their relation to companies. Everybody wants to consume. Everybody wants to increase the quality and quantity of the goods and services they consume. Lifestyles and income levels determine which goods and services each individual or household wishes to consume.

Yet if the need is correctly identified and met then the purveyor of the service will be successful. There is no fundamental difference between Fortnum & Mason and Aldi when it comes to meeting customer need, none between Saks Fifth Avenue and Kmart. Providing services profitably to underserved communities advantages both the provider and the consumer. If the ghastly tag ‘win-win’ can be applied to anything then it can be applied to this.

The chapters on underserved communities as potential employees, suppliers and product developers are less convincing. It would doubtless be good for society as a whole if the market economy brought jobs to underserved communities, sourced supplies from them and developed products with their needs in mind. Mostly the examples given seemed like the initiatives a company would take when in a corner. In a tight labour market see if you can recruit single Mums or people for whom English is not the first language but otherwise where is the commercial imperative to do so. Unduly cynical? Perhaps, but more evidence of clear commercial benefit needs to be marshalled.

Internal barriers to entering underserved markets

One aspect of working with underserved markets that needs to be explored more fully is the inherent suspicion many firms have of them. In a number of the examples given, initiatives had been successful only when managers had experienced life in underserved communities. Clearly lack of understanding of the lifestyle, needs and household economics of the underserved communities acts as a bar to successful operation in this area for many companies.

What next?

The publication of Untapped is the first step on the journey. What should happen next? Here are three suggestions:

• Get more metrics: Untapped is long on story but short on numbers. It would be good if the authors could produce the facts about the underserved markets, say initially just for the US. How big is the underserved market? What is its total income? What is the average income? Which states is it concentrated in? If it can’t be measured it can’t be managed.
• Where are the gaps? Again this is an exercise that could be conducted for the US. What are the goods and services that the underserved markets do not have access to? Where are the opportunities?
• What proportion of income are companies deriving already from underserved markets? What is the contribution that these communities already make to company profitability.

The issue of underserved markets has been fully aired. Congratulations to the pioneers for opening up the new territory. Now it needs to be tilled with deeper economic analysis and populated with more comprehensive figures.