Entries in middle of the diamond (7)


China's emerging consumer class

A recent article in the Economist pulls together CPG industry data to produce an interesting snapshot of the emerging consumer class in China.

The authors found consumer tastes in China are changing as the country's economy shifts from one predicated on industry to a more service-driven model. As the ranks of blue-collar workers shrink, the growing urban middle class is seeking out more premium goods and brands. For example, the sales volume for instant noodles - long an indicator of consumer growth - fell by 12% last year, while sales of makeup grew by over 15% and skin care products went up by 13%. Some other consumer trends include:

  • Chinese travelers are taking more trips abroad, spending about $1,200 each time on shopping;
  • Chinese tourists return home with a taste for cosmetics brands based in South Korea, whose cosmetics exports to China surged by 250% last year;
  • Brands promoting healthy lifestyles are also thriving, including restaurants and supermarkets. As well, fitness is becoming more popular;
  • Functional drinks favored by the health-conscious are going down well, as is yogurt and soup that's MSG-free; and
  • Sales of pet food rose by nearly 12% in 2015, a reflection of a softening of Chinese attitudes toward animals.

These trends can give us insight into the evolution of the consumer goods marketplace as more people in the middle of the economic diamond enter the consumer class.

-- Catalysts


The race to connect the next billion, and the business models to get there

Google and Facebook both have a mission – to “connect the next billion,” as Google puts it. This Financial Times article, “Facebook, Google and the race to sign up India,” explores the tech giants’ initiatives that are “bringing internet access to India’s masses as a way of alleviating poverty, improving education and creating jobs.”

Google, in partnership with NGO Tata Trusts, is sending thousands of tech-connected bikes to women in rural Indian villages. (In these regions, women are much less connected than men.) The bikes, loaded with two Android smartphones and two tablets, educate women about using the internet, and these women can then pass their knowledge on to other villages. Google also aims to launch its pilot technology, “Project Loon” later this year, sending balloons into the sky that will provide internet connectivity to remote areas. Additionally, the company, through a partnership with India’s railway ministry, is in the process of rolling out high-speed wifi to a hundred train stations this year.

Facebook, on the other hand, has been heavily focused on its “Free Basics” program. This program, an app that is part of the social network’s initiative, offers users of partner telecoms networks free access to Facebook and a number of other well-known sites (Wikipedia, BBC News, Accuweather, etc.) Since it’s 2004 launch, 38 countries have come on board.

Both companies’ goals are echoing those of the United Nations’ 2030 Agenda for Sustainable Development, which includes an aim of universal internet access. What’s notable is that these tech giants aren’t using funds they’ve set aside for corporate social responsibility, rather they’re driving these initiatives with money from their core budgets. This speaks to their belief that connecting the unconnected is more than just a charity effort, rather that there is “solid business logic of investing in connectivity in India and other developing markets,” according to the Financial Times article, and a benefit for both companies to gain a first movers advantage in these regions.

Despite their grandeur and reputation, these companies still face challenges developing business models that incorporate their social impact efforts. Recently, Facebook’s Free Basics app was blocked by India’s telecom regulators, after they ruled that “differential pricing” by internet companies infringes on the principles of net neutrality. While the ban wasn’t targeted specifically at Facebook, it has created a major roadblock for the company. However, the tech giant isn’t ready to wave the white flag allowing Google to take the lead in this race to connectivity just yet, saying it plans to pursue other connectivity projects in the region.

-- Clara Shen


Mutuality lecture, Q&A at Oxford's Saïd Business School

Members of the Catalyst team spent an hour and a half with students at the Saïd Business School at Oxford, presenting some of our work on the Economics of Mutuality and taking questions.



Monitoring and evaluation at the middle of the diamond

A business model shouldn't remain theoretical; if it's to be successful, it's costs, production and impact must be accurately measured. This applies to models meant to work at the middle of the economic diamond -- with emerging consumers worldwide -- as much as with new digital business models deployed in developed economies.

I enjoyed a recent NextBillion piece on measurement and evaluation because it reminds us that you need to take the time to develop the right metrics in order to get the most value from them.  In it, Heather Esper, program manager of impact assessment at the William Davidson Institute at the University of Michigan, reviews nine tips for M&E for "base of the pyramid" business models. These include:

  1. Metrics are essential to inform decision-making, understand impact, monitor progress toward targets and identify areas of opportunity.
  2. Many professionals now accept all assessment types (impact, process, performance, etc.) and methods (qualitative and quantitative) and use a range of these to incorporate multiple perspectives and types of indicators depending on their organizational needs and budget.
  3. Using assessment to create value works best when it is driven by the business or organization being assessed, as it ensures reporting is relative and in line with organizational goals.  
  4. Evolve with your metrics – as you grow and your metrics grow, they can become more robust and complex. Think big, start small. Focus on collecting data to answer priority questions and build your data collection from there.
  5. Be clear in the goals of data collection and the value you expect to extract from that data so that focus and clarity is maintained as you acquire data and use it.
  6. Assess only what you will use and what will bring value to the organization. This means you should have the capabilities to analyze the data, and be able to share the findings in a way that resonates with different audiences. This is a critical component to reaping the most value from assessment.
  7. Measure what you can actually affect – don’t measure for the sake of measuring, but ensure you’re measuring with good reason and in an area in which you can intervene. Having a theory of change can guide you in what to collect and what you don’t need to collect.
  8. Collected information can be valuable to internal and external organizations (data collected for a particular purpose can also be used to create value in other ways).
  9. Pay special attention to opportunities to deliver value to the research subjects through data collection. Do not merely extract data.

Image source:

-- Yan Toh



Maua & Bloom -- putting mutuality theories to the test

In introducing Mars' efforts to build an economics of mutuality to the world last year, Chairman Stephen Badger stated:

Without tangible action, I fear that capitalism will both fail to reach its full potential or achieve the benefits so desperately needed for the 7 billion alive today and those who are still to come on our fragile planet Earth."

Catalyst has worked over the past six years to create a rigorous framework to measure mutuality in all its elements across our value chain, and our findings so far have been reviewed and validated by internal and external experts. But "tangible action" requires, in part, real-world testing of our metrics and theories. Maua and Bloom are two such tests, pilots for new business models that will enable us to reach--and create mutually beneficial relationships with--consumers at the middle of the diamond (also known as the "base of the pyramid).

We invite you to read a more detailed description of Maua and Bloom on a new page we have created on this site, and please check back here for future updates as our project team members will be weighing in with updates.

-- Clara Shen