On March 17 2021, Rachel Howell will defend her PhD thesis entitled 'Creating and Capturing Value: A Consumer Perspective on Frugal Innovations in Water and Energy in East Africa'
Frugal innovation emphasizes the reduced use of resources and cutting of costs through the process of innovating around constraints. However, how innovating around constraints leads to profitable (value creation) businesses and local economic development impact (value capture) is still unclear. Early frugal innovation literature assumed that a reduction in cost would be a means to reach low income consumers. Yet, many companies in emerging markets are not reaching their intended low income customer group. Most early frugal innovation literature was conceptual and case study based with most case studies being from India and Asia. Additionally, frugal innovation literature focused more on the design process and less on the consumer and what drives decision making of frugal innovations.
Howell focused on the consumer side of frugal innovations:
How can companies reach their intended low income group while still being profitable, and why and how consumers make purchasing decisions for bottled drinking water?
During her PhD Howell conducted field work on consumers and non-consumers of two low cost bottled drinking water companies (Dutch Water Limited and Jibu, Inc) in Kenya, Uganda and Rwanda to investigate the types of the consumers these companies are reaching and how the consumers make purchasing decisions. Part of the field work was a small behavioural study where non-consumers were split into a control and treatment group to see whether receiving a “nudge” of a free bottle of water influenced the decision to purchase the water."
When visiting the three countries, Howell saw with her own eyes how different they are. ''Africa is often considered as one continent. But just like within Europe, every country has its own culture and unique factors that influence purchasing decisions.''
Just like within Europe, every country has its own culture and unique factors that influence purchasing decisions.
"The aim of both water companies was to provide the poorest of the poor with access to clean drinking water," says Howell. "Unfortunately I have to conclude that both DWL and Jibu have not succeeded. The level of education and thus the knowledge about the importance of clean drinking water seems to play a more prominent role in purchasing decisions than income, "she explained from her office at the TU where she finalized her dissertation on frugal innovation. "Both companies have initiated a movement, which has increased the supply of drinking water. The awareness about clean drinking water has also increased. "
Read more in Howell's dissertation and join us for Howell's defence on Wednesday March 17.