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The Solutions Mosaic
Market-Based Strategies that Benefit Low-Income Communities ¹
Examples from Citizen-Sector Organizations and Businesses Around the World

Factors ² Principles ³	Limited purchasing power of individual clients	High volume business based on small (even tiny) individual transactions	Poor understanding of the human and social capitals of low income communities
Design products and services that tap into the wealth of poor	"World Class Quality at Affordable Price" David Green Health (Global)	"Combining Retail and Financing" Casas Bahia Consumer Goods (Brazil)	"Acquiring Technology through Microleasing" Fabio Rosa Energy (Brazil)
Change radically the logic behind your business model	"Multitiered Pricing Model" Rebeca Villalobos Health (Costa Rica)	"Group Microlending and Demand Aggregation" Prof. Muhammad Yunus Financial Services (Global)	"Save and Build Assets Now" CEMEX/Patrimonio Hoy Housing (Mexico)
Leverage the power of communities as both consumers and producers	"Shared Purchasing" Grameen Telecom ICT (Bangladesh)	"Transforming Economies of Small Producers" Dr. Verghese Kurien Dairy (India)	"Leveraging Social Networks" ICICI and CSOs' Financial Services (India)

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The solutions contained in this mosaic have been chosen to illustrate concrete and powerful market-based strategies targeting low-income communities. Their inclusion here does not constitute an endorsement on Ashoka's part of their social impact dimension.
Factors refer to the characteristics that distinguish low-income markets from traditional ones.
Principles represent new standards emerging from practical applications that are meant to inspire and guide the innovation process going forward. Note that although the best solutions probably speak to more than one principle, we have chosen to emphasize one specific innovative aspect. If you would like to learn about the multiple innovations behind each solution, please click on each name for a fuller description of each case.

Short Descriptions of Mosaic Cases

World Class Quality at Affordable Price
Project Impact, USA/India (David Green, Ashoka Fellow)
Driven by his vision of Compassionate Capitalism, David Green has been instrumental in making top quality medical technology and healthcare accessible for low-income citizens of developing countries in collaboration with Project Impact and Aurolab. By partnering with top researchers, medical practitioners and designers, Aurolab—the manufacturing division of the Aravind Eye Hospital—manufactures state-of-the-art hearing aids for a cost of $50 while the market price in the United States averages $1,500. Aurolab has also played a catalytic role in bringing down the prices of intra-ocular lenses from over $300 in the early nineties to under $10 per lens today. It is one of the largest manufacturers of intra-ocular lenses in the world selling over 600,000 units annually, is profitable, and is exporting to more than 85 countries. With regards to medical services, the Aravind Eye Hospital is able to attain a 50 percent gross profit margin that is reinvested in its operations while providing 65 percent of the care free of charge or below cost. www.project-impact.net.

Combining Retail and Financing
Casas Bahia, Brazil
By allowing low-income citizens to finance their purchases, Casas Bahia has created a market for its products in the highly populated slums of Brazilian cities and become one of the largest retailers in the country. Over the last 50 years, the company has discovered that the poor, who often migrate to urban areas with nothing but a few possessions, have a need and a demand for consumer goods such as linens, electronics and furniture. These goods are made affordable by offering retail loans to low-income citizens who have regular or variable incomes. Casas Bahia maintains an extraordinarily low default rate by building client loyalty, using a proprietary credit check system to assess a client's ability and willingness to pay by conducting a short survey, and requesting that all payments be made in a retail location, allowing employees to demonstrate the excellent customer service they are known for. Casas Bahia has been able to harness the limited purchasing power of low-income citizens by identifying and responding to their needs, which has allowed them to expand into a 330-store, 20,000-employee and US $1.2 billion business. www.casasbahia.com.br

Acquiring Technology through Micro-Leasing
IDEAAS/STA, Brazil (Fabio Rosa, Ashoka Fellow)
For over 20 years, Fabio Rosa has pioneered systems to provide electricity to hundreds of thousands of impoverished rural Brazilians, establishing the standard for low-cost electricity transmission by reducing costs to consumers by more than 90 percent. After the privatization of the state-owned electricity companies, Fabio refocused his efforts to deliver affordable solar energy solutions to the same underserved market through a hybrid nonprofit and for-profit venture able to attract capital investment: IDEAAS and STA. STA is providing rural customers with electricity services, as opposed to solar panels only. Thanks to an in-depth understanding of their market, STA developed a basic solar home kit that rents for about $10 a month (what families used to spend on non-renewable energy sources) in addition to an initial installation fee that can be financed through the first 12 months of the lease. By demonstrating that access to electricity can help alleviate poverty by improving farming techniques and creating new income-generating opportunities, STA convince farmers to pay for its installation. After finding out that only 70 percent of the off-grid population could afford STA solar energy services, IDEAAS, the non-profit branch, launched a specific program focusing on income-generation and sustainable agriculture to serve the poorest 30 percent. www.ideaas.org.br

Multi-Tiered Pricing Model
ASEMBIS, Costa Rica (Rebeca Villalobos, Ashoka Fellow)
Like deafness and dental decay, blindness is often not only a health problem but also a broader social issue as most health systems are not able to provide prevention and treatment to low-income and rural populations. To respond to this need, Rebeca Villalobos has developed an integrated set of services for high-quality eye care that allows Costa Ricans of all classes to access medical services, ranging from vision tests and low-cost lenses to sophisticated surgical procedures. Over 600,000 people in Costa Rica have been served by ASEMBIS since its creation in 1991. ASEMBIS transformed the eye care value chain by creating an extensive network of non-traditional health professionals for vision testing and preventive care, cost-efficient and high-volume clinics, mobile rural clinics, and a multi-tiered pricing system. Under this system, higher revenues earned from wealthier patients cross-subsidize the price of healthcare delivery to poorer patients who pay according to their resource. This creates a system that is financially self-sustaining from user fees, while still affordable to all members of society. Overall, ASEMBIS services are provided at 40 percent of the cost of private clinics. www.asembiscr.com

Group Micro-Lending and Demand Aggregation
Grameen Bank, Bangladesh (Prof. Muhammad Yunus)
Microfinance was born from the realization that billions of individuals were left out of the traditional banking system even though they could be trusted to repay loans. When Muhammad Yunus realized what a daily struggle it was for low-income women to find tiny amounts of money to make a living, he started lending a total of $27 to 42 women in the village. All of them repaid. Since its creation in 1983, Grameen Bank has over 2 million low income clients in Bangladesh and has inspired thousands of organizations around the world to provide financial services to low-income communities. Two decades later, it is estimated that about 50 million microentrepreneurs have access to microcredit. One of Grameen Bank's main innovations is the use of social collateral as an alternative to the traditional collateral required by commercial banks, by forming solidarity groups and pooling individual needs for loans. Local women form groups, supported by "barefoot bankers" who come to each home and village, building trust, confidence and empowerment. www.grameen-info.org

Save and Build Assets Now
Patrimonio Hoy, Mexico
By mobilizing the small regular savings of Mexico's urban poor, CEMEX's Patrimonio Hoy program has enabled thousands of families to upgrade their homes at a lower cost (member save in the order of 20 percent of the cost of the traditional system)—and faster (members typically build an additional room in 1.5 years instead of 4 years). Additional benefits include technical assistance, delivery at their door step, guaranteed prices for two years for over 200 types of building materials and secure storage are also available to members. After realizing the tremendous potential of low-income markets, which were not as cyclical as traditional markets, CEMEX, one of the largest construction materials companies in the world, invested significant resources to gain an in-depth understanding of low-income families' needs to develop Patrimonio Hoy ("Build Assets Now" in Spanish). Patrimonio Hoy's marketing strategy is based on the understanding that all families independently of their income have the aspiration of a better home. The program is spread via a network of local promoters, mainly women that have trust-based relationship with the communities. www.cemex.com/cc/cc_cc.asp

Shared Purchasing
Grameen Telecom's Village Phone initiative, Bangladesh
The Village Phone initiative was developed by combining Grameen Bank's expertise in village-based microenterprise with the latest digital wireless technology of Grameen Phone, a for-profit corporation holding a nation-wide license to operate a mobile cellular network in Bangladesh (joint venture between Telenor A.S., the Norwegian national telecommunications operator, and Grameen Telecom). Grameen Telecom is a nonprofit organization that focuses exclusively on the deployment of the Village Phone program in rural parts of Bangladesh as a tool for both local empowerment and developmental leapfrogging. It buys airtime in bulk from Grameen Phone. The program has been remarkably successful with over 115,000 "village phones" distributed throughout the country, where they serve as "owner-operated" pay phones. Known as Grameen phone ladies, these local women provide villagers with a vital link to services such as hospitals, relatives or clients, in a country with the lowest number of phones in South Asia. They typically purchase the phones with money borrowed from Grameen Bank and sell phone services to customers by the call. Thanks to its sustainable approach based on micro entrepreneurs and a shared-access business model that concentrates demand and creates relatively high cash flow even in poor villages, enabling operators to make regular loan payments, the Grameen Village Phone initiative is been replicated to rural areas of Uganda and Rwanda where no telecommunications services have previously existed. www.grameentelecom.net

Transforming Economies of Small Producers
Amul Dairy, India (Dr Verghese Kurien)
Dr. Verghese Kurien, founder of the Amul Dairy Project, has led the process of revolutionizing the Indian dairy industry by focusing on millions of milk producers. Amul Dairy has organized over 10,000 village cooperatives, designed and implemented multiple interventions along the value chain. Together these cooperatives bring more than 10 million liters of milk to market daily, which makes them the leading player in the Indian milk industry. For many of India's rural poor, daily milk sales from the few cows they own is an essential part of their income. Yet the entire process from taking the milk to a market to selling it and collecting payments is fraught with inefficiency and unfairness. Amul Dairy has transformed the process for millions of small farmers by using an automatic, computerized collection system which reduces the time for weighing, quality testing and payment processing from a few hours with payment days later, to five minutes and immediate payment. Each day, milk is collected no more than 10 miles from the farmer, with this nationwide, decentralized, collection process. Amul developed a computerized quality testing machine, which makes the process transparent and fair to the farmer, and buys exclusively from women—a decision which has increased the status of the women, while developing a positive brand image for India's largest food products business. www.amul.com

Leveraging Social Networks
ICICI Bank, India
This large Indian bank has brought the facilities of commercial banking to the rural poor in a viable, low-cost manner by moving banking activities away from traditional branches and working with networks of self-help groups. However, when ICICI inherited the Rural Development Program from the Bank of Madura, the self-help group program was not financially sustainable. To reach profitability the number of self-help groups had to be expanded exponentially without increasing the cost of managing these groups. ICICI therefore created a pyramid model where one bank staff member can serve over 14,000 low-income clients who have been formed into self-help groups, and who are overseen by promoters (elected members of the self-help groups who are paid based on the number of groups created). ICICI currently works with over 8,000 groups. The groups must save for one year before they can collectively apply for a commercial loan, which will be collateralized by the entire group. They can also lend to each other through group savings, and are paired with non-profit organizations that provide healthcare, education, and local development projects. www.icicibank.com

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