Company Overview

d.Light :

Durable, modern, human: Solar lighting & power for us all

The United Nations Millennium Development Goals identify electricity as

essential to eradicating poverty. d.light is a global social enterprise
delivering affordable solar powered solutions designed for the two billion
people in developing world without access to reliable energy. d.lights
founding inspiration came in 2004 when co-founder Sam Goldman was
serving in the Peace Corps in Benin (West Africa) and a neighbours child
was badly burned in a kerosene fire. d.light was founded in 2007 with the
goal of eliminating kerosene. d.light took this forward understanding more
than 1.5 billion lack access to electricity, of which 400 million are in India.
Most houses use kerosene lanterns and candles to meet their needs. Apart
from being dangerous kerosene is costly too. Data indicates that 10-15 %
of monthly income goes in kerosene consumption.

Why d.light ?
d.light has major parts of its logistics division working in taking its
products to the distant corners of the world. Through 10 field offices and
four hubs in Africa, China, South Asia and the United States, d.light has
sold over ten million solar light and power products in 62 countries,
improving the lives of over 50 million people.

d.light has performed exceptionally in all domains of business be its

finance, CSR, operations, technology or marketing. With a brilliant
product, it has achieved a natural monopoly at the bottom, which will only
grow as its network grows and the competitors are barred enough by the
technology barrier. In competitive markets such as these the margins are
very low but unit sales are very high. The advantage of economies of
scale decreases the cost of production and adds to the relatively thin
margins. Focusing on high profit margins will not help managers
understand this kind of opportunity ,managers who innovate will be
rewarded.
In total, d.lights lanterns have resulted in 275 million USD in savings per
year for families who no longer rely on kerosene. Carbon emissions have
been offset by 375,000 tons per year, and over 2,000 deaths per year
have been prevented from kerosene fires. This is also one way where
d.light uses its business model to give back to the society through a CSR
approach.
The company d.light developed a robust operations model when their
CEO Donn Tice, who had been an adviser and board member since 2008
and Chairman since 2010, stepped in as CEO in 2011 and recruited an
experienced local (in-market) executive team, developing new approaches
to distribution and the supply chain that have combined to create rapid
growth from 2,000 retail outlets and 3 million customers served to over
10,000 retail outlets and over 15 million customers, a compound sales
growth rate of over 100% and a market share exceeding 50%. The product
is already easily available in top ecommerce websites and retail chains.

There is another factor, the technological factor, there is a popular

belief that the member of the society who are socio-economically weak
don't adapt to innovations. But Late C.K. Prahlad argued in his theory of
"Bottom of the pyramid" that these members are very eager to adapt to
new technology. The same has be reinforced through solar panel lighting
systems marketed by the company. The users have not only accepted the
product but also marketed it with word of mouth so that more and more
sales resulted in a short span of time. The theory has attracted the
attention of many new tech entrepreneurs who have focused their efforts
to achieve the blessings of this target group. With increased penetration
of PC kiosks, internet and mobile banking to these sectors of the
economy, people have started connecting with the world which was away
from their reach for a long time.
With the right marketing mix focused at different users d.light has
developed different products for different segments of consumers.
Marketing segmentation of rural market divides the market into these four
groups :

Availability of marketing infrastructure and the efforts needed to develop

these in rural areas are issues facing some of the marketers. All these
segments have different needs to the consumer products and play a
different role in the development of strategies focused at improvement of
this market. What is important for marketers to understand is this
segment is increasing and so is the difference between the various sub
segments. In this digital domain when the attrition in terms of customer
switching to different brands easily, companies have a very good chance
of developing a loyal customer segment.

SWOT Analysis
Strength
Unique Product
Good Supply chain network
Niche Target Segment
First Mover advantage
Good Quality
Reputation

Weakness
Government subsidy
Only for sunny areas
Less margin
Need constant cost reduction
Limited scale

Opportunities
Targeting Industries
More marketing
Improved functionalities

Threat
Entry of Big players
Low oil gas prices
buyer monopoly

Tie-up with retail stores

Raw material sourcing

Other Renewable energy

BoP Theory :

The 4 billion people in tier 4 roughly represent 2/3rd of the humanity and
their per capita income is less than 1$ per day. Doing business with them
requires radical innovation in technology and business models. A new angle
in the profit margin relationship and capital efficiency to measure financial
success. In short these economies raise a enormous new challenge in terms
managerial capabilities for the richest companies. Even more significant,
the income gap between the rich and the poor is growing , so the poor
cannot participate in the global market economy, even though they
constitute the majority of the population. But due to its vast size the tier 4
represents a multitrillion-dollar market. Also this population is supposed to
grow soon to 6 billion people and hence the market will expand in its
enormity. To tap these markets a more robust supply chain network along
with proper marketing mix has to be adjusted leading to segmenting and
targeting the audience.
An added impetus to the private players is the transformation of this tier
and development of a more just business ecosystem. New hybrid
innovative products will be required catering to the evolved needs of these
customers. With products catering to more than one need, players will have
to provide added value and appeal to these customers to get involved in
the transformation process. Scalable and transportable operations across
countries, cultures and languages through logistic and manufacturing
infrastructure and skill development will help in the transformation of this
sector. These BoP segments must become the integral part of the core
business of the private sector for a more sustainable approach towards
growth and not merely leave this segment to the realm of Corporate Social
Responsibility.
The biggest challenge in targeting the BOP is that each consumer makes a
very small purchase, says Mark Martin, vice president of international
marketing for SC Johnson. "You need lots and lots of consumers to cover
the fixed costs," he said. "It's all about getting the scale." Donn Tice, one of

Prahalad's research assistants at Michigan and is now CEO of d.light says.

"These problems haven't been solved before. Usually your first solution
isn't the right one. You have to keep learning and adapting," .Building a
learning enterprise is important.
Important, too, is getting close to customers, even if they live in remote
rural areas. "Our customers design our products," Tice says. Patience,
persistence and focus are our best friends when doing business with these
economies.
The industry is perceived as attractive when the opportunities are great
and the barrier entry is low.

Porters five forces theory

The current competitive scenario of the Solar energy sector can be

explained by using Porters five forces theory. The segment can be
distributed in five segments namely :
1.Intensity of Industry Rivalry : Complicated solar energy ecosystem. The
entry of big players who are into battery and lighting can heat up the
industry and marketing campaigns might become a major contributor.

Financial crisis has also contributed to the rivalry and the made
companies more fierce.
2.Threat of new entrants : The range of product entry is wide and margins
are low. So sustainability is achieved by implementing volume production.
Brand loyalty, brand switching cost and government regulations are other
barriers for new entrants.
3.Threat of substitutes : Nuclear power plants and in-house production
using Gas turbines pose a big threat. Other renewable sectors like marine,
wind etc. are catching up. The closeness of these sectors pose a big threat
to solar lighting business.
4.Bargaining power of suppliers : The raw material suppliers are limited in
number for developing panels and photovoltaic products. Also the industry
has become very large and this makes it lucrative for sellers to serve this
segment. Also entry of these companies in the extraction of raw materials
decreases suppliers bargaining power.
5.Bargaining power of buyers : The sector has enjoyed good demand
levels and this makes the power of the buyer less, as there are not many
suppliers. But with more players entering , this will change soon.

Conclusion
In a short span of time, d.light has developed a good consumer base and
made a good brand name for itself. The segment they are targeting is a
very lucrative segment and is very profitable in the long run, tying up with
more e-commerce websites can help in forming a effective delivery chain.
There is great focus worldwide on reduction of carbon footprint and
becoming more eco-friendly. The renewable energy sector is huge
upcoming sector. Both investors and consumers are actively looking for
cheaper eco-friendly options. The company is already working with the
direct export model, now the next course of action can be aligning
themselves with the global agenda. For starters they can tie up with NGOs
around the world who are working towards providing electricity to remote
areas. Also forming good distribution channels can help them have a
better reach to all economies of the developing nations. Also providing
support for renewable energy research and legislations, the company can
become a big market player and brand in this space.

Published references
Porter, M. E. (2008). On Competition. Boston, The United States of America: Harvard
Business School Publishing.
Kotler, Marketing Management : A south Asian perspective.
The economist, Profits and poverty.
The Fortune at the Bottom of the Pyramid, http://www.strategy-business.com/
www.dlight.com
d.light Executive Case: USA, http://reports.weforum.org/