The roadsides leading out of the main cities in Lao PDR are lined with numerous small retail shops, which are mostly owned by women, offering a variety of locally-made products, among them a selection of ceramic cook stoves. A vast majority of households in Laos cook on these portable stoves, using wood or charcoal.
Retailers are a key link in the cook stove supply chain, bridging the gap between other areas where the EU-funded SWITCH-Asia project Improved Cook Stoves (ICS) operates: stove design, production and testing, and the intended consumers.
Most of these small family businesses along the roadsides sell about 20 stoves per month. Prior to the project intervention, the most common stoves sold were the traditional “Tao Dum,” or black stove. There are a variety of other stoves offered on the market, which come in many shapes and different qualities, with a typical price of around 3 Euros, the retailer fetching a margin of 1 Euro each.
Since the ICS hit the market in 2013, over 733 of these small retailers have begun stocking the improved stoves alongside the traditional models. The improved cook stove is more expensive to sell, at 4.5 Euros, and it is not uncommon for retailers to charge even higher prices in order to increase their margins to 2 Euros or more, however they are still able to sell the stoves, increasingly so as the product becomes better known on the market, thanks to word of mouth, cooking demonstrations, marketing training, and its distinctive blue superman label and consistent branding.
Retailers join the project in a number of ways. Some hear about the ICS through word of mouth and approach the producers or the project, requesting a supply of stoves to stock, while others join through a relationship with the producers, who recommend the stoves. Finally, some are approached by the promotion team from ARMI, a local Lao NGO and project partner.
The project began in 2011 in Savannakhet Province (southern Laos), with 20 retailers selling the first ICS. This number has grown exponentially with 733 retailers in 2015 over nine different provinces.
Some retailers however are not very interested in the new stoves, mainly because they believe the wholesale price from the producer is too high, and they don’t feel confident selling more expensive stoves. The project is seeking to address these concerns: in order to engage more retailers who feel they don’t have the cash to invest in a stock of ICS, the project partner SNV has recently approved a revolving fund that will become effective in the last quarter of 2015 to help producers provide ICS to retailers on consignment, which helps to break this financial barrier.
Project representatives from SNV and ARMI, the Lao partner NGO for Improved Cook Stoves, provide retailers like Ms. Sookthavee with some marketing skills training and coaching, to help them be able to answer questions about the new stove and display it in an appealing way to the customers, boosting their sales despite the higher price.
The training includes learning how to explain the factors that both make the cook stoves sustainable and benefit the customer, like the time and fuel savings, and that the stoves are made by local producers.
Project representatives follow up every month, and also provide opportunities for retailers to join promotional sales booths at special events during Lao holidays, like the annual boat racing festival. Retailers are given promotional materials for free, including brochures and banners, to help the products stand out at their shops, focusing particularly on retailers in high-demand locations like markets.
Ms. Sookthavee is a typical example of a retailer who became involved with the project. She is 45 years old and lives at her shop in Thameuang Village, in Savannakhet Province, towards the south of Laos. She has sold stoves in her shop for a long time, but decided to begin stocking the ICS about a year ago, and joined the project’s growing group of registered retailers.
“The project taught me some sales techniques and marketing skills and provided me with promotion materials that I can use in my shop to make the product more attractive,” she says.
In its approach, the SWITCH-Asia Improved Cook Stoves project does not interfere with the price setting, apart from a minimum threshold to avoid unhealthy price competition. At the beginning, retailers found some difficulty in convincing people to spend money on a more expensive product, as many customers do not have a lot of disposable income and buy stoves based on the lowest price. However, now that the reputation of the ICS is growing, an increasing number of customers understand the economics and the fast pay off in savings when using an improved stove, despite the higher initial cost, as 50,000 units have been sold since 2013. Using improved stoves, customers using charcoal for fuel are able to save around 2.2 euros per month, which pays back the cost difference to a traditional stove in only one month.
Satisfaction on fuel savings and durability tend to be very high, based on the results of marketing surveys conducted by the project, whereas surveys at the start of the project show satisfaction levels on the common stoves were quite moderate.
Retailers are reporting that more customers are asking specifically for ICS. “I am able to make more of a profit on the improved stoves,” Ms. Sookthavee adds, “because customers are willing to pay more for the quality now. People also tell their friends and family that they can buy the stoves at my shop.” The project is to continue engaging retailers, as a key link in the supply chain, to actively promote the product and its benefits.
Also in a few cases counterfeits (or look-alikes) have even been spotted on the market, proving that the brand has achieved a level of prestige. In 2015 the project managed to register its brand with its distinct blue logo, as a legal trademark.
Author: ICS team
Editor: Silvia Sartori