Aerogel: Business Model #2
Week #30: How To Would Scale In Mexico (Part 2)
My intentions for writing these articles are:
- Explain technical information about aerogels in simple terms (to the public)
- Store information and habits for my future self and others (in <7 minutes)
Coolio? Sweet. Enjoy the series :-)
Business Model Canvas [BMC] | (Recap) 📊
Projects like these involve an immense amount of iteration.
The mentors told us to go back to the drawing board… again.
After talking with mentors in Mexico & water spin-off companies in Peru…
There are two potential business models for implementation in Mexico.
The first business model was discussed here. 👇
Aquaperla Series: Business Model #1
Week #29: How We Would Scale In Mexico (Part 1)
The second business model will be discussed in this article.
Boom. Let’s go.
Why Should We Iterate The BMC? 🔄
The previous business model involved sub-level local distribution from supermarkets in Mexico.
From the results, this business model can’t scale up in 500 villages in Mexico & Latin America.
How would you manage tons of distributors?
Where is the team culture?
One lesson I learned from my Isla Urbana mentorship (an NGO from Mexico City on water collection):
“To build a respectable company/organization, you must build a culture first. The best companies in Mexico are treated like a culture, a religion. Telcel, Pelon Pelo Rico, PEMEX, they’re everyhere… and be independednt from the puppet masters, the hands of the government.”- H.G.
That’s deep. 😵
Business Model #2 📈
The previous business model involved selling filter kits to retailers, who would sell them to the final customer.
An individual is also a target customer, but perhaps people prefer to stop by their local home department store.
But what if you sold directly to the customer?
It is feasible!… with a few catches.
Let’s begin with the different ways of payment.
- Payment By Installment
- Individual Units / Package Units
- Charge by type of customer / Cross-Subsidizing
1️⃣ Payment By Installment
Payment by installment is an agreement of dividing up the cost of the full purchase over x amount of time.
Example: Sunculture’s water pump costs $1200 USD in Kenya. Farmers can do a payment by installment of $40 USD over 30 months until they fully paid the water pump.
You would offer a series of payments to fulfill the full cost through “payment by installment”.
Microcredits are small loans made to low-income people who can’t access/be granted loans by traditional banks.
From Feburary 2023, consider this option for people making below <$5 USD/day…
This option is a bit tricky.
For now, seek an alliance with a microfinance company (i.e. Compartamos, Finconúm) to use these microcredits for the purchase of water harvesting systems.
3️⃣ Individual / Package Units
The individual unit would provide the filters & personalized material/content for the target customer.
The package unit is a formulation (bulk) of a mix of products, services, and complements at a lower price than the sale of each of these per unit.
Most likely, these would be used by mining companies to extract heavy metal ions or water trucks to attach to their water tanks.
The bulk units would be sold at a higher price than the individual units.
4️⃣ Charging By Type Of Customer & Cross-Subsidizing
The modification of prices so that the revenue from a sale can finance rebates or losses on other sales.
This option is one that you would use in an emergency or if necessary. You personally would not use this option.
Here’s how it works:
You would sell an adaptable water purifier for individual/water trucks at a higher price to a target market of the upper-middle and upper-middle socioeconomic class.
While at the other end of its target market, in the lower class, it sold the same product for a slightly lower cost.
A Few Precautions ⚠️
Some things that were discussed with mentors, families from Mexico & Isla Urbana:
1️⃣ People are hesitant if a project involves the government.
Quick story (2019): In San Jose Del Progreso, Oaxaca, Mexico, a Vancouver-based mining company entered the town after the mayor accepted them to dig through their land for silver in exchange for $2 Million MEX. A few months later, he & his sons are assassinated. Half the village depends on bottled water to survive. It’s dangerous to enter now.
2️⃣ People already build trust & stick with products that their family use.
When a new product arrives on the market, people find other things that they know to compare it to. But when it’s a new product, they have zero idea of how to evaluate it.
This is when intense education about the product is crucial (especially for you.)
Otherwise, people won’t know what it does, how it works, what it is, and its ROI for their lives… and they won’t buy.
3️⃣ The product-price-value dichotomy is something to be aware of.
When something costs more, people perceive its value to be higher.
(This is why I said option 4 is not good.)
Example: There was an experiment with three bottles of wine. The bottle prices were $50, $500, & $1000.
20 people were blindfolded & were asked to taste them and rate the wine quality.
All of them mentioned that the $1000 wine was the best.
The plot twist?
All of the samples were the same wine. The price was the only difference.
Business Model Canvas (BMC) - D2C 💹
This BMC is designed for the direct sale-to-customer of water purifiers.
This is specifically for individuals, not for a community/retail/organization.
But awareness of the product would be the first step towards recognition & acceptance of the value (IF people are constantly seeking an answer/prayer from God).
Content creation plays a monumental role in the outreach…
Attention is monetizable once it’s captured.
You must capture the attention of the target customer if it wants to make an impact in their lives.
The kits are designed with a manual so that people can DIY them… without interference from another individual/pay another person.
Once the filter runs out of filter power, the proprietor can dispose of it via biodegradation & repurchase it online.
To capture attention physically, you would use expositions held by the villages once or twice a month.
To capture attention digitally, you would create content on FB & TikTok (as these sites are where the majority of Mexican users live on.)
Final Thoughts 💭
Time to build momentum on funding.
If there is something that has allowed us to remain a family, it is…
We could have allowed the vision, story, and struggles to knock us out.
You would not tolerate this fate.
If we play games that require a decade-vision, patience, and low arrogance, we will win…
And win. 💡
BMC Draft (D2C) Is Complete. ✔️
© 2023 by Carlos Manuel Jarquín Sánchez. All Rights Reserved.