Market resource gaps

Abstract

The needs of low-income consumers in emerging markets often go unfulfilled. In this article, we integrate literature related to cocreation, market separation, and the 4As (acceptability, affordability, accessibility, and awareness) into a new conceptual framework on market resource gaps. The framework allows firms to determine the nature and extent of the gaps between themselves and consumers that limit consumption while simultaneously identifying resources for potential integration into new solutions that can resolve these gaps. The framework also recognizes market dynamics and can be employed iteratively to enable continuous innovation.

Keywords

emerging markets low-income consumers 4As cocreation market resource gaps

Low-income consumers in emerging markets face difficult trade-offs, as they allocate their limited resources across an often subpar set of alternatives. As a result, there is a general lack of consumption as many basic needs go unfulfilled. It is now widely accepted that firms cannot ignore these consumers (Acosta et al., 2011; Aggarwal 2006; Burgess and Steenkamp, 2006; London and Hart, 2004; Prahalad, 2004, 2012; Sheth, 2011), but many are still unsure how to approach these markets while others have tried and failed. Karnani (2011) has shown that if a firm cannot profitably serve these low-income consumers, they tend to retarget their efforts toward higher income levels, relegate the project to corporate social responsibility, or exit the market completely, none of which improves consumption significantly for low-income consumers. Firms that do achieve success tend to adopt more customer-centric strategies, understanding and embracing local market differences and then working with local actors to cocreate innovative new solutions (e.g. Eyring et al., 2011; London and Hart, 2004; Prahalad, 2012; Rangan and Rajan, 2007; Vachani and Smith, 2008; Weidner et al., 2010). Along the way, new frameworks have emerged that simultaneously guide practitioners toward success while advancing marketing theory (Burgess and Steenkamp, 2006; Sheth, 2011; Pels and Sheth, 2016). It is our hope to do the same with this article.

Cocreation is increasingly seen as key to innovation and consumption in emerging markets. Integrating a firm’s resources with consumers’ resources can lead to mutually beneficial solutions (London, 2011; London and Hart, 2004; Prahalad, 2012; Ritchie and Sridharan, 2007; Sridharan and Viswanathan, 2008; Vachani and Smith, 2008; Weidner et al., 2010; see also Mason et al., 2013). Firms benefit from more efficient resource allocation and profit potential, which should not only encourage them to maintain and grow their involvement but should also attract new firms to enter these markets. This in turn provides low-income consumers with greater access to affordable and acceptable solutions, which should increase their capacity to consume and improve their standard of living. However, firms still struggle to identify the adequate level of cocreation that achieves these benefits.

New research on managing cocreation activities points to the need for an outside-in approach that begins with consumers (Frow et al., 2015; Payne et al. 2008). We develop a conceptual framework that enables firms to achieve two goals: (1) determine the nature and extent of gaps between firms and consumers that inhibit consumption and (2) identify resources for potential integration into new solutions that can resolve these gaps and facilitate consumption. In accordance with Prahalad (2012), we focus on the 4As framework, defined here as acceptability, affordability, accessibility, and awareness (Sheth and Sisodia, 2012). However, we repurpose the 4As and integrate them with theory on market separations (Bartels, 1968) and cocreation (e.g. Payne et al., 2008; Prahalad and Ramaswamy, 2004; Vargo and Lusch, 2004). The resulting framework, while ideal for emerging markets, can also be applied more broadly to analyze cocreation in any market situation.

The article is organized as follows: A review of the literature is followed by extending the 4As framework to assess existing solutions in new markets and identify paths to greater customer value; next, we develop our main conceptual framework and address framework dynamics; finally, we conclude with theoretical and practical implications, followed by limitations and future research.

Literature review

Solutions

Throughout the article, we use the term solution rather than product (e.g. Kotler and Keller, 2012) or value proposition (e.g. Lusch and Vargo, 2014). First, it does not inherently make any assumptions about origination and thus can capture varying degrees of cocreation between a firm, consumer, and other actors or entities. Second, it can incorporate traditional marketer activities (e.g. marketing mix) as well as nonmarketer activities. Third, it is broad enough to include informal market alternatives, such as counterfeit, knockoff, or second-hand items as well as nonmarket alternatives, such as making, borrowing, or sharing (Araujo, 2013). There is also precedent for using the term. Sridharan and Viswanathan (2008: 459) write about subsistence contexts where “the problem of survival suggests a need to develop solutions for consumers, not products per se.” They also discuss marketplace solutions within the context of “symbiotic relationships between buyer and seller” and recognize the value cocreation process (see also Prahalad, 2012). Meanwhile, Lusch and Vargo (2006) include the term among the service-dominant logic lexicon, and later Vargo and Lusch (2014) state that “the business of business is the ongoing discovery of solutions to contextually changing, human problems” (p. 242; see also Frow et al., 2015).

Value cocreation

The literature on value cocreation is extensive (e.g. Frow et al., 2014; Humphreys and Grayson, 2008; Lusch and Vargo, 2014; Payne et al., 2008; Prahalad and Ramaswamy, 2004; Saarijarvi, 2012). The basic premise is that firms do not simply produce value for consumers, but rather firms and consumers cocreate value. During cocreation, a variety of resources are integrated ranging from physical and financial to knowledge and skills. This integration of resources can create value not only for the customer but also for the firm, third parties, communities, or even the planet (Humphreys and Grayson, 2008; Tapscott and Williams, 2006; Vargo and Lusch, 2008). For example, brewing coffee, assembling furniture, or riding a bike provide value-in-use through personal benefit or reduced sacrifice for the consumer. Alternately, suggesting design ideas, spreading product recommendations, or contributing to Wikipedia provide exchange value, as they enable consumption by others and help firms be more successful. Going forward, we do not distinguish between types of value cocreation but use the term in a broader sense to recognize that value is created through interactions between firms and local actors. Instead, we focus on identifying resources and needs for cocreation activities.

Cocreation is especially relevant within the context of emerging markets where consumers’ economic resources may be significantly constrained, despite having ample social, cultural, and physical capabilities (e.g. Arnould et al., 2006; London and Hart, 2004; Ritchie and Sridharan, 2007). Cocreation occurs across the entire value chain (Frow et al., 2015; Saarijarvi, 2012; Vargo and Lusch, 2014). When key value chain elements are absent, such as production, communication, or distribution, consumers and other local actors are increasingly called upon to contribute their own resources to these roles (Frow et al., 2015; Saarijarvi, 2012; Vargo and Lusch, 2014). Consider the community sanitation initiative in Bangladesh (as described by Weidner et al., 2010), where local actors were involved in both codesigning and coproducing the latrines using locally available materials. Another example of a win–win solution comes from Project Shakti (Rangan and Rajan, 2007), where Unilever empowered village women in India as micro-entrepreneurs to provide education, sales, and distribution for Unilever in remote villages. As with these examples, we encourage firms to take an inclusive stance in cocreation activities (see Acosta et al., 2011; London and Hart, 2004; Mason et al., 2013; Prahalad, 2012; Simanis and Hart, 2008).

4As framework

The 4As represents a set of outcomes that customers value and that, when all are fulfilled, increase the likelihood of marketplace success. The most comprehensive discussion to date of the 4As comes from Sheth and Sisodia (2012; see also Anderson and Billou, 2007; Kamande and Jarhult, 2013; Prahalad, 2012; Sarkar and Pareek, 2013) who incorporate two dimensions for each of the 4As as follows:

Acceptability refers to meeting and exceeding the needs and expectations of customers on functional dimensions (e.g. capabilities, quality, and reliability) and psychological dimensions (e.g. brand image, style, social and emotional value).

Affordability refers to customers’ economic ability to pay (e.g. income, financing) and psychological willingness to pay (e.g. perceived value, fairness).

Accessibility refers to customers’ ability to acquire and use the product and is captured by the product’s availability (e.g. supply) and convenience (e.g. time and effort to acquire and use).

Awareness refers not only to brand awareness (e.g. brand recall and associations) but also to product knowledge (e.g. understanding of relevance and benefit).

Comparisons to the 4Ps (product, price, place, and promotion) are inevitable. While the 4Ps focus on activities performed by the firm, the 4As focus on outcomes perceived by the customer. According to Sheth and Sisodia (2012: 47), the 4As “offer managers a set of conditions that must be fulfilled.” If even one A is not sufficiently high, the offering will ultimately fail even if the other As are exceptional. Further, there is not a one-to-one correspondence between the Ps and the As. Any one P can impact various and multiple A outcomes (see also Kamande and Jarhult, 2013). For example, a change in price not only affects affordability but can also influence acceptability (e.g. brand image or social value), accessibility (e.g. retailers’ likelihood to stock), and awareness (e.g. increase word-of-mouth).

Framework development

Existing solution assessment

The 4As framework has predominantly been used to evaluate and improve a firm’s existing marketing activities (Anderson and Billou, 2007; Prahalad 2012; Sheth and Sisodia, 2012). However, acknowledging that value is perceived by consumers through the consumption experience (e.g. Lusch and Vargo, 2014), and the 4As represent outcomes that consumers value, we argue that the 4As can provide a means for assessing cocreated value in market solutions. As such, we extend the 4As to a new use assessing solutions and opportunities in a market a firm might wish to enter.

The first step is to determine what solutions exist in that market. For low-income consumers in emerging markets, not only are resources limited but markets are often underdeveloped, so we must include informal market and nonmarket solutions (Araujo, 2013). Further, consumers may need to be given a frame of reference that is broader than in developed markets. For example, rather than asking about making a phone call in markets where there are no landlines and few cell phones, instead ask about communicating with someone at a distance, which could include writing a letter, sending a messenger, or arranging to meet face-to-face.

Once the possible solutions are known, firms can determine the extent to which consumers perceive value associated with each of the 4As for each solution (Sheth and Sisodia, 2012). The resulting scores can then be plotted to better understand where existing solutions are succeeding and failing. In the hypothetical scenario portrayed in Figure 1, letter writing (Solution 1) scores high on awareness, affordability, and accessibility but low on acceptability. In contrast, individual cell phones (Solution 3) score high on acceptability but low on access and even lower on affordability. Using this analysis, a firm can identify combinations of As that should provide more total value to consumers, resulting in solutions like the Grameen Village Phone (Solution 4), where one consumer owns a mobile phone and sells the service to members of the community (Anderson and Kupp, 2008).

Figure 1.

Hypothetical assessment of existing solutions.

Firms that use top-down strategies can also ask consumers how solutions from their own portfolio would be valued if made accessible in that market. If low scores are obtained, they can make necessary modifications to their marketing program prior to entering the market. Building on the notion that a single marketing activity can affect multiple A outcomes (Sheth and Sisodia, 2012; Kamande and Jarhult, 2013), the corollary implication is that a low score on a single A outcome can be addressed through various P activities. For example, a low score on affordability does not imply that lowering price or providing financing are the only paths to improvement. Instead, firms can enhance perceived value through either product or promotion activities to improve psychological affordability. Modifying place is also an option, as reducing acquisition time and effort can free up employable time and increase income. With a variety of action paths, the challenge for marketers becomes determining which activity not only provides the greatest potential value to consumers but also provides positive financial value to the firm.

In summary, in this section, we propose a conceptual extension of the 4As framework. However, it is not without limitations, as it is more amenable to top-down strategies (London and Hart, 2004; Viswanathan, 2011; Weidner et al., 2010) and falls short of identifying resources that could be integrated into innovative, new solutions. To address these limitations, we next develop a framework built around assessing market resource gaps.

Market resource gap assessment

Low-income consumers in emerging markets face resource constraints that limit their opportunities for consumption. Related to this, Bartels (1968) wrote of separations that exist between consumers and producers that prevent consumption from occurring. He argued that “(t)he purpose of marketing is to resolve or remove these separations and to cause or permit consumption to occur” (p. 32). The separations serve to “describe the market, determine the marketing task, and predetermine the requisite marketing functions and structure” (p. 31) for a particular context. We find Bartels’ theory to be especially fitting to address the lack of consumption occurring in these resource-constrained environments. The framework we propose modifies and extends his framework in three important ways.

Bartels (1968) viewed separations as existing between producers and consumers. Incorporating value cocreation, we reframe the key actors as firms and consumers existing within an ecosystem (Frow et al., 2014; Mele et al., 2015).

Rather than separations, we use the term market resource gaps to reflect that the market is made up of resources associated with firms and consumers (e.g. Frow et al., 2014; Vargo and Lusch, 2004).

Bartels (1968) described separations as occurring along physiological, economical, temporal, spatial, and informational dimensions. We replace these dimensions with the 4As (Sheth and Sisodia, 2012), which correspond to acceptability, affordability, accessibility (both temporal and spatial), and awareness. With their subdimensions, they provide a more comprehensive understanding of the market situation.

To illustrate, consider a gap with a group of consumers on one side and the firm on the other, each with various resources at their disposal (see Figure 2). If they combine their resources, they can more effectively bridge the gap to enable consumption. Adding a layer of complexity, consider that there is not one but four market resource gaps, one for each of the 4As. Any new solution must connect the two sides on all 4As for the bridge to be strong. Next, consider that these market resource gaps exist in an ecosystem with numerous other market and nonmarket actors, each with potential resources for cocreating solutions to bridge the gaps (Frow et al., 2014, 2015). This is the situation our framework is designed to address. In the next sections, we develop three key aspects of our framework related to the actors, identification of resources, and the 4A dimensions used to assess market resource gaps.

Figure 2.

Market resource gaps framework.

Actors

Although Bartels (1968) viewed separations as existing between producers and consumers in a particular social environment, he recognized that marketing is a process undertaken by society at large. He categorized participants into numerous roles (e.g. manager, employee, competitor, consumer, etc.) and identified the process as involving interactions and flows between economic and social entities. While his theory is not entirely inconsistent with current marketing theory, it stops short of treating consumers as active players who jointly produce value with the firm (Humphreys and Grayson, 2008; Payne et al. 2008; Prahalad and Ramaswamy, 2004; Vargo and Lusch 2004). To incorporate current theory, we reframe the gap as between a firm and consumers embedded within a market ecosystem that includes numerous market and nonmarket actors (e.g. Frow et al., 2014, 2015; Vargo et al., 2008). Value cocreation occurs at the intersection between firms, consumers, and these other actors. Note that consumers in our framework represent a specific segment of consumers existing in a specific market context. Given the heterogeneity across consumers and markets, the market resource gaps a firm faces in one situation may not readily transfer to other situations. Rather, separate gap analyses are needed for each segment of consumers a firm might wish to target.

Resources

It is generally understood that successful solutions in emerging markets require an in-depth understanding of the local market context (London and Hart, 2004; Pels and Kidd, 2012; Prahalad, 2012; Vachani and Smith, 2008; Viswanathan 2011; Weidner et al., 2010). We maintain that translating this understanding into market resource gaps between the firm and consumers enables the firm to both better understand the factors limiting consumption and then work toward improved and potentially more sustainable new solutions that resolve these gaps and facilitate consumption. While the local context is often seen as having large resource deficits, such as no or irregular electricity, a dirty river for water, or un/underemployment with low and irregular wages, it is important to recognize that these contextual characteristics include assets available for cocreation (Sheth, 2011; Simanis and Hart, 2008; Viswanathan 2011; Weidner et al., 2010). Reframing the context in this manner, the lack of electricity may mean kids play outside rather than on a computer, the dirty river could be used for transportation or hydroelectricity, and the low employment may cause consumers to value time and effort differently, thereby increasing the availability of human capital for cocreation activities.

The local context can be seen as containing two types of resources: market resources (e.g. associated with competitors, suppliers, financial institutions, retailers, etc.) and nonmarket resources, whether private with privileged access (e.g. associated with one’s person, including knowledge, skills, and belongings) or public with shared access (e.g. associated with government or nongovernmental organizations, such as roads, rivers, and public services; Vargo et al., 2008). We note two significant implications from this. First, firms must consider nonmarket resources available to low-income consumers, such as social, cultural, and physical capabilities (Arnould et al., 2006; London, 2011; London and Hart, 2004; Ritchie and Sridharan, 2007). Resources that developed markets consider waste also hold value; cow dung can become fuel and product packaging can be repurposed into a bowl, a kite, or even a latrine (Viswanathan 2011; Weidner et al., 2010). Recognizing this, Coca-Cola gave away custom bottle tops in Vietnam that turned used Coke bottles into spray bottles and other useful objects (Soat, 2014). Second, all social and economic actors as well as items in the market context may be a resource for creating new solutions (Lusch and Vargo, 2014). The creators of the Soccket (unchartedplay.com) recognized that kids playing outside due to a lack of electricity are a resource and developed a soccer ball that captures the energy created by rolling a ball around. After 1 hour of play, the ball can provide light for up to 3 hours. Consider some of the resources here: the local kids (nonmarket, private), a local field (nonmarket, public), and the ball (market). Integrated, they initially create entertainment and later light, which in turn becomes a resource for yet another solution.

To create solutions like the Soccket, the people behind it needed to understand the range of resources on both sides of the gap. In this case, the creators were undergraduates studying innovation at Harvard University (Boyd, 2012; unchartedplay.com). One had family in Nigeria and knew firsthand about the resource assets and deficits in that context. Although the students lacked engineering expertise or the necessary business assets, they determined how to obtain such resources within their own context and integrate them with Nigerian resources.

Dimensions

The Soccket provides a great example of a new solution that was derived from understanding resources available on both sides of the gap, but at this point only addresses acceptability. Given that all 4As are necessary for consumption (e.g. Sheth and Sisodia, 2012), we maintain that firms have a better chance of success if they understand the market resource gaps that exist related to each of the 4As, including their subdimensions. Starting with acceptability, Bartels’ (1968) physiological separation captures functionality but does not reflect psychological dimensions. Although physiological needs are, as per Maslow, generally seen as requiring fulfillment before moving to high-order needs, there are numerous examples of low-income consumers spending on products that fulfill higher order needs related to belonging, self-esteem, and self-actualization even while some physiological needs go unfulfilled (Viswanathan, 2011). Subrahmanyan and Gomez-Arias (2008) explain these spending patterns based on the importance of social capital and family, cultural differences, and compensatory consumption. They conclude that providing linkages between basic and higher order needs helps products “gain acceptability among consumers in this segment” (Subrahmanyan and Gomez-Arias, 2008: 409, emphasis added). In contrast, consider the Tata Nano. Designed for low-income Indian consumers’ functional needs, it was deemed cheap and uncool and as such did not fulfill its target markets’ belonging and self-esteem needs, causing low initial sales (McLain, 2013). To prevent such missteps, we advocate using acceptability, with its functional and psychological dimensions, to define market resource gaps.

Looking at affordability in the context of low-income consumers, the economic gaps on ability to pay are obvious; not only are incomes low but wages may be paid daily and work may be irregular. Then, there are the mechanics of payment, especially in cash-based markets with limited access to banks, although mobile financial services are beginning to narrow this gap. Equally important are the psychological gaps related to willingness to pay, which is subjective and context dependent (Steenkamp et al., 2010). On the latter, firms must incorporate how consumers perceive value in existing market and nonmarket solutions. While price may take on more prominence, they are willing to pay more if they perceive value, especially if it affects their quality of life (Sridharan and Viswanathan, 2008; Subrahmanyan and Gomez-Arias, 2008). Consider General Mills’ success with flour in India. They recognized that the price consumers are willing to pay for Pillsbury flour is influenced by unpackaged and unbranded alternatives, which made up 95% of the market and included grinding flour from whole grains (Mukherji, 2014, personal communication; www.generalmills.co.in). Deeper examination also revealed gaps related to nutrition, time constraints, and providing for one’s family. General Mills responded by adding fiber and iron to their flour. Ads emphasized convenience while allowing moms to continue expressing love for their families through freshly baked roti bread. By increasing functional acceptability without compromising psychological acceptability, the perceived value of Pillsbury flour increased as did willingness to pay.

Some of the larger deficits in emerging markets are associated with accessibility (Acosta et al., 2011; Anderson and Kupp, 2008; Vachani and Smith, 2008). Primarily, due to inadequate infrastructure (e.g. roads, electricity, banking, retail), firms face challenges supplying products to consumers, especially in rural areas. Further, distribution can be sporadic and/or inconvenient. However, these environments are not without assets, especially given a population that is un- or underemployed, often highly motivated and rich in cultural knowledge and social networks. Within the agriculture industry in India, ITC recognized a number of resource gaps that impacted not only the resource flow from firms to consumers but also from farmers to agriculture buyers. In response, they developed e-Choupal, a bidirectional distribution network that integrated existing local resources and connected them to markets beyond their village (London, 2011; Vachani and Smith, 2008). They hired local farmers as village representatives and provided each with a computer, solar panel for electricity, and satellite dish for connectivity, all set up in the farmer’s existing home. For a couple hours each day, they sent information on the previous days’ local and international commodity prices, plus the minimum price ITC would offer the next day at their procurement centers, which provided an alternative to the government-sanctioned traders. This information was shared with local farmers along with weather forecasts and insights on farming practices to improve yield. Representatives also performed other tasks, like grading the quality of farmers’ produce to provide a tentative price as well as selling ITC and non-ITC brand products (e.g. salt, flour, batteries, and clothing) to farmers and other villagers. The net result was a solution that incorporated numerous local resources and benefited farmers, the community, and ITC. Vachani and Smith (2008: 71) concluded that firms should “selectively bridge the infrastructure gap” by carefully considering existing resources, especially local entrepreneurs, and identifying solutions that are appropriate for the specific task at hand. We could not agree more.

Awareness is somewhat unique compared to the other As. Brand awareness and product knowledge act more as facilitators than drivers of value (Sheth and Sisodia, 2012). When considering low-income consumers in emerging markets, this factor becomes more complex. Consumers could be unaware of a firm’s brand, the entire category, or even their own needs (London, 2011). Further, awareness does not guarantee understanding of the benefits or importance of the solution. Consider iodized salt in Africa and India. Although accessible and economical, consumers were not fully aware of iodine or the health implications from iodine deficiencies (Prahalad, 2004). To resolve this gap, companies such as Unilever and ITC needed to educate consumers on how iodized salt lessened their risk of becoming ill (Vachani and Smith, 2008). Resource gaps in the means of communication can also exist, as traditional media resources may be limited and language barriers may be present. Equally important is consumers’ ability to process the message. Literacy and education levels can be low, and if malnutrition is present, cognitive capacity may also be an issue (Pels and Kidd, 2012; Viswanathan, 2011). Factor in time and attention constraints, and there is an issue of motivation to process the message. So how can firms overcome these gaps? With few media outlets in Africa, United Nations International Children’s Emergency Fund was used to help educate consumers about iodized salt (Subrahmanyan and Gomez-Arias, 2008). Indian cola company Thums Up addressed resource gaps related to literacy, cognitive capacity, and multiple languages by creating a visual brand symbol of a thumbs-up (Rao, 1998). Firms can also consider resources used to cope with illiteracy and other issues, such as relying on strong social networks (e.g. Sridharan and Viswanathan, 2008). The village women in Hindustan Lever’s Project Shakti (Rangan and Rajan, 2007) and ITC’s farmer representatives (Vachani and Smith, 2008) proved to be such a resource. As trusted members of society, they could improve awareness and understanding, as well as distribution, thereby facilitating consumption and a higher standard of living.

Framework dynamics

As described in the preceding section, our market resource gaps framework uses the 4As and their respective subdimensions to provide a more comprehensive assessment of the gaps and resources that exist within a local market ecosystem. At this point, existing frameworks (e.g. Frow et al., 2015; Saarijarvi, 2012) can help firms determine which cocreation activities best fit their strategy, allow them to optimize resource allocation, and provide mutually beneficial solutions. However, once gaps are bridged and consumption begins to occur, new gaps are likely to emerge. Sheth and Sisodia (2012) argue that customers’ perceptions of the 4As are dynamic. The presence of a new market solution can shift perceptions of what is acceptable, affordable, convenient, top of mind, and so on. As a result, they argue that firms must continually audit how their solutions are being perceived by consumers and respond accordingly. Similarly, the cocreation literature considers resources to be dynamic (Lusch and Vargo, 2014). The introduction of a new resource or solution impacts the way value is perceived within the ecosystem (Frow et al., 2014). Further, new solutions themselves become resources available for integration into yet other new solutions.

One benefit of our market resource gaps framework is that it can be applied iteratively. While we propose using the 4As to assess an initial market situation prior to cocreating new solutions, the 4As framework was originally intended to assess the outcomes of existing market solutions (Sheth and Sisodia, 2012). Considering both these uses, a single assessment of the 4As can both track progress on objectives from past activities (i.e. outcomes) and identify gaps and opportunities for future activities (i.e. situation assessment).

Tigo, a mobile service provider operating in Africa and Latin America, provides an excellent illustration (Marincioni and Salvarezza, 2013, personal communication; www.millicom.com). Recognizing the rapid pace of change for both technology and emerging markets, Tigo measured their 4A indicators 2–4 times a year, depending on market maturity. Each assessment cycle allowed them to capture their progress in fulfilling the 4As as well as identify new resource gaps. In one such assessment, despite finding growing market penetration, they also discovered critical moments where their existing solution failed. Specifically, they learned that customers sometimes run out of credit during an important conversation or an emergency. In these zero balance moments, customers experienced multiple resource gaps that were innate to prepaid plans in cash-based marketplaces. On acceptability, not only does the phone not function, but customers felt unprotected. One Tigo customer compared the feeling to running out of gas and being left in the middle of nowhere with a car that does not work. On accessibility, although the signal and phone were available, the time and distance to a POS location made buying credit inconvenient. Similarly, customers were highly willing to pay but lacked a method to pay, suggesting an affordability gap. Finally, although customers were aware of the brand and their urgent need, they did not know of a better solution because at that time none existed. Tigo acknowledged these gaps and recognized that a solution needed to build from resources available at that critical moment. The solution involved enabling customers to receive a small, short-term loan from either Tigo or someone in that customer’s social network. Customers could acquire this loan, equivalent to about US$0.20, on the spot using a new option on their phone’s menu and then repay the loan along with a small fee the next time they purchased credit. The cocreated solution integrated a variety of resources, including consumers’ social networks, to create still higher levels of mutually beneficial consumption.

Conclusions and implications

Our overarching goal in this article has been to facilitate consumption among low-income consumers in emerging markets by helping firms better understand how these consumers perceive value, the gaps that prevent consumption, and the resources available for cocreation of new solutions. Because economic resources tend to be scarce and consumption tends to be limited, this context forces us to incorporate informal and nonmarket solutions as well as market and nonmarket resources that extend to consumers’ cultural, social, and physical capabilities (Arnould et al., 2006; London and Hart, 2004; Lusch and Vargo, 2014; Ritchie and Sridharan, 2007). Further, we recognize that new solutions must be mutually beneficial for consumers and firms in order to be sustainable (Karnani, 2011; London, 2011; Ritchie and Sridharan, 2007). For consumers this means obtaining value on each of the 4A outcomes (Sheth and Sisodia, 2012), while for firms this means receiving at least a modicum of economic value, as that provides motivation to maintain and grow their presence in these historically neglected markets.

We first propose a conceptual extension of the 4As framework (Sheth and Sisodia, 2012) to determine the extent of value consumers associate with existing solutions in a market and identify opportunities to provide greater value. Further, when a firm seeks to improve a specific A outcome, we argue that they are not limited to a single P action path, as each P can impact any one or multiple A outcomes (Sheth and Sisodia, 2012). Instead, marketers must determine which action path has the greatest potential to benefit both customers and firms. We view this approach as appropriate for firms that employ top-down strategies focused on market adaptation over radical innovation strategies (Pels and Sheth 2016).

In our main market resource gaps framework, we integrate theories related to value cocreation (e.g. Payne et al., 2008; Vargo and Lusch, 2004), market separations (Bartels, 1968), and the 4As (Sheth and Sisodia, 2012), this time deploying the 4As in an entirely customer-centric manner to assess market situations from the bottom-up. Given that the 4A outcomes are necessary for consumption, the framework identifies resource assets and deficits associated with each A outcome. The focus is primarily on resources within consumers’ local context, which are then used to determine the nature and extent of the gaps between consumers’ resources and a firm’s resources that limit consumption, similar to Bartels’ notion of separations. The firm’s task then becomes cocreating solutions that can bridge these gaps to facilitate consumption. Although we illustrate our framework using examples from firms that faced market resource gaps and bridged those gaps by integrating resources from firms, consumers, and other actors, we stop short of recommending processes to identify and cocreate these new solutions. At this point, our framework begins to intersect with research on innovation through cocreation (e.g. Frow et al., 2015; London, 2011; Prahalad, 2012; Weidner et al., 2010), which our framework is intended to complement. By focusing on the 4As and their respective subdimensions during the market resource gap assessment, the set of identified resources for potentential integration into new solutions are not only comprehensive, but also organized around the 4A outcomes to be achieved. It is then up to managers to use these other frameworks to determine the activities for cocreation, where they occur along the value chain, and the optimal degree of resource integration to achieve mutually beneficial solutions. Over time, new gaps will likely form as resources and value perceptions evolve (Lusch and Vargo, 2014; Sheth and Sisodia, 2012) at which point our framework can be applied in an iterative manner to assist firms as they strive for continual improvement and growth.

Before concluding, we are pleased to note that the World Bank uses a market gap framework to optimize resource allocation for broadband development in emerging markets (Muente-Kunigami, 2010). As with our framework, they recognize that resource constraints create gaps that prevent consumption, but differ in the breadth of outcomes and resources considered. Where we consider all 4As, they focus on the level of availability that could be achieved based on the cost to supply relative to demand, specifically household income. In terms of resources and solutions, they focus on relatively standard private enterprise and government actions, while we advocate for integrating a wider variety of resources in the co-creation of innovative, new solutions.

Limitations and future research

In developing this framework, several simplifications were made that need to be acknowledged. First, we did not address the fact that firm and consumer contexts are likely to overlap. Second, we focused on a single firm when in reality there are often multiple firms associated with multiple market resource gaps. Although firms can and do cooperate, more often they compete not only for consumers’ economic resources but increasingly for their non-economic resources, which in the case of physical capabilities can eventually be exhausted. Third, while we acknowledge that consumers can become employees or agents for a firm, our framework does not incorporate the various roles consumers play (e.g. Sridharan and Viswanathan, 2008). Therefore, future research should investigate the implications associated with operating within market ecosystems with multiple, interconnected actors who play a variety of different roles (e.g. Frow et al., 2014; Mele et al., 2015).

Although our framework developed from a desire to improve consumption opportunities and general well-being for low-income consumers in emerging markets, its fundamental premise should be equally applicable for consumers with high incomes and/or living in developed markets. With the relative plethora of resources and solutions in these contexts, consumption activity is more abundant. Further, the ecosystem is likely to be more stable, resources more known, and competition more intense, shifting the challenges associated with creating more competitive offerings through cocreation activities (Frow et al., 2014, 2015). We hope that future research will examine these assumptions more closely and recommend improvements to the framework.

Finally, given the innate heterogeneity and rate of development in emerging markets, firms must recognize that which resources are abundant and which are scarce varies not only from developed to emerging markets but also between and within emerging markets (Acosta et al., 2011; London and Hart, 2004; Pels and Kidd, 2012; Prahalad, 2012). Therefore, not only should the framework be applied iteratively over time, but it must also be reapplied for each market a firm wishes to engage. For example, resources associated with outcomes like accessibility can vary greatly from urban to rural areas within a country. However, similar patterns of resources also exist across market contexts (Mason et al., 2013), allowing firms to become adept over time at recognizing market resource gaps. As firms develop a suite of solutions for emerging markets, a top-down approach becomes more useful, assessing which solutions provides the most value to consumers and where adaptation and innovation is necessary.

In conclusion, these are still early days in emerging markets. Firms are continually learning how to cocreate mutually beneficial solutions in these environments. We believe that our framework not only advances marketing theory, but can also direct practitioners to resources and gaps in emerging markets that, once bridged, can facilitate consumption and improve quality of life for billions of low-income consumers.

Footnotes

Acknowledgements

We would like to thank Marcela Marincioni, Fernando Salvarezza, and Tu Duong from Tigo for generously sharing their time and information. We also extend thanks to Tomas Kidd, C. Page Moreau and Sandra Rathod, as well as the editors of this special issue and three anonymous reviewers.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

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