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Experiment Results

[EXPERIMENT RESULTS] Fiji Fuel Dec 18 - Currency Testing

by
Brian Hu
+1
Submitted by
Brian Hu | 2 months ago | in Sustainable Fuel Consulting

Lean Phase: Revenue Streams, Cost Structure, Solution

 

Assumption: The customers in Fiji are willing to pay more than $60 FJD for the Buka Stove 5.0

 

Results:

 

https://docs.google.com/spreadsheets/d/1xP4AXUYEmsREmNRIo0dWwuXEE5vVGtnMCecgjGyF6YE/edit#gid=0

 

During the experiment, a total of 30 responses were recorded, 25 of which were interacted with in Sigatoka town, 4 in Suva and 1 in Naroro Village. Those in Sigatoka town included residents of Sigatoka as well as some villagers visiting the markets.

 

While only a 43% of respondents expressed interest in purchasing the stove, those that didn’t have an interest in the stove were still able to give a valid opinion on the value of it and commented it may be useful for others. Common reasons as to why a respondent wouldn’t buy the stove included:

  • No need for a firewood stove as they already use kerosene and gas
  • Too expensive
  • Perception about cheap/weak material due to the way it sounds
  • Perception about cheap/weak material due to thinness

 

Common suggestions for improvement included:

  • Ash tray
  • Tray at the feed hole to hold longer pieces of firewood
  • Change the material
  • Larger size of body, hole at the top

 

Among the responses, it was found that 83% thought $60 was still a fair price for the stove while only 43% thought $80 was fair. Some people stated a price would be fair but only with a condition, such as bigger size or different material, and these were not counted as a positive for the data.

 

On average, respondents valued the stove at $60 but the value to respondents who wanted the stove was $67.65 indicating those that actually had a use for the stove would value it higher. However, we also had quite a large range in perceived value from $30-150. In reference to our Success Metric, 43% were willing to pay more for the Buka Stove 5.0 which is just over the Green Light of 40%.




Validated Learning:

 

In conclusion, our assumption that customers in Fiji are willing to pay more than $60 for the Buka 5.0 was validated. As identified in the results above, the stove seems to be moving towards a successful product as 43% is slightly over the Green light of 40% but has definite room for optimisation to increase the appeal of the stove across all customer segments. Valuable feedback was recorded that would give a direction for iteration in future prototypes of the stove but since this design is completely different from the previous Buka 1.0-4.0, the amount of positive response indicates we are moving in a positive direction.

 

Though there is lack of data from direct village visits, the Buka Stove 5.0 is not intended to target that customer segment at the moment (which is the purpose of the 4.0). Due to the inherent cost increase due to more advanced manufacturing techniques and raw materials, it is inevitable that the Buka Stove 5.0 will have a higher price attached to it. As such, the generally more affluent townsfolk were mainly targeted for this study.

 

Next Move:

 

Despite the Green Light result on the success metric ,the December Fuel Team decided we will not be moving forward with distribution and sale but instead continue with optimisation. Taking into consideration the criticisms and suggestions received, the target for Green light seemed to be set too low and more work should be conducted in the prototyping stage to improve the design of the Buka stove 5.0. When an improved design is completed, another Currency Test is recommended using a modified success metric of perhaps 45% or 50% for the Green Light.

Haziq Ahmed 2 months ago

Status label added: Experiment Results

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Alexander Teicher 2 months ago

Interesting results, have you guys had a chance to look through the numbers yet and see what kind of revenue and gross profit you could get by pricing higher with an obviously lower sales conversion. For example is selling at $70 with an assumed conversion rate of 63% (between $60 and $80). Optimising this might lead to a new pricing for the 5.0.
Balancing this with the ethics of serving as many people as possible while also making sustainable profit for minimal effort is not easy.

Interested to see what the iterations look like leading into Jan and whether these can add value as well as improving function.

Keep up the good work!

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Haziq Ahmed 2 months ago

Definitely something we are looking more into however there is some clear feedback that we have gotten on the 5.0 that we want to implement first before doing any further currency testing such as increasing the thickness of the sheet metal.

Hopefully implementing these changes will result in increasing both the price point and the conversion rate

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Lucy Preiss 2 months ago

This is super promising, and good to know that a decent amount of people would be willing to pay a higher amount. Having that bit of wiggle room considering the costs to produce the stove is fantastic. What is the plan for the further iterations? How long is this planning on taking and what are the key things you have to change? Does spending extra on creating a tray at the feed hole or an ashtray justify only being able to sell the stove for an extra few dollars? How do these changes tie into the changes recommended by Ryan from an engineering point of view? Keen to see these babies at their optimal.

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Brian Hu 2 months ago

Right now we are considering the following design changes:
Thicker material - to address the cheap/weak perception
Modified wider outlet - from Ryan's suggestion to improve efficiency
- will look like it can hold bigger pots
Increased outlet height - from Ryan's suggestion to improve efficiency
- larger stove may appear less flimsy
Support tray - to hold firewood for convenience
Removal of legs - from Ryan's suggestion to improve efficiency

These were chosen to integrate engineering suggestions with the perceptions of our customers.

The design is to be completed by the end of this week (Week 3) and getting a physical prototype is hoped to be completed by Week 4 of project, but that is heavily dependent on our manufacturer in Suva. Further testing of the new design would likely be a task for the Jan/Feb 2019 teams.

The tray at the feed hole shouldn't be a problem. In the 4.0 and previous versions, the cut-out for the feed hole was simply bent to form the tray and we would like to use that idea. We believe selling the stove without an ashtray would be like selling an incomplete product and it should be a feature rather than separate addition.

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