Hi,
Basically, you need to understand how much the government is saving (and can potentially redirect on subsidizing), how much the customers are willing to pay now and how you can minimize the gap. I would approach this particular case in the following way:
1) Product comparison
- Prices of the standard / LED Bulb
- Value proposition of the standard / LED Bulb (replacement rate, energy efficiency, etc)
- Costs per unit
2) Government potential savings (sources of subsidies)
- Waste utilization savings / costs
- Energy consumption savings (If energy subsidized)
- Health savings (If better ecology)
- Other savings
3) Customer willingness to pay
- Cost savings for the household (replacement rate, energy efficiency, etc)
- Additional value (More light, etc)
- Ability to pay (Maximum payment they can afford, share in spending)
- Adoption measures and scalability
4) Options to reduce the gap / increase the value of the pie
- Other funding sources (Available budget, funds, etc)
- Cheaper production (Localized production with benefits / tax-breaks from the government, state-owned production, Public-private partnerships, Centralized purchasing, etc)
- Cheaper distribution (Same as with production)
- Payment options / deals (Microloans, promo-pricing, etc)
Best!
(edited)
Vlad, thanks for your answer. Would you agree this is case looks like a New Product Promotion for the sake of Cost Reduction ?
Unfortunately I don't know this case