In this multi-part article, I address the three most crucial ways donors can think like business people to help ensure the success of enterprise development projects.
Women producing pots in a rural area had no plan to let buyers know about their products. They were totally reliant on invitations to trade shows, which only came a few times each year. What should be done to create demand for one’s products?
POINT 2 – Marketing and Sales.
“Marketing” is a term that means the act of creating a demand for a certain product or service. This concept includes advertising, branding, packaging, and pricing. “Sales” refers to the direct interaction between the buyer and seller. In the age of the internet, this direct action can be on-line, but for purposes of our clay pot example, let’s just talk about it as the more personal contact between pot sellers and pot buyers.
Creating a Demand for Your Product
If you are starting a business or starting a project that has the aim of helping someone else start a business, you must ask: What needs to be done to create a demand for this product?
The market survey that you conducted in Step 1 will give you crucial data to find an answer to this question. Using this survey data, one would decide what products to make, where to sell them and how to sell them. You even have some data on pricing, but additional analysis has to be done on this topic (see Part IV).
An Example: From Clay to Soy
Let me digress from clay pots for a moment to give another example of a wonderful, donor-funded project to produce organic soymilk and tofu. The facility is clean and hygienic, the products are exceptional, and the food is placed in every up-market grocery store in town.
Unfortunately, sales are low and the company is producing at half-capacity. The explanation for this is that “the market is small”. My argument is that they have absolutely no idea what the size of the market is because they have not yet done anything to create demand for their product.
As any expat who has lived in a developing country will tell you, one of the biggest concerns with local food is whether it’s safe to eat. In the case of this soymilk, it is, in fact, very safe but no one know this because there has been no advertising, education or outreach campaign to inform on this characteristic. There is nothing on the packaging to tell consumers that it is hygienic, and there is no government or industry certification process that would provide food safety assurances. So, expats see that it’s on the shelf but they don’t buy it because they don’t have the information they need to make the purchasing decision.
The soy products are also perfectly suited for the local market from a social business perspective. In a country that is struggling with malnutrition and searching for agricultural value chains, helping farmers grow organic soy beans that are then turned into a product with 49% protein could be a win-win situation all around. The current marketing outpoint is that the local market is not familiar with soymilk. Thus, the marketing effort must start with an education campaign. Mothers are not going to buy a product for their families when they don’t have any idea what the product is.
Marketing requires that the business do something to create a demand for its product. What that “something” is depends on how much buyers know about the product or the type of product. It also depends on how your buyers make their purchasing decisions. Do they look for ads in the newspaper or radio? Do they go to handicraft markets? Word of mouth? Through other retailers, such as with value added products in the case of flowers in pots?
The marketing method is limited only by the business’ creativity and budget. The stable piece of data, however, is that the marketing must be targeted toward the identified group of consumers who are most likely to buy the product.
Last but not least, how do you identify how much to charge so that the people making the product actually make money? . . . See Part IV.