Download Marketing Extension

Marketing Extension:
A Guiding Tool for the Foundation
of Rural Enterprises
SDC-Samriddhi project implemented by HELVETAS Swiss Intercooperation
Marketing Extension:
A Guiding Tool for the Foundation of Rural Enterprises
Text writing:
Shamim Hossain
Md. Zahid Hasan
Ms. Ismat Ara Laboni
Ms. Nilufar Sultana
Editing:
Adwyait Kumar Roy
Layout & designing:
Sultan Mahmud
Year of publication:
First edition: December 2005
Second edition: December 2011
Copies available at:
Country Office
HELVETAS Swiss Intercooperation-Bangladesh
House # 2F NE (D), Road 73 (G)
Gulshan-2, Dhaka-1212 Bangladesh
Phone: (880)-2-881 56 88, 882 76 33, 882 92 08
E-mail: [email protected]
Website: www.intercooperation-bd.org
Foreword
Poor producers in the villages produce diversified products on a very
small scale and occasionally sell these subsistence products at unfair
prices. The commercialisation of the small amount of products requires
the development of market-oriented production. Success in
commercialisation depends on market orientation and on the removal,
or reduction of a broad range of marketing constraints.
Due to the lack of marketing knowledge rural producers cannot identify
potential products and exploit market opportunities. There is no
appropriate institution for rural producers to develop their marketing
knowledge. The Marketing Extension (ME) handbook contains a sixstep process, which aims at the development of the marketing
knowledge of rural producers in order to increase their profit margin.
Basically, the processes foster the capacities of the producers for
analysing existing products and markets, and developing appropriate
strategies of marketing by themselves.
This handbook aims at providing an appropriate guideline for Local
Service Provider-Business Service (LSP-BS) developed by Samriddhi
project working with Micro and Small Enterprises (MSE). This handbook
is also helpful for the development workers working for the economic
empowerment of the rural micro and small enterprises.
ATM Azmul Huda
Deputy Country Director
HELVETAS Swiss Intercooperation
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
Glossary of Terms
APO
Annual Plan of Operation
CBO
Community Based Organisation
LEAF
Livelihoods, Empowerment and Agroforestry (project)
LSP-BS
Local Service Provider-Business Service
ME
Marketing Extension
MSE
Micro and Small Enterprise
VC
Value Chain
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
Contents
Page
1. Background............................................................................... 05
2. Strategies of enterprise development....................................... 06
3. What is marketing extension....................................................
09
4. Operational methodology.........................................................
09
4.1. Step-1: Assessment of villagers' products........................ 10
4.2. Step 2: Analysis of selected products .............................. 11
4.3. Step 3: Market survey ...................................................... 12
4.4. Step 4: Analysis of market survey findings....................... 13
4.5. Step 5: Selection of strategies ......................................... 14
4.6. Step 6: Development and implementation of action plan
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
15
1. Background
Samriddhi project aims to contribute to sustainable well-being and
resilience of poor and extreme poor households of Rajshahi and
Rangpur Divisions and Sunamganj District through social and
economic empowerment.
The project aims to ensure poor and extreme poor men and women
make use of enhanced employment and income generating
opportunities through the processes of influencing market system, and
defining, managing and lobbying to secure a more enabling
environment for their sustainable well-being.
Under this goal, Samriddhi has taken various initiatives for promoting
income generation and marketing activities for rural poor considering
the major constraints of exploiting market opportunities i,e lack of
marketing knowledge of rural producers.
In 2004, Livelihoods, Empowerment and Agroforestry (LEAF) project
started a pilot on marketing extension approach for increasing the
marketing knowledge of Community Based Organisation (CBO)
members in order to identify appropriate income generating activities.
At least 5,000 CBO of 56 upazillas were benefited of this course,
which encouraged them to scale up their marketing activities adopting
different marketing strategies such as; producing bulk amount,
improving quality of products, group purchasing of inputs, group selling
of products, producing new products that have higher market demand
and involving more community people in income generating activities.
This document is a guiding tool for the foundation of rural enterprises.
The first part of this guidebook consists of the strategies of enterprise
development. The second part of the document will clarify about
Marketing Extension while the third part of it consists of the process of
facilitation.
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
05
2. Strategies of enterprise development:
Empowering the poor to exploit market
opportunities
The project identified the main cause of poverty as the lack of economic
opportunity, compounded by insufficient skills to capitalise on market
opportunities. In this context, the poor were extremely vulnerable to
shocks and crises, the majority living below the poverty line ($1 per
day). On this basis, the following hypothesis was made:
"Lack of marketing knowledge of the producers is the major constraint in
rural areas for exploiting market opportunities. A greater understanding
of functioning markets and the actors, while participating in identifying
the economic opportunities at field level, could reinforce their selfconfidence to negotiate with market actors. Ultimately, becoming more
proactive in undertaking new income generating activities and
businesses would increase their incomes in a sustainable way".
Based on the above mentioned hypothesis, the project designed the
empowering process of four stages allowing poor and extreme poor to
gradually acquire knowledge and skills and finally join in marketing
activities independently and confidently.
Fig-1: Empowering process
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
06
Marketing Extension
Acronyms
APO
BMDA
BRRI
BWDB/WDB
CBO
CC
CDMP
CF
CP
CRiSTAL
DRR
FF
IC
IGA
First stage - Developing capacity of planning through Annual
Plan of Operation (APO) and implementation: The first stage of
empowerment process is APO development .The APO process helps
the communities to analyse their livelihood strategies, identify the
barriers and opportunities and finally develop a list of micro projects
for local development.
Second stage - Developing capacity on marketing strategies
through Marketing Extension (ME) and implementation: The
second stage is the Marketing Extension (ME) exercise, which aims to
empower villagers to identify and exploit market opportunities
especially in the local area. The ME exercise helps the communities to
assess their products, analyse cost-benefit of the products, assess
markets, develop appropriate marketing strategies and elaborate
plans. During implementation of marketing plan, judging profitability,
creating access to markets, developing skills, gaining experience, etc.
help the producers and traders to understand their role in the market
chain. This consensus enables them to function more cooperatively
and more efficiently to everyone's benefit.
IPCC
IRRI
LEAF
LSP
MFDM
MoFF
PNGO
Third stage - Developing capacity of Micro and Small Enterprise
(MSE) development: The third stage is the MSE development, which
assists the producers to manage the business efficiently and
effectively. The MSE are to manage business at two different levels;
firstly at MSE level and secondly at MSE network level with a view to
develop the formal relationship with different levels of market actors
considering different types of products.
SAAKTI
SDC
SHARIQUE
UDMC
UNISDR
UP
WB
Marketing Extension : A Guiding Tool for the Foundation of Rural Enterprises
07
Fourth stage - Developing capacity on linkages through Value
Chain (VC) development:
The fourth stage is the value chain
development, which assists MSE to scale up existing marketing
activities. For scaling up marketing activities, the major requirements
of MSE are: information of higher market, information of advanced
technical and financial services, and linkages with the market actors
and service providers. In this stage, the project facilitates the process
of implementation by responding to MSE's needs through various
tools such as value chain analysis, business plan development, skill
development and stakeholder workshops. All these tools are
organised in a participatory way with MSE playing an active role.
MSE are encouraged to take the lead role and make decisions about
production and marketing themselves.
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
08
3. What is Marketing Extension?
Marketing Extension module is a 6 (six) days course on knowledge of marketing for developing
the skills of rural poor producers' groups. In each day of this process, producers' groups are to
spend 2 hours time. The total course requires 1.5 months of time for each producers' group.
LSP-BS facilitates the producers' groups for exercising the module. Through the exercise, the
producers' groups and their taskforces collect the market information, analyse those, develop
strategies and finally elaborate marketing action plans. The producers' groups implement their
marketing action plans by themselves. During the implementation of the plans, LSP-BS also
accompanies the producers' groups.
Objective of the ME course is to develop the capacities of the producers' groups so that they
can identify the strengths and weaknesses of their firms, identify the opportunities and threats
of the markets, improve their products, innovate new products, explore markets and distribute
products to the appropriate actors of the value chain with maximum profit as well as maintain
values.
“Empower the villagers to
identify markets
opportunities and plan how to
exploit them”
Marketing Extension:
A powerful approach in 6 steps
Assessment of villagers' products
Selection of 1 to 2 potential existing products
Constraints and opportunities
at production to market level
All villagers
involved
FACILITATION
Analysis of selected products
Cost and profit analysis of products
Selection of location for market survey
Carried out
by a
producers'
taskforce
Market survey
Discussion with traders on selected products
Collection of information ( price, quality, quantity)
Identification of new market opportunities).
Analysis of market survey findings
Selection of strategies
(production and marketing) for existing
products and new products
All villagers
involved
Development and implementation
of action plan
COACHING
Discussion on different marketing strategies for selected products
and new products identified (weakness, strength and opportunity).
Fig-2 : Overview of Marketing Extension
4. Operational Methodology
If the community's APO reflects marketing problem, 6 (six) steps ME course is offered for
them. LSP-BS accompanies all 6 steps. The steps are incorporated in the community's APO
for exercising within the 1.5 months of time starting from a suitable time through the negotiation
between the producers' group and LSP-BS. The steps of the module are as follows:
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
09
4.1. Step-1: Assessment of villagers' products
The first step of the process is to assess the existing situation of the
communities'/villagers' products. The products are assessed through
discussion with all the community people. All interested community
people participate in the discussion. The LSP-BS facilitates the
community people to develop the production calendar of the
community/village. The major contents of the calendar are the product's
name, monthly distribution, production volume, selling prices, % quantity
of selling and consumption, etc. The major outputs of the steps are firstly,
the general overview of the marketable goods of the community, secondly
the selection of promising goods.
Operation:
Introduction of the community people and the facilitator (LSP-BS);
Brief discussion about the expectation of the community people
regarding marketing of products;
Hanging of the format of production calendar on the poster paper;
Asking the community people to explain the monthly and yearly
production volume, price of their products and document in the poster;
Identification of major problems related to profit maximisation;
Selection of potential 1-2 products from the list for in-depth analysis and
market survey;
Formation of a taskforce of 5-7 members for market information
collection (As per requirements, other village people are included in the
taskforce);
Selection of a suitable day for organising a taskforce meeting.
JAN
FEB
Summer-2
Summer-1
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
Examples
Vegetables
Fruits
Goat
Fish
Poultry
Handicraft
Skills
Spare time
Interest for
new activities
Major
Expenses
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
10
DEC
Constraints
Winter
Opportunities
Products/
Resources
% of sales
Production volume sales price (maximum-minimum),
Planting time, selling time
Production (kg)
Villagers' products assessments
4.2. Step 2: Analysis of selected products
The second step is the taskforce meeting of 5-7 members. LSP-BS
facilitates the taskforce meeting. The major discussion of the taskforce
meeting is to discuss the main issues, which create obstacle to
maximise profit from the selected products. Generally the major issues
are inferior quality of the products, lack of professional relationship
with the real actors in the value chain. Two questionnaires are used as
the checklist of collection of information; one at firm level and the other
at market level.
Operation:
Facilitation of the taskforce meeting;
Discussion about the main marketing problems facing by the
producers (prices, demand and competition etc);
Identification of the actual cost and profit of the selected products
and determination of the expected price. (Four types of costs are
considered such as input cost, labour cost, input carrying cost and
product transporting cost);
Presentation of different markets and market actors in the value
chain through diagram;
Selection of the required questions for interviewing market actors
in the value chain for collecting information from the market.
Product analysis
Producers &
market
Price of
products at
producer and
market levels
Distance of
market from
producer
Constraints/
Opportunities
Producers
Village
market-1
Village
market-2
Union
market
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
11
4.3. Step 3: Market survey
The third step of the process is the collection of information from the
market through interviewing the representatives of different
stakeholders such as traders, wholesalers, processors, retailers etc.
The taskforce survey markets related to the selected products.
Generally the producers survey the village markets where the
producers did never sell their products. Sometimes, the taskforce go to
the subdistrict and district markets. LSP-BS accompanies the taskforce
to go to the market and to discuss with the traders.
Operation:
Selection of the traders in the market;
Briefing about the objective of the discussion and introduction of
the group with the traders;
Discussion with traders and collection of different types of
information of the selected products;
Selection of new products and ideas from the traders (in some
cases);
Establishment of a primary agreement between the taskforce
members and the traders.
Checklist for the market survey
- Why are they interested to this business?
- Way of communication
- Name and address of trader
- Type of trading: Wholesaler / Retailer/ / Aratdar
- Date of establishment
Existing products
Potential products
1. Where the products come from?
10. Which products could be the best for the poducers'
2. Who have benefit to collect product?
groups?
3. What is the price?
11. How the producers' groups can start?
4. Do they buy products in cash or on credit?
12. Who will be the best person for training?
5. What is the quantity required for colleting products at a
13. What could be the production time?
time?
14. Is there any opportunity of processing of new products?
6. What is the good way of selling/supplying products for
15. Do they sell processed products? Which products?
the producers?
16. What are the advantages of processed products?
7. How the producers can improve their products?
17. Who are the buyers? How do they communicate?
8. What strategy do they follow during collecting products
(Collecting from the farm gate or sending to the shop)?
Major problems and ways of solutions
9. Do they have any opportunity for collecting products
18. Do they have any suggestion for buying and selling
directly from the producers?
products?
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
12
Marketing Extension
Acronyms
APO
BMDA
BRRI
BWDB/WDB
CBO
4.4. Step 4: Analysis of market survey findings
The fourth step is also a taskforce meeting. The taskforce members
arrange the information collected from the markets. The information are
arranged considering the areas such as name of products with
weaknesses, strengths, opportunities, costs, prices and demand-supply
situations at different levels (farm, village market, urban market, traders
and wholesalers).
Operation:
CC
Preparation of a chart (considering products, weaknesses.
strengths, opportunities and strategies);
CDMP
CF
CP
Incorporation of information from the markets;
CRiSTAL
Identification of some strategies for the presentation in the group
meeting of all producers.
DRR
FF
IC
Analysis of market information
(Qualitative & Quantitative)
IGA
IPCC
Location
of market
IRRI
LEAF
LSP
Village
MFDM
MoFF
Market Actors
Mobile traders
Retailers
Wholesalers
SAAKTI
Union
Mobile traders
SDC
Aratder traders
SHARIQUE
Retailers
UDMC
Upazilla
UNISDR
Wholesalers
WB
Strategy
Producers
PNGO
UP
Strength Weakness Opportunity Risk
Aratder
Retailers
Wholesalers
District
Aratder
Retailers
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
13
4.5. Step 5: Selection of strategies
The fifth step is selection of strategic choice. The step is organised in
the group meeting. All the producers of the community participate in
the meeting. The taskforce members present the information collected
from the markets. They also present the potential strategies. The
participants debate with the identified strategies and finally prioritise
the most potential ones.
Operation:
Development of presentation by the taskforce;
Orientation of the facilitators from the taskforce by the LSP-BS
before the plenary session;
Facilitation of the group meeting by the taskforce members;
Hanging of the strategies on the board;
Discussion about the information collected from the farm, market;
Explanations of different options and strategies;
Discussion with the general producers;
Selection of potential strategies from the discussion.
Selection of strategies
Strategy
Strength
Weakness
Opportunity
Risk
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
14
4.6. Step 6: Development and implementation of action
plan
The final step is the preparation of the action plan by the producers'
groups. The action plans are prepared in the group meeting in the
presence of all the producers. In the action plan they document the
products and strategies, list of activities against all the products, the
responsible persons, time frames and required service providers.
Operation
Facilitation of the meeting by the taskforce members;
Hanging of the Gann chart of the action plan;
Incorporation of the selected products in the Gann chart;
Identification of list of activities against each of the products;
Identification of the responsible person/small group and time frames;
Identification of the required service providers.
Action plan
Different
strategies
/ options
Specific
activities
Responsibility
Time
Required
supports
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
15
Marketing Extension in Photograph
ME group discussion
Products marketing through MSE network
Marketing Extension: A Guiding Tool for the Foundation of Rural Enterprises
16