Strategies for self-help groups: finding and entering your market
This article captures the main insights from a learning circle call with three partner organisations dedicated to serving their communities to grow their wellbeing.
Drishtee
Drishtee is a social organization working in villages towards sustainability and shared prosperity for over 25 years. The organisation is working in over 6,000 villages in India supporting and promoting rural entrepreneurship through its reach, services, capacity, market linkage, and know-how of sustainable rural enterprise development. Drishtee follows a holistic approach, known as the 4C approach, which focuses on Community, Capacity, Capital, and Channel. It has enrolled more than 600,000 rural producers under this approach. Their model thrives on community engagement and ownership. By actively empowering communities, Drishtee creates sustainable solutions that are driven by the needs and aspirations of the people they serve.
Buzz Women Gambia
Buzz Women Gambia brings opportunities to low-income women, who live in the rural villages and urban communities with their mobile classrooms. With their mobile classrooms they’ve been able to train over 18.000 women and built 344 active beehives: groups of empowered women selecting their own anchor women. Buzz Women’s training work is organised around The Inner Power training (financial literacy, entrepreneurship and personal development) and the Buzz Green training (learning capsule on climate change and environmental education).
Durian Nigeria
True to their slogan ‘Rural is cool’, Durian is creating rural communities of the future: circular, creative, and empowered by rural women, in Nigeria. The organisation engages women in rural communities in intensive training and activities which enable them to create change from within and reclaim their unique identity and dignity. Durian works to equips women in rural communities with the skills and perspectives they need to be self-sufficient. They are guided by the philosophy that there is nothing called waste, and no one deserves to be treated as waste. With the mission of transforming local waste and resources into livelihoods, Durian has reached 20 communities, 38.000 people, and trained 500 women so far.
Different solutions to tackle the access to a market for groups of producers
From Gambia through Nigeria to India, small groups of entrepreneurs trying to reach the markets with their products face a common challenge once they set up their production – market creation. Backstories vary: some groups are physically far away from their customers; others cannot get the pricing right or have not assessed their market needs properly. As women from Kafuta group, a Gambian entrepreneur group in the business of dry food processing, points out – limited access to market prevents their social venture from scaling their production and reaching their full potential.
Keep reading to learn about some of the solutions identified and tested in practice by Drishtee, Buzz Women Gambia and Durian Nigeria in collaboration with the entrepreneur groups they support.
Perform market research before you start producing
Market research is crucial to successfully unlocking new markets but should not take away from the autonomy of the entrepreneur groups.
A key question a venture needs to consider before getting into production is the level and nature of interest of their intended market in their product (Do people need it? Is it an essential product or a nice-to-have? Is the product used all the time or during special occasions / certain moments of the year?). This is another area where organisations such as Drishtee, Buzz Women and Durian can be of high value to the entrepreneurial groups they support – the capacity to conduct market research.
However, the outcome of a market research exercise should not overrule ideas the groups themselves have about what businesses they would like to get into. Rather, it should serve as a starting point for a dialogue between the organisation and the group. A great example of this two-way community engagement was shared by Durian working with a bamboo crafts group. The group was experiencing declining sales of their bamboo key chains and jewelry. Upon having conducted market research, Durian realised people did not consider those bamboo items as a necessity, and in conversation with the group, came up with the idea of producing bamboo toothpicks instead. Soon, they realized setting up a toothpicks production with bamboo as the material was proving non-feasible, and again in conversation with the group, they came up with the idea of using palm instead of bamboo. Today, the group, running their venture successfully, produces both palm toothpicks and bamboo craft items. This example displays clearly the strong need for a close collaboration and open dialogue between the organisations like Durian and the groups they support, which when done properly, can lead to product diversification as a solution to declining market or market entry challenges.
Focus on products that your neighbours buy regularly
This ties in with the previous point of assessing the needs of your potential market. As Drishtee put it: the biggest market is the local market. Groups typically embark on their social venture journey by tapping into the specificities and needs of their own communities and those situated nearby before venturing beyond.
Invest time and effort in showcasing your products in nearby (super)markets
Once the group understands the needs of its local market and commences production, (sales savvy) members of the groups should start showing the products on markets and start engaging with shop owners. This creates awareness and builds interest in their products, which can be of particular importance in marketplaces where the product is not yet being sold. An example of this is shared by Durian that supported a bamboo processing group in bringing their toothpicks to the local supermarkets, an effort which turned out to be a successful one, as toothpicks were both a product that people need, and the local supermarket was not selling them.
Dedicate roles within a group for reaching out to retailers
As groups expand, they realize the added value of aggregation, Drishtee shares. Large numbers of producers allow groups to introduce specialisation. This is well exemplified by a textile group, that started in a rural village and has in the meantime expanded to the Japanese market, able to take up to 1000 orders at a time. This group’s path illustrates that it can be worth dedicating a role to reaching out to retailers. While some women are responsible for e.g. measuring the fabric, others, better suited for selling, are facing prospective customers. This function-split between women, together with the increased order volume, allowed them to become better at their craft, boosting the quality of products sold. This is not to say specialisation alone is sufficient – organisations such as Drishtee have an important role to play in terms of translating the skills of these groups into marketable products. Prior to this market expansion, Drishtee trainings made sure the group understands how their skills translate into the final product they offer to the market, which boosted the group’s confidence in their skills being marketable and in turn, being able to better present and sell their products in the marketplace.
Drishtee describes a common set-up for women social ventures in Indian rural areas, which includes 3 distinct sales type roles enabling a connection to the retailer: a ‘runner boy / girl’ (who carries and shows products around), a mitra (who enables barter between producers or producer and a retailer), and a product expert woman (who knows the ins and outs of the product and is able to convince a retailer skillfully). This model, implemented widely in India, demonstrated that having a certain sales structure helps with market access. Also, identifying agile, sales-savvy people in the group and directing their efforts towards talking to the market is extremely useful in making new market connections.
Use low (cost) tech as a powerful tool to raise product awareness
To create awareness and connection between hundreds of women entrepreneurs Buzz Women Gambia created a WhatsApp group. In this group women can learn what products other groups produce. Cold calling might not be appreciated by everyone, but it helps to connect entrepreneur groups with each other and opens opportunities to connect with potential customers. An alternative option is a platform plus an app, which was developed by Drishtee. The MIRI platform (Made in Rural India) supports producer groups to connect with their market. With an app that can be used by ‘runner boys / girls’ and mitras (local shop owners), but also by potential customers based in nearby cities to order products. Such a platform can help lower the cost of promotion and decrease the ‘distance’ to market.
Tap into your partner organisation’s network to establish connections with retailers
For most producer groups, the local market is the biggest market, and their first market. The groups build their network through word-of-mouth, meeting shop owners, displaying their products during market days, and in some places making use of the barter system. In Gambia, Buzz Women shares that women are typically good at accessing their local markets.
When such a group wants to grow beyond its local market, the partner organisation can support it by building a network of retailers and / or the capacity to approach these retailers effectively. Drishtee, Buzz Women and Durian all reach out to their network of potential interested businesses to open new markets for their groups. For example, Durian connected a local group to a spa center, helping them sell their soaps. Sometimes, regulatory issues arise. Such is another example of Durian that helped a group obtain licenses required to be able to introduce their food and skin care products (e.g., body water, organic soaps) into supermarkets. These examples bring to light the fact that, besides training a group in how to run a successful venture, partners can support with connection and support to meet requirements of this new buyer.
Get the price right
When determining the price for your product, understanding the total cost of making the product is a crucial first step to take. Drishtee has been working a lot with various rural based producer groups supporting them to translate the time and labour going into the making of a product into a number reflecting the true cost of a product that goes beyond the cost of raw materials. The labour aspect of the price is captured in the pricing formula they use through time (B) and skill level (C):
LP = (A + (B X C)) X (100 + D) %
where:
A = Cost of raw material
(e.g., in the case of agricultural products, this would be the cost of seed/raw material used, irrigation methods, machinery used, etc.)
B = Time spent on producing the goods/service
(e.g., in the case of agricultural products, this is dependent on the time spent during sowing, harvest, irrigation, weeding, applying fertilizers, etc.)
C = Skill level of labor deployed in the process
(this is dependent on the personnel’s training, practices implemented in production, skill level, the productivity of resources deployed, etc.)
D = Profit margin the producer wishes to retain for their produce
Beyond coming up with a more accurate number for the true product cost, Drishtee empowers the groups to appreciate the monetary value of their labor.
Use pricing to unlock markets
Getting the price right is not easy. Developing a price for a product is a complex task – a product needs to cover the costs incurred to make it and provide sufficient income for the producer group. The price needs to be affordable for the customer, and competitive with similar products already on the market.
As mentioned earlier in this article, getting the true price of the product is the first step. Unfortunately, that sometimes means that the local market might not be the most suitable one, leaving the group with the task of finding a new market able to afford their product. Arankon, a group of female producers making organic soap, experienced that their price was too high for their local market in The North of Gambia. Arankon resolved this by crossing the border to the neighbouring Senegal where there was not only interest in organic soaps, but also a higher level of disposable income allowing the Arankon group to make a profit with their soaps.
Partner organisation should only be an enabler of self-governing entrepreneurial groups
As brought forward several times in this article, organisations such as Drishtee, Buzz Women and Durian have an important role to play in unlocking new markets, build new partnerships (for example with buyers) for the groups they support. Their role is the one of a facilitator, an enabler – they train and help set up structures and processes so that the groups can run their own ventures independently and so that the groups feel empowered with skills and self-confidence needed to own the process of managing their ventures end-to-end. Drishtee, for example, employs an ecosystem approach – local committee (leadership) group take the agency, and together with that group they jointly select enablers based in the community (e.g., a woman for enabling barter, training, etc.), who take on these roles. Drishtee’s role is only to support from the background by means of facilitating trainings and tools for these enabler women.
The examples the entrepreneur groups and our partner organisations shared in the call clearly show that successful producer groups have partner organisations that take an enabling role. This role is often related to building an eco-system for the producer groups to flourish, through e.g., building partnerships with buyers, creating pricing tools for producer groups to use, supporting with creating roles in hyper-local value chains, etc. So, partner organisations do act upon the needs the communities, but those communities are self-governed. The role of the partner organisations is an active one, but one that places the agency in the hands of the producer groups.
We hope these takeaways prove useful to you and your organisation. In case you have any questions or would like to learn more about the topic, please feel free to contact us.