Designing BDS Market Strategies

Designing BDS Market Strategies PowerPoint PPT Presentation


  • 154 Views
  • Uploaded on
  • Presentation posted in: General

Designing BDS Market Strategies. Define target SEsAll the SEs in a sub-sectorSEs in an industry clusterSub-categories within a geographical area (e.g. women-owned SEs, HIV/AIDS affected SEs)SEs that use a particular service. Designing BDS Market Strategies. Analyze constraints and opportunitiesToolsSub-sector analysisIndustry mappingPRA techniquesSWOT analysisHelps to divide opportunities/constraints into categories..

Download Presentation

Designing BDS Market Strategies

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


1. Designing BDS Market Strategies ACDI/VOCA February 2003

2. First we need to know what types of SEs we will be working with. We may define our target SEs in terms of a sub-sector. Sub-sectors include all the firms linked horizontally and vertically who compete and collaborate in a market system. Sub-sectors may be commodities (e.g. maize, horticulture), products (e.g. handicrafts, furniture), or services (e.g. advertising). Why would we look at a sub-sector? Often, opportunities exist for SEs in a sub-sector to work together to access new markets, develop new markets, or increase market efficiency. Or we can look at industry clusters. What are they? Industry clusters are firms that compete, collaborate, and provide support services to each other in a particular region. (Tighter geographical focus than sub-sectors, but wider in terms of the types of SEs involved.) May approach it from the other end – if we are an institution that specializes in IT, for example, we would want to define our target group of SEs as those that use/want to use IT.First we need to know what types of SEs we will be working with. We may define our target SEs in terms of a sub-sector. Sub-sectors include all the firms linked horizontally and vertically who compete and collaborate in a market system. Sub-sectors may be commodities (e.g. maize, horticulture), products (e.g. handicrafts, furniture), or services (e.g. advertising). Why would we look at a sub-sector? Often, opportunities exist for SEs in a sub-sector to work together to access new markets, develop new markets, or increase market efficiency. Or we can look at industry clusters. What are they? Industry clusters are firms that compete, collaborate, and provide support services to each other in a particular region. (Tighter geographical focus than sub-sectors, but wider in terms of the types of SEs involved.) May approach it from the other end – if we are an institution that specializes in IT, for example, we would want to define our target group of SEs as those that use/want to use IT.

3. Designing BDS Market Strategies Analyze constraints and opportunities Tools Sub-sector analysis Industry mapping PRA techniques SWOT analysis Helps to divide opportunities/constraints into categories. There are lots of ways of going about this. In the case of a sub-sector, there are several different types of sub-sector analysis that map the players in a sub-sector, kinds of transactions that take place between them, cost structure, and so on. There are numerous books on sub-sector analysis that you can read if you want to know more about that tool. Similarly with clusters – there are all kinds of mapping exercises you can do. Or good old fashioned PRA techniques that draw on things as unsexy as SWOT analyses. There are lots of ways of going about this. In the case of a sub-sector, there are several different types of sub-sector analysis that map the players in a sub-sector, kinds of transactions that take place between them, cost structure, and so on. There are numerous books on sub-sector analysis that you can read if you want to know more about that tool. Similarly with clusters – there are all kinds of mapping exercises you can do. Or good old fashioned PRA techniques that draw on things as unsexy as SWOT analyses.

4. Designing BDS Market Strategies Market Access Technology/Product Development Organization and Management Regulatory/Policy Finance Input Supply Infrastructure Market access: lack of market information, marketing skills (advertise, research) Technology/product: technology is outdated, products have quality problems Organization and management: lack of business skills, labor problems, not collaborating with others to reach scale Regulatory/policy: taxes, state-subsidized monopoly, difficulties with licenses Finance (not micro-finance): investors, inputs on credit Input supply: inputs delivered irregularly, lack information on alternative input supplies Infrastructure: warehousing, telecommunication, roadsMarket access: lack of market information, marketing skills (advertise, research) Technology/product: technology is outdated, products have quality problems Organization and management: lack of business skills, labor problems, not collaborating with others to reach scale Regulatory/policy: taxes, state-subsidized monopoly, difficulties with licenses Finance (not micro-finance): investors, inputs on credit Input supply: inputs delivered irregularly, lack information on alternative input supplies Infrastructure: warehousing, telecommunication, roads

5. Designing BDS Market Strategies Identify business development services Meet our end goal Are specific, focused and tailored Are demand driven Select services that will (remember our 5 BDS principles) address needs of the SEs, focus on high-priority opportunities and constraints. List a constraint/opportunity per category (go back one slide) experienced by SEs in one of our project areas. What business development services might meet this constraint? (A few fast examples.)Select services that will (remember our 5 BDS principles) address needs of the SEs, focus on high-priority opportunities and constraints. List a constraint/opportunity per category (go back one slide) experienced by SEs in one of our project areas. What business development services might meet this constraint? (A few fast examples.)

6. Designing BDS Market Strategies Assess BDS market The market for a business development service consists of the supply of the service, the demand for the service, and the transactions that take place to allow a SE to access the service. A BDS market is bounded by target SEs (clientele), the geographical location, and the service under consideration. Often markets are “hidden” – you may get the impression that there are no services being offered or demanded. There may be subtle embedded services; services available to larger firms that SEs would like to access; there may be demand but no supply for some reason. It is important to uncover these “hidden markets”.The market for a business development service consists of the supply of the service, the demand for the service, and the transactions that take place to allow a SE to access the service. A BDS market is bounded by target SEs (clientele), the geographical location, and the service under consideration. Often markets are “hidden” – you may get the impression that there are no services being offered or demanded. There may be subtle embedded services; services available to larger firms that SEs would like to access; there may be demand but no supply for some reason. It is important to uncover these “hidden markets”.

7. Designing BDS Market Strategies Assess BDS market Weak supply Weak demand Few transactions Just as with the assessment of SE constraints and opportunities, it is often useful to break down the assessment of the market into categories: this time Supply problems Demand problems Transaction problems What might be the reasons for weak supply of a business service? Services offered might be inappropriate for SEs Providers might not think SEs are an attractive customer base Providers may lack technical skills… etc. What might be the reasons for weak demand of a business service? SEs lack information about services SEs can not identify their business needs Lack of capacity to pay up front SEs may be risk averse What might be the reasons for few transactions? Lack of interaction between SEs and providers Lack of informationJust as with the assessment of SE constraints and opportunities, it is often useful to break down the assessment of the market into categories: this time Supply problems Demand problems Transaction problems What might be the reasons for weak supply of a business service? Services offered might be inappropriate for SEs Providers might not think SEs are an attractive customer base Providers may lack technical skills… etc. What might be the reasons for weak demand of a business service? SEs lack information about services SEs can not identify their business needs Lack of capacity to pay up front SEs may be risk averse What might be the reasons for few transactions? Lack of interaction between SEs and providers Lack of information

8. Designing BDS Market Strategies Assess BDS market - supply What types of suppliers exist? What range of products are available? What are the strengths and weaknesses of current suppliers? What substitutes for BDS do SEs use?

9. Designing BDS Market Strategies Assess BDS market - demand Are SEs aware of the service? Do they understand the benefits of the service? What types of services do they use? What benefits and features do SEs want from the service and at what price?

10. Designing BDS Market Strategies Assess BDS market - transactions What percentage of SEs have tried the service? How are services paid for? How are services delivered? Why do SEs use/not use a service?

11. Designing BDS Market Strategies Assess BDS market - tools Usage, Attitude, Image study Focus groups Action research Participatory appraisal Standard marketing tools can be used, and there are plenty of books on these kinds of tools. (We do not have time to go into them today.)Standard marketing tools can be used, and there are plenty of books on these kinds of tools. (We do not have time to go into them today.)

12. Designing BDS Market Strategies Assess BDS market This helps us to start thinking about the kinds of services that we are going to need.This helps us to start thinking about the kinds of services that we are going to need.

13. Designing BDS Market Strategies Design sustainable delivery strategy Develop a vision of the end result Select service providers Identify financing mechanism In reality, you probably would not separate out this step of the process from the next – that of selecting the intervention strategy, but for the sake of clarity, we will first look at the “vision” and then at how we get there. How do we want the BDS market to look after the program is over? What kind of services need to be available? What kind of providers can deliver these services sustainably? How are the services going to be paid for?In reality, you probably would not separate out this step of the process from the next – that of selecting the intervention strategy, but for the sake of clarity, we will first look at the “vision” and then at how we get there. How do we want the BDS market to look after the program is over? What kind of services need to be available? What kind of providers can deliver these services sustainably? How are the services going to be paid for?

14. Designing BDS Market Strategies Select an intervention strategy Voucher programs Information services Social venture capital Business linkages Etc., etc….. By this we mean identify program activities that will get us to our vision. What do we actually need to do to stimulate the various actors, prime the pump, get the services on the market and the demand going, and create momentum? Some strategies that have been tried are: Voucher programs – used extensively in Latin America as a way of offering temporary subsidies for training to develop the market. E.g. any small business employing between 5 and 10 people can register at a business center and receive a $50 voucher that can be used with any certified trainer in a given database. SE owner pays a small amount also. Next time perhaps you can get a $100 voucher for advanced training but the co-pay element will be higher. This kind of mechanism helps SEs to value the service, and reduces risk. ILO program in Zimbabwe reaches 300,000 SEs with a commercially viable radio program. Programming is paid for by advertisements. Programs teach business skills and supply information useful to SEs. The total cost of the program was $100,000. Take an equity share in a SE in order to help capitalize them. (To be honest, no one ever seems to take the money back out and move on to a new venture, so is it really so different from a grant with strings?) Manicaland Business Linkage project – oft quoted success story. The program facilitates large firms sub-contracting to smaller firms, providing them with TA on how to manage the relationships, contracting etc. Builds the capacity of larger firms to mentor smaller firms. Trade fairs, technical assistance, introduction of new technology, … You can find a lot more of these on the SEEP BDS website – I will give you the address at the end.By this we mean identify program activities that will get us to our vision. What do we actually need to do to stimulate the various actors, prime the pump, get the services on the market and the demand going, and create momentum? Some strategies that have been tried are: Voucher programs – used extensively in Latin America as a way of offering temporary subsidies for training to develop the market. E.g. any small business employing between 5 and 10 people can register at a business center and receive a $50 voucher that can be used with any certified trainer in a given database. SE owner pays a small amount also. Next time perhaps you can get a $100 voucher for advanced training but the co-pay element will be higher. This kind of mechanism helps SEs to value the service, and reduces risk. ILO program in Zimbabwe reaches 300,000 SEs with a commercially viable radio program. Programming is paid for by advertisements. Programs teach business skills and supply information useful to SEs. The total cost of the program was $100,000. Take an equity share in a SE in order to help capitalize them. (To be honest, no one ever seems to take the money back out and move on to a new venture, so is it really so different from a grant with strings?) Manicaland Business Linkage project – oft quoted success story. The program facilitates large firms sub-contracting to smaller firms, providing them with TA on how to manage the relationships, contracting etc. Builds the capacity of larger firms to mentor smaller firms. Trade fairs, technical assistance, introduction of new technology, … You can find a lot more of these on the SEEP BDS website – I will give you the address at the end.

15. Designing BDS Market Strategies Select an intervention strategy Guiding Principles Focus Tread lightly Subsidize training and TA, not services Promote competition, create a level playing field Develop business relationships with service providers Remain flexible to change Coordinate with other stakeholders Develop a clear exit strategy From experience with these implementation strategies, some Guiding Principles have been developed by Donor Committee. Interventions should be targeted to address BDS market constraints. Minimize interventions to avoid BDS market distortions. In particular, don’t provide services directly as this may crowd out the private sector. Subsidize the capacity building of service providers, not the delivery of the service. Develop a range of suppliers and service products in the same market to offer SEs a choice. Look for mutually beneficial contracts, do not be a donor giving grants to service providers. SE and BDS markets can change rapidly. If some donors or facilitators are giving services away for free, or at heavily subsidized rates, they will undermine your efforts to develop BDS markets. Plan to leave behind a vibrant, competitive sustainable BDS market.From experience with these implementation strategies, some Guiding Principles have been developed by Donor Committee. Interventions should be targeted to address BDS market constraints. Minimize interventions to avoid BDS market distortions. In particular, don’t provide services directly as this may crowd out the private sector. Subsidize the capacity building of service providers, not the delivery of the service. Develop a range of suppliers and service products in the same market to offer SEs a choice. Look for mutually beneficial contracts, do not be a donor giving grants to service providers. SE and BDS markets can change rapidly. If some donors or facilitators are giving services away for free, or at heavily subsidized rates, they will undermine your efforts to develop BDS markets. Plan to leave behind a vibrant, competitive sustainable BDS market.

16. Designing BDS Market Strategies Select an intervention strategy Lessons to Date Embed services along the supply chain Make BDS affordable Understand demand patterns Bundle services Market access and market information are key Use a wide range of service providers Services can be provided in a sustainable and commercial manner BDS has the potential to achieve large impact over the long run And then USAID has its own set of “lessons to date”. Incorporating a range of services into existing production and marketing transactions Deliver services through groups, payment schemes to match cash flow Create demand, develop brands, cultural considerations, gender issues Create a “one stop shop” Some even go so far as to say that for the poor, market access and market information are ALWAYS the two biggest needs. Perhaps you would have a hard time proving that, but certainly they are often vital for microenterprises Private sector firms, NGOs, Chambers of Commerce, associations, etc That may seem a little absolutist – and in the third part of this training we will look at a few cases where people have asked if it is really always true (we already briefly discussed “public goods”) Again, a very confident statement by USAIDAnd then USAID has its own set of “lessons to date”. Incorporating a range of services into existing production and marketing transactions Deliver services through groups, payment schemes to match cash flow Create demand, develop brands, cultural considerations, gender issues Create a “one stop shop” Some even go so far as to say that for the poor, market access and market information are ALWAYS the two biggest needs. Perhaps you would have a hard time proving that, but certainly they are often vital for microenterprises Private sector firms, NGOs, Chambers of Commerce, associations, etc That may seem a little absolutist – and in the third part of this training we will look at a few cases where people have asked if it is really always true (we already briefly discussed “public goods”) Again, a very confident statement by USAID

17. Designing BDS Market Strategies Develop a performance assessment system Scale and outreach Sustainability Cost effectiveness Impact We need to think about how we will measure success. Generally there are four categories. USAID has put a lot of work into this area, developing something called the Performance Measurement Framework. Last time I checked it out, it was still very unwieldy. They were trying to measure everything, making it rather impractical. This is a area under development for BDS, and I am sure it will feature in future AMAP Task Orders, and action research grants, and so on. However, a lot of research has been done and is available through some of the resources I will direct you to at the end.We need to think about how we will measure success. Generally there are four categories. USAID has put a lot of work into this area, developing something called the Performance Measurement Framework. Last time I checked it out, it was still very unwieldy. They were trying to measure everything, making it rather impractical. This is a area under development for BDS, and I am sure it will feature in future AMAP Task Orders, and action research grants, and so on. However, a lot of research has been done and is available through some of the resources I will direct you to at the end.

18. Designing BDS Market Strategies Define target SEs Analyze constraints and opportunities Identify business development services Assess BDS market Design sustainable delivery strategy Select an intervention strategy Develop a performance assessment system Recap.Recap.

  • Login