INTRODUCTION

How do we improve the livelihoods of the landless asset-poor? is a question that the development community is struggling with. Quite often the answer lies in the adoption of income generating activities and entrepreneurial endeavours. Unfortunately, the traditional business approaches of both the NGOs and government are outdated, impractical, and, frequently, ineffective. This is because, typically, income generating activities have been focusing on skill enhancement and teaching participants to produce. This type of instruction is dangerously obsolete for many reasons: The focus is on skill enhancement, typically encouraging participants to enter production, which is an increasingly untenable position for small entrepreneurs. Larger companies have the ability to work on a massive scale, producing more than a small entrepreneur can ever hope to match at a fraction of the cost. Therefore, a productioncentred focus for income generating activities is simply not sustainable in a globalised marketplace.

Skill training is typically capital intensive, requiring expenditures on machinery, factories, and raw materials to move forward. This imposes a huge monetary risk upon landless, asset-poor participants who can least afford it. Skill enhancement that is limited to a single product, requires large capital commitments and makes lateral mobility moving from product to product virtually impossible. If participants find that the activity they have been trained for is not viable, they cannot switch easily to another business. Therefore, if the product fails, so do the participants. Is there a market? Who will buy it? These questions are central to any business but simply not asked, i.e., participants have committed time, effort, capital, and hope into a business venture without even knowing if people want their product. Countless income generating activities are launched, and fail simply because they have not asked these basic questions.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

Income generating activities taken up by NGOs and government are stuck on a business model that has been refuted decades ago, a model in which production, finance, marketing, and human resources are equal parts.

Illustration 1: Business models

76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321 76543210987654321

Traditionally, participants are given limited training for the production of a single product and then abandoned, to later find their own way in the market. But according to todays thinking, marketing is not just a component, but the CENTRAL driving force of a business. Therefore the traditional approach must be turned on its head if income generating activities are to be successful. Participants must first develop the skills to analyse and research the market, and only then, start a business.

Human Resource Production Marketing

Finance

Why MOVE?
Market Oriented Value Enhancement (MOVE) is a method to approach income generating activities for the landless, asset-poor, and illiterate with marketing as the central focus. Marketing, for our purpose, is defined as understanding the customers needs and wants, and designing and delivering products and services accordingly.

Market Orientation is when instead of being oriented to their perceived abilities or lack of it, participants will undertake a business venture according to customer demand. The key to the process is when participants first ask, What does the customer want? and then, How do I deliver it?

Traditional Model

MARKET

MOVE Model

MARKET

MARKET

MARKET MARKET

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

Introduction

Value Enhancement is the process of continuously evolving new products and services to cater to customer needs and demand. By adding value to products according to the customers wants, entrepreneurs can serve specific market niches that larger producers cannot cater to.
This approach solves many problems: By conducting thorough market research first, income generating activities are more likely to succeed. Participants estimate market demand, gauge possible sales of a given product, identify market segments to target, and THEN begin business. Not only does this method make success more likely in the long term, it results in a greater likelihood for immediate success in the short term. Training and education builds the participants capacities to enter the market, but nothing reinforces their confidence like the first experience of turning over a profit. With the emphasis being on marketing rather than on a specific product, adaptability to the marketplace is built in. Hence, participants are trained to be more than just skilled labourers they become entrepreneurs. If income generating activities are like teaching participants to memorise a single poem, MOVE is like teaching participants to read. In short, they develop the skills to navigate the market, no matter what form their business may take. If one product proves to be unsuccessful over time, they have the skills necessary to identify demand and switch to another product. Though the poor and landless may not have the resources to compete with large scale production, they have one key advantage over large corporations: the possibility of a direct connection to the customer. As big players rapidly work on a larger and larger scale, they are less able to cater to the specific needs of diverse market segments. Participants can capitalise on this advantage by catering to the customers needs in any number of ways:

By delivering products to their doorstep in remote villages, and thereby adding value to existing products (for e.g., by adding embroidery to clothes) By tailoring products to the specifications of the customer (for e.g., providing milk with varying fat content to different customers).

The purpose of this manual

This manual is a practical guide for community organisers to replicate the MOVE process, which begins with motivation, progresses to general business concepts, market research, and finally the formulation of a business. By the end, participants should be empowered to enter the market confidently as independent players. Market analysis is commonly perceived to be the monopoly of experts, but through innovative tools, MOVE has opened up possibilities for the illiterate to understand the market. Complex business concepts are communicated through methods that have been tailored for an illiterate audience. Every step of the MOVE process is driven by the knowledge of the participants and every step forward is based on decisions the participants have made. Therefore, the modules are designed for participants to share what they know, expand

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

their knowledge base, and move forward based on what they have learned about the market and potential customers. Each module in this manual articulates the goals of the session, the link to the entire MOVE process, followed by detailed step by step instructions and case studies. The instructions provide a guide and the case studies illustrate a variety of approaches and outcomes. The process will vary widely across many different contexts, and deviation from the text is entirely expected. Trainers using this manual should make any modifications necessary so the module is relevant, occurs in a timely fashion, and most of all, so the primary lessons are imparted. The MOVE process is about a single idea i.e., the customer-centric approach to business. By focusing on the demand of the market and the needs and wants of the customers, participants can enter the marketplace as confident and independent entrepreneurs. Most importantly, it provides a real alternative for improving the livelihoods of the poor.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

Chart 1: The MOVE (Market Oriented Value Enhancement) Path

Module 1 Module 3 Module 9 Production

Module 6 Preparation for PMA Sampling and Surveying

Format Free Market Visit

Number Game Goal Setting Game Tower Building Game Module 4 Understanding Needs and Wants Analysis of the PMA Module 7 Module 10 Customer Feedback Module 2

Wedding Card Game Buying and Selling Game Module 5 Market Strategy

Module 8 Matching Demand and Supply Narrowing down on the Products Retailing

Module 11 Business Plan

Participant

Entrepreneur

Motivation

Business concepts

Understanding the market

Understanding the customer

Researching the customer

Launching the business

Planning for the future of the business Researching the market Entering the Market

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

Orienting to the Market

MOVE

Without knowledge... Business is a complicated burden

With knowledge... Business will take you places!

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MODULE 1A
The Number Game
Materials Needed Sheets of paper numbered from 09 Currency of various denominations (coins and notes) Lined paper Markers

Purpose
To gauge the groups proficiency with numbers and lay the groundwork for teaching numbers to illiterate women.

Link to MOVE
Familiarity with numbers is essential in a business to understand printed prices, receipts, contracts and to maintain records.

Steps
1. Find out how many participants are literate in the group.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

2. Group the illiterate people together and lay out the number cards in random order in front of them. 3. One volunteer should place the numbers in order. If she cannot do this, give her a one rupee coin. Then ask her the following: What is the worth of the money/coin you are holding in your hand? How do you know the value of the coin? Make her identify the number on the coin. She should then identify the corresponding number in the set of number cards. Note: The members may know basic maths (i.e., addition, multiplication, subtraction and division) but may not be able to recognise the numbers. The key to the game is to connect the numerical symbols, which they do not know, to the mathematical calculations and exchanges of currency that they are already familiar with from their everyday experiences. The game should be improvised as per the situation 4. Continue this strategy with other denominations and numbers. The volunteer should place the number cards in order. If she is unable to do this in several tries, let someone else help her. 5. Once the cards are in order, ask her to try to memorise the order. Then mix up the cards again, and ask her to arrange them once again. 6. After this, deal with numbers 10 and above. Ask the participant: What comes after 9? She should put together the number using the cards (09). If she cannot do this, show her a Rs10 note. Ask her: What is the value of the money? Make her identify the number on the bill. She should then recreate the number using the number cards. Combining two digits to form numbers over 9 is generally a very difficult concept to understand. Give the participant sufficient time to figure this out because she probably will not understand immediately how to do this. Note: It is not realistic to expect illiterate participants to learn functional numeracy in just one lesson. However, if each subsequent MOVE session begins with a brief session on the numbers, it is possible that participants will make significant progress by the end of the entire training. Outcomes Participants should gain basic familiarity with the digits 09 and with numbers above ten.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

Module 1A

Case Study 1: In Our Experience The Number Game Across all villages it was found that, although illiterate, participants knew maths and could recognise currency, but they could not identify number symbols. For example, in Channapur village, participants quickly and accurately answered addition, subtraction, multiplication, and division problems when presented in terms of money. One participant was even able to calculate compound interest on a loan in her head. However, these very same participants who did lightning-quick mental calculations could not recognise a single digit. Their experiences with money had developed their mathematical skills, but they identified the money by its colour and size and not by the numbers printed on the currency. The key in all the villages was to connect numerical symbols to money. The number game was most successful in villages where a systematic approach was used. An example of a non-systematic approach was in Kotur village where participants were simply asked to put the cards in order over and over again. Trainers asked participants only to memorise the numbers. A more systematic approach was used in Mugad. When participants could not put the number cards in order, they were given currency, asked to identify the value and then match the number on each note to the cards. This worked because the facilitator used a strategy which built upon participants familiarity with money.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

MODULE 1B
Goal Setting Game
Materials Needed

Chalk 10 coins

Purpose
Motivation exercise to emphasise the importance of having goals and explore the thinking behind formulating goals.

Link to MOVE
All income generating activities need goals to set targets for profit and growth. This game is an introduction to the concept of setting goals.

Steps
Individual Goal Setting

1. Draw a circle approximately 3 feet in diameter and a horizontal line approximately 15 feet away. The goal of the game is to throw as many coins as possible into the circle

Approx. 15 feet

Group Goal Setting

2. Ask each volunteer: How many attempts would you like? Then ask, How many coins will you get in the circle?

10

Approx. 3 feet

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

Module 1B

3. Ask questions related to the results: Why did you choose x number of coins to attempt? Why did you choose y number of coins to get in the circle? Why did you get more/less than you predicted? 4. Allow the volunteers a second chance to improve upon their performance. 5. Relate the results to a business venture. For example: If the volunteer gets more coins in the circle on the second attempt, the trainer could possibly offer the explanation that they are more likely to be successful as they gain experience. If they get fewer in the second time, emphasise that they may experience success or failure, but the more they try, the more they will succeed. In this fashion, relate the results to a potential business. Since any outcome is possible, it is absolutely essential that the trainer is able to improvise, no matter what happens. Note: There is a danger that the participants will play the game and not understand why it is relevant to a business. It is extremely important to pause after each volunteer has thrown her coins to ask questions about how the goal-setting game is related to a potential business. 6. Divide the participants into three or four groups. Ask each group to set a goal. The participants may each decide to throw coins or choose a single designated thrower. 7. Ask questions such as: Why did you set your goal at x coins out of y attempts? How was choosing a goal different in a group from that as an individual? Why? Why was it the same as/different from the throwers previous results? Why do you think that the thrower experienced success/failure? 8. Again, relate these results to a potential business. For example, if a participant receives a lot of advice from her team and succeeds, emphasise that shared knowledge, supportiveness, and unity are ingredients for success. The participants should discuss why they succeeded or failed. Was the thrower confident/over confident? Was the team supportive/not supportive? Were the expectations realistic? Again, because results will vary widely, the trainer must improvise a link between an outcome and a business venture. Outcomes

Understanding the similarity between setting goals in this game and setting goals in a business. The challenges and benefits to setting goals. The differences between individual and group goal setting.

11

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

MODULE 1C
Tower Building Game

Purpose
To show participants the challenges and benefits of working together in a fun and lively setting.

Link to MOVE
The participants will have to work together to run an effective business. They will have to delegate responsibility and learn to cooperate.

Materials Needed Stones of varying shapes (flat, round, jagged). It is best if the stones are approximately the same size. Stopwatch

Steps
1. Split the participants into groups of three or four. Give each group about 56 stones of varying shapes. 2. Each group should stack the stones one on top of the other (not side by side) to make a tower. The first challenge is to stack the stones in 60 seconds, and then next in 30 seconds. Then the participants should compete against the other groups for the fastest time. The groups should exchange their sets of stones and they should compete again. 3. Discuss the strategies that successful groups used and the strategies that unsuccessful groups used. Ask the participants: Why did certain teams accomplish their goals? Why did others fail? Did some groups succeed because they had an easier set of stones? Did some groups continue to succeed no matter what stones they had? 4. Improvise a discussion with questions such as: How do the outcomes relate to a business? How did everyone contribute? How are the contributions in the game similar to the contributions members must make to a potential business? Outcomes Understanding the importance of cooperation.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

12

MODULE 2A
The Wedding Card Game

Purpose
To facilitate understanding of the basic elements of running a business.

Link to MOVE

This game will simulate a decisionmaking environment where participants have to buy raw materials, produce, delegate specific responsibilities, ensure timely delivery, set reasonable prices, negotiate, and estimate profit margins. This exercise is the introduction to the idea of customer orientation, which is the central focus of MOVE.

Materials Needed 15 card sheets in 45 colours (A1 size) 150 sheets of plain white (A4 size) 30 sheets of coloured paper (goti sheets) in 45 colours 3 glue sticks (gum tubes) 3 scissors (or blades) 3 sets of markers, coloured pencils, or sketch pens Currency (photocopied or real money) for groups to buy raw materials

Steps
Set Up
1. The basic premise of the wedding card game should be explained to the participants as follows: The participants will be divided into groups of 45 that represent wedding card companies. The companies will buy materials from the trainer to make sample wedding cards and based on the sample, the trainer will place orders for wedding cards with the companies. 2. The trainer divides participants into three groups to become three companies. Each company chooses a name. The trainer provides each company with money to buy materials. Note: Real money could be used in this game so that participants can more easily relate to the results.

13

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

3. The trainer sets up a shop where the women can buy the materials necessary to make the cards. At the shop all materials are displayed with price tags.

Purchase of Raw Materials:

1. The three companies buy the raw materials from the trainer to create sample cards. 2. Equipment (such as scissors, markers, and glue) should be given free to the companies or rented out to them. 3. The trainer should record details of purchases of each company in Table 1a. (Shown on page 16)

Sample Production:

Give the groups 20 minutes to create sample wedding cards.

Order Procurement:
Once the cards are ready, each company needs to get orders. For this: 1. Each company should introduce the companys name and explain why that particular name has been chosen. 2. Each company should present their cards to the trainers. They should explain the advantages of their own cards, the disadvantages of other competing companys cards, and set the price. 3. After negotiations on the price of the cards takes place, the trainer places orders for cards from all three companies. The trainer should make sure that she/he places an order that will be realistic for participants to fulfil in the allotted time frame.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

14

Module 2A

Mass Manufacturing
The companies must then produce the number of cards ordered within about two hours.

Final Sales:
1. The product should be subjected to close scrutiny by the trainer. If the trainer feels that the product is not the same quality as the sample, then she/he should: Feel free to cancel the order and reject the product Reduce purchase quantity Negotiate a lower price. This helps the groups to understand that the customer is the KING. 2. The buyer will then in todays market pay for the cards he has decided to purchase. The trainer should record details of sales of each company in Table 1b. (Shown on page 16)

Analysis and Review:

1. The first lesson that participants learn is that Customer Perspective Is Important. Generally participants tend to produce without asking the customer (in this case the trainer) what she/he is looking for. How many companies actually asked the customer what she/he wanted? Would the companies have been more successful if they had asked the trainer what kind of cards she/he needed for his shop and then produced exactly what she/he needed?

Note: No clues should be given to the groups to ask the customer what he wants. This will make the impact of this lesson stronger. 2. Information and input that should have influenced production: Price range: How much is the customer willing to pay? Quality: What features did the customer want in the product? Product: What type of card did the customer want? Market: What is the range of prices for your product? Into which market niche can your product fit? Find out what the customers want and what you can deliver. 3. Analysis of each company (Table 1c on page 16): The trainer should help the companies analyse and compare their profits.

15

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

Table 1a: Expenditures on Inputs Raw Material Cost of Raw Material Quantity Purchased Total

Table 1b: Revenues from Sales Price of Card Quantity Sold Total Sales

Table 1c: Revenues from Sales Total Sales Total Cost Total Profit

Outcomes

The customer is King. The customers perspective is most important, and cannot be ignored. An understanding of the customer is required BEFORE production begins. Find out from the customer what she/he needs. Meet the customer and have a dialogue. Know the market and the range of prices for the product. With knowledge of the market, analyse where a product can fill a market niche and ask, Why should the customer buy this? What do I have to offer that others dont have?

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

16

Module 2A

Case Study 2: In Our Experience The Wedding Card Game The wedding card game in all villages illustrated that the customer is all important. In Channapur, three groups experienced three different challenges which were also faced in many other villages. Group A presented the trainer two sample cards, but he thought that neither of them was of good quality. He said, Do you expect me to buy these pieces of garbage just because you made them? The participants were forced to sit out for the rest of the session with nothing to do because they had failed to make a sample that met the standards of the customer. Group B created the nicest, most ornate cards of all groups. It took women approximately 15 minutes to draw the intricate design work on each card. Unfortunately the groups representative set the price at 80 paisa, which was actually below the production costs. The trainer readily agreed to this price and ordered 15 cards. The group slaved away making the cards and despite their hard work and the outstanding quality of their product, they suffered a deep loss. These women learned a lesson they would not forget: No matter how high the quality, if the pricing is not fixed correctly, they will make a loss. Only one of the four women in Group C was working. This woman complained, These three arent working. I am the only one doing anything. Unfortunately, she was not able to delegate responsibility efficiently and give the other women tasks to do, such as cutting and gluing. The group fell well short of the target order and thus made only minimal profits. It was also found that the impact of the game was dependent on simplifying the rules so participants could easily understand the results. In Kottur village, the women were given Rs200 to buy items such as glue, markers, and scissors. Because these items could be used over and over again, it was difficult to calculate the actual cost per card and profits. The trainers attempted to cost these materials by estimating that one tube of glue could last for approximately 200 cards, so they divided the cost of glue by 200. They made similar calculations for markers and scissors. The final figure was given to the women when the profits were calculated. However, with such complicated calculations (which the participants were not involved in), the participants could not understand the actual cost per card. As a result, the companies set their prices based on random estimates and each group spent about Rs100 regardless of how much material they actually needed. In short, they bought materials and sold products with no clear idea of what they had actually spent and how much profit they had actually made on each card. In contrast, in Mugad village, women were given glue, scissors, and markers for free. Despite having plenty of initial capital, they bought only the amount necessary to make their samples. The participants in Mugad were more aware of the expenditure on raw materials so they estimated the cost of production per card and set prices above that cost. This was a simpler process, easily understandable by participants.

17

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

MODULE 2B
Buying and Selling Game

Purpose
To understand customer behaviour, selling behaviour, the role of the middlemen, distress selling, sunk cost, and profits of different products.

Materials Needed Various products such as soap, groceries, vegetables, stationery, biscuits, and so on. Money

Link to MOVE
Most people start income generating activities with the assumption that production is necessary to make a profit. This exercise shows participants that retailing is a legitimate business in and of itself, that offers the potential for substantial profit. They learn the techniques of buying and selling.

Steps
1. Explain the basic premise of the game to the participants: in this game two groups will start shops and two other groups will have to buy from those shops. The groups who start shops will buy their stock from the trainer, who will act as a wholesaler. 2. Divide participants into four groups, two groups will be sellers who each own a shop and two groups will be buyers who must buy from these shops. In the case of a fewer number of participants, divide them into only two groups, one buyer and one seller group. 3. The trainer (acting as a wholesaler) sets up his shop and fixes price tags on each item. The prices are fixed slightly higher than the actual cost. 4. Provide each group with an equal amount of money (to be returned after the session). For example, if the total amount of material purchased by the trainer is Rs370, it is best to give each seller group about Rs200, so all the products will be sold at a reasonable price.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

18

Module 2B

Trainer Wholesale

Sellers

Sellers

Retail Customer Customer

5. Each selling group must use all their money. Any money they do not spend will be returned to the trainer. 6. The seller groups have to set up shops and act as retailers. They can give their shop a name. The seller groups should display their wares with price tags. 7. The trainer should then give the same amounts of money to the two groups of customers. The customer groups must spend all their money, but still bargain for the best prices possible.

19

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

8. In the next 30 minutes or so, the buyer groups buy from the seller groups. There should be lively bargaining, various deals, and other negotiations as the sellers try their best to make a profit and the buyers try to get a good deal. 9. When the time is over, the seller groups can sell unsold products back to the wholesaler at half the price. The trainer should feel free to reject perishable products such as milk and vegetables. 10. After the session, analyse the results: What items do the seller groups have left over? Would they be able to sell these items the next day (compare perishables to non-perishables such as clothes or soap) Is it a sunk cost an expenditure that will not be recovered (for products such as milk or vegetables)? Ask the buyer groups why they selected and bought certain items and why they prioritised certain items over others. Analyse the thinking behind each purchase and track the patterns of buying and selling. What lessons can we learn from this game? Who was most successful and why? What products were most successful and why? Which products yielded the highest profits? Which products yielded the highest losses? Which products sold the most volume? Which products sold the least? How can we relate the results of the game to reality?

Outcomes Participants gain an understanding of:

Wholesale and retail rates and profit margins Buying strategies Selling strategies Distress selling decreasing prices in order to minimise losses. Sunk cost products that will not yield a revenue. For e.g., wilted flowers which have not been sold by the end of the day cannot be sold at all. This is a sunk cost. Distress Selling

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

20

Module 2B

Case Study 4: In Our Experience... The Buying and Selling Game In all villages, participants realised the importance and profits associated with retailing. In Mandihal, two groups sold based on two very different philosophies. Group A said, We should make 25% profit on each item. They attempted to accomplish this by any means necessary, and even resorted to cheating. Group A charged customers the price for a 4 kg packet of soap while in fact the packet contained only 2 kg. The customers were furious, shouting at Group A and threatening to go to Group B. Group A apologised profusely, and after a lot of sweet talking, managed to get the customers to sit down again. But they did not learn their lesson. Next they attempted to sell undergarments for almost double the price, saying there were four pieces in a packet which only contained two. 15 minutes of name-calling, accusations, and threats followed. Customers did not trust Group A to make fair transactions, so they refused to buy from their shop. As a result, Group A made heavy losses. Group A cheated because they were too set on achieving a 25% profit margin, which blinded them to the fact that this margin did not match market prices. Group B, on the other hand, set their prices at one rupee above the wholesale price, and said, Take it or leave it. They conducted business without any quarrelling, but their profit margins were tiny. Group B did not take market prices into consideration. Instead of setting the price based on market factors such as, What are the prices of comparable products? How much is the customer willing to spend? and What are the prices of the competitors? they set a very simple price formula based on the wholesale price. This strategy prevented them from making larger profits. However, most villages noticed a sharp increase in the profits made in just one hour of retailing compared to the previous session of an entire afternoon spent producing wedding cards. Every group used different methods to buy materials wholesale. In Mugad, groups bought the cheapest items first to minimise risk. In Channapur, groups bought items such as vegetables because they were consumed daily. Certain products had moderate, but almost guaranteed profits, such as food, while clothing items generated the most profit when sold (in Kottur) and the most losses when they went unsold (in Channapur). These products were analysed later as high risk with high gain (clothes), and low risk with low gain (vegetables).

Wholesale

Retail

21

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

MODULE 3A
Format Free Market Visit

Purpose
To go to the market without any preconceived ideas to observe various types of sellers and customers, different types of products, and buying and selling patterns. To shift the participants perspective from that of a customer to that of a potential entrepreneur.

Link to MOVE
This is a milestone session because it is here that the initial market orientation takes place. What participants learned in previous simulated sessions can now be observed in reality. Participants will observe transactions not only from the customers point of view, but also from the sellers point of view.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

22

Module 3A

They observe market dynamics. This session is also essential because participants begin collecting the basic information needed to explore possible business opportunities and construct business strategies.

Steps
Briefing prior to market visit
1. Discuss what the participants saw on their way from their homes to the market. Emphasise the businesses they saw along the way (such as tea shops, vendors at bus stops). 2. Tell them that the casual observations they have made about these businesses is only a fraction of the information they can gather. They have to observe carefully, ask questions and gather as much information as they can and explore the market from the perspective of a business person.

Walk through the market.

1. Let the participants walk around the market place on their own. 2. Assign a time and location for everyone to meet to discuss what they have seen. Allow plenty of time for exploration but not so much that the participants get exhausted and then cannot engage in discussion.

Discuss what was seen and the experiences in the market

1. What happened during their visit? What information were they able to get? What were the products available? Ask about: How much were the wholesale costs? What is the distribution pattern? Who are the customers? etc. The gaps in the participants knowledge will set the agenda for the next session, i.e., the formatted market visit. Outcomes

Participants discuss various products and prices. Although they have some information, they still see the market primarily as a customer. Through discussions the trainer helps participants realise that they have not observed a range of different market features (trainer can refer to table 2 on page 26) This session prepares them for a formatted market visit. The result should be that participants share the information they have gathered, but also recognise, Oh, I didnt think about that.

23

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

Case Study 5: In Our Experience Format Free Market Visit The participants gathered very little information other than wholesale and retail prices. Most participants did not ask questions about shelf-life, stock, distribution, customer relations, market segments, or other information. Most participants took the session as a chance to do some shopping and shared with other participants the asking price of retailers and (proudly) compared it with the price they were able to bargain. The shopkeepers in the more urbanised market were less willing to share information about wholesale rates and even regarded participants with suspicion, sending them away. To avoid this, one woman from Gabbur went to get information only from shops where she was an established customer so the shopkeepers were more forthcoming. The women from Mandihal who experienced a severe loss during the buying and selling game because they cheated their customers, seized the market visit as a chance for redemption. They went far beyond compiling information on the market and actually made an attempt to enter the market as entrepreneurs. They went immediately to the wholesalers, bought vegetables, laid out a mat, and spent their entire time in the market selling. During the allotted two hours they managed to make Rs100 profit, with plenty of vegetables left over.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

24

MODULE 3B
Formatted Market Visit

Purpose
To orient participants to observe market dynamics in detail

Link to MOVE
This session helps participants build the skills to understand the market. It fills gaps in knowledge with primary research. The information they gather in this session will be the basis for future decisions on how to enter business.

Steps
1. Participants are told that they need to think about the products they are investigating both as a customer and as a business person. They are told not to go to a shop just to bargain but to speak to shopkeepers as fellow business people. Participants should introduce themselves, inform the shopkeepers that they are undergoing business training, and request time to ask them a few questions. 2. The participants should be divided into groups of three. Each group should choose five products to explore in-depth. Participants will choose their future businesses from the information gathered in this session, so each group must become experts on the products of their choice. 3. Ask shopkeepers: Who are the customers? What is the turnover? How much profit is made weekly? What are the main challenges to the business? Where are materials bought wholesale? etc. Then follow the trail and ask the wholesaler: Where does most of the supply come from? How labour intensive is the production? Who are the retailers you sell to? and Which retailer has the most success? At every step from producer, to wholesaler, to retailer, to customer find out as many details as possible about price, profit, sales, quantity, and so on.

25

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

4. Let the participants walk around the market place on their own. Assign a time and location to discuss what they have seen. 5. The success of a business is most dependent on information. All information for the business will come from the participants and nowhere else. The more information the participants get in this session, the more successful their business will be in the future. Discuss what was seen in the market with the help of Table 2.

Table 2: Information Collected from Formatted Market Visit

Daily/Weekly Sales Wholesale Price Where it is sold

Retail Price

Production Information

Ex: Where do the wholesalers get the product? Who are the producers? When is production the highest/lowest (ex. Vegetable seasons)? Is it possible for you to produce this product?

Record geographic location, and types of stores that sell the product, i.e. (roadside vendors, shanties, fancy shops).

Customer

Product

Who buys this product (Rural people or urbanites, rich, middle class or poor)? Do different shops have different types of customers? How much are people buying? What qualities are they looking for in the product?

Outcomes The participants have an in-depth understanding of the types of customers, types of shops and types of products. They get information about the dynamics of the marketplace and on different products, which builds their capacity for lateral mobility (switching business ventures).

26

Other Information

Profit

Any information particular to the product being examined. Ask retailers and wholesalers the advantages and disadvantages of selling this product. What are the strategies they can use to succeed?

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MODULE 4
Understanding Needs and Wants

Purpose

To facilitate an understanding of consumers needs and wants of a product. To assess which needs and wants participants can meet. To be able to estimate demand.

Materials Needed Chart paper or brown paper (big sheets) Marker pens

Link to MOVE
In the previous module, the participants observed how products are bought and sold and shortlisted a few products. This session asks the participants to link what they observed in the market to the customers needs and wants for the products selected. Prerequisite

The groups should have been on a market visit where each sub-group collected information on five products. There should be information on at least 1015 products based on the number of subgroups created. The number of houses in the village/area should be known to estimate market demand. Approximately the number of rich, medium or poor households should be known.

Needs

Wants

27

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

Steps
1. Make a list of all the products that the participants have researched during their visits to the market. 2. Ask them to choose five products that they would want to produce or sell from the list. Give them sufficient time to discuss the WHYs? of inclusion or exclusion of certain products. 3. For each of the five products that are eventually chosen, collectivelly discuss the needs and wants on a chart that everyone can see (Table 3). Table 3: Needs and Wants of Products: Soap Commodity Soap Needs To clean clothes Wants Smell good Low price Nice lather Soft on hands What wants can you meet?

Note: Needs are the most basic qualities that a customer would expect of a product. Wants are extra features that are not necessary but desired by a customer. For instance, the need for soap is that it should clean clothes; the wants are that it should smell nice, create a nice lather, cost a reasonable amount, and not be harsh on the hands.

A product is a bundle of wants

Smell Tastes Weight
Money

4. Tick off the wants that participants can satisfy if they manufacture or retail the products. Some wants may eliminate others. For example, if you satisfy the want of nice packaging, you may not be able to satisfy the want of low price. Therefore the participants will have to think of different priorities different customers may have. They should begin to realise that a product is a bundle of wants. 5. Identify the market potential: The group estimates the number of households to whom they can potentially sell. When estimating the number of potential customers, participants need to keep in mind that most people already go to certain shops to purchase these items. The target households will be the ones that the participants can win over.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

28

Module 4

6. For each product they should identify: the buying rate, the selling rate, the number of potential households that can be sold to, the amount consumed and total profits. Table 4 below can be used as a guide for the discussions.

Table 4: Estimation of Market Demand and Profit for Each Product

(a) Product (b) Cost/ Unit (Rs/unit) Puffed Rice 1Re/ measure (c) Price/ Unit (Rs/unit) 1.5Rs/ measure (d) Profit/ Unit (Rs/unit) 0.5Rs/ measure (e) Total Number of Household (HH) 500 HH (f) Estimated Target Household (HH) 100HH 6 measure day 219,000 measure year (fxgx365) (g) (h) (i) Total/ Profit Year (Rs/year) 109,500 Rs/year (hxd)

Consumption/ Target Time Period Household Consumption

Soap

2Rs/bar

3Rs/bar

1Re/bar

500 HH

100 HH

1 bar/week

5,200 bars/year (fxgx52)

5,200 Rs/year (hxd)

29

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

Smell

Feel Touch

MODULE 5
Marketing Strategy

Purpose
Participants will design a production, promotion, and distribution strategy. After detailing the needs and wants of each product in the previous session, participants examine how to deliver those needs and wants.

Link to MOVE
This takes the previous module a step forward by examining the products from the perspective of how to serve potential customers. Market segments are defined and each segments specific needs and wants are identified. Furthermore, the best way to deliver these needs and wants are detailed through product, pricing, distribution, and promotion strategies. Broader ideas about products are broken down into specific concerns.

Materials Needed Samples of the entire price range of the five chosen products. Make sure you have the cheapest brand of product, a high-end brand, and a few in between. Include a single brand with two or more varieties that target different customers or perform different functions (for example, bar soap and powder soap). One large sheet of brown paper Markers

Market segments: Different customers, Different needs, Different prices

Incense

Temple

Home

Shop

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

30

Module 5

Low quality

Medium quality

High quality

Prerequisite: The community organiser should have bought various samples of the five products chosen, each varying in price, quality and brand.

Note: Do not compromise on representing the ENTIRE spectrum of products.

Steps
1. For each of the five short-listed products, obtain the cheapest brand and the most expensive brand with at least three varieties in between. 2. For each product present the various brands. Allow participants to take their time examining the qualities of each, compare and contrast the different brands. Discuss which brands are bought by which customers. This helps participants understand market segments. 3. Participants should provide the information necessary to complete Table 5. This will be a long, in-depth discussion. 4. Focus on price. What is the price of the product? What market segment does this product serve? Why? 5. Repeat this process for each of the 5 products.

Outcomes

Participants should be able to visualise what products they want to sell and where to sell it. Create strategies that are specific to each product. Know about different pricing for different market segments.

31

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

Table 5: Market Strategy

Pricing Strategy Selling Strategy Promotion Strategy Distribution Strategy

MOVE

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

Product

Product Strategy

32
2. Which market segments will be willing to pay? 3. What wants can they fulfil for that price. 3. Sell at retail rates through their own shop. 4. Set up stall in a grocery store and pay a store commission. 3. Advertising: Use networks to generate demand through word of mouth. 2. Branding: How do you choose a brand name? What would be its message? What do you want to convey? Who is your target audience? 2. Sell to other shops at wholesale rates. Temples: Price should be cheap. Homes: Willing to pay a little bit for long lasting sticks. Shops: May be willing to pay more for fragrance. Selling through shops. Direct selling to temples. Essential to know festival dates and auspicious days. Temples do not need elaborate packaging. Low price and minimal packing needed. Homes would want a nice cardboard box with a nice design, where you can close the cardboard box to keep the sticks fresh.

1. Identify the customer using family size, age group and so on. 1. Direct selling: Door to door Street vending Exhibitions and fairs

1. Relate price to market segments and wants. 1. Packaging: what type of packaging do they need? (colourful, clear plastic, different sizes, company name printed on the package?)

1. Margin: What are the profit margins if you are producing and selling to wholesalers and if you sell retail? What margins can you get if you buy from wholesale and sell retail? 2. Stocking: How much of the product should be available at a time? How much should be in stores? How much should be with them? Therefore, how much should they produce or have available monthly? 3. Shelf life: What is the minimum and maximum shelf life of your product? Within that shelf life how much can you sell? What will you do with excess stock? Can you extend the shelf life? Nearing the end of the shelf life if you cant sell, do you have a back up plan, like an agent to whom you can off-load the product. If a product (like vegetables) decreases in quality with time, will you sell it at a discount? 4. Inventory (variety): Which market segments require what varieties and how many varieties will you stock for each market segment (ex. The rich require many varieties of bangles to choose from). 5. Choice of Distributor: Who is a good distributor? How much product stock is a distributor willing to take? How much can she/he sell? What kind of profit margin will she/he give you? Is she/he willing to promote your product over time?

2. Identify market segments, i.e., households (rich, medium, poor)

3. Identify shops, hotels, hostels and so on

4. Identify wants of each market segment (Example: Houses need high quality, hotels need bulk).

5. Compare existing brands. Which brand targets which segment?

Example: Incense Sticks Shelf life is not much of a concern. Products last longer if they are in sealed packages, but this will be at an extra cost. Variety is not important for temples, but if you want to sell to multiple market segments, you need different varieties with different qualities and different fragrances.

Incense Sticks

1. Market segments: Temples, homes, shops, offices, buses

2. Temple: Minimum wants: it should just burn. Smell, longevity, packaging is not important.

3. Home: It should last a long time, be fragrant.

4. Shop: Being fragrant is the most important factor.

Distributor and Stocking: If you want to sell to shops outside temples, youll have to sell in bulk. If you yourself want to sell outside temples you can sell in smaller amounts or even sell single sticks. Homes will want a few incense sticks in a box that will last. Outside temples, you can also sell a kit which includes a coconut, flowers, etc. Selling door to door may not be worth it because profits may not compensate for transportation costs.

MODULE 6A
Preparation for PMA

Purpose
To create and test a market survey that participants can use.

Materials Needed Brown sheets or chart paper Marker pens Carbon sheets

Link to MOVE
Participants design surveys to conduct in their village to understand the local market. The Participatory Market Appraisal (PMA) is a version of market research specifically designed for the illiterate. Prerequisite: The community organiser should have visited all the shops in the village/ area to understand what is being sold.

Steps
Design of visual surveys
1. Take the list of five products. For each product, ask participants to list the qualities customers want in the product, based on the analysis from Module 4. 2. Participants should define these qualities in detail (For example, What does crunchy mean? Should it make a sound when you eat it? Should it be not soggy at all?) 3. Participants should rank the top qualities for each product. 4. Participants should create a symbol for each of these qualities. The trainer should work collaboratively with the participants if they are unable to draw the symbols on their own. It is important that the ideas for the symbols should come from the participants and should be understood by the participants. 5. Symbols also have to be created for other relevant information such as price, quantity, family information and so on. Include relevant information on the household for each product. If you are surveying bangles, find out the number of female members in the household. If the survey is for cattle feed, find out the number of livestock the household owns. Illustration 3 shows a typical PMA with symbols for quantity, type of market and product characteristics.

33

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

6. Since the participants are primarily illiterate, they have to mark quantity with tick marks or dots. Note: Participants must use uniform measures for each product! Participants must be very clear about the unit for each product namely kilograms, litres, bundles, boxes and so on. The time frame must be clear, namely daily, weekly, monthly, etc. For example, if one person enters data on edible oil in litres per week and another enters it in kilograms per month, the information will be useless. 7. For symbols of quantity, if there are different denominations such as , , draw a circle divided into four parts and colour in the appropriate number of segments. 8. The facilitator should reproduce charts for each woman using carbon sheets. 9. Conduct a pilot test among participants to familiarise them with surveying. Divide the participants into groups of two and ask each one to pilot test the survey on his/her partner.

Illustration 3: Example of Participatory Market Appraisal for Soap: Mugad Village

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

34

Module 6A

10. In the pilot some questions may be screened out. For instance, price for a given product may be uniform so it may be eliminated from the survey. Change the survey if necessary. 11. After the session, the trainer should make photocopies of the revised surveys for the next session. Note: It is best to help participants create a chart that simplifies the process, so they can just simply tick off a box. Organise the chart in any way, which makes sense to the participants. This will require a degree of creativity and improvisation on the part of the facilitator. Outcomes

The group has an understanding of the existing competitors, what they sell, how much they sell and why customers go to them Participants have created a workable prototype of a survey that they can understand Symbols for needs & wants

Create Survey
432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

35

MOVE

MODULE 6B
Sampling and Surveying

Purpose

Materials Needed Surveys created in the earlier session Pens

To sample and survey households and thus give participants the tools to research their customer base. To collect the data necessary to understand the market, find a niche, and move forward in business.

Link to MOVE
Estimates of market size in the previous sessions and assumptions of what customers need and want are put to test with actual surveying. For the first

1 1 1 2

2 3 1 2

1 2 1 1 1

1 1

1 2 1

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

36

Module 6A

time, participants are asking the customers about their buying habits and desires face-to-face. This dialogue between entrepreneur and customer forms the core of the MOVE process. Prerequisite: The community organiser should know the number of households in the village and approximately how many are rich, middle income and poor. Enough surveys should have been created and photocopied so at least 10% of the village is surveyed for each product. Every member should participate.

Steps
Sampling
1. Participants should identify the number of households in the village. They should sample approximately 10% of this population for a large village and at least thirty households if it is a small village. 2. Split the sample population into wealth categories of rich, middle class, poor, and very poor. Ensure participants survey a proportionate number of households from each wealth category. Assign each participant households from each wealth category to survey. Note: participants will typically only want to survey their neighbours and may feel intimidated or uncomfortable going to richer or unknown households. Make sure that all types of households are represented in the sample and each participant surveys every category of household. 3. Give every participant an equal number of forms to fill for each product. Note: Every participant should conduct the survey for every product. The idea is to give every participant information on every product so that each is familiar with all five products and can make an informed decision on what to sell. This is needed for participants to understand different market segments.

Surveying
1. Each participant should spend the next week visiting the households they are assigned to and filling out the forms by ticking off the appropriate boxes. 2. When the participants are surveying they should be careful not to suggest answers or prompt the client and only mark what the client has said. 3. No leading questions should be asked. For example, with the case of puffed rice ask the customers what they want from puffed rice. If they say it should be cheap then the surveyor should only tick off those boxes. These responses will be the wants that are most important to the customer. The surveyor should not ask the customer about every attribute on their survey form, with questions such as: Do you want it to be cheap? Do you want it to be crisp and so on. Because there will be a natural tendency for the client to agree to all the

37

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

wants. The result will be that all forms are identical, with every box ticked. This makes the survey useless. Instead ask questions such as, Where do you buy puffed rice? and then Why do you buy it from there? or What kind of puffed rice do you buy? And then Why do you buy that kind? so customers are free to provide their own reasons. These strategies should be practiced thoroughly before the actual surveying takes place. Illustration 4: Example of Participatory Market Appraisal for Milk: Gabbur Village

Rich

Medium

Poor

Adult Male

Adult Female

Child Male

Child Female

Quantity of milk consumed Reasons for buying

Contact Time Taste Freshness Buffalos milk Cows milk Other Services Pure Facilities Utilization Credit Butter Cheap price Home Delivery

Tea Ghee Butter milk Sweets Curds

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

38

Module 6B

Do you want puffed rice to be crisp? Clean Crisp Yes Yes Yes

Wrong

Useless
you buy Why do e from ric puffed City? the

Right

the ner and re Its clea a ements measur te accura

Good

Outcomes

Since participants collect the data themselves, there is a sense of ownership over the data. The process of gathering data on five different products from very different households helps orient participants to customers and their needs. They obtain the skills to gather market information and deal with different types of customers They lose the fear of dealing with richer clients which helps build confidence for future sales. Participants begin to get a clearer idea of their own market, how much customers consume, and what customers want.

39

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

MODULE

Analysis of the PMA

Purpose
To analyse the data collected in the PMA collectively in order to create a clear picture of the market. To know the market size of a product and gauge the possibility for business success.

Materials Needed Large sheets or chart paper Sketch pens of different colours Marker pens

Link to MOVE
The collection of all the results will give the participants a clearer image of their customer base and market. Based on their findings, they will discover the true market potential for each product surveyed as well as what customers want from each product the most. Based on the survey data participants will choose a market niche to fill. Prerequisite

The participants should have done the survey and collected all the data. The community organiser should have created the master sheets using the same format as the surveys so participants can easily fill in the data they have collected.

Steps
Entering Data
1. The trainer should hang large sheets prepared exactly like the survey sheets on the wall, one sheet for each product. These sheets should be re-creations of the survey forms with the exact same symbols for each product. If five products were surveyed then there should be five large sheets. 2. Participants should each be given different coloured sketch pens.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

40

Module 7

3. Participants should enter all the data from their forms on to the main charts for each product. 4. Boxes checked on the survey forms should in turn be checked in the corresponding box on the large sheets. The participants should enter all the data on each survey form onto the large sheet. 5. After each survey form has been entered it should be checked off on top of the survey forms to indicate that the data has been transferred (so by mistake it does not get entered a second time).

Table 6: Summary Data for Edible Oil: Channapur

Edible Oil
Number of families surveyed Quantity consumed by families surveyed

Purchasing in the City

Should not spoil

Purchasing in the Village

Should not spoil

Groundnut Oil

Groundnut Oil

Total number of families

Wealth Categories

Accurate measure

1 2 3 4 5 Total

14 17 37 57 122 247

9 9 8 16 40 82

17.5 kg/w 12 kg/w 10 kg/w 19 kg/w 41 kg/w 99.5 kg/w

27 26 23 53 101 230

35 27 25 49 109 245

8 8 8 16 36 76

4 3 3 1 1

1 1 3

2 2 5

9 27 46 1 0 0 1

41

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

Accurate measure

Palm Oil

Palm Oil

Women

Men

MOVE

Note: Ideally for this session there should be five people facilitating, one looking after each chart, so they can ensure that participants fill the information on all five products simultaneously and correctly. If there is only one facilitator, organize the participants in the most practical and fastest way to compile the information. Case Study 6: In Our Experience Collective Analysis of PMA In Channapur village, the information gathered on edible oil yielded many conclusions. Market Demand: A total of 99.5 kgs of edible oil was consumed by the sample households per week. Since the sample (82 households) is approximately a third of the population (247 households) total market demand can be estimated by multiplying into 3 which is about 300 kgs per week (i.e., 99.5 x 3). A more detailed analysis that breaks down the estimate for each wealth category is also possible. Location: Almost everyone in the village bought edible oil from the city (with 76 households reporting buying groundnut oil from Hubli city market compared to 1 household buying it in the village). This clearly indicated an opportunity to begin sales within the village without threat of competition. Attributes: Most people (46 households) consider accurate measurements extremely important, a feature usually associated with city markets. Very few (5 households) are concerned with the prospect of the oil spoiling. People overwhelmingly prefer groundnut oil over palm oil (76 households compared to 3 households). The basic information that this survey yielded was that if the women of Channapur wanted to sell edible oil, they would have virtually no competition within the village, but they would have to insure their customers received accurate measurements, and there is more demand for groundnut oil. Women decided they would start with selling 15 kgs of groundnut oil per week targeting 5 per cent of the market (300 kgs). They estimated they could make Rs2 profit per kg or 30 rupees per week.

Collective Analysis
1. Quantity: To analyse the quantity, the column assessing quantity should be totalled up at the bottom. If the sample was 10 per cent, numbers should be multiplied by ten to arrive at total village/area demand for that product. (In Case Study 6, the sample is a third) 2. Prices: Analyse the range of prices, if this information has been acquired. If not, use this opportunity to estimate price. 3. Location: Ask participants to look at where there is the highest concentration of dots in the location columns (Local market vs urbanized markets) to understand where people buy the product the most. For example, in Case Study 6, most people are buying from the city.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

42

Module 7

4. Product Attribute: What is the most important factor for customers to buy that product? Where are the maximum dots in the product attributes? For example, do most people buy from the city because it is cheap or because of variety or other such reasons?

Outcomes

After analysing all five product charts, participants know market demand in terms of volume and profits To estimate profit, participants need to know or estimate the cost of production and price to get profit margin for each product. If they intend to do retail they need to know the wholesale rate to estimate profit margins. The participants can now decide which product they would like to produce or retail and what percentage of the market they want to capture. All assumptions about where and why people buy goods will be proven or contradicted

43

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

MODULE 8A
Matching Demand and Supply; Narrowing Down the Products

Purpose

A more detailed analysis matching demand and supply is done on one or two products to narrow down the product the group wants to retail or manufacture. To understand the different kinds of shops in the village, products sold, amounts sold, and profit margins. To differentiate between what the shops are offering and what the participants can offer.

Materials Needed A map of the village/area (if it does not already exist, one can be created with the participants, see map on page 45) Chart or brown paper Marker pens

Link to MOVE
After choosing a product, the participants will begin planning for logistical issues. In earlier modules participants studied potential strategies, identified the market, and now they zero in on the strategies that will match the findings of their market research. By mapping shops in the village, the participants get an idea of the current market environment and how they could potentially fit in it, which is another element of market orientation.

Which product should I choose ?

Prerequisite: They should have analysed all the five products from their survey and decided upon one or two products that they want to start doing business in.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

44

Module 8

Map of Mugad Village

Steps
Mapping of markets
1. Create a map of the village or use the one that has been made in the Participatory Rural Appraisal (PRA). 2. Locate the shops and other businesses. Use different symbols for different kinds of shops so that they can be differentiated. 3. Create a symbol for each of the five chosen products. Draw the symbol on each shop which sells the product. 5. Include some reference to city markets if the villagers have access to urban centres, but do not go into extreme detail mapping it. 6. If there are sellers coming in from other villages or areas mark them on the map too. 7. If possible also mark the approximate territories each seller has.

45

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

8. Once the shops and sellers are marked, ask why people buy from some shops and not others. Also examine types of products sold by each type of shop. 9. Once members have chosen a product, shops selling it are identified and quantity sold by each shop is estimated, using the map from module 6A. This tells the participants the approximate total supply of the product. 10. Participants use the results of the PMA to estimate the total demand for a product. Participants find the difference between estimates of demand and supply to estimate potential sales. 11. For each product the different qualities are discussed and matched to different wealth categories or market segments. 12. Of the total market not covered by shops, they estimate what percent of the market segments they can attract. (e.g., 10 per cent of the rich and 20 per cent of the poor) 13. Based on this percentage, they can decide what variety and how much of each variety of the product they can sell or produce.

Outcomes

The participants have a clear idea of what they want to sell, what quality, how many varieties, who their targeted customers are, their sales cycle, selling price and approximately how much profit they can make. All the information they have gathered in earlier comes together to form a plan of action. The product is chosen and participants decide if they want to produce it or sell the product through buying wholesale and selling retail. They also estimate the sales cycle, namely how quickly they can sell a product (within one week or one month)

For retailers refer to Module 8b. For producers refer to Module 9.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

46

MODULE 8B
Retailing

Purpose
To start buying and selling of one or more products.

Link to MOVE
After choosing potential products, participants begin business. They locate wholesalers and buy in bulk and begin selling at retail prices to customers. Prerequisite: They should have chosen the products from their survey analysis.

Steps
1. Participants need to locate wholesalers and buy products based on price and quality. 2. Participants should decide on a selling strategy (door to door, starting a shop, etc.). 3. The timing of buying and selling should be based on when customers buy products. For example, ration shops sell rice around the 10th of every month which runs out by the end of the month. So to prevent people from buying rice outside, sale of rice can be sold in the first ten days of the month. 4. Through a couple of cycles participants are able to estimate: How much can we sell? When can we best sell? Who buys? What profits can we make? How do we factor in costs such as transportation? 5. Once funds start to flow problems may arise because some participants may work more than others and want a higher share of profits. Thus some rules need to be developed by the group as the business grows to decide on profit sharing, distribution of work, account keeping and so on.

47

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

MODULE 9
Production

Purpose
To guide potential producers on the series of steps that follow once the decision is made to enter production.

Link to MOVE
After choosing potential products participants begin production and selling. With MOVE production begins on a small scale with a clearly identified customer base which is based on market research. Then the business expands to fulfil demand.

Steps
Testing
1. Participants are taken on exposure visits to production units to learn the production process for the product of their choice. 2. They learn particular production techniques based on price and quality. 3. They then produce a small sample of their product 4. They test market samples by selling small amounts to customers. 5. The trainer should inform the participants that there are three types of customers: Those who are known and will buy the product because of a pre-existing relationship with the producer. Those who are flexible and could potentially shift Those who are loyal to other brands and will not shift. 6. When selling, the participants should focus on those who are flexible. What do these customers want?

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

48

Module 9

7. Based on customer feedback (Module 10), they make changes to the product. These changes may even require a second or third visit to production or training units to learn new techniques which produce goods that match the consumer needs. 8. They again produce and sell another round of samples. This process continues till their clients are satisfied.

Small scale production

Sample selling

Large scale production

Branding
1. At this point, before scaling up, they decide on the product name
2.

The facilitator makes the participants aware of the importance of branding through a series of exercises which includes exposure to a variety of existing brands in the market. Participants are asked to examine each brand for quantity, shape of packet, size of packet, design of the packet, logos and symbols on each packet, colour of the product and the packet, specific properties of the brands, language used in branding (English or local language) and the pricing.

49

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

3.

This familiarisation exercise makes them realise how branding should be done, why it is important and then participants choose their own brand name and mode of distribution. The facilitator helps participants by providing them information on costing of labels which varies according to the method used such as screen-printing, offset printing and polythene printing.

4.

Pricing of the product

1. Based now on a clear idea of how much people will pay, participants decide on the price. 2. At this stage they enter full production and scale up production. As they continue producing they research ways to cut costs and increase efficiency. Note: Production takes a long time. In MOVE, production is a constant learning process which tailors the product to the customer. It follows a cycle of production, sample sales, customer feedback, learning new production methods, and production again. It may require that the product itself is changed based on what sells. Participants will go into full scale production when they are able to meet customer needs satisfactorily.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

50

MODULE 10
Customer Feedback for Value Enhancement
Purpose
To maintain a customer-centered approach to business. To give the entrepreneurs the opportunity to hear their customers response and move forward based on their reactions and recommendations. Customers tell entrepreneurs what aspects of the business they are satisfied with, dissatisfied with, and recommend further value additions that they would like (in terms of services or enhancing the product). By seeking this advice and following it, the entrepreneurs maintain their market share and develop ways to increase it.

Link to MOVE
After a few trials of selling, participants recognise the central role that customer feedback plays in running a successful business. By formally introducing a customer feedback session early in the process, it will continue to be an established practice for entrepreneurs. The customers will also suggest several ideas on how the business can expand and evolve in the future.

51

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

Prerequisite

The participants have gone through at least one complete sale cycle, i.e., purchase of raw materials, production, selling and recovering money The entrepreneurs should ask their customers to attend their next meeting or schedule interviews with customers. Note: It may be difficult to get customers to take the time to participate in the feedback session. The option is that the participants visit the customers homes and get feedback.

Steps
1. On a large chart for everyone to view, the trainer can fill out a template below (Table 7) Table 7: Customer Feedback Format: Puffed Rice Product Puffed Rice General customer Feedback The Puffed rice is crispy and cheap. There were stones present. Value Input (Why did you buy?) Because they came to my doorstep. The measurement was correct. Value Addition (What more can be done?) They can add nuts. They can add other flavours to provide variety.

2. The entrepreneurs should first and foremost listen to the customer feedback, even if it is negative. This is not the forum for entrepreneurs to defend themselves or clarify misconceptions. The trainer should set the tone by respectfully listening to the customer feedback and preventing interruptions. 3. First the trainer should ask: Why did you buy the product? Where do you usually buy the product from? Why did you buy from the participants? What value do the participants provide? 4. Then the trainer should move on to ask the customers what other value can be added to the product. The trainer introduces the idea of the value chain. The Value Chain: value can be added to any product by moving closer to the customer and fulfilling more and more wants. For example, wheat can be sold at Rs8 per kg. If it is packaged it can be sold at Rs9 per kg. If it is ground into loose flour it can be sold at Rs1011 per kg, if the flour is packaged it sells at 14 rupees per kg. Finally if it is baked as bread it is sold at 2540 rupees per kg. The higher the value added the more profit made. Entering the market at a higher end of the value chain will earn them more. As participants understand their customer more and more, they can tailor their business to their specific needs and move up the value chain.
432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

52

Module 10

5. After the customers have finished giving all the feedback, the trainer should moderate a discussion between the entrepreneurs and customers where they can address their concerns and discuss how they will improve operation in the future to meet their needs. Outcomes

The goal is to develop the habit of analysing past sales cycles in order to tailor business for the immediate future and the long term. At this point participants should be ready to continue their business on their own, adapting to the market and to customer demand as necessary.

Case Study 7: In our experience... Customer feedback A challenge that participants in all villages faced was getting customers to participate in the feedback session. Since this session took place during the monsoons, movement was difficult, so even walking the short distance from home to the meeting place through mud and rain was hard. The participants were finally successful in acquiring customer feedback because they accommodated their own schedules to fit with the customers. This spirit of putting the customers first was especially evident in Channapur. Participants laid out two mats on one side of the room and one mat on the other side. Six customers spread out on the spacious area of the two mats while eight participants crowded themselves in half the space on the tiny single mat. Viewing this scene, the trainer commented, Make way for the gods! In Channapur participants remained completely silent as the customers spoke; they did not argue, protest, or respond in any way. The room felt as if the customers were the only people present, and as a result the customers were more open and gave more detailed feedback than in other villages.

Value chain profits

Wheat

Flour

Packing

Bread

53

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

MODULE 11
Creating a Business Plan

Purpose
To evaluate the initial stages of the business and create a business plan for the immediate future as well as long-term accordingly.

Link to MOVE
After altering their strategies according to customer feedback, further analysis of past success and failure will dictate future plans for the entrepreneurs. The basic necessities for conducting a business should be well established so the group should be self-sufficient from this point on. Prerequisite: Participants should have detailed records of expenditures and revenues with them.

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

54

Module 11

Steps
1. A universal template is impossible for business plan development. Base your analysis on whatever records or other information that the group has with them. 2. Any and all information participants have gathered (i.e. expenditures on different products, sales of different products, sales by date, etc.) should be displayed for all members to see. 3. Based on the profit and loss of their first experiences in business, participants should devise a plan to move forward. 4. Discussion points may include: Where were the most sales? Can you sell in other places? Are there ways to cut expenditures? What are the primary barriers to growth? How can you overcome these barriers? What are possible promotional strategies? 5. Guidelines for developing a business plan could include Facilitate the development of business plans from the market side: Unlike conventional business plans where profit and loss statements are linked to production, in this case, participants develop plans based on market forecasts. In other words, projections should be based on how much you think people will buy and adapt accordingly. Estimating market demand : Participants identified market segments (households and retail outlets). For each segment participants assess current and future demand. Profit and loss statements: Based on their projections participants estimate future costs and profits. Table 8: Projected Business Plan as per Future Sales Cycles: 400 kgs of Soap Plan Components Raw Materials Transportation Packing Total Expenditures Total Revenue Gross profit Outcomes

Rupees 6600 400 280 7280 8000 720

The participants should now have a sound business plan with which they can approach a bank for credit linkages.
432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

55

MOVE

FINAL REMARKS MOVE

Market Oriented Value Enhancement (MOVE) gives the illiterate poor the tools to understand the market. MOVE teaches participants to estimate market size, demand, and customer needs and wants, thus providing them with the tools and the confidence necessary to enter the market. The MOVE process was used with seven different groups in five villages around the twin cities of Hubli-Dharwad, India. Two iterations of MOVE have taken place, for existing and potential producers. The second iteration of MOVE resulted in all five groups taking up trading, i.e. buying products wholesale from city markets and selling them at retail prices in their own villages. This outcome may be because the business plans were created over a relatively short six month period. The unanimous adoption of trading may be an indication that this is simply an initial phase of a longer process. It is possible that participants may wish to take on the capital risks of entering production only after they have identified a reliable customer base for a given product through retailing. As their businesses evolve, participants may also begin catering to customers specific needs through value addition, identifying and serving more specialized market niches In our experience participants have manufactured soap, started a grocery shop, and sold clothes, to name just a few endeavours. But the applications of MOVE are almost limitless. More specific MOVE modules can be developed for any number of business activities, for example

Skilled trades such as tailoring Natural resource based businesses such as milk producing Natural resource based services such as for Para veterinarians Health services such as those provided by midwives

And much, much, more Our experiences provide only a snapshot of businesses as they continue to evolve. This manual takes participants to the point where they have business plans and can begin a business on their own. There are a series of modules that can be developed as participants think about scaling up, entering new markets, and exploring new products, therefore, this manual is only the first of a series. The modules presented here are only the beginning and there are many more places that MOVE can go. MOVE has been tested mainly in villages located in the urban periphery, which offered many advantages such as access
432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

56

Final Remarks MOVE

to urban markets and potentially a greater scope for value addition. However, MOVE can be tailored to many different contexts, from India, to across Asia, to across the third world, in urban centers, rural areas, and everywhere in between. It is worth pursuing these new applications of the MOVE process because it has proven to be dramatically more effective than traditional income generating schemes. Every group that has undergone this training has experienced immediate profits, with no initial losses. These profits have increased with every successive business cycle. These results were achieved with poor, landless, illiterate women. If MOVE has succeeded with this group, it will surely succeed with better off groups. Thus MOVE represents a real alternative for the very poor. The very poor cannot afford to risk their meagre assets for the production of items that may not even be sold. Schemes designed to improve the livelihoods of the poor can even get them further into debt if the marketing component is ignored. MOVE is an effective way to improve the livelihoods of the very poor because it exposes them to less risk by teaching them to research areas of the market where they are likely to be successful and then enter business gradually. In the larger context, the world is rapidly urbanizing and the service sector is booming, so an increasing emphasis on customers will be required. MOVE is necessary because current production-centred approaches to business are not effective and will become even less effective in the future. MOVE can teach ANYONE to not only cope with a globalized economy, but to also capitalize on it, by understanding and adapting to the market. Therefore, MOVE represents an essential and radical shift in thinking about income generating activities that is clearly the way forward, eliminating production fixation and introducing a market focus in its place.

57

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

MOVE

58

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

Market Oriented Value Enhancement

MOVE

KIMS, Karnataka University

Created and Developed by:

Dr M S Subhas

59

MOVE

MOVE Market Oriented Value Enhancement

Published by

BOOKS for CHANGE

139, Richmond Road Bangalore-560 025 Phone: +91-80-25580346 e-mail: bfc@actionaidindia.org www.booksforchange.net

Edition: First, January 2006

Copyright Dr M S Subhas, KIMS, Karnataka University Shawn Sebastian, BPF Simone Purohit, BPF Sangeetha Purushothaman, BPF

Price: Rs95.00 in India US$7.00 outside India

ISBN: 81-8291-019-6

Bf C Production Team: Shoba Ramachandran, Rajeevan, Gokul and Shailaja Cover design and illustrations: Shailaja

The views expressed in this manual are not necessarily those of DFID
432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321 432109876543210987654321

60