Marketing to the Poor (2)

Marketing to the Poorvprašanje: May God continue to bless your works for the impactful response to my request for hints, on what to do in order for Nigerians to give a little to change the lives of the rural poor. It was quite rewarding to me personally and my organisation generally. I’m back with another related question – What is the place of marketing towards alleviating the plight of the poor?Geraldine Kumba.

(Continues from Part 1)

Most often the supply chain components of what comprise product creation process, especially in agro-based activities, tend to be very long and with many intermediaries. This tends to limit amount of payments to small holders in most initiatives aimed to benefit the poor (npr. farmers, traders, processors, and consumers). Enhanced value chain, in any production-to-consumption process, can be put in place to reduce poverty through addressing issues of constraints and opportunities faced by farmers, producers, processors, traders, and other businesses at points along a given value chain. Effective value chain management is relevant in pro-poor development.

Geraldine. You will agree with me that whenever the issue of poverty is raised, in the Nigerian context, we remember the more than 80 million Nigerians that live in the rural areas, who are mostly subsistent or small-holder commercial farmers. What about the urban poor, who form a significant part of the 13.41 percent of this country’s urban population? This group inhabit most shanty-communities around urban centres in Nigeria. Marketing related initiatives aimed at the rural and urban poor are often jeopardized by poorly structured farmers’ groupings (or other jointly-owned bodies), to effectively interact with traders or undertake marketing.

We know that most attempts at organising groups at the base of the pyramid for related activities here are faced with problems of undercapitalized financial base; low quality of experienced management stemming from low education level (them no know book); poor staffing; predatory lending; exorbitant rent-to-own transactions, and even access to land.

Typical small holder farmers here, even with the desire to increase production beyond subsistence level in order to step out of poverty, often encounter lack of marketing credits. This compels them most times to sell their produce shortly after harvest. Affording storage and even holding facilities would have enhanced farmers’ capabilities to sometimes await better pricing. Inadequate price and information about the market make for low remunerative pricing for their products.

The marketing system just has to be made to work for the poor, as it is well known that the poor like to purchase goods or services too, but lacks the ability to realize this. The poor access to the markets, lack of competition among traders in the rural areas makes for monopolistic trading practices to the disadvantage of the poor and small producers.

To make marketing system work for the poor, governments and development organisations at various times have come up with various initiatives to facilitate this, even from the angle of business ventures of various shades. It is quite pleasant to note that with the advent of the 21st century, private sector concerns have become awakened to the realization that businesses can also benefit from alleviating poverty through innovative business models that could bring ‘goodies’ to the poor-Away from typical corporate social responsibility efforts. Even a number of multinational businesses have shown increasing interest in low income segments. There is no doubt that excess production capacities, seeking growth opportunities, abound in developing markets.

The idea here is to put in place profitable business which provides socially beneficial products and services to the poor, which genuinely improve their quality of lives. Who says that a business enterprise can’t ‘do well by doing good’? I endorse “poverty alleviation as a business”, as I’m all for business concerns making significant profits through marketing to the poor, so long as activities are devoid of exploitation.

Business activities can even take the form of a concept I believe to you must’ve heard aboutSocial Enterprise", where the business generates sufficient revenue to sustain itself, but not to earn profits or pay dividend. Any additional cash is re-invested into the business. What about the micro-finance concept of ‘Grameen Bank’ (an innovation of Muhammed Yunus, the Nobel laureate), based on group lending model?

As the scales have now fallen off the ‘eyes’ of the private sector (thanks to the efforts of governments and development agencies over the years), moves towards untapped consumer market (living on less than $2 per day) is now apparent, especially in the area of clothing, basic durables, food and beverages. There is also the realisation that it is essential to create enabling conditions to make the poor employable, for higher value-added functions. S tem, their income levels will get to a stage that qualifies them as customers, and not just consumers of basic essential products.

Private sector concerns are aware that the poor is spurred on by the need for survival, and then a desire to move out of poverty (to higher brand choice). Among several other essentials for marketing to the poor, the private sector concerns must meet these two basic conditions: (a) Create the capacity to consume, in (b) Develop products or services which can be accommodated in terms of finance and lifestyle of poor consumers.

As I reserve modalities for developing business models for another day, please make do with these hints which space constraint here allows (You can contact me for details): Safe Water (cheap point-of-use water treatment system); Insecticide treated bed nets; private latrine production (from local materials); Treadle pump (small farmers participation in agricultural value chain for increased incomes); organic textile programme, where cotton farmers have direct access to end-users (fashion designers); transformation of traditional industrial sector (npr. Akwaete cloth weaving, Nigerija); affordable eye-glasses production; bicycle repair scheme (for farm inspection bicycles); yoghurt production scheme (za razvoj otroka); innovative financing (to help urban poor, through instalment buying, rental or leasing); innovative procurement schemes (fresh produce procurement system, from farmers); farmers’ cooperative (for vegetable export business).

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