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IREX Social Enterprise IREX Social Enterprise Orientation Training Orientation Training

Gbanga, Liberia Kim Alter

Virtue Ventures LLC

Part 6: Market Research Example

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Haiti Example Haiti Example Impetus for social enterprise:Impetus for social enterprise:

Poverty alleviation Poverty alleviation

Greyston, “bake brownies to create jobs”

SKOLL CENTRE FOR SOCIAL ENTREPRENEURSHIP

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Social Problems Social Problems

• Many poor people • Few economic opportunities in rural areas• Urban flight • High population of women single heads of

household• Low skilled/illiterate population• No local market for client-made products• Socio-economic situation has negative

impact on children’s health, education & quality of life

Rural Clients MarketPort au Prince

Limited Local Market

Bottleneck

Demand

Mamba

Market Study ResultsMarket Study Results

Market Access

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Design Assumptions Design Assumptions

1. Women in rural Haiti make peanut butter 2. Demand exists for peanut butter3. Clients source raw materials4. Market access is a major constraint5. Clients are entrepreneurs6. Can be a viable business 7. Social enterprise will not impact the

product or production process8. Marketing strategy focuses on distribution

and competitive promotion for “mature product”

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Services:BrandingMarketingInventory management DistributionSales

Revenue:Product mark ups

Marketing Social EnterpriseMarketing Social Enterprise

CentralizedDecentralized

TOLPA’s Value Chain TOLPA’s Value Chain

1. Clients Already Make Peanut Butter 1. Clients Already Make Peanut Butter

Yes, but …

•No standard recipe•Can make only small quantities •Never used technology in

production•Quality/consistency variable

•Hygiene a problem

2. Demand for Peanut Butter2. Demand for Peanut Butter/ Business viability/ Business viability

TRUE, but...

• Very price sensitive / Low profit margin• Lots of competition • “Mature product” • Undeveloped consumer taste for

“natural peanut butter” product• Demand-supply gaps

sales depends on constant supply complementary product can help sell need better product mix to secure commercial

contracts and increase margins

3. Clients Source Raw Materials3. Clients Source Raw Materials

True, but…

• Raw materials are seasonal storage is required for year-round production technology needed to avoid spoilage

• Capital is a constraint Cannot realize cost savings of bulk

purchase

• Coordination/management required increases overhead

4. Accessing Markets is a Constraint4. Accessing Markets is a Constraint

TRUE, clients lack…

•Marketing know how •Transportation •Knowledge of markets•Sales acumen•Contacts

5. Clients are Entrepreneurs 5. Clients are Entrepreneurs

True but… Entrepreneurs out of necessity not choice

Would prefer a job

Risk averse

Clients lack capital & access to capital

Purchase assets

Buy bulk materials

Finance working capital

6. No Impact on Production/Product6. No Impact on Production/Product

FALSE ...• Food products require stringent quality

control to sell commercially product consistency /quality /reliability Sales volume/output

• Technology inputs required increase profitability achieve economies

• Inventory management Raw materials (purchase, store, maintain) Finished products (freshness/shelf life… )

Long time to consumer causes product to change

7. Implications on Marketing7. Implications on Marketing

• New product strategy Different “perceived” benefits

• Introductory product Requires educational marketing to

penetrate market

• Need to differentiate vis-à-vis competitive positioning

• Additional new products are needed to cross-sell and increase margins

Shift in Model Shift in Model

• Entrepreneur Model Entrepreneur focused Impact focused Decentralized Entrepreneur assumes

risk Not market oriented Clients are

entrepreneurs Threat - not viable

• Enterprise Model Enterprise focused Viability focused Centralized Partner assumes risk Market oriented Clients employees Threat - clients

become laborers

New SE ModelNew SE Model

Product Mix

TOPLASalesForce

EntrepreneurGroups

SourcingProduction Storage

Design Design

•Viability and social impact May require phasing and trade-offs

•Realistic for client Social criteria & role of the client in

SE•Understand nature of demand•Based on market realities

Thoroughly test your assumptions Know your deal breakers

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Best way to learn about markets? Best way to learn about markets?

Start sellingTest market

Pilots

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Business Plan Business Plan StructureStructure Objectives

Target Market

External / internal factors Competitors/Industry

MarketingPlan

OperationsPlan

FinancialPlan

HumanResource

Plan

FinancialPlan

VisionMission

ContingencyContingency