Re-constructing The Elements Of The Process

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Re-constructing The Elements Of The Process How
Did IDE Do It In India
International Development Enterprises (India)
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Background

• Started in 1991
• Set up as a representative office in 1991 of
  IDE-Canada, headquartered in USA
• Registered in India in 2001 under section 25 of
  Indian Companies Act

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Key Technologies

• Treadle Pump (1991)
• Drip irrigation (1995)

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Concept of Product Life Cycle

• Different stages of a product introductory,
  growth, maturity, decline
• Shape of a PLC

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• Phases
• TP Introductory 1991-1995
• Growth 1996-1999
• Maturity 2000 onwards

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Key intervention areas for IDEI

• RD Product identification, design,
  development, testing, refining
• Supply chain management identification,
  appointment, training, relationship mgmt
• Sales primary (to supply chain) and secondary
  (to farmer/end user), after sales service
• Promotion elements, mix/strategy

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• Treadle pump
• Introductory phase 1991 1995
• A period of slow sales growth as the product is
  introduced in the market. Profits are non
  existent in this stage because of the heavy
  expenses on product introduction.

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• Product was rejected
• Length of cylinder
• priming

Brought pump from Bangladesh
Product identification

• Bamboo pump popular as low in price-where
  bamboo and mechanics were available
• Concrete pump most stable but heavy
• In areas where there was surface sources supply
  chain innovated and provided a stand with metal
  pump

Modified pump for differing contexts
Product adaptation
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• Product was virtually given away free
• Cost recovery as low as 10

• Promoted through a local NGO

Promotion

• Private supply chain set up in all regions
• Subsidy pushed price of pump higher

• Initiated process of setting up supply chain in
  all states
• In one region had to work with gover-nment subsidy

Supply chain
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Marketing strategies adopted in introductory stage

• IDE knew it had a killer product
• offering clearly differentiated
• met specific needs of customers
• low priced
• easily available
• a quick payback
• high return on investment
• self selected the poor

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Marketing strategies adopted in introductory
stage

• Rapid penetration strategy launched at a low
  price (relative to existing options) with high
  expenditure on promotion.
• market was large
• price sensitive
• unaware of product
• manufacturing costs would fall with scale of
  production.

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Key learnings in introduction stage

• Understand local context and needs and adapt
  product to needs and requirements of the area
• Important to maintain control over the process to
  avoid dilution

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Key learnings in introduction stage

• Need to quickly work through market forces
  (private sector)
• Withdrawal from a potential area due to dilution
  of approach not a choice as high incidence of
  poverty
• If subsidy is inevitable maintain control over
  the product and process

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Growth phase 1996 -1999 A period of rapid market
acceptance and expansion
Outcomes
IDEIs Role Activities
Intervention

• 200 growth in sales

• Appointment of distributors and dealers
• IDEI as a direct player both as distributor and
  as selling directly to farmers
• Credit was extended to supply chain and farmers

Supply chain creation
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• Very high growth in sales
• Growth in sales was directly proportional to the
  no. of sales staff

• IDEI staff closely assisted the supply chain in
  collection of money, order -processing and
  delivery

Supply chain management

• Installation, maintenance and repair was not a
  problem
• But spares were sometimes not available

• Village mechanics were trained

After sales service
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• Very high growth in sales
• Enhanced brand image
• Unique positioning in several areas vegetable
  pump.

• Detailed promotion strategy drawn up
• All promotion expenses borne by IDEI
• Aggressive promotion by IDEI staff

Promotion
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• Good quality pump sold to farmers at a reasonable
  price
• Good brand image and high brand recall
• Manufacturers unable to conform to the quality
  standards were restricted from entering the
  market limited competition

• Highly centralized QC
• Tight control on quality of product

Quality control (QC)
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Marketing strategies adopted in growth stage

• Maintained quality
• Price was kept at same level
• Promotion was maintained at high levels maybe
  even increased
• High service levels
• Expanded distribution coverage

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Key learnings in growth stage

• Important to put in place an after sales service
  strategy from the very beginning
• A limited positioning could restrict the market
• High quality, affordability and high visibility
  were key to high brand image
• Direct service provision may be necessary when
  the market is weak/ not there
• Necessary to quickly move into facilitation
• Danger of very high growth rates delaying
  facilitation role

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Key learnings in growth stage

• Facilitation in markets is critical
• IDEI realized the need to hand over the physical
  and financial transactions to channel partners -
  reduce dependence on IDEI staff for sales
• Gradual handing over of the demand creation
  function to the market players must be done as
  early in the project as possible

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Key learnings in growth stage

• Build some marketing costs into price of product
• Easier to hand over marketing function
• Pricing also allows room for competition
• Make room for competition ? IDEI max 25
  market share

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Maturity phase 1999 onwards
A period of a slow down in sales growth because
the product has achieved acceptance by most early
adopters

• Insecurity amongst staff
• Staff turnover increased
• Sales did not fall

• Review of field operations
• Revised staffing structure put in place
• Redundancies reduced

Organisational rightsizing
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• sustainability withdrawal ?

• 1999 2001 was declared as the sustainability
  phase for TP

Sustainability of operations

• Manufacturers could maintain a good level of
  quality. Involvement in product increased

• Quality systems were reassessed with IDEI staff
  having a minimal role
• Co-branding

Quality control
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• Sharp drop in sales in Orissa initially
• Sales in other states stable
• STP received a very positive response from the
  market

• Policy changes (reduction in subsidy) in Orissa
  led to private sector supply chain being revived
• Introduction of new pump (STP)

Supply chain management
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• Static promotion largely managed by supply chain
• Greater involvement of supply chain in dynamic
  promotion and marketing

• Gradual handing over of promotion to supply chain
  

Promot -ion

• Price Quality combination pumps ? towards local
  fabrication

• Quality checks reviewed
• Product quality reviewed
• Pricing reviewed

Product variants
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• Fresh insights on smallholder incomes

• External studies were sponsored

Impact assessment
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Marketing strategies adopted in maturity stage

• Shift in role. Reduced interference in market
  forces with a focus on sustainability
• Product variants, price-quality combination to
  bring in next level of price sensitive customers

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Key learnings in maturity stage

• A large sales force is difficult to sustain after
  the growth phase - In maturity phase, reduction
  in staff need not reduce sales
• Important to clearly lay out your strategy
  leaving no scope for ambiguity and
  misinterpretation
• A continuous dialogue with donors, partners,
  staff essential.

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Key learnings in maturity stage

• Quality must always be looked at in the context
  of affordability, willingness and ability to pay
• IDEI could have launched price-quality variants
  earlier, possibly in growth stage
• An external impact assessment study led to not
  just looking at impacts of our work but also
  opened the way for future program design

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From supply chain to value chain (from 2001 ?)

• External study highlighted differences in income
  impact
• Further studies provided factors affecting
  differences in incomes
• Indepth field studies by IDEI staff
• Donor apprehensions on limited supply chains
  focus
• Shift in thinking within IDEI from supply chain
  to value chains

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Shifts in IDEIs role
Facilitates co-ordination and linkages between
supply chain members
Direct involvement in order processing, monetary
transactions
Supply chain management
Gradual handing over to supply chain
By IDEI staff directly
Promotion
Shifting to supply chain with periodic quality
checks by IDEI
Highly controlled and centralized
Quality control
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• Facilitate supply chain and new alternative
  channels to stock spares

Trained mechanics Extra spares with product
After sales service

• Train input suppliers
• Understand local require-ments and facilitate
  adequate and appropriate stocking

Nil
Quality input supply

• Organize training programs using local resource
  persons from village, researchers, govt
  officials, etc.

Some staff interacted locally
Agronomic advice
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• Assist in selection of crop to be grown/
  diversification
• Facilitate training on cost benefit analysis,
  production techniques, best practices

Nil
Crop selection

• Facilitate the setting up of agri-service
  centres, use existing ICT services available
• Train farmers on how to use information for
  better returns

Nil
Information and market access
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Key challenges for IDEI

• Change in orientation
• Facilitation role
• Working through others
• Skills and capacities
• Mindsets and attitudes

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