Theory of Change

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Theory of Change
Get Grounded
Social Enterprise Design
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Is the idea a concept?
Social Enterprise
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Understand Nature of social problem
Needs/limitations of clients
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Where to begin

• Clarify your business and its goals
• Build scenarios
• Play it out your idea
• Identify deal breakers
• What will make or break your business
• Money, laws, partners, etc.
• Identify key design influencers
• Competitors, industry dynamics, regulatory
  environment, demand, required resources
• Reality Test
• Objective feedback
• Quick Market Test
• Benchmarks

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Pare it down

• Scope
• For most SEs scope is a practical issue of
• Location (other resources) haves have nots
• Time
• Strategy
• Low hanging fruit
• Window of opportunity
• Proof of concept/display
• Inflection point for impact
• Assumptions
• Informs market research

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Social EnterpriseBusiness Concept Discussion
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Best way to learn about markets?

• Start selling
• Test market
• Pilots

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Marketing Videos
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What is a Value Proposition?

• Identifies
• target market
• opportunity
• Explains
• cost and benefits
• how that combination is superior to other choices
• A value proposition is NOT
• a mission statement
• an elevator pitch
• A sales pitch Unique Selling Proposition

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Creating your Value Proposition

• For List target customers or beneficiaries.
  Group them and ultimately define THE customer or
  beneficiary.
• Who Define the need or opportunity. What is
  critical issue?
• The Name your product, service or concept. Place
  the product, service, or concept into a generally
  understood category
• That Quantify the benefits of the product,
  service, or concept. Identify the single most
  compelling benefit
• Unlike List the competitors and competitive
  alternatives
• Our Differentiate the product, service, or
  concept. Set it apart from the competition.

Asserts the VALUE of the offering
POSITIONS the value
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Example IDE India
For List target customers or beneficiaries. Who
Define the need or opportunity, i.e. what
critical issue for customer or beneficiary? The
Name the product or service or concept and place
the product, service, or concept into a generally
understood category. That Quantify the
benefits of the product, service, or concept.
Identify the single most compelling benefit
Unlike List the competitors and competitive
alternatives Our The primary differentiation of
the product, service, or concept.

• For small scale rural farmers using surface
  irrigation
• Who lose over 50 of usable water to surface
  runoff annually
• The IDE-India low-cost drip irrigation system
  is an advanced irrigation device
• That inexpensively and completely eliminates
  water loss from surface irrigation
• Unlike currently used, expensive and
• large-scale drip systems
• Our product is a customized, modular and
  scalable system that consistently reduces water
  loss and increases farmers yields

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Marketing Mix in SE Context

• Availability - Product
• Product/service does not exist
• Collateral free micro-loans
• Eyes on Four Paws
• Affordability Price
• Product/service exists but is too expensive
• moneylenders (interest can be 200 of loan)
• Aravind

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Marketing Mix in SE Context

• Access Distribution
• Product/service exists but customers do not have
  access
• Banks and formal financial markets
• NOTE access to markets or undeveloped markets
  often major barrier for SE clients.
• Vision Spring
• AWARENESS - Promotion
• Product/service exists but customers do not know
  that it exists
• Information on meetings in markets
• Kickstart

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SE Marketing Considerations

• Educational marketing
• Market development
• Undeveloped/fragmented markets, poor market
  infrastructure
• Barriers to reaching clients through traditional
  marketing vehicles
• Literacy, language, social physical isolation,
  fear and distrust, etc.

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More

• Communications /PR efforts to educate SE
  stakeholders
• Community, donors, public, etc.
• Demand Imbalance
• Wants/inability to pay
• High costs
• Marketing cost/demand imbalance major reason for
  private sector market failure
• Cultural context

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Whats in a name?
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Your marketing message is not your mission

• Why will a customer buy your product or service
  more than once?

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Baking with a difference

• All-natural bakery products from scratch.  We
  mix small batches of fresh, premium ingredients
  and finish each product by hand to create
  irresistible desserts. 
• Rubicon stands for more than fabulous desserts
  we are part of a nonprofit organization, Rubicon
  Programs, that helps individuals in the San
  Francisco Bay Area overcome economic and social
  hurdles.  Rubicon provides training, housing,
  employment and support services to people in
  need.  You can feel good about buying Rubicon
  products because you in turn support your
  community.

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Customers buy Benefits
TOLPA PB
Microfinance
Features Benefits Features Benefits
High in protein Good nutrition Working capital loans Vehicle to grow business
Slightly sweet flavor Kids love it easy for parents Weekly repayment Easy to pay back
100 natural Peace of mind Collateral free Access
Expiration date Guaranteed Freshness Solidarity groups Peer support
Plastic container Convenient reusable Short loan cycles Lower risk
Produced by low income Haitians Feels good make a difference Easy application Low stress
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1 Marketing Vehicle
How to incite?
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Most common price strategy challenge for a social
enterprise?

• Inability to Pay

Third party payer Payment plans
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Watch out for subsidies in price!

• Volunteer time
• ED time on SE
• Wage premium
• Wastage
• Lower employee productivity
• Time spent on employee personal problems/social
  programs
• Higher insurance rates
• Supervisory staff (i.e. job coaches)
• turn over
• Time for SE fundraising

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SE Distribution

• Distribution strategy is often a key for social
  enterprises that serve clients with barriers to
  ACCESS
• Markets, Jobs, Information, public services
  health, education, water, utility etc.

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Distribution - Eyeglasses
Method/market Rural poor Urban poor Factory Workers Chemist Partner NGOs
Mobile vans X X
Vision Guardians X X
Micro-entrepreneurs X X
Chemists X
Direct Sales Franchise partners X X X X X
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Distribution Channels
VE Channel
Wholesale Channel
Franchise Partner Channel
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SE Marketing Pitfalls

• Confuse marketing message and mission
• Confuse need and demand
• Assume customer loyalty can be built on social
  good instead of quality
• Build it and they will come failure to market
• Lack capacity/acumen - inability to deliver on
  basics
• Failure to listen to customers/watch the market
  incorporate feedback
• Inappropriate marketing vehicles for reaching
  customers
• Confuse payer user / clients customers

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SE Marketing Practice

• Creative/unconventional and traditional
  marketing approaches
• Take business to clients emphasis on
  distribution
• Price and payment of services based on clients
  abilities to pay or third party payer
• Quality, Consistency, Reliability are king
• Brand
• Market penetration is key - Test market new
  products
• Accurate price
• Flexibility and responsiveness
• Social benefit
• Mission leverage