Frontier Markets Pilot: Chitradurga

Frontier Markets has been in Chitradurga, Karnataka for the past 3 weeks conducting our first pilot.

The purpose of the pilot is to test our theory of connectivity and market penetration. We believe there is a new market potential out there - the rural and urban bop are capable of spending and are demanding products to improve their standard of living, however because of lack of infrastructure and awareness, companies are not responding. It is time to break the barriers of communication and penetrate this gap.

Companies like HUL, ITC, Godrej, Coca Cola, and others all understood, so why not J&J, P&G, Ranbaxy, and others? Why not break the norm of the FMCG (Fast Moving Consumer Goods) market and start delivering products that are more complicated and significantly more useful to this sector?

The approach is through Microfinance Institutions. Til date, the CEO (Ajaita Shah) believes she has not encountereed a better infrastructure/system that reaches these households in a direct and efficient way - MFIs today have been able to penetrate vast households and deliver products. Why not use that infrastructure for more products and services?

Using the MFI infrastructure, we can better engage these households and understand their needs... We believe that low touch point marketing is not reaching the bop. We need to understand the barriers and strategically message and reach the bop in a more high touch point, or a peer-to-peer interaction to help educate and explain concepts and lifestyles.

PILOT PROJECT: JULY – NOVEMBER 2009

Frontier Markets is studying various models in which a strategic partnership between public and private companies, MFIs, government and NGOs create the infrastructure necessary to introduce goods and services to the rural poor in India. The field is changing so fast that new opportunities and new questions are emerging all of the time. Our team will work in North Karnataka from August through November to gather quantitative and anecdotal information to shore up our business intelligence and refine the tools we have developed for successful market entry.

During this pilot, we will introduce femine hygiene and other health-related products that would make a demonstrable improvement to the quality of life of bottom of the pyramid households.

Frontier Markets will:
• Clarify the expectations and goals with each partner;
• Develop survey instruments, metrics and reporting tools to ensure that we capture meaningful data to inform future product development, marketing and distribution strategies;
• Cultivate individual relationships to gain consumer insight throughout the pilot;
• Develop marketing materials that are intended to raise health awareness and financial literacy;
• Introduce four products and ask consumers to respond using evaluative criteria;
• Place product with reliable central distributors and village retailers;
• Build retailer capacity by offering training, materials and support;
• Report on sales volume and product integrity through the life of the project;
• Share findings and facilitate a post-flight analysis with the participating partners.

The MNC will:
• Endorse the pilot;
• Supply quantities of products and relevant marketing materials for testing and getting feedback on the product
• Share information about pricing strategy, messaging, current distribution and adoption rate; and, sales goals for rural market;
• Share the current cost structure so we can forecast what it would cost to scale the marketing, sales and distribution and where cost savings might occur to preserve and increase the profit margin.

The Micro-finance institution and Healthcare Partner and will:
• Provide feedback to the scenario for the pilot project;
• Endorse the pilot;
• Share demographic research about one branch in North Karnataka (1500 households, covering one town: Chitradurga, Karnataka);
• Introduce us to 1500 credit customers (included kirana shop retailers) at bank center meetings;
• Provide limited field coordination to execute the pilot project.
• Provide feedback to the evaluative criteria we use to vet products;
• Help us define the benefits and liabilities of various product options;
• Provide feedback on the final product selection and pricing;
• Provide feedback to health awareness and product marketing materials;
• Dedicate a healthcare clinician to join us in the field to educate consumers about the problem and to introduce the product-solution;
• Train the Frontier Markets field staff to communicate effectively about health and hygiene issues to rural consumers. Our goal is to inform consumers about various product options and how they will reduce or eliminate common health and hygiene problems.

Targets
1. Reach 750 MFI members·
2. Place Products in 10-12 kirana shops·
3. 5% conversion of 750 members·
4. Sell 35 units of each product

We will be updating our progress shortly.