About Frontier Markets

Frontier Markets is creating the most sustainable and cost-effective model for base-of-the-pyramid market entry through its affiliation with Microfinance Institutions.

Founded by microfinance professionals, Frontier Markets’ mission is to develop and promote goods and services for the BOP. We focus on innovations in health and hygiene, clean water and energy alternatives that will make the greatest impact on the lives of peri-urban and rural women and children in India. Our core values reflect what is most important to us as an organization. These are not values that change over time; rather, they frame every relationship with clients, partners, rural consumers, investors and employees.

Frontier Markets is committed to:

promoting the health and well-being of BOP households through basic education
getting to know rural villagers and peri-urban households through a two-way interaction
satisfying rural and peri-urban consumers by offering a choice of quality products
aligning our goals with microfinance institutional partners to extend their reach
working with manufacturers that care about the environment
supporting professional development and excellence among our employees
creating wealth through profitability and growth
engaging in long-term relationships that bind our success to the success of our clients and partners
About the BOP landscape

Approximately 70% of India’s 1.1 billion population lives outside of major urban areas, in villages scattered throughout the country. In the last decade, government and philanthropic organizations as well as private and public companies have attempted to bring goods and services to the rural poor. Although there have been impressive success stories, some efforts have been thwarted because of a lack of infrastructure; regional and cultural differences; inappropriate product or pricing; and, lack of quality assurance.

Microfinance institutions (MFIs) have proven to be the only service providers able to reach the poor on a very large scale, catering to 20+ million households throughout India. Their in-depth research as well as ongoing, personal relationships with credit customers has yielded incomparable insight into the BOP. Frontier Markets has partnered with Tier 1 MFIs, to leverage their existing distribution channel to bring other, non-financial products to the field.

We believe that improving the quality of life for the BOP is a matter of educating consumers about healthcare, water and energy options and making affordable products available even in the most remote regions.

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.

Meet Frontier Markets: About Us

We staff a client project with a Client Liaison, Senior Analyst, a Project Manager and Customer Service representatives from the region. Each member of the team combines industry expertise with a keen understanding of the culture, the lifestyle, consumption pattern and structure of rural households.

1. Ajaita Shah, Client Liaison, is the Founder of Frontier Markets. She has 4 years of microfinance experience as a Credit Plus Manager at Ujjivan Financial Services, and Director for Swayam Krishi Sangam (SKS). She has consulted with leading MFI organizations, foundations, and universities about microfinance in Latin America and South Asia. She has her B.A. in International Relations and International Development from Tufts University.

2. Caren Rabbino, Senior Analyst, is a seasoned entrepreneur and principal of her own consulting practice in New York City. She has brought her extensive experience in strategic planning and managing operations to more than fifty businesses and non-profit institutions in the U.S. and Latin America. Ms. Rabbino received an M.P.S. degree from New York University (in 2000); both an M.A. (in 1984) and a B.A. (in 1982) from the University of Pennsylvania.

3. Manu Sharma, Project Manager, is a researcher and field practitioner in the arena of finance and international development. She has two years of experience working as a hedge-fund analyst in New York as well as two years of microfinance experience in India working with Intellecap and ACCESS Development Services. Ms. Sharma holds a B.A. in Economics and English from Barnard College, Columbia University.

4. Firdush and Salma - Field Staff - local trained marketers who are enthusiastic and well trained in Frontier Markets principles and strategy. Originally from Devangere, Karnataka are commited to social engagement and speak Hindi, English, and Kannada.

Our Partner

Ujjivan Financial Services Pvt Ltd. is a microfinance company based out of Bangalore, India. Founded in 2001 by Samit Ghosh, Ujjivan is one of the fastest growing and innovative Non-Banking Financial Companies in India. Ujjivan is present in 12 states in India including Karnataka, Tamil Nadu, Haryana, Jharkhand, West Bengal, Orissa, Rajasthan Uttar Pradesh, Uttarkhand, New Delhi, Maharashtra, and Chennai. To date, Ujjivan has disbursed over Rs. 4,754 million to over 400,000 customers with 202 branches across India and plans to expand nationally to serve 2,000,000 customers in 500 branches by 2010.

Samit Ghosh, Chief Executive Officer and Managing Director, pioneered consumer banking in India with Ravindra Bahl and Jaitirth Rao at Citibank in 1985. He subsequently led the launch of retail banking for Standard Chartered in the Middle East and South Asia and for HDFC Bank in India. His last commercial assignment was Chief Executive, India of Bank Muscat. He has had international banking experience for over thirty years. He is an alumnus of Jadavpur University and the Wharton School.