re-constructing the elements of the process – how did ide do it in india international development...

Re-constructing The Re-constructing The Elements Of The Process – Elements Of The Process – How Did IDE Do It In IndiaHow Did IDE Do It In India

International Development Enterprises International Development Enterprises (India)(India)

BackgroundBackground

Started in 1991Started in 1991

Set up as a representative office in 1991 of IDE-Set up as a representative office in 1991 of IDE-

Canada, headquartered in USACanada, headquartered in USA

Registered in India in 2001 under section 25 of Registered in India in 2001 under section 25 of

Indian Companies ActIndian Companies Act

Key TechnologiesKey Technologies

Treadle Pump (1991)Treadle Pump (1991)

Drip irrigation (1995)Drip irrigation (1995)

Concept of Product Concept of Product Life CycleLife Cycle

Different stages of a product – introductory, Different stages of a product – introductory,

growth, maturity, decline growth, maturity, decline

Shape of a PLCShape of a PLC

PhasesPhases

TP:TP: IntroductoryIntroductory 1991-19951991-1995

GrowthGrowth 1996-19991996-1999

MaturityMaturity 2000 onwards2000 onwards

R&D – Product identification, design, R&D – Product identification, design,

development, testing, refiningdevelopment, testing, refining

Supply chain management – identification, Supply chain management – identification,

appointment, training, relationship mgmtappointment, training, relationship mgmt

Sales – primary (to supply chain) and Sales – primary (to supply chain) and

secondary (to farmer/end user), after sales secondary (to farmer/end user), after sales

serviceservice

Promotion – elements, mix/strategyPromotion – elements, mix/strategy

Key intervention areas for Key intervention areas for IDEIIDEI

Treadle pumpTreadle pump

Introductory phase 1991 – 1995Introductory phase 1991 – 1995

A period of slow sales growth as the product A period of slow sales growth as the product

is introduced in the market. Profits are non is introduced in the market. Profits are non

existent in this stage because of the heavy existent in this stage because of the heavy

expenses on product introduction.expenses on product introduction.

►Bamboo pump – popular as Bamboo pump – popular as low in price-where bamboo and low in price-where bamboo and mechanics were available mechanics were available

►Concrete pump most stable but Concrete pump most stable but heavyheavy

►In areas where there was In areas where there was surface sources – supply chain surface sources – supply chain innovated and provided a standinnovated and provided a stand with metal pumpwith metal pump

Modified pump Modified pump for differing for differing contextscontexts

Product Product

adaptationadaptation

►Product was rejectedProduct was rejected Length of cylinderLength of cylinderprimingpriming

Brought pump Brought pump from from

BangladeshBangladesh

Product Product

identificationidentification

OutcomesOutcomes IDEI’s Role IDEI’s Role – Activities– Activities

InterventionIntervention

►Private supply chain Private supply chain

set up in all regionsset up in all regions

►Subsidy pushed price Subsidy pushed price

of pump higherof pump higher

►Initiated process of Initiated process of

setting up supply setting up supply

chain in all stateschain in all states

►In one region had In one region had

to work withto work with gover-gover-

nmentnment subsidy subsidy

Supply chainSupply chain

►Product was virtually Product was virtually

given away freegiven away free

►Cost recovery as low Cost recovery as low

as 10%as 10%

►Promoted through Promoted through

a local NGOa local NGO PromotionPromotion

OutcomesOutcomes IDEI’s role –IDEI’s role –ActivitiesActivities

Intervent -Intervent -ionion

Marketing strategies adopted in Marketing strategies adopted in introductory stageintroductory stage

► IDE knew it had a killer product IDE knew it had a killer product

offering clearly differentiatedoffering clearly differentiated

met specific needs of customersmet specific needs of customers

low pricedlow priced

easily availableeasily available

a quick paybacka quick payback

high return on investmenthigh return on investment

self selected the poorself selected the poor

►Rapid penetration strategy – launched at a Rapid penetration strategy – launched at a

low price (relative to existing options) with low price (relative to existing options) with

high expenditure on promotion.high expenditure on promotion. market was largemarket was large price sensitiveprice sensitive unaware of productunaware of product manufacturing costs would fall with scale of manufacturing costs would fall with scale of

production.production.

Marketing strategies Marketing strategies adopted in introductory adopted in introductory

stage …stage …

Key learnings Key learnings in introduction stagein introduction stage

Understand local context and needs and adapt Understand local context and needs and adapt

product to needs and requirements of the areaproduct to needs and requirements of the area

► Important to maintain control over the process to Important to maintain control over the process to

avoid dilutionavoid dilution

Key learnings Key learnings in introduction stage…in introduction stage…

► Need to quickly work through market forces (private Need to quickly work through market forces (private

sector)sector)

► Withdrawal from a potential area due to dilution of Withdrawal from a potential area due to dilution of

approach not a choice – as high incidence of povertyapproach not a choice – as high incidence of poverty

► If subsidy is inevitable maintain control over the If subsidy is inevitable maintain control over the

product and processproduct and process

►200% growth 200% growth

in salesin sales

►Appointment of Appointment of distributors and dealersdistributors and dealers

►IDEI as a direct player – IDEI as a direct player – both as distributor and as both as distributor and as selling directly to farmersselling directly to farmers

►Credit was extended to Credit was extended to

supply chain and farmerssupply chain and farmers

Supply chain Supply chain

creationcreation

OutcomesOutcomes IDEI’s Role –IDEI’s Role –ActivitiesActivities


Growth phase 1996 -1999

A period of rapid market acceptance and expansion

►Installation, Installation, maintenance and maintenance and repair was not a repair was not a problemproblem

►But spares were But spares were sometimes not sometimes not availableavailable

►Village mechanics Village mechanics

were trained were trained

After salesAfter sales sserviceervice

►Very high growth in Very high growth in

salessales

►Growth in sales was Growth in sales was

directly proportional to directly proportional to

the no. of sales staffthe no. of sales staff

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


managementmanagement

OutcomesOutcomesIDEI’s Role – IDEI’s Role – ActivitiesActivities


►Very high growth in Very high growth in

salessales

►Enhanced brand imageEnhanced brand image

►Unique positioning in Unique positioning in

several areas – several areas –

“vegetable pump”.“vegetable pump”.

►Detailed promotion Detailed promotion

strategy drawn upstrategy drawn up

►All promotion All promotion

expenses borne by IDEIexpenses borne by IDEI

►Aggressive promotion Aggressive promotion

by IDEI staffby IDEI staff

PromotionPromotion


InterventIntervent-ion-ion

►Good quality pump sold Good quality pump sold

to farmers at a reasonable to farmers at a reasonable

price price

►Good brand image and Good brand image and

high brand recallhigh brand recall

►Manufacturers unable to Manufacturers unable to

conform to the quality conform to the quality

standards were restricted standards were restricted

from entering the market – from entering the market –

limited competitionlimited competition

►Highly Highly centralized QCcentralized QC

►Tight control on Tight control on

quality of productquality of product

Quality controlQuality control

(QC)(QC)

OutcomesOutcomes IDEI’s Role – IDEI’s Role – ActivitiesActivities


Marketing strategies adopted in Marketing strategies adopted in growth stagegrowth stage

►Maintained qualityMaintained quality

►Price was kept at same levelPrice was kept at same level

►Promotion was maintained at high Promotion was maintained at high

levels – maybe even increasedlevels – maybe even increased

►High service levelsHigh service levels

►Expanded distribution coverageExpanded distribution coverage

Key learnings in growth stageKey learnings in growth stage

Important to put in place an after sales service strategy Important to put in place an after sales service strategy

from the very beginningfrom the very beginning

A limited positioning could restrict the market A limited positioning could restrict the market

High quality, affordability and high visibility were key to High quality, affordability and high visibility were key to

high brand imagehigh brand image

Direct service provision may be necessary when the market Direct service provision may be necessary when the market

is weak/ not there is weak/ not there

Necessary to quickly move into facilitationNecessary to quickly move into facilitation

Danger of very high growth rates delaying facilitation roleDanger of very high growth rates delaying facilitation role

Key learnings in growth stage…Key learnings in growth stage…

Facilitation in markets is criticalFacilitation in markets is critical

IDEI realized the need to hand over the physical IDEI realized the need to hand over the physical

and financial transactions to channel partners -and financial transactions to channel partners -

reduce dependence on IDEI staffreduce dependence on IDEI staff for salesfor sales

Gradual handing over of the demand creation Gradual handing over of the demand creation

function to the market players must be done as function to the market players must be done as

early in the project as possibleearly in the project as possible

Key learnings in growth stage…Key learnings in growth stage…

Build some marketing costs into price of Build some marketing costs into price of

product product

Easier to hand over marketing functionEasier to hand over marketing function

Pricing also allows room for competitionPricing also allows room for competition

Make room for competition Make room for competition IDEI = max 25% IDEI = max 25%

market sharemarket share

Maturity phase – 1999 onwardsMaturity phase – 1999 onwards

A period of a slow down in sales growth because the product A period of a slow down in sales growth because the product has achieved acceptance by most early adoptershas achieved acceptance by most early adopters

►Insecurity amongst Insecurity amongst

staffstaff

►Staff turnover Staff turnover

increasedincreased

►Sales did not fallSales did not fall

►Review of field Review of field

operationsoperations

►Revised staffing Revised staffing

structure put in structure put in

placeplace

►Redundancies Redundancies

reducedreduced

Organisational Organisational

rightsizingrightsizing



►Manufacturers could Manufacturers could

maintain a good level of maintain a good level of

quality. Involvement in quality. Involvement in

product increasedproduct increased

►Quality systems Quality systems

were reassessed were reassessed

with IDEI staff with IDEI staff

having a minimal having a minimal

rolerole

►Co-brandingCo-branding

Quality controlQuality control

►““sustainability” = sustainability” =

“withdrawal” ?“withdrawal” ?

►1999 – 2001 was 1999 – 2001 was

declared as the declared as the

sustainability sustainability

phase for TPphase for TP

Sustainability of Sustainability of operationsoperations



►Sharp drop in sales Sharp drop in sales

in Orissa initiallyin Orissa initially

►Sales in other states Sales in other states

stablestable

►STP received a very STP received a very

positive response positive response

from the marketfrom the market

►Policy changes Policy changes

(reduction in subsidy) in (reduction in subsidy) in

Orissa led to private Orissa led to private

sector supply chain sector supply chain

being revivedbeing revived

►Introduction of new Introduction of new

pump (STP)pump (STP)

Supply chain Supply chain managementmanagement



►Price – Quality combination Price – Quality combination

pumps pumps towards local towards local

fabricationfabrication

►Quality checks Quality checks

reviewedreviewed

►Product quality Product quality

reviewedreviewed

►Pricing reviewedPricing reviewed

Product Product variantsvariants

►Static promotion largely Static promotion largely

managed by supply chainmanaged by supply chain

►Greater involvement of Greater involvement of

supply chain in dynamic supply chain in dynamic

promotion and marketingpromotion and marketing

►Gradual handing Gradual handing

over of promotion over of promotion

to supply chainto supply chain

Promot -Promot -ionion


Intervent-Intervent-ionion

OutcomesOutcomesIDEI’s Role IDEI’s Role – –

ActivitiesActivities

Intervent-Intervent-ionion

►Fresh insights on Fresh insights on

smallholder incomessmallholder incomes

►External External

studies were studies were

sponsoredsponsored

Impact Impact assessmentassessment

Marketing strategies adopted in Marketing strategies adopted in maturity stagematurity stage

►Shift in role. Reduced interference in market Shift in role. Reduced interference in market

forces with a focus on sustainabilityforces with a focus on sustainability

►Product variants, price-quality combination Product variants, price-quality combination

to bring in next level of price sensitive to bring in next level of price sensitive

customerscustomers

Key learnings in maturity stageKey learnings in maturity stage

A large sales force is difficult to sustain after the A large sales force is difficult to sustain after the

growth phase - In maturity phase, reduction in growth phase - In maturity phase, reduction in

staff need not reduce sales staff need not reduce sales

Important to clearly lay out your strategy leaving Important to clearly lay out your strategy leaving

no scope for ambiguity and misinterpretationno scope for ambiguity and misinterpretation

A continuous dialogue with donors, partners, staff A continuous dialogue with donors, partners, staff

essential.essential.

Key learnings in maturity stage…Key learnings in maturity stage…

Quality must always be looked at in the context of Quality must always be looked at in the context of

affordability, willingness and ability to payaffordability, willingness and ability to pay

IDEI could have launched price-quality variants IDEI could have launched price-quality variants

earlier, possibly in growth stageearlier, possibly in growth stage

An external impact assessment study led to not An external impact assessment study led to not

just looking at impacts of our work but also just looking at impacts of our work but also

opened the way for future program designopened the way for future program design

From supply chain to value chain From supply chain to value chain (from 2001 (from 2001 ))

► External study highlighted differences in External study highlighted differences in income impact income impact

► Further studies provided factors affecting Further studies provided factors affecting differences in incomesdifferences in incomes

► Indepth field studies by IDEI staffIndepth field studies by IDEI staff

► Donor apprehensions on limited supply chains Donor apprehensions on limited supply chains focusfocus

► Shift in thinking within IDEI – from supply chain Shift in thinking within IDEI – from supply chain to value chainsto value chains

Shifts in IDEI’s role

Shifting to supply chain Shifting to supply chain

with periodic quality with periodic quality

checkschecks by IDEI by IDEI

Highly controlled and Highly controlled and

centralizedcentralized Quality controlQuality control

Gradual handing over Gradual handing over

to supply chainto supply chainBy IDEI staff directlyBy IDEI staff directly PromotionPromotion

Facilitates co-Facilitates co-

ordination and linkages ordination and linkages

between supply chain between supply chain

membersmembers

Direct involvement in Direct involvement in

order processing, order processing,

monetary transactionsmonetary transactions


managementmanagement

NowNow BeforeBefore

Organize training programs Organize training programs

using local resource persons using local resource persons

from village, researchers, from village, researchers,

govt officials, etc.govt officials, etc.

Some staff Some staff

interacted locallyinteracted locallyAgronomic Agronomic

adviceadvice

Train input suppliersTrain input suppliers

Understand local require-Understand local require-

ments and facilitate adequate ments and facilitate adequate

and appropriate stockingand appropriate stocking

NilNil Quality input Quality input

supply supply

Facilitate supply chain and Facilitate supply chain and

new alternative channels to new alternative channels to

stock sparesstock spares

Trained mechanicsTrained mechanics

Extra spares with Extra spares with

productproduct

After sales After sales

serviceservice

NowNow BeforeBefore

Assist in selection of crop to be Assist in selection of crop to be

grown/ diversificationgrown/ diversification

Facilitate training on cost benefit Facilitate training on cost benefit

analysis, production techniques, best analysis, production techniques, best

practicespractices

NilNilCrop Crop

selectionselection

Facilitate the setting up of agri-Facilitate the setting up of agri-

service centres, use existing ICT service centres, use existing ICT

services availableservices available

Train farmers on how to use Train farmers on how to use

information for better returnsinformation for better returns

NilNil Information Information

and market and market

accessaccess

NowNow BeforeBefore

Key challenges for IDEIKey challenges for IDEI

►Change in orientationChange in orientation

►Facilitation roleFacilitation role

►Working through othersWorking through others

►Skills and capacitiesSkills and capacities

►Mindsets and attitudesMindsets and attitudes

re-constructing the elements of the process – how did ide do it in india international development...

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