Igniting Markets for Sanitation Thinking Like a Business Not an NGO
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WASH 2011: Cordell Jacks, IDE-Cambodia
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Igniting Markets for Sanitation Thinking Like a Business Not an NGO
- 1. Igniting Markets for Sanitation Thinking Like a Business Not an NGO
- 2. What are Markets? Markets are where supply and demand come together to exchange products or services for money
- 4. Sanitation markets can function regardless of government support
- 7. Enduring: Has the opportunity for continued sales over time.
- 9. Seeing is Believing Understand the constraints that cause supply and demand to be ineffectively connected Develop and test a profitable business model proof of concept
- 10. Engage Entrepreneurs Entrepreneur = willing to take a risk in an opportunity to profit Entrepreneur = personality trait Entrepreneur = new OR existing business that self selects
- 11. Risk is Fundamental Risk = Monetary Investment Risk = Having “skin in the game” Risk = ‘Buying in’
- 12. No Control What a business chooses to do or not do is up to them.
- 13. No Boundaries or Timelines NGOs cannot restrict the geographical reach of businesses. NGOs cannot expect businesses to adhere to program timelines.
- 14. Failure IS an Option In the end success is dependent on the entrepreneur, it is not up to the supporting NGO to ensure they succeed.
- 15. Many is Better Enable many businesses to self-select Many businesses = competition
- 16. Competition is Key Competition drives five key aspects of sustainable market development: Aggressive demand creation Innovation Quality Price Collaboration
- 17. Listen Markets are constantly evolving – developing markets for sanitation is an iterative process
- 18. Thinking Like a Business Take Aways Profit, first and foremost A business must be self-motivated A business will decide what works best for them Competition makes businesses thrive
Hinweis der Redaktion
- Our presentation will focus on discussing key principles that will help those looking implement Sanitation Marketing to engage the private sector and help nurture environments where entrepreneurship can flourish. Based on the work we have done in Cambodia as well as the consulting work we have in other countries, these principles we will discuss are really based the question and discussion we’ve had with other organizations internationally. We’re going to try to keep this brief so we have ample time for questions and discussion.
- Sanitation marketing its core is about market development, not just marketing.
- Sanitation markets can function regardless government support sanitation marketing initiatives can benefit if there is government support but is not necessary for sanitation marketing initiatives to succeedIt doesn’t end at ODF – There will be an ongoing need for sanitation products and services as a sector we’ve chosen ODF as the gold standard for public health achievement but we must remember that once ODF is achieved there will be ongoing needs for parts, upgrades, maintenance, pit emptying – and with growing populations there is always a growing market for latrines.
- Sanitation Marketing is not just about supply or just demand – it’s about both.
- Businesses are not motivated by the same GOALS as an NGO working in sanitation - they are motivated by profit. For a business to invest into sanitation there must be the opportunity to make more profit, easier than other alternative investmentopportunties.
- To demonstrate the profit opportunity first …Developing this proof of concept is one of the most important roles a Sanitation Marketing program implementer playsThis will be discussed further in the Wednesday and Friday Sanitation Marketing training sessions
- Once there is the proof of concept then businesses, or entrepreneurs, need to be engaged and encouraged to work in sanitation markets. Entrepreneurs also tend to be more innovative and willing to try new ideas. Traditional NGO thinking dictates who carries out implementation e.g.: CBG community business group vs. iDE Cambodia (concrete producers)If you have to try to push a business to succeed you’re already going to failRisk is…..
- Risk is key to developing sustainable businessesRisk is important for creating motivation and sustainability. Businesses that self-select to join sanitation markets should not be subsidized. In the iDE Cambodia program for the first business, to help create the proof of concept, we provided an interest free loan but Enterprises need to invest their own money into the business, without support from a project, as financial risk is a strong motivator for success.
- Businesses do not want to be controlled – they are open to suggestions, recommendations, and training but it is their business and what they do or don’t do is up to them. Control kills entrepreneurial spirit.
- Sanitation Marketing programs cannot restrict the geographical reach of enterprises.Trying to dictate or limit where enterprises carry out their sales activities in regards to program geographical boundaries is futile and de-motivating. Motivated by profit, enterprises will seek out the largest, easiest to access markets that it is possible for them to capture. Speaking point: San Mark and CLTS yes businesses will work in the CLTS villages but they will also work in the village in the area where there isn’t CLTS, their market potential is not limited to NGO program geographical scope.As well, business have their own timelines, they are not concerned with program timelines – their motivations are different
- NGOs can demonstrate the potential of new ideas and practices and provide capacity building in identified skills gaps but at the end of the day what a business does and how well, or not, they do it is up to them. Have to let them sink or swim.
- In the developed world 9 out 10 new businesses fail – this isn’t about NGOs insuring every business they invest their time into will succeed – it’s about getting a lot of businesses started and providing the opportunity for success but understanding that ultimately it’s the individual entrepreneur that will determine their own success. Because failure IS an option it is important to encourage more businesses to be involved in sanitation than fewerMore businesses creates a competitive environment
- At the very heart of any market based approach is the need for competition. ‘Survival of the fittest’ is at the root of competition that drives fivekey areas that further stimulate sanitation markets:Aggressive Demand Creation: In a competitive environment enterprises are motivated to reach out and aggressively sell their products – if they don’t go after the market in a given village, someone else will. This element of competition helps drive increases in latrine coverage faster with more businessesactively creating demand for latrines. Innovation: When there is more competition, to gain more customers and differentiate themselves, businesses will innovate – e.g.: find ways to reduce price, develop new products, offer new servicesQuality: Ensuring households receive quality latrines that do not break or collapse is important from a safety and public health standpoint. As mentioned, word of mouth is the most effective form of marketing. If the quality of product does not meet the expectations of customers, they will tell friends, family and neighbours not to purchase. When customers have no alternatives to choose from (i.e.: no competition in the marketplace) enterprises have less incentive to meet the needs of customers, only doing the minimum required. When there are multiple suppliers though, to remain in business, enterprises need to ensure they are providing quality products and services that meet needs of customers or someone else will. Price: Customers want to pay the lowest price possible and enterprises want to charge the highest price possible. From a public health perspective, to reach the largest number of households, particularly the rural poor, it is important that price remains as low as possible. When there is no competition it is easy for an enterprise to charge higher prices without driving away demand. Competition brings prices down as customers have more alternatives to choose between and the fear of losing a sale to a competitor drives down prices. Increased competition also reduces the risk of price fixing and collusion that arises in monopolistic and oligopolistic market environments. Collaboration: A thriving competition environment also supports value chain collaboration – where value chain actors come together and discuss constraints and opportunities and share ideas for overall market development. NGOs can support this collaboration.
- Markets are constantly evolving and so market-based approaches, like Sanitation Marketing, need to approach market development initiatives the same way businesses do: taking the best information available at the time to create and test strategies, continuously listening to the marketplace and all stakeholders to see what is working and what isn’t: revise, test, listen, repeat.
- Globally there are many examples of successful Sanitation Marketing, or igniting markets for sanitation. Specifically at this conference WSP, WaterSHED, and iDE are here sharing our collective experience. If you are interested in learning more about Sanitation Marketing we encourage you to attend the Wednesday WSP led Scaling-up Rural Sanitation and Friday WaterSHED led Sanitation Marketing 101 training sessions.