SEEP PLP LEARNING COMPETITION PAPER

Transcription

1 SEEP PLP LEARNING COMPETITION PAPER TOPIC LESSONS LEARNED FROM USING NON- CONVENTIONAL RESEARCH METHODS TO UNDERSTAND BDS IN A WEAK MARKET Compiled by: Seth S Tladi Eugene Isaacs 1

2 CONTENTS Page 1. INTRODUCTION 3 2. TTO S RESEARCH PROCESS IN UNDERSTANDING BDS IN A WEAK MARKET 4 3. TTO S NON-CONVENTIONAL APPROACH TO UNDERSTANDING BDS IN A WEAK MARKET 6 4. THE LESSONS LEARNED 8 5. HOW WE APPLIED THE LESSONS 9 6. CONCLUSION 12 2

3 LESSON LEARNED FROM USING NON-CONVENTIONAL RESEARCH METHODS TO UNDERSTAND BDS IN A WEAK MARKET 1. INTRODUCTION In 2002 The Triple Trust Organisation (TTO), a market development facilitator working with informal sector enterprises embarked on a research project into the Spaza shop market in the greater Cape Town area. The purpose of the research was to gain an understanding of the market constraints faced by Spaza shops with the view to developing appropriate BDS interventions specific to the Spaza shop market. Spaza shops are small, informal convenience stores located mainly in disadvantaged communities in people s houses or backyards. They sell groceries including both fresh and dry household products. The word Spaza is taken from Zulu and it means, hidden. The term arose during the apartheid era when restrictions were placed on black people running businesses. TTO chose to work in the Spaza shop market because of the potential for impact on poor people. Both owners and customers of Spaza shops are poor and improvement in the Spaza market could help both and this would lead to TTO achieving its mission of poverty alleviation. TTO also knew that the market was very large. A previous study on the Cape Town retail industry had estimated the value of the Spaza market sales at $110M, or about 13% of the entire retail industry in Cape Town. However, TTO suspected that the market suffered from inefficiencies that were reducing benefits to both owners and customers. Hence TTO s understanding of working in a weak market. At the onset of the research process, TTO was faced with the challenge of deciding on what appropriate tools and research methodologies to use to uncover BDS within this weak market. The choice was between taking the conventional approach of conducting a comprehensive BDS market assessment using conventional tools such as UAI and sub-sector analysis or to first gain an understanding of the Spaza shop market and the market constraints facing Spaza shops as a step towards understanding BDS within this market. 3

4 After much deliberation and assistance from a research consultant, TTO decided to first gain an understanding of the Spaza shop market and the market constraints facing Spaza shops as a means towards uncovering hidden BDS within this market. TTO engaged the services of a research company to conduct a survey of the market that would provide us with an understanding of the market constraints on both the demand and supply sides of the market. The purpose of this paper therefore is to present the lessons learned from using non-conventional research approach to gain an understanding of BDS in a weak market in order for TTO to develop appropriate BDS interventions specific to the Spaza shop market and to ultimately contribute to the corporate learning within the BDS field. The paper will therefore focus on the following areas: TTO s market research process in a weak market TTO s non-conventional approach to understanding BDS in a weak market The lessons learned in the process and the application thereof Drawing of specific conclusions from such learnings. 2. TTO S RESEARCH PROCESS IN UNDERSTANDING BDS IN A WEAK MARKET TTO s process of uncovering hidden BDS in a weak market started about 18 months ago. Initially we started with desktop research into the Spaza market, which yielded disappointing results on the market itself let alone the existence of BDS in the market. At this point our first challenge emerged in that there was very little documented research on the Spaza market specific to BDS. We initially decided that what we needed was to conduct a UAI survey amongst Spaza shops relating to BDS. The question in our minds was always is this the appropriate tool for our needs as our initial survey did not yield much in terms of BDS or BDS provision. After consultations with research experts, TTO decided to embark on a survey that would provide us with an understanding of the market constraints faced by Spaza shops in disadvantaged communities, and to assist us in designing appropriate BDS interventions specific to this market. 4

5 The survey showed that ME s did not know much of the existence of BDS or BDS providers. This still left us with the challenge that there could be hidden BDS in the market that our research did not reveal. The research however found constraints that were common to Spaza shop owners. We used this information in planning our next phase of uncovering hidden BDS. Our challenge therefore was to find the most appropriate assessment tools that would uncover BDS in this market. After some help from the MDA development consultant, we moved away from the quantitative approach to a qualitative approach. We decided to use Focus Group Discussions as a data collection tool. We felt that the focus group discussions would provide us with the following: An opportunity for us to fill the gaps in our knowledge of the market An instrument that would provide quick results (i.e. based on time) as opposed to conducting a survey The opportunity of probing for BDS if ME s are not clear on what this is An opportunity for TTO to build its own research capacity In preparing for the FGDs considerable time was spent adapting the questions to suit our needs and building research capacity within TTO. This entailed adapting the language used and the use of terminology, so as not to overwhelm the FGD respondents with terminology and language they do not understand but rather to concentrate on trying to establish what BDS exists in the market and from where it is sourced. Questions were framed differently, e.g. instead of asking, What BDS support did you receive? we asked, Who do you turn to when you experience business related problems? An interesting adaptation or addition made in our research was the use of the products concept test technique in a qualitative assessment setting. What we did during the focus group discussions was to use a product concept test assessment tool which is usually applied in the form of a survey and adapted it into what we called What if scenario s. We then suggested potential BDS services/products around the constraints identified in our initial survey by eliciting responses from the participants concerning the following issues: The ME perception of the service Perceived benefits of the service to ME s ME s willingness to pay for the service and at what price 5

6 This approach resulted in us uncovering that there was a limited amount of BDS and BDS provision taking place in the market in the following areas: Transport Pest control Distribution of products The focus group discussions also demonstrated that there was a demand for business services amongst Spaza shops but there was limited provision from on the BDS supply side. This information proved invaluable in the early stages of intervention design and implementation. 3. TTO S NON-CONVENTIONAL APPROACH TO UNDERSTANDING BDS IN A WEAK MARKET The conventional approach to understanding and uncovering BDS in a weak market would generally take the following approach: A sub-sector analysis of the market A BDS market assessment with the use of the UAI tool focusing on specific services within the market Focus group discussions to gain a deeper understanding of the identified constraints Programme design based on the analysis of the data gathered Programme implementation On the other hand TTO s unconventional approach took the form of: 1. Undertaking research to first understand the market and its constraints Instead of starting with a sub-sector analysis followed by a UAI survey TTO s approach was different in that we decided to first gain an understanding of the Spaza shop market and the market constraints facing Spaza shops as a step towards understanding BDS within this market by conducting a survey of the market. 6

7 2. An incremental approach to understanding and uncovering BDS in a weak market TTO s market assessment was incremental. After each stage of the research, the TTO team paused to assess their findings, think about the implications for the program and determine what additional information is needed. Then we designed another piece of research around those information needs. The end result was a staged market assessment as follows: Stage 1: Research on the Spaza market Stage 2: Qualitative research on Spaza shops and BDS in the Spaza market. Stage 3: Targeted research on the supply chain and Spaza shop customer preferences. Stage 4: Research on specific BDS services. 3. Using qualitative tools to arrive at a quantitative outcome As mentioned earlier on, the adaptation of qualitative tools in our research was unique in the sense that we used quantitative methods in qualitative setting. For example, the use of the product concept test technique during FGDs. What we did during the focus group discussions was to use a product concept test assessment tool which is usually applied in the form of a survey and adapted it into what we called the What if scenario s. We used the constraints identified in our initial survey and suggested potential BDS services/products around them and elicited responses from the participants. 4. The use of business models to design BDS interventions Through our market research and the PLP Field Visit, TTO identified a variety of existing and potential business models for the delivery of BDS in highest demand from Spaza owners. TTO realised that the choice and use of business models through which to deliver BDS to Spaza shops is critical. These business models not only represented different channels through which BDS do or might flow they also presented TTO with different ways to bundle services and thus deliver a bundle of business benefits that Spaza owners want. 7

8 4. THE LESSONS LEARNED The lessons learned In the process of using non-conventional approaches to BDS assessment in a weak market, the following is a summary of the most significant learnings: The importance of understanding the market before intervening When we started with the project we knew very little of the Spaza shop market. Had we embarked on a BDS market assessment without a broader understanding of the issues at play within the market, we would have missed valuable information that is now becoming helpful in the design of interventions specific to the market. Understanding the value of a research tool and the limitations thereof, Much as the UAI is an effective tool in understanding and uncovering BDS, our initial observations were that it would not have been an effective tool to give the desired information since the Spaza shop owners did not know of any BDS, much more so of any organisation that renders such support services. The effectiveness of using Business models to design BDS interventions and to facilitate the bundling of BDS so as to ensure viable and suitable BDS provision Our experience so far with the use of business models in programme design and delivery is that, not only do business models represent different channels through which BDS do or might flow they also represent different ways to bundle services and thus deliver a bundle of business benefits that Spaza owners want in a viable and sustainable manner. The importance of understanding business to business relations in BDS markets and what role these play in the delivery of BDS TTO recognizes that within the retail market many players have common interests with the Spaza shops including wholesalers, manufacturers, distributors and BDS providers. The players whose interests are at odds with the Spaza shops are the big retailers such as Score and Pick & Pay. It is TTO s intention to raise the awareness of those players with whom the Spaza owners have common interest, to take the Spaza shops seriously as business partners. 8

9 The importance of ensuring that all key issues are covered in the initial market survey At the end of the market survey we realised that there were questions that we should have asked but did not ask, in other words there were still gaps in our knowledge and understanding of the market. This resulted in the prolonging of the study of the market, as we had to conduct further studies of the market to fill our knowledge and understanding gaps. Incorporating the realities of a weak market in the design and conducting of the research From the onset it was very clear to us that some of the MDA and BDS terminologies were very foreign to our target market and that the levels of trust and literacy were very low. We had to adapt the language in the questionnaires and in our research approach to be accommodative of these and other dynamics. 5. HOW WE APPLIED THE LESSONS TTO applied the abovementioned lessons in the following key areas: The initial research into the Spaza shop market TTO commissioned a research firm, Strategy and Tactics, to conduct a study on the spaza market. The study had several objectives: 1. to determine the size of the market 2. to understand how the spaza market operates 3. to understand the role of the key market players, 4. to identify key constraints within the market from the perspective of the spaza owners. Strategy and Tactics conducted focus group discussions with 60 spaza shop owners to gain a basic understanding of the market. They then conducted a survey of 300 spaza shop customers and 300 spaza shop owners. The research came out with 12 key findings and highlighted the following key constraints faced by Spaza shop owners: Insufficient & limited range of stock Difficulty and high cost of transporting goods from suppliers to their shops Lack of safe, protected and adequate storage space Environmental problems (rats and other pests and rain damaging stock or buildings) Theft 9

10 Based on the key constraints that spaza owners face, TTO brainstormed some ideas for program interventions that would help spaza owners address their key problems. Constraint Stock Transport Storage Environment Theft Intervention ideas Facilitate links to suppliers and credit facilities Assist with setting up transport service providers or group transport Facilitate links to storage facilities or set up local storage points Set up pest control services or facilitate access to better storage containers Facilitate access to better security devices or set up security services The TTO team also identified missing key information as follows: 1. Lack of data on total amount spent on a basket of goods per month by township residents (by brand and supplier) 2. Understanding the purchasing behaviour / habits of the spaza shop customers (and particularly their total grocery spending and what they could but don t buy at spazas) 3. A further understanding of the types and size of spaza shops 4. Understanding the goods supply and distribution chain 5. What BDS exists in the spaza shop market, the levels of BDS consumption and the profile of BDS providers within this market Use of qualitative research tools and methods on Spaza shops and BDS in the spaza market The TTO team decided that focus group discussions with spaza owners would be the best method for gathering the information they needed to supplement their knowledge and understanding of the spaza market and the BDS within it. Staff of TTO conducted FGDs with 60 spaza shop owners with the aim of answering the following questions: 1. How does the goods supply and distribution chain work in detail? 2. What program interventions could improve the goods supply and distribution chain? 3. What BDS are spaza shop owners accessing now? For what reasons? From whom and how? 4. Is there really a market for BDS within the spaza shop market? Would spaza owners be willing to pay for BDS solutions to their business problems? 5. If so, what BDS is needed? What BDS is demanded? To what extent are spaza owners willing to pay for particular services? 10

11 Based on the expressed demand for services, TTO decided to focus on the following business services: Transportation Pest control services Security services Costing and pricing Record keeping Promotion/advertising Stock management TTO also decided to include interventions to strengthen the spaza shop supply chain in their program design. Conducting targeted research on the supply chain and spaza shop customer preferences. TTO s targeted research on the supply chain is divided into 2 broad areas: 1. Understanding consumer preferences From the analysis of the FGDs, TTO extracted what it termed a product basket of goods held by spaza shops. The consumer research aims to test this product basket with consumers to validate the products in the TTO product basket. Once these products have been validated they will form the basis for bringing new products into the spaza market (i.e. adding to their limited range of stock). 2. Understanding the supply of goods within the Spaza shop market In order for TTO to understand the supply and distribution chain to spazas, TTO has constructed a questionnaire that will test for the following from the perspective of the suppliers of goods to spaza shops: a) Suppliers strategy for this market b) Where do they fit into the supply chain (manufacturer, wholesaler, retailer etc) c) What are the major constraints they face in dealing with spaza shops, and d) What support (if any) do they provide to spaza shops Conducting research on specific BDS markets using a modified UAI In order to design interventions to develop specific BDS markets, the TTO team decided that they needed to know more about both the current supply and demand for these services. TTO conducted a modified Usage, Attitude, Image survey among spaza shop owners to determine: 1. What are spaza owners current awareness, understanding and usage of these services? (Quantitatively) 2. What are spaza owners perceptions and satisfaction with these services? 11

12 3. What are spaza owners reasons for using or not using these services? 4. What is the market potential? To what extent are spaza owners willing to acquire these services? To what extent are they willing to pay for these services? On the BDS supply side, TTO has interviewed and conducted a workshop with 13 potential service providers in the two geographical areas that they are targeting. The types of services they are currently providing are: pest control, transportation, business management services, promotion and advertising, office stationery services and security services. This research examined the following issues: 1. Service providers ability to develop attractive service products for spaza owners 2. Service providers capacity to actually provide solutions to spaza owners key constraints 3. The potential benefits of services to spaza owners 4. The current number of service providers Based on the above TTO was then able embark on a process of developing business models that were to be used for sustainable BDS delivery in the Spaza shop market. 6. CONCLUSIONS Based on the aforementioned lessons and the applications thereof, we have come to the following conclusions 1. For organisations to intervene in an effective and sustainable manner there is a need to be creative and innovative in the application and use of research tools and methodologies. Failure or lack thereof may result in intervention programmes that may not be in a position to effectively meet the demand of SMME or address their market constraints. 2. Facilitators and BDS providers must avoid the temptation of being tied to the conventional use and application of research tools and methodologies in conducting BDS market assessment. We need to be flexible in our approach by adapting the use and application of the tools in order to obtain the relevant information needed to design appropriate interventions. 12

13 3. BDS market assessment if done properly by taking into consideration the dynamics of the market in which BDS occurs, should facilitate the development of appropriate and sustainable interventions. 4. The choice of the business models through which to deliver BDS to Spaza shops or in any market is critical. The business models not only represent different channels through which BDS do or might be delivered they also represent different ways to bundle services and thus deliver a bundle of business benefits that small business owners want. 5. Developing business plans for various existing and potential business models is a key part of program design in weak markets. 13