Learning objective:
At the end of the session participants shall be able to:
Outline the different components of market research.
Identify the information needs that they have as a local business and why this information is important.
One LSB in Northern Uganda was interested in growing sweet potato vines as planting material because they felt it was a crop that almost everyone eats and was considered a food security crop. They started asking other farmers whether they would buy sweet potato vines. After talking to the farmers the group realised that vines were actually not sold in their area and that who-ever needed sweet potato could cut it from another person’s garden. In the communities, clear rules exist on when and how much a farmers can cut. The cutting actually helps the owner of the sweet potato to keep the garden pruned. As a result of their market research the group changed their mind and started producing simsim seed instead.
Content
For the LSB to be successful and grow we need to know what customers want, understand customer behaviour to treat them well, deal with other seed suppliers, create demand, promote the seed, package the seed and transport the seed to the point of sale. The process of getting information on these issues is called market research. The main purpose of a market research is to assess and understand the 4 As in rural marketing.
Availability: Is there scarcity or excess?
Affordability: How is the price compared to farmers’ purchasing power? Acceptability: Is there any positive or negative perceptions about the seed? Awareness: Do the farmers know enough about your crop or variety? In addition to these, other important purposes of market research are:
Knowing your customers: what crops and varieties are farmers in the area growing and
where do they get the seed from. Who is buying your seed: are they farmers, agro dealers, seed companies, NAADS? Farmers generally look at yield capacity, cooking quality and taste and whether there is a market for the produce they grow with seed. Customer preferences change over time because the output market changes, new varieties are released or the climate changes. How far are your customers willing to travel and what are their transport costs? Additionally there may be a difference in male farmer and female farmer seed preferences.
Understanding customer behaviour: This is important so that you can be able to treat
your customers appropriately based of the understanding of their behaviour. This will make customers come back for more seed. Always be Friendly. To be able to treat your customers well you need to able to answer questions they may ask on characteristics of seed and planting information (including benefits of using other inputs) and you need to explain what makes your seed better than other seed seller in terms of quality and price.
Understanding your competition (Seed sold by other seed suppliers): to be able to
position yourself well as a local seed business, you need to know who else is selling seed in your area of operation, the quality and certification levels that seed is and the price your competitors ask. Also take into consideration that many farmers buy grain in the local market and plant it as seed, especially for OPVs and SPV such as beans and groundnut. In short there are three types of competitors: 1) seed sellers that sell the same quality of seed, e.g. other local seed businesses: similar pricing; 2) grain sellers that sell grain as seed, thus lower quality seed: much lower price; 3) specialised seed producers that produce certified seed, such as seed companies: higher pricing.
Knowing your input suppliers: to be able to produce seed you need input; need
foundation seed or other input seed and fertilizers and crop protection products. You need to know where you can buy them at what price. What is the quality and cost.
Estimating demand and understanding demand trends: you need to know how often
farmers buy your seed (seed replacement rate) and when they use seed from their own farm. Once a new variety is introduced, the demand may start high and goes down over time. The figure shows how demand for a new seed variety may develop over time. Other ways of increasing demand include looking for new crops to introduce, expanding the area of sales, and looking for new customer (e.g not only farmers but also schools), lower seed sale prices and actively promote the seed so farmers are aware of your seed.
Source: CIAT handbook 2 chapter 5
Understanding preferred Packaging: proper packaging and labelling is important for
certain types of crops such as beans because it sells something about the quality of seed and makes it look different from seed available from other sources. To do packaging well you need to know which quantities of seed your customers like to buy (e.g. 1kg packs, 100 kg pacts) and you need to know what kind of packaging material is accepted by your customers and where to get it from. The label should also be clear with information about the producer, crop and variety characteristics, quantity and quality characteristics and class of seed. There may be a difference in packaging requirements between male and female farmers in terms of size and material and labelling.
Identifying most effective promotion methods: there are different ways to promote
your seed, such as demonstration plots, field days, radio announcements, posters, markets, shops. You need to know where your customers get their information about seed from and target these events to promote your seed. Use different ways. It is also important to distinguish between needs of female farmers and male farmers in terms of promotion location that are frequently visited.
Assessing available modes of transport: transport can add a major cost to the seed
price but it can also help to provide access to a higher market segment in another area of Uganda. Therefore you need to know the different options of transport available and the costs involved of hiring that transport.
Identifying the marketing risks: To be able to adequately manage the inherent market
risks, there is need to adequately identify all potential threats and risks that exist in the marketing process and the marketing environment. The risks could include: loss of market due to delays in supply, influx of free/subsidised seed, failure to access markets due to poor transport etc. Always keep in mind that a risk once identified is no longer a threat but a management issue.
Training methods
Start with reading the case and discuss with the participants what they learned from the story brainstorm.
Q: What do you think market research is? (answers on flipchart)
Q: What kind of groups and people are important for the seed business? Farmers will be able to come up with the buyers and other seed sellers etc. Divide the flipchart in two columns. Write actors in the first column (each row 1)
Q: What kind of information would you like to know from these actors? (Column 2).
Add the components which are missing from the first column and ask participants what kind of questions they have.
Q: What are the most effective ways to promote your seed?
Q: What are other important considerations you need to know about your market? Q: Name some know market risks in your area and mention how you would be able
to manage them?
Materials:
Mango tree charts on market research, Flipcharts and markers,
Advise:
Briefly explain what market research is and why it is important. Give simple and relevant examples. Demystify the concept of research by getting participants to recognize that they already do research.
It is important to show the need for market research at different stages in the life of a business: at the beginning and more regularly (every 2 years).
Resources
CIAT handbook 2 chapter 2 CIAT handbook 3 chapter 2