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Participatory Market Chain Approach (PMCA) User Guide

1. 8 Participatory processes for market chain development 12 Participatory market chain approach PMCR 15 What is PMCA X 17 Phase 1 Getting to know and understand the market Chain actors 23 Phase 2 Analysing potential business opportunities 33 Phase 3 Implementing joint market chain innovations 45 Follow up Consolidation Of innovations 56 Usefull tools for PMCA u 61 Tool HA PAGE FIMe hi nnana EE AE A EE E A ENS 63 Tool 2 Market Chain Sketch a 69 Tool 3 Rapid Market Appraisal sssssssssssssssssssecsssssssssssssssssssssssssssssssssesssesessssssnsesssssseasesees 73 Tool 4 Quantitative Market Study sissuscsscccoasssducaccasssssnsnecaseacsaseedasaccibenssassssusasvuasasdusansistataasesetee 77 TOOL 5 FOCUS GrOUps caceria iii a uq q ad da q qq da 85 Tool 6 Marketing Concept Development 95 Tool 7 Business Plica i bicis 101 First applications Of PMCNA
2. 10 C4 Horizontal and vertical mistrust in market chains 11 C5 Empowerment and ende cara 12 C6 Developing constructive interactions sssscsssscsssscesssecsescssnsecsseessnseecsseessseserateessseeesneees 13 C7 PMCA l tt r by letter aran arras 17 C8 Definition of tool method and approaqh 17 C9 Outline of a SWOTF Ana nia n 38 C10 Marketing CONCEPTS iia AAA 47 C11 Corporate social responsibility l u 51 Methodological Tips T1 Preparation of guiding questions a a a 25 T2 Interview planning time and place u 26 T3 Triangulating market chain information 27 T4 Criteria for forming thematic groups u u a 29 T5 Getting to know each other in the thematic groups 30 T6 Cultivating positive values right from the start 31 T7 Ensuring benefits at each meeting a a 35 T8 Giving room to consumer near actors U 36 TA Ma aging consultants usaras 39 T10 Involving new key actors into the PMCA Process sssecsssescssesesssescnseecsneece
3. 107 Application 1 Promting innovation in Peru s potato sector 109 Application 2 Promoting the use of native potatoes in Peru 117 Application 3 Generating new products in the Bolivian potato sector 129 Application 4 Starting to use PMCA in Uganda a 135 Challenges when using PMICA 143 Having the right context of application 145 Having the necessary internal support u 147 Having the required leadership SkiIIS sssssscssecsecsseesseecssccsscsssscentecssecssteenecsneesneessseess 149 Having the means to attract the relevant actors 152 Having clear how to plan and monitor the PMCA process 154 Glossary X 157 Annex 1 Overview to plan and monitor PMCA applications 163 ANTI ASA 167 Applications Challenges X Participatory Market CHAIN APPROACH USER GUIDE Contents of textboxes Basic Concepts C1 Human and social capital l u 4 C2 Invention versus INNOVATION u n 7 C3 The prerequisites to gain leadership legitimacy
4. A p 73 85 Particpatory Market Chain Approach PMCA 37 In order to build a systematic understanding of the market chain among participants each group s facili tator should try to visually present the market chain using drawings and other graphical media wherever possible Such market chain drawings help to increase participants awareness of the activities involved and the links that exist between the different actors and how potential market opportunities might affect them In addition the use of such visual aids is likely to raise further important questions and stimulate interesting new thoughts provoking innovative ideas regarding the design of new creative business options If well done such aids can serve as illustrative references for further discussions and help new participants catch up with the group in understanding where the weak links are in the chain and how innovations might improve the situation Once the thematic group has decided which market opportunities to focus on the facilitator might want to use the SWOT Analysis see Box C9 to assess in a participatory manner the potential strengths weak nesses opportunities and threats associated with each innovation Without doubt this SWOT exercise will provide an important first insight into the market potential and feasibility of a proposed innovation At the same time it will also reveal what information gaps still exist In some cases the information
5. All the actors involved have already learned much from this initial PMCA experience The first event has already enabled small scale farmers to collaborate directly with processors Concerning the institutional stting the close collaboration that occurred dur ing Phase 1 has improved trust and the exchange of information Individual researchers for example have mentioned that this new way of working together has already changed their way of thinking They now realize that it is market demand that should drive their technology and variety development activities How ever the PMCA process must continue into Phases 2 and 3 in order to consolidate the learning skills devel opment and new contacts achieved so far x S A a 2 lt 140 Participatory Market CHAIN APPROACH USER GUIDE A8 Implementation of PMCA Phase 1 in Uganda Potato market chain The first potato market chain event was held on November 28 2005 In all 26 actors participated After identifying themselves with certain market chain activities the participants identified the following major constraints Poor access to clean seed especially that of improved varieties Poor access to market information Insufficient capital and poor extension Services Poor quality of the potatoes sold to end users due to improper harvesting sorting and grading Inadequate packaging of both fresh and processed products and a lack of storage facilities especially a
6. Getting innovations designed Developing sound marketing concepts a p 39 C10 Marketing concepts Particpatory Market Chain Approach PMCA 47 The process of designing the earlier discussed innova tions will take up most of Phase 3 For the R amp D organi zation this step is essential to gt Transform the proposed innovations into tangible products technologies and institutions all explicitly responding to market demand Shape these innovations in such a way that their characteristics and design effectively communicate their value to potential users The outline formulated for each market opportunity in Phase 2 see Step 3 is the starting point for further analyzing the proposed innovations i e the factors that characterize and differentiate them and shaping marketing concepts around them see Box C10 A marketing concept refers to a set of different characteristics which taken together provide a coherent identity for a product or service The development of a sound marketing concept implies concep tual work to combine in a coherent manner characteristics that are valuable to a specific group of consumers and effectively communi cate the product s overall design including the following aspects What is the purpose of the product or service e Why it is different from and better than other products Who should consume it e What can be expected from its use Remark A sound marketing concept reflec
7. lt 108 Participatory Market CHAIN APPROACH USER GUIDE gt Promoting the use of native potatoes in Peru describes the second application of PMCA in Peru when the PMCA process focused on native potatoes in order to more directly benefit small scale farmers in the Andes gt Generating new products in the Bolivian potato sector describes the first application of PMCA in Bolivia when it was used to create new market op portunities for native potato producers gt Creating collaboration and trust along market chains in Uganda outlines how PMCA has been taken up by R amp D organizations in Uganda where it has been used to foster market chain collaboration in the potato sweetpotato and vegetable sectors R amp D staff from Uganda assessing PMCA PMCA Application 1 First APPLICATIONS OF PMCA INNOVATING THE Potato SECTOR IN PERU 109 Promoting innovation in Peru s potato sector Thomas Bernet Gaston Lopez Kurt Manrique Overview Context Engel P and Salomon M 1995 Facilitating innovation for development a RAAKS resource box Kit Publications Amsterdam the Netherlands available at www kit nl PMCA Phase 1 Purpose To improve the competitiveness of the Peruvian potato sector Who INCOPA Project CIP Duration March 2002 to June 2003 Since 2002 the International Potato Center CIP has been developing and applying PMCA as part of its IN COPA Project in order to create new market opportu
8. Trac ing the quality of a product as it journeys through the manufacturing process will definitely foster teamwork among market chain actors and enable them to iden tify and take advantage of both new and existing joint business opportunities At the same time the enforcement of quality standards may also improve collaboration among producers and allow price premiums that consumers are willing to pay For instance organic production and fair trade force producers to work closely together in order to comply with certification while simultaneously forging closer links between producers and consum ers because such business schemes advocate social responsibility Participatory Market CHAIN APPROACH USER GUIDE Innovations along market chains Response to changing needs Life cycles of innovations v o E oO E fe a a S S UO re gt Introduction Competitiveness is only achieved if the actors in a market chain are continuously able to provide goods and services that have sufficient consumer value to en sure profitability Thus competitiveness is not a static but a dynamic concept once achieved continuous adjustments must be made to sustain it As a consequence market chains must respond to changes in demand competition policy and avail ability of resources i e production factors Thus the competitiveness of market chains relies on the actors involved being able to
9. Very practical aspects should also be discussed at this point Examples include what type of packaging would be most practical to use where the product should be located in the store or market and what measures might be taken to ensure it attracts atten tion So for instance participants might consider its location on the shelf e g category and height on the display rack and its graphic elements e g letters colours drawings photos both of which are of criti cal importance in allowing the product to effectively communicate its value to potential consumers in a few seconds Effective strategies for publicity might also be discussed at this stage Are special sales people and stands posters or pamphlets feasible and cost effective options to stimulate sales It may also be possible to promote the product by linking it with other products So for example new sauces could be sold and pro moted alongside known brands of potato chips But participants may come up with other creative ways of promoting a product Atwhat sales points should the product be sold and where should it be placed Whatis the most practical packaging when purchasing and using the product e Should different types of packages be offered and why What means of promotion could be most effective to attract consumers attention and stimulate sales 92 Participatory Market CHAIN APPROACH USER GUIDE 6 Closing the session Evaluating
10. during which achievements are presented to the public Although not all R amp D work might be fin ished by this point explicitly ending the PMCA process in this way is strategically important the final event clearly communicates that at this stage the innovations achieved are in the hands of the market chain actors who by then must feel and be responsible to take them forward on their own Psychologically this transfer of ownership is very im portant as it consolidates the perception that the R amp D organization is not the real owner of the innovations despite the considerable efforts they have made This insight is relevant for both the market chain actors and the R amp D organization that leads the PMCA process Although the PMCA process ends explicitly with a final large event this does not mean that the R amp D organiza tion should step completely out of the picture On the contrary in many cases further support from the R amp D organization plays a key role However this new and different role must be clearly defined in order to consoli date PMCA s outcome with well defined interventions based on specific requests and needs of market chain actors who take the innovations forward Continuing support for instance might be impor tant when small scale producers should be trained and organized to enable them to respond better to market opportunities identified through PMCA Also further research might be required to remove
11. members of the R amp D organization who will act as facili tators in the thematic groups that will be formed later The 20 to 40 interviewees may be split into groups in such a way that the interviews are conducted in paral lel so taking up less time The interviews should follow four basic rules listen probe observe and record The first two interviews should involve one or two actors already known to the interviewers providing a means to test and become familiar with the guidance questions and ensure that the interviews do not last too long see Box T2 Generally survey interviews should not take more than 45 minutes unless the interviewee is very motivated and eager to express his or her ideas Whatever the case care should be taken to ensure that the actors being interviewed do not become tired and lose their enthusiasm to answer as this will negatively affect the outcome of the interview Ideally to save the interviewees time the interview should be conducted in the actors work environment This will also provide the interviewer with the opportunity to gain a clearer idea about his or her situation related to the market chain In order to identify potential market opportunities it is best to begin by surveying those actors closest to the consumers Actors at the production end of the chain can then rapidly assess these opportunities men tioned in the interviews The interviewed actors can always be asked to sug
12. 6 percent said they would need to sample the product first Too 5 Focus Groups 85 Focus Groups Maria Elena Alva Thomas Bernet Overview Brief description Purpose Use in PMCA When Phases 2 amp 3 Who R amp D staff or consultant Preparation 1 2 days Duration 45 90 minutes Focus Groups help to evaluate the different marketing aspects associated with products and services through structured group discussions involving six to eight people who represent the target consumer market Focus Groups are used to evaluate new or existing products based on the perceptions and ideas of actual or potential consumers Working with small groups makes it possible to validate individual and group perceptions and gt Understand consumer habits with regard to certain products gt Identify and evaluate consumers reasons for pur chase and consumption or factors that add value to the product being analyzed i e purchase factors gt Evaluate marketing concepts i e the combination and priorization or weighting of purchase factors and promotional strategies gt Assess label designs product packaging publicity material etc In the case of PMCA Focus Groups are especially useful in Phase 2 to rapidly assess the commercial potential of certain market opportunities in Phase 3 the tool can help generate key information concerning the development of marketing concepts and validate draft versions of
13. Based on the general tendencies and conclusions the questions are analyzed in greater detail compar ing key information across different subgroups of the sample For instance there may be significant gender differences in terms of age and sex or with regard to certain product aspects lt may be appropriate to verify these differences later on statistically To calculate the potential market size for the product being investigated the results from the study sample must be extrapolated to the total number of potential consumers The accuracy of this approximation may vary depending on the data available Overall the following calculations need to be done to assess the potential market size in terms of the numbers of con sumers and expected total consumption gt Potential consumers of potential consumers of sample x total consumers with characteristics of the sample 82 Participatory Market CHAIN APPROACH USER GUIDE Presenting the results gt Potential consumption potential consumers x average consumption found in the sample In many cases these consumer and consumption estimates will be far too high as it will be unlikely that all these consumers will be able to access the product being studied Thus this number might need to be adjusted using information about product distribution to make a more realistic estimate of the real market potential To document and illustrate the results of the study cha
14. Evaluation of the experience Packaging for native potato chips This initial application of PMCA in Bolivia helped the PROINPA Foundation to refine its objectives and link small scale farmers efficiently with new markets Thanks to these ties farmers have learned to respond to the need for a higher quality product within the market so enhancing their income Based on their shared interest of promoting native potatoes as a commercial and technological innova tion PMCA also built important levels of trust between APROTAC farmers LUCANA the potato chip process ing company and supermarkets At the final large event when the products were launched PMCA s success benefited both the market chain actors involved and PROINPA as an R amp D organi zation In all the event sparked interest not only in these new products but also in the use of PMCA as a mechanism to improve market linkages in other con texts As a consequence of this experience different R amp D organizations have approached PROINPA eager to learn more about PMCA In response to this demand a special PMCA training workshop was conducted in 2005 with support from CIP This reconfirmed the po tential PMCA has for development in Bolivia both for export crops and crops oriented towards the domestic market PMCA Application 4 First APPLICATIONS OF PMCA STARTING TO USE PMCA IN UGANDA 135 Starting to use PMCA in Uganda Immaculate Sekitto Berga Lemaga Ove
15. PMCA s three phase process as a lot of learning takes place during thematic group meetings However when PMCA is used for rural development and poverty alleviation this approach falls short of constructively building the necessary capacity at the production level Instead this must be achieved after the PMCA process has ended There are several good reasons for this e The innovations developed through the PMCA process clearly point to the areas in which capacity building is needed If the organization of farmers is a central goal of capacity building PMCA innovations will be important drivers that encourage farmers to move in this direction When PMCA ends the R amp D organization in charge of farmer training will have a broader perspective and so will be able to focus more on market demand when undertaking the work The PMCA process will generate different types of part nerships which can also be used to upgrade the training provided to farmers Once the PMCA process has ended the R amp D organi zation should follow up certain activities to maintain the good contacts that have been established If the different new relationships are not used the new social capital will diminish and could be lost see Box C1 From the perspective of the R amp D organization it is es pecially interesting to invest in collaborative activities with complementary partners that have different goals and resources In such partnerships extraordinary r
16. This chapter describes the first applications of PMCA il lustrating how the basic theoretical concepts of PMCA were transformed into practice in each situation Introduction A learning experience From the Andes to Africa Need for new applications Summary of described PMCA applications PMCA was developed only recently within the context of national potato projects in Peru and Bolivia These projects have helped to shape and validate PMCA while PMCA has provided them with important methodological guidance that has allowed them to strategically involve market chain actors in a demand oriented R amp D process The use of PMCA in Peru and Bolivia has already gener ated considerable interest within the R amp D community And because PMCA is flexible and adaptable it is now also being applied in Uganda where different R amp D organizations have expressed an interest in applying this method to the potato sweetpotato and vegetable sectors We hope that the lessons learnt from the first applica tions of PMCA will inspire others to apply this method in new contexts so allowing it to be further fine tuned Thus we hope to soon expand this section of the manual by adding examples of PMCA from different parts of the world gt Promoting innovation in Peru s potato sector re counts the first time PMCA was applied to improve market linkages and the competitiveness of Peru s potato producers x S A a 2
17. a generic three phase process outlined below and a strong focus on market demand and trust building Tools are well defined instruments and specific tools are needed to solve specific problems As a result different situations and problems require different tools e g a hammer or a chisel Methods are the techniques or routines used to analyze and handle complex situations They consist of a series of well speci fied components however the way in which they are used differs according to the situation or problem e g wood carving Approaches are the guidelines which govern generic processes to reach a certain practical outcome They outline how one should approach a type of situation and are independent of the context specific tools that should be used in each case e g the principles of furniture design 18 Participatory Market CHAIN APPROACH USER GUIDE Stimulating innovations based on demand ABC A Design of the three phase process PMCA focuses upon stimulating market chain innova tions and creating tangible benefits for the stakehold ers involved Depending on the specific situation and the interests of the R amp D organization leading the proc ess and the market chain actors involved the type of innovations that emerge from PMCA vary Innovations are of different types gt Commercial innovations involve the creation of new products and services They don t need to be entirely new i e some
18. a guide for briefly covering the different aspects If the market opportunity is shared among several actors an in depth discussion among all of them is necessary to clarify all the details related to this busi ness idea Finally this summary will serve as a baseline agreement for the business idea Once the summary has been agreed upon those in volved must decide who will take the lead in develop ing the whole Business Plan This person should have experience with this tool In addition he or she should be able to analyze complex information and translate it into a concise and logical document Ideally one of those involved in the business ven ture should take on this task because they have a clear understanding of the business idea and are aware of previous research findings However ifthe necessary time or skills are lacking a consultant could be hired to undertake this task One considerable advantage if working with consultants is that it is easier to ensure that deadlines are met this is more difficult when the person doing the work is not being paid In a consul tancy contract responsibilities for both the consultant and the promoters must be defined in terms of provid ing the information required and work supervision But when hiring a consultant be sure he or she is really capable of doing the work required see Box T23 Before hiring a consultant it is advisable to screen different candidates to determine
19. a new context thus gen erating value for the innovation s users see Box C2 Both invention and innovation imply something new While an invention is a discovery a new idea or a product presented to the public for the first time an innovation refers to some thing new and useful that has a real market value In this sense innovations always respond to a demand they can be based on inventions but most of the time they are simply driven by a new or improved combination of already existing ideas and activities where the value of a product is increased for both consumers and producers As part of a good communication strategy trademarks and labels can be effective mechanisms for differen tiating products in the marketplace These not only add value to the product but also make the product unique by differentiating it from similar products This uniqueness might be of great relevance for the con sumer who might feel better about not buying a con ventional mass market product but it is also relevant for producers who protect themselves from competi tors and have more leverage to influence the price received for their products In other words producers have greater negotiating power if nobody else or only few competitors are able to offer the same product 8 Participatory Market CHAIN APPROACH USER GUIDE Building trust among different stakeholders Profitability The starting point for innovation in marke
20. achieved within the space of 7 to 10 thematic group meetings and within no more than 4 to 5 months in order to keep par ticipants motivated based on visible progress gt To ensure that each meeting proceeds smoothly it is necessary for facilitators to prepare for each meeting thoroughly setting up an agenda that guides the discussion toward those issues that most urgently need to be discussed During each meeting a whiteboard or flip chart should be used to track the decisions made during group discussions This will reinforce the group s awareness of the commitments made and will help to ensure that the summary of each meeting which should later be circulated by e mail or mail will reflect what was discussed and agreed on This is a key point because misinterpretation can badly damage the image of facilitators and harm their leadership legiti macy endangering participation and the PMCA process as a whole gt To strengthen the thematic group the facilita tors should be proactive in encouraging the par ticipants to invite new potentially useful actors to the group meetings The facilitator must make sure that such newcomers are well received and feel comfortable right away ensuring their involvement in group discussions PMCA Phase 3 Particpatory Market Chain Approach PMCA 45 Implementing joint market chain innovations Objective of Phase 3 Structure and useful tools of Phase 3 Table 4 Stru
21. and innovative way the tool gt Illustrates a real problem affecting the chain such as inefficiency inequality and informality all of which distort the relationships that exist among the links of the market chain gt Introduces a potential solution by improving exist ing relationships and building new ones allowing the actors to collaborate effectively when working together to achieve a common objective gt Stimulates active involvement on the part of the observing stakeholders in a participatory process gt Relieves the tension that can occur when antago nistic actors in the chain are first brought together gt Promotes a closer relationship between the facilita tors and fosters a sense of group identity among the participants Overall this motivational sketch is used to make the audience more aware of the need to enhance collabo ration along the whole chain by improved coordina tion of activities at different points in the chain 70 Participatory Market CHAIN APPROACH USER GUIDE Use in PMCA a p 72 Defining the theme and planning Selecting the actors and preparing the script The use of the Market Chain Sketch helps to clarify ideas concepts and proposals that grow out of the PMCA process In this sense it is extremely useful for the final event of Phase 1 when a variety of actors involved in the chain meet for the first time and are confronted with the results of the market chain survey The dr
22. available studying uses prices forms of presenta tion and branding etc gt Questioning family members and friends to gather opinions about the product s potential uses and their perceptions of competing products Toot 3 RAPID MARKET APPRAISAL 75 gt Searching the Internet to gather both general and specific information about the product gt Visiting research centers to access expert knowl edge e g on production and processing To complement the information follow up activi ties might require a little bit more effort and creativ ity For instance individual in depth interviews could be conducted enquiring where and how consumers processors or other key actors perceive the potential of new products Such interviews could also include product sampling Good ideas for structuring these interviews or group sessions are provided by the Focus A p 85 Group tool see Tool 5 Step It is a good idea to prepare a brief summary report 2 4 pages containing the most relevant findings Plac Presenting the ing the main findings in a logical order on paper will study s results guarantee that the results are well communicated and that sound conclusions are drawn Another interesting option to structure the main findings is to use SWOT aP 38 Analysis see Box C9 The report should be complemented with an oral presentation where findings can be discussed in a big ger group When used in the PMCA process findings sh
23. booklet was created with the help of a German chef This used the instant native mashed potato flakes Pur Andino soup developed by a German chef Brief evaluation of the experience First APPLICATIONS oF PMICA PromoTiNG THE Use or Native Potatoes IN PERU 127 produced by the project in international dishes such as gnocchi croquettes cream of potato soup and des serts More work was also needed to refine the instant soups produced in order to improve their flavour and reduce costs The work of balancing supply and demand in order to ensure that T ikapapa was commercially viable was spearheaded by the company that sold the product in supermarkets However supply problems due to the strong seasonality of Peru s native potatoes led CIP to step up its research into post harvest issues As a consequence the INCOPA project sponsored a the sis designed to evaluate the use of sprout inhibitors in the storage of native potatoes The native potato catalogue suggested by those involved in PMCA was also taken on by CIP this catalogue highlights those varieties that show most promise for commercializa tion under the T ikapapa brand Without doubt this second application of PMCA benefited a great deal from the first one see Applica tion 1 It had access to a number of highly motivated participants who already trusted each other and were familiar with PMCA as a mode of work and facilitators who knew the potato se
24. bottlenecks in production storage and processing etc This said how ever in these follow up activities the R amp D organization must be clear that it cannot play the role of the private sector That is it cannot get involved in marketing on its own and nor should it subsidize activities that are strictly commercial Particpatory Market Chain Approach PMCA 23 PMCA Phase 1 Getting to know and understand market chain actors Objective of Phase 1 The objective of PMCA s first phase is to allow the R amp D organization using this method to become familiar with the targeted market chain and its actors and to identify potential innovations based on the shared in terests of the stakeholders involved Potential innova tions suggested at the end of this phase are analyzed in more detail in Phase 2 Structure and useful Phase 1 consists of three steps see Table 2 However tools of Phase 1 depending on the knowledge base and contacts of the R amp D organization using PMCA Step 1 might be omit ted or conducted over a shorter period Table2 Overview of the steps involved in Phase 1 Structure of Phase 1 Time frame Useful activities and tools Step 1 Rapid assessment of the 3 to 6 weeks market chain Step 2 Definition of thematic groups 1 day Tool 1 Impact Filter Step 3 Planning the final event of 3 to 5 weeks Tool 2 Market Chain Sketch Phase 1 Step This first step consists of a rapid and qualitative study of the mar
25. can be ad justed to any context in which an impact assessment is relevant either ex ante i e assessing potential impact prior to interventions or ex post i e assessing the out come of completed interventions In either case when adapting the tool those using it need to redefine the development objectives and the weighting of the three impact dimensions and their sub criteria The Im pact Filter is derived from the poverty filter Devaux amp Thiele 2004 and is still under development as it needs further testing under different conditions to validate its adjustability and usefulness in different contexts Toot 1 Impact FILTER 67 A1 Initial application of the Impact Filter In 2001 when the INCOPA project started there was a need to prioritize lines of action that would benefit small potato growers The objective was to improve the competitiveness of Peru s potato sector while empowering poor Andean potato farmers There was also a need to identify and target existing or new market opportunities in order to improve potato farmers incomes Asa first step three market opportunities were considered potato chips mini yellow potatoes and white chu o or tunta naturally dehydrated potatoes These were characterized using a simple table see Table 5 Table 5 Matrix for characterizing different market opportunities Business Production Type of Principal Principal opportunity zone producer markets purchasers Potato chips Coas
26. chains determine the rules of the game preferring to work with large and well organized producers Limited access to information and contacts jeopard ize the position of small producers in the marketplace making agricultural production unprofitable and risky This perpetuates poverty and puts at risk the resource base of rural areas Human and social capital espe cially young people are lost as competitiveness de clines setting in motion a downward spiral that further undermines their ability to compete see Figure 1 Most R amp D organizations agree that improved market access is crucial if the competitiveness of rural areas and its producers is to be enhanced Promoting col laboration along the market chain among different stakeholders is a promising approach to gt Increase efficiency in the market chain by lower ing the production and transaction costs which occur between the different market chain actors gt Enhance the value of the products and services generated along a market chain so justifying higher consumer sale prices vi Participatory Market CHAIN APPROACH USER GUIDE How tointervenein Stimulating positive market chain collaboration from market chains the outside is a tricky issue Market chain actors com pete with regard to price and quality in their day to day business which apparently inhibits the develop A ABC ment of trust and concerted action New methodologyto The Participatory Market Ch
27. characterized by three phases each of which has an objective and its A p 19 own process logic see Figure 7 This allows a lot of flexibility as PMCA should be adapted to different contexts PMCA is flexible with regard to gt Target First and foremost PMCA is intended to be applied to a specific market chain However it could also be used in a context which involves several com modities with similar characteristics such as organic vegetables or fresh fruit gt Accuracy The precision used when analyzing po tential joint innovations will depend on the R amp D or ganization using this method PMCA is flexible in this sense as it can either be used in a very qualitative manner or in a more quantitative data intensive way This said however it should be remembered that greater data accuracy raises research costs and may put at risk the active participation of key stake holders as the research involved takes more time gt Duration Duration depends on the content and progress achieved in each application PMCA is flexible in terms of time However to guarantee progress and ensure that those involved retain the motivation needed to participate actively it has been shown that ideally each phase should not last more than five months 22 Participatory Market CHAIN APPROACH USER GUIDE Sustainability logic of PMCA Further support on demand PMCA suggests concluding its process with a large final event
28. consolidated it is worth writing a concise text that brings all this information together Again the Business Plan see Tool 7 should provide you with a good idea of how this can be done practically When this text is shared among the group mem bers it will help to internalize the group s ideas and stimulate a stronger group identity as it communi cates to outsiders what the group has in mind In this sense it is a valuable piece of work both for the final event of Phase 2 during which the thematic group work is presented and for Phase 3 during which it will serve as a guiding document for the implementation of innovations In order to define what joint work should be under taken in Phase 3 we recommend that each thematic group prepares a work plan This will allow the R amp D organization to Creating a to do list Identifying needs and new actors Holding the final event of Phase 2 Particpatory Market Chain Approach PMCA 41 gt Plan how the work undertaken in Phase 3 will be implemented gt Specify what support the group will need during Phase 3 gt Identify what new actors should be invited to participate in the final event of Phase 2 in order to bring them on board for Phase 3 Since market opportunities were outlined in a previ ous discussion see Step 3 it should be easy for each group to come up with a work plan for Phase 3 This work plan should take the form of a to do li
29. empower different stake holders three to five actors from each group should share this responsibility It is important for the R amp D organization facilitating the process to make these ac tors more visible see Box T11 The facilitators of each thematic group may suggest which indi viduals could represent their group at this event Thus they might propose those individuals who have participated most or those who have played a key role in the group This said however it is best if the responsibility of nominating the presenters is actually shouldered by the group itself as group discussion will avoid a unilateral decision which might otherwise generate mistrust in the group The fact is that the thematic group will always empower those people who have in the eyes of those involved demon strated that they perform well are capable and merit trust In this sense the group will most probably choose its own future leaders actors who will play a key role in implementing the sug gested innovations after gaining essential leadership legitimacy via the PMCA s group interactions 44 Participatory Market CHAIN APPROACH USER GUIDE Practical issues for Phase 2 gt How long Phase 2 will last will vary from case to case Overall its length will depend on how frequently each thematic group meets and how many meetings are needed to formulate a sound work plan Ideally the facilitators should ensure that this goal is
30. environment for key actors to launch the innovations successfully in the market Gain public recognition for the work achieved with PMCA Overall this final large event should lay the best possi ble foundations for the future success of all the innova tions derived from the PMCA process It is especially important to use aggressive communication e g producing leaflets making press releases and giving interviews to the media when commercial innovations are generated Unlike previous PMCA events this final event should attract journalists to foster the diffusion of PMCA s results Therefore the leading R amp D organi zation must create tangible incentives for the mass media to attend Such incentives should include 52 Participatory Market CHAIN APPROACH USER GUIDE gt The sending out of personal invitations together with a press release that provides information about the event and the market chain innovations that have been generated and will be made public that day gt The presence of one or two media attractive VIPs who will discuss the PMCA s work and its achieve ments see Box T15 gt A special reception for the media including an aperitif and a gift basket with detailed informa tion about achievements and samples of products developed during the PMCA process The presence of one or two attractive personalities from the government or private sector is an important hook to gene
31. eo16918115 uuo5 q Pjnod oym apeu u q s12e1uo2 Mau APH SPIE 1 U1O Ul JOM BY SAO UU O 1lueluoduui aq p no2 s12e1uo2 1eu A SaIpIsqns 3 1 mara jo julod 3I qnd e Wo p unsn ase salAoe 1eU A OOM Jay SAO UU O SISUYEA djay pinom S HIA1I12e JUDISHIP LYM Bulddo3sy3eq aplAoisd 0 Aejd von estueblo ay p nous jo1 urew JeuAA 101995 1BAHd y JO spueUu y U SUOIJLAOUUI eIDIBWIWOD DY DY sype uo mau UO Burzi ede gt g anss yoddns Jo sad JU3Jay Ip BuipiAoid z nss uoneziueBio Gq9u u1 104 9 04 Mau e Buluyaq anss SUO EAOUUI JO uol epijosuo2 dN MO 04 V3Wd erpau ay 104 pasedaid u q jeze seH Zelpaw ay peye yey paynu suosiad dIAZ O AY uaaa Big sly pjoy 0 qe ieAe asnjonsyseyyul ayenbape si ssa301d UBISIP siy u PaAjOAu Ajayenbape si dnos6 u11eu1 ams apew s uBIs p YUM djay Yadxa 0 553938 aney sdnoiB6 Huom au oq ssa301d ubisap siy u djay yey pasn sjoo ay Ay SONANDO JUdIAYIP u1 104 NIQISUOASIA y UO Saye oym Jed Y S Jo esed ul yom uonelu uu duui Op 0 2e d u SLUSJUBYIOW JV JU9A3 euu s V2Wd BulpjoH dais paubisap suoljeAouul Hunan zz dais paziuebo sdnoub anevwsy Hu 1 days SUO EAOUU ue yo zaye JUIOf Bunua ua dul aseUd V3Wd APPENDIX 167 Annex 2 List of authors Javier Aguilera jaguilera proinpa org Proinpa Bolivia Maria Elena Alva m alva cgiar org CIP Papa Andina Peru Alain Barrero abarrero ciatbo o
32. etc Step Once the thematic groups have received a first in jection of helpful information it s time to begin the Evaluating potential group discussions that will consolidate the shared innovations interests of the group by analyzing potential joint in novations These discussions lie at the heart of Phase 2 and enable the leading R amp D organization to Focus the discussion on market opportunities of joint interest taking into account consumer de mand gt Empower market near actors whose active and continuous involvement is key to the success of the process gt Enhance mutual learning and trust building both of which are driven by the identification of tangible market solutions Thematic group session in a processing plant 36 Participatory Market CHAIN APPROACH USER GUIDE Consolidating interests and ideas T8 Giving room to consumer near actors If no consensus has yet been reached by the individual thematic groups regarding which innovations to target additional group discussions will be needed To prioritize one or two opportunities in each thematic group it may be helpful to make a list of different op tions then rate them using simple qualitative criteria such as gt Commercial viability gt Relevance for consumers gt Effect on poverty or rural development gt Feasibility of developing this opportunity as a group If such a rapid form of evaluation generate
33. gaps revealed can be easily filled through further group discussions In other cases however the missing information might require new actors to be integrated into the thematic groups Or special research efforts might be needed especially when information concerning consumer behavior and market structure is necessary Rapid Market Appraisal see Tool 3 and Focus Groups see Tool 5 could prove helpful when trying to collect information on such subjects 38 Participatory Market CHAIN APPROACH USER GUIDE The SWOT Analysis is an effective tool for identifying the Strengths S and Weaknesses W and the Opportunities 0 C9 Outline of a SWOT Analysis and Threats T related to a business option When used in a par ticipatory setting such as PMCA it is useful to work with cards which stakeholders can use to summarize their observations Pinned on the wall or laid on the floor these cards stimulate a lively discussion which can be used to validate the informa tion gathered within the group The following questions given for guidance will help to ensure that the maximum benefit is obtained from a discussion of a specific market opportunity Strengths What advantages does the market opportunity have What are your strengths as a group e What relevant resources do you have access to Weaknesses e What weaknesses does the market opportunity have What as a group might you not be able to do so well e What are the key areas
34. good people that have a good reputation A collaborative spirit is even more important in the case of those actors who join the process at a later stage Quarrelsome and egocen tric actors must be avoided PMCA tries to give room to those actors who are in the best position to identify real market opportunities and give shape to innovations which will be beneficial both to consumers and to the participating market chain The involvement of rural producers should be carefully managed since difficulties of access and communi cation might hamper their active attendance Initial group discussions need to focus on issues such as mar ket demand and processing options where small scale farmers often have little knowledge to contribute However if PMCA is used for instance to empower small scale farmers by providing them with improved market access the R amp D organization must find ways to ensure that these actors remain sufficiently close to the PMCA activities to make them feel that they are part of the process and have a stake in the business that results from PMCA gt Whatever the case the leading R amp D organization must define mechanisms to ensure the appropriate involvement of its main beneficiaries e g small CHALLENGES WHEN USING PMCA 153 scale producers Most importantly these actors must be invited to the final events of each phase where they will be provided with an update on the progress achieved and have
35. held at times and in places that are convenient for the interviewees Because such a market study will involve various interviewers the process needs to be supervised to ensure the consistency of responses To ensure that interviewees were actually interviewed and that the cor rect protocol was followed a random follow up of those interviewed could be carried out by the supervisor Reviewing data entry Analyzing the information Market size projections Toot 4 Quantitative MARKET STUDY 81 Once the interviews have been conducted the data from each questionnaire should be reviewed to verify the quality and consistency of the information provid ed by the interviewees Each questionnaire must also be coded to indicate who did the interview To facilitate data entry each question and its possible responses must be assigned numbers A codebook must be prepared containing the different numbers assigned to the responses to each question Using these codes the responses are then entered into a database question by question Microsoft Excel is an ideal program for this as it is very user friendly with regard to data processing and makes the subsequent visualization of key data very easy During an initial review of the results it is useful to ana lyze the differences in responses question by question across the whole sample To get a fast visual impres sion the preparation of tables or graphs can be helpful at this point
36. labels product packages and promotional materials see Tool 6 86 Participatory Market CHAIN APPROACH USER GUIDE General planning A p 73 Planning a session In order to obtain good results a Focus Group must be well planned First it must be clear what type of infor mation is needed and who should be invited to attend the interview sessions This might require qualitative research before proceeding with the Focus Groups to specify the market segment and potential consumers see Tool 3 Often focus groups are conducted in special rooms that contain two way mirrors which allows marketing specialists to observe group interactions However a normal environment should function just as well as long as the room is welcoming and the participants are able to sit down in a way that allows all of them to see and hear each other clearly To make participants feel comfortable and so participate well it may be useful to provide refreshments or snacks making sure that they don t interfere with the interaction of the group and distort the research results a point which it is es pecially important when products are being sampled Videotaping may help to evaluate the responses of the group but it should only done if active participa tion is not hampered Having observers sitting in the back part of the room should not cause any problems as long as they don t intervene and participants know why they are there In
37. management staff and colleagues have difficul ties understanding the principles of PMCA and its potential value for a given situation it may make sense to sell PMCA in parts Thus as a first step only a market chain survey might be conducted in conjunction with an event at which the results are presented and discussed PMCA Phase 1 This event would then provide those unsure of the proc ess with the insight required for them to agree that the work should continue into Phases 2 and 3 Challenges 148 Participatory Market CHAIN APPROACH USER GUIDE Making PMCA fit with the administration High level decision makers invited to the closing PMCA event in Peru Most R amp D organizations draw up yearly work plans to plan and budget for activities Since PMCA involves a high degree of uncertainty in terms of what specific activities will be conducted these are defined within the PMCA process by participants based on needs and opportunities the organization s administration might not like this new working style not only are the activities to be undertaken unclear but also the amount of funds that will be needed and when they will be spent is not fixed gt It will be important to negotiate internally more flexible budgeting Optimally a work plan should be produced that covers all three phases of PMCA where each phase is be assigned a rough budget based on generic process related activities includ ing fo
38. market opportunities for the Bolivian potato sector especially with native potatoes Who PROINPA Foundation Duration 2003 to 2004 Context In Bolivia the PROINPA Foundation is working on vari ous projects designed to link small farmers to markets In 2003 through the Papa Andina Initiative staff from PROINPA were introduced to PMCA and saw evidence of its initial successful application in Peru It was agreed that applying this method would be useful in Bolivia so giving impetus to work already in place and taking advantage of new market opportunities in the potato sector It was hoped that PMCA could be effectively used to promote the development of strategic part nerships between producers and other actors in the market chain Since PROINPA already had several projects under way PMCA was mainly used to enhance the quality of the interaction among market chain actors and to foster the establishment of agricultural businesses For example PROINPA had already conducted two stud ies which it was able to use as the basis for applying PCMA one on the potato food chain in Bolivia and one on the market chain associated with chu o and tunta two forms of dehydrated potato in Bolivia s Central Altiplano x 2 a Ad a 2 lt 130 Participatory Market CHAIN APPROACH USER GUIDE PMCA Phase 1 Final event As part of PCMASs initial market chain survey around 50 interviews were undertaken involving dif
39. nities that would be of particular benefit to small scale potato producers in Peru It was clear to the project managers that small scale potato producers would only be able to take advan tage of new market opportunities if they were able to collaborate successfully with other actors in the market chain The question was how could such collaboration be stimulated In order to build collaboration the RAAKS meth odology Rapid Appraisal of Agricultural Knowledge Systems was applied to the market chain emphasiz ing the joint development of new business opportuni ties This particular application of RAAKS gave birth to PMCA a market chain method specifically designed to stimulate joint innovations As a first step a market chain survey was conducted This involved 24 qualitative interviews with different actors in the market chain For three weeks the inter viewers spoke with farmers NGOs merchants proces sors and distributors The assessment revealed that the potato market chain in Peru is highly informal and that trust is lacking along the whole chain it is common for both providers x S x 2 e lt 110 Participatory Market CHAIN APPROACH USER GUIDE Final event and clients to be deliberately deceived with regard to product quality and quantity The assessment revealed that it is a very common practice to mix poor quality potatoes with better quality produce within large sacks and to sell buyers
40. output from a research project funded by the DFID Crop Post Harvest Research Programme CPHP Promotion and Development of the Participatory Market Chain Approach PMCA in Uganda R8418 The views expressed in this document are not necessarily those of DFID CIP publications contribute important development information to the public arena Readers are encouraged to quote or reproduce material from them in their own publications As copyright holder CIP requests acknowledgement and a copy of the publication where the citation or material appears Please send a copy to the Communication and Public Awareness Department at the address below International Potato Center Apartado 1558 Lima 12 Peru cip cgiar org www cipotato org Prologue PROLOGUE Ill The most practical thing is a good theory Shifting towards an innovation focus From RAAKS to PMCA Engel P and Salomon M 1995 Facilitating innovation for development a RAAKS resource box Kit Publications Amsterdam the Netherlands available at www kit nl Thiele G and Bernet T eds 2005 Conceptos pautas y herramientas enfoque participativo en cadenas productivas y plataformas de concertaci n CIP Lima Peru Validation in South America and Africa In 2001 the Swiss Agency for Development and Coop eration SDC launched a new potato project in Peru INCOPA Hosted by the International Potato Center CIP this project seeks to enhance the compe
41. product is better than the packaging prom ises many potential consumers will never know the real value of the product as they won t buy it gt Ifthe package oversells the content the result is guaranteed a frustrated consumer who will not purchase the product again and will provide bad publicity for it An important index of satisfaction is the price that each participant would be willing to pay at this point i e after having tasted the product So the facilita tor should again ask the participants to write down the price they would now be willing to pay below the price they have written down before What do you think of the taste consistency colour and size of the product e Do these elements correspond to what the packaging promises e Is there a conflict between what the packaging promises and what the product really offers Should other elements be mentioned on the package Does the price mentioned earlier seem appropriate or should it be higher or lower Evaluating merchandising options Possible questions during this part of the session Toot 5 Focus Groups 91 Since by this point the participants know the product fairly well they can now be asked to share their opin ions regarding how the packaging could be improved and where and when the product should be sold Also they might give interesting advice on promotion or how to best orient the product so that it appeals to the target consumers
42. production areas to classify potatoes of different sizes After the final event CIP s role as the facilitating entity changed considerably It was no longer CIP s responsi bility to lead the meetings instead CAPAC Peru took the lead in calling the meetings needed to continue with the Mi Papa commercialization scheme The PMCA facilitators changed their role to one of advisors INCOPA which led the PMCA process continued to offer specific support to increase the marketplace success of the innovations developed For instance it supported a consultancy to help CAPAC Peru develop a business plan and helped to finance the pilot launch of CAPAC s products Mi Papa and its information bulletins from Lima s Wholesale Market Additional assistance was provided to reinforce the links between CAPAC Peru the Ministry of Agriculture the Municipal ity of Lima which manages the wholesale market and other organizations interested in potato commerciali zation In the case of the yellow potato chips the chip processor and CIP re evaluated the marketing concept for Papy Boom at an export fair with a Rapid Market Appraisal see Tool 3 This study resulted in hiring a new designer who quickly improved the packaging and created an additional marketing concept which was aimed at adults Both concepts were then evalu ated in a Focus Group see Tool 5 With regard to the potato selection and classifi cation machine a ser
43. project partners it was agreed that the use of PMCA should not be limited to sweetpotato x S A a 2 lt 136 Participatory Market CHAIN APPROACH USER GUIDE Initial visit to Peru by Ugandan partners but also be used in the potato and vegetable sector In order to come up with the most suitable approach for Uganda and the region the experiences with PMCA in the Andes were analyzed by project participants and compared with other market chain approaches exist ing in the region This collaborative learning process involved training workshops and the implementation of three small scale PMCA projects led by different R amp D organizations that have been participating in the proj ect Progress with these activities is described below In March 2005 a Ugandan team visited Peru to get a firsthand impression of PMCA before embarking on project activities in Uganda Three persons became acquainted with PMCA work in Peru learning exactly how it was used to bring together the different stake holders in order to help them work towards a common goal The team visited a number of players in the mar ket chain including farmers groups markets super markets and researchers and interacted with different staff from Papa Andina a Partnership Program of the International Potato Center CIP which has promoted the development of PMCA The Ugandan team drew the following conclusions from their visit gt The market chain
44. s perception of the product at the time of purchase matches their perception at the time of consumption Finally it is important to write a good concise re port that documents the structure of the Focus Group its results and conclusions This report will help keep in mind the main results and conclusions when follow up activities are defined or the product is assessed again later on Toot 5 Focus Groups 93 A5 Evaluating the marketing concept for yellow potato chips To evaluate two marketing concepts for yellow potato chips a Focus Group session was organized with six women who have children between the ages of 3 and 8 After asking their general opinions about this type of product a marketing concept aimed at children Papy Boom was presented The participants were asked to comment upon how they perceived the packaging This provided a variety of useful information For instance they mentioned that the generic brand used on the package Top Chips did not make sense to them and that the design did not inspire confidence They also noted that it is extremely important for them to know that a product is natural and nutritious while containing as little fat as possible For them these were the purchase factors that mat tered when they considered buying a product for their children Then they were presented with an improved concept for Papy Boom All liked this packaging better although they still insiste
45. s competitiveness in the market when launched To draw on the valuable information that can be provided by consumers Focus Group research see Tool 5 might be very helpful at this stage involving consumers who represent the market segments that best appreciate the initially identified purchase factors The Focus Group should be conducted so that participants can appreciate a clear hierarchical rela tionship among the different purchase factors In other words the researcher must understand consumers perception how they prioritize the different purchase Designing the marketing concept T22 Using brand names for differentiation Toor 6 MARKETING Concept DEVELOPMENT 97 factors and how they are related The fact is that a product s principal advantage must be emphasized to bring across the main reason why it should be pur chased other advantages might help to add value to the product but they should be communicated less forcefully Applying such a clear ranking of product values will inspire confidence when the product is being purchased by briefly looking at the product package the consumer should know what it is good for For instance a consumer will be confused if a product is sold as being nutritious easy to use and cheap all at the same time however they will feel comfortable if a package tells them that the product is first of all nutritious and additionally it is also easy to use and not too expensi
46. s1072 Ie ajqedeo ay sdnoJ6 gt 1Je way 0 Z ul e1ed u Y1OM 0 alqey eae sjeayew ayy e ay JU9A9 SIU PJOY 0 qejieA e ainjonsysesul ayenbape s dno16 e ulof 0 ajqe aq Juana S seud 104 SISP OYIALIS p llAul Je IM S19YIO ay JUdIaYIP pusnujns dno16 gt pew y yea jo Ido aya S SJOPR Aq 5359 9 U1 passaidxa ay 199491 SANOIB 1 8UU9Y 01 z u1 oq SJOYR Ady 1u nuJns u MeJp pue uoneuuojJul Alessadau ay ute1qo 0 y10q ybnous abe ajdwes ay s p pnpu suoneziuebjo Bunuoddns uenajas sow 3y By SM9IAJ3 UI BY 104 PSJBPISUOD Urey JayxJELW JU JO SIUSUIBOS e 1V 1u A euu y Buip oH dais sdno16 gt 11eu3yj JO uonluU q z dais uleyd Joy Je y JO JUaLUSSasse pidey 1 dais 510138 uey 39448 UU 34 puelasi pun pue mouy 0 Bun 5 L seud V3Wd 165 APPENDIX Lyd z aseyd uoldas 491deuD2 YOWd Ov d z aseyd uoldas 4a3deyD VINd ue d SSAUISNY OO 6 d z aseyd uoldas Ja1deyDd YOWd sdnodyd snd04 oo Apnis PAMEN DAILUJUCNH y JOOL esiesddy 1 J1eW pidey joo SIS eUy 1OMS 8 SE d z aseyd Uu0Ol 2 S 194de YD VIWd ve d z aseyd uoldas Ja3deyD YOWd Bed aduasajay DOM Koed NIRO siy JO seme uuo2 qQ 0 Pa AU Jeys Ady euu lui S om sdnosb ay UaYy Huadys 0 enu lod YUM pazAU u q si p ou ye1s Mau BACH 1U9AS sy p ou 0 qe ieAe aunjonsyseyjul ayenbape s ue d 410M ay uo 1Be sjuedpiued
47. sketch A p 69 Putting in place good facilitation T6 Cultivating positive values right from the start Particpatory Market Chain Approach PMCA 31 During the final event of Phase 1 the team of PMCA facilitators may perform a market chain sketch see Tool 2 where they play the role of different market chain actors bringing across in a visual way the core message of PMCA which is that market chain collabo ration is essential to take advantage of new market opportunities At the same time such role play also helps participants relax and creates a friendly environ ment that favors the exchange of ideas in the thematic groups during the second part of the event Such market chain sketches can be performed at the beginning of an event or after the plenary presen tation before the thematic group work starts This first event requires a group effort on the part of the entire team of R amp D staff implementing PMCA Good facilitation is key to stimulating a positive attitude among participants which will encourage the sharing of interests and ideas This is particularly important at this early stage in the PMCA process when there is still only a minimal level of trust among the participants Thus facilitators must be very careful when leading the discussions plac ing participants in the role of experts rather than pushing their own opinions It is important to ensure that every participant is given the chance to express h
48. the reasons why the product or service might be purchased i e identifica tion of purchase factors Do you purchase and or consume a product of this type Why do you buy it What are its benefits in relation to alternative products When do you buy it e How often do you buy it Who mainly consumes it and why Understanding the visual logic Possible questions during this part of the session Toot 5 Focus Groups 89 At this stage the facilitator should present a product label or package Now the facilitator wants to know how participants perceive the visual marketing con cept and if it is congruent with the ideas and important purchase factors mentioned before the participants saw the product see 2 The facilitator might want to focus the group s attention on both the physical characteristics of the product s packaging size shape material etc and the graphic elements logo colours design etc that com municate the product s value The key issue is to deter mine whether the packaging helps the participants to perceive the product s real value and its comparative advantages In order to generate the necessary feedback the fa cilitator must use precise questions and stimulate con clusive answers For instance it is not enough for the participants to simply say that the packaging is pretty or to state I like it the facilitator needs to know ex actly how each element is percei
49. their experience and their ability to develop a business plan To do this it is best to ask candidates to provide one or two examples of business plans that they have prepared previously These examples will show if the person in question is capable of taking on this important task Let s be clear a bad business plan is the first important step on the road to losing a lot of money Analyzing all relevant data p 104 p 73 Presenting the document Toot 7 Business PLAN 103 The person in charge of developing the Business Plan must ensure that all relevant information is on hand For that the Business Plan structure see Application A7 can be used as a checklist Additional information might need to be obtained through further research including individual and group interviews see Tools 3 and 5 After the data has been thoroughly analyzed the different sections of the Business Plan are prepared taking care that the different parts of the document are consistent The initial summary of the business idea see Step 1 can be used as a starting point when developing the entire Business Plan as it provides all the key information needed for each section of the full Business Plan The initial summary can also serve as the basis for the executive summary which is written last and then placed at the beginning of the document The entire document including appendices with cash flows and profitability calculations should not e
50. tors should ensure that the first meetings of Phase 2 lead to valuable and concrete outcomes as this stimulates further participation see Box T7 This is particularly important in the case of those consumer near key actors who have little time available for such activities i e those whose time involves the highest opportunity costs To enhance learning and create further benefits the PMCA facilitators might organize special field visits with their thematic groups see Box T7 Visiting pro duction facilities of actors from the thematic group and sharing insider information will enhance trust among group members Visits can also be combined with the initial meetings of Phase 2 Why not try dis cussing potential market opportunities in a warehouse barn or processing plant PARTICPATORY Market Chain Approach PMCA 35 Because meetings represent an expense for participants time is money the PMCA facilitators must make sure that every T7 Ensuring benefits meeting benefits the participants so that they are compensated at each meeting for the cost of their participation Benefits can consist of new con tacts relevant learning or simply an enriching exchange of ideas Ultimately to ensure optimal stakeholder involvement in the PMCA process facilitators must be creative and quick to spot opportunities that lead to tangible benefits for participants such as product sampling during group meetings and special field visits
51. was well organized the players in the market chain were known to each other and the prices of the commodities were determined at all stages gt Market and income possibilities are the drivers for change in production and commercialization and genetic diversity has a special place in making this happen The frankness and readiness of each party to freely share information made clear the confidence and trust the parties had in each other gt With appropriate empowering and follow up farm ers can become effective and practical researchers enhancing technology adoption and utilization gt Researchers working very closely with market chain actors can create an exciting innovation framework Survey of R amp D organizations in Uganda Three PMCA training workshops First APPLICATIONS OF PMCA STARTING TO USE PMCA IN UGANDA 137 which has the potential to change traditions in a way that benefits different actors Activities in Uganda started in April 2005 with a survey of organizations The purpose was to determine which R amp D organizations had experience of market chain activities and which would be willing to be involved in this project Out of the 44 institutions identified 20 were interviewed and invited to participate in the project The following selection criteria were applied gt Availability of activities related to market chains gt Interest and availability of competent staff to imple ment PMCA
52. way will optimum use be made of available resources which are transformed into products and services that are of value to market chain actors and consumers But how can such collaboration be achieved in a situation where actors mistrust each other because they compete daily negotiating for more favourable prices quality and terms of payment Participatory Market CHAIN APPROACH USER GUIDE Contribution of PMCA The Participatory Market Chain Approach PMCA fills a toruraldevelopment methodological gap It is an instrument for facilitating change in market chains that lack coordination so cre ating an environment that fosters interaction among market chain actors promotes mutual learning and trust and stimulates shared innovations Such an innovation process should create a virtu ous circle that improves the development environ ment of rural areas increasing the competitiveness not only of the market chain but also of the communities A ABC and producers who are empowered as they benefit from improved access to markets contacts and infor mation see Figure 2 a nable rural develo Pm Ong yctive intera y okt to nN Methodological guidelines Figure2 PMCA creates a virtuous circle for enhancing rural development Basic Concepts FOR MARKET CHAIN COMPETITIVENESS 3 Local development and market chain competitiveness Access to different types of capital ABC ABC A Quest for capital development
53. 2 days Duration 2 3 weeks The Business Plan is a strategic document that de scribes all aspects of the development of a market opportunity and which includes a projection of the expected profitability of a venture once implemented A Business Plan presents all aspects of a new business in a simple comprehensive way In this sense it serves as the basis for decision making among promoters and can be used to persuade new actors to get involved particularly new financial partners Operationally the Business Plan helps to plan take the steps necessary to implement operations and de fine the roles partners should play When used with PMCA the Business Plan enriches the participatory process and forces stakeholders to analyze and describe in detail on the basis of consensus and specific commitments all the components needed to take advantage of a market opportunity In this sense the Business Plan can serve as a guide when participants are working to address all the relevant aspects of a pro posed business venture during Phases 2 and 3 of PMCA see Table 1 102 Participatory Market CHAIN APPROACH USER GUIDE Summarizing the main idea Agreeing on how to prepare the document T23 Checking first the quality of work As a first step it is advisable to think through a busi ness idea in theory and then summarize the key points in a short document The Business Plan struc ture see Application A7 can be used as
54. 3 Capitalizing on they do not see real progress being made Seeing is believing visual progress Hence the facilitator must take advantage of all available opportunities to make progress visible Preliminary designs for packages or labels for instance can be real motivators And it l should be remembered that seeing progress is the best way to continue making progress Clarifying roles Although roles and strategies were discussed earlier and strategies see Step 4 in Phase 2 these issues need to be revis A p 40 ited specifying ownership commitments e g in terms of investment and promotion activities and the group s strategies for product launches Such discussion might not be easy depending on the prevailing possibly differing expressed or non expressed interests within the group Nevertheless in order to enhance trust this transparent negotiation remains fundamental to the gP 50 success of the process see Box T14 Building of a potato grader in Lima Peru 50 Participatory Market CHAIN APPROACH USER GUIDE T14 Managing tricky transparency discussions In poker when much is at stake participants tend to hide their cards But PMCA is not a game of poker To ensure that all participants are on the winning side facilitators must play with the highest level of transparency This will allow the PMCA facilitator to develop the necessary leadership legitimacy needed to guide difficult d
55. ABC ABC Y Y ABC A Good collaboration along the market chain The basis for any productive activity is capital resourc es that make production possible and create value Five different types of capital can be distinguished gt Natural capital environmental factors needed in the production process such as land and water gt Infrastructure physical assets that facilitate production processes such as tools and machines buildings roads and irrigation systems gt Financial capital cash and monetary reserves that provide liquidity for production processes gt Human capital people s knowledge and abilities that drive production processes gt Social capital organizations networks and institu tions that facilitate cooperative action amongst different actors The development of a geographic area requires an op timal combination of different capital types Together infrastructure and natural and financial capital lay the foundations for development processes however hu man and social capital see Box C1 become more and more important in that they drive and catalyze such processes and enhance value addition Neither human nor social capital are depleted by use Rather they are depleted by non use use it or lose it These types of capital are crucial to develop ment processes that enhance competitiveness But how can they be built up Strategic linkages between geographic areas and com pet
56. Because the market concept development work is a key aspect when designing viable innovations an ex plicit Marketing Concept Development tool is included in this user guide see Tool 6 The Business Plan see Tool 7 might also be helpful at this stage of shaping innovations as it outlines important considerations for putting a market opportunity into practice To ensure that the innovations being produced are designed professionally external experts with specific skills might be brought in So for instance commer cial products might need graphic designers to create labels etc while technologies might need engineers to develop machinery etc and institutional inno vations might require the use of lawyers to define statutes etc When such specialists are employed clear terms of references TORs will be important as part of a service contract that allows outsourced work to feed directly into the work being conducted by the thematic groups see Box T9 To ensure that the thematic groups remain motivated when work is done by outsiders facilita Particpatory Market Chain Approach PMCA 49 tors must make progress visible to their groups see Box T13 If the implementation activities are led by group members facilitators must insist that these members present their work to the whole group Trust increases when words are transformed into deeds Participants will begin to doubt the practical potential of PMCA if T1
57. CA CA Toot 6 MARKETING Concept DEVELOPMENT 95 Marketing Concept Development Alain Barrero Thomas Bernet Overview Brief description Purpose Use in PMCA When Phase 3 Who Consultant Preparation 2 3 days Duration 2 3 weeks Marketing Concept Development is the process of identifying weighting and visualizing those elements that cause target consumers to perceive the real value of a specific product or service In this sense a market ing concept is a construct made up of different aspects of a product such as package size and form label in formation price etc all of which communicate in the best possible way its value for the consumer Marketing Concept Development seeks to differentiate a product from its competitors through a sound com mercial strategy clarifying 1 The target consumer population 2 The points of sale for the product 3 The elements that add value to the product in the eyes of consumers i e purchase factors 4 The ways in which the different valuable attributes of the product can be communicated When used with PMCA this tool can be of great help in Phases 2 and 3 to shape market opportunities for both the private and the public sector see Table 1 In either case a well constructed marketing concept will play a key role in increasing the chances of market success of a new product 96 Participatory Market CHAIN APPROACH USER GUIDE Identifying inte
58. CHAIN APPROACH USER GUIDE PMCA Workshop with Ugandan partners in the Andes July 2005 On going collaboration Crop Post Harvest Programme CPHP After two train ing workshops Ugandan partners began to use PMCA as part of their own work applying it to three different market chains potato sweetpotato and vegetables This user guide is the product of many constructive and intense discussions involving a large number of R amp D staff from different countries These actors have contributed valuable information and time and we would like to take this opportunity to thank them sincerely However this user guide should not be seen as the final step in the documentation of PMCA Inevitably future applications will provide new insights and help to improve PMCA and the way it is documented We hope that you will be able to contribute to this process in the future Participatory Market Chain Approach PMCA User Guide Edited by Thomas Bernet Graham Thiele and Thomas Zschocke FACING THE DEVELOPMENT CHALLENGE FOR RURAL REAS V Addressing the development challenge of facing rural areas Poverty begins with failure to take advantage of existing market opportunities Danger of marginalization A p VI Escaping the competitiveness trap A ABC ABC Rapid urban growth challenges the development of rural areas which could become increasingly margin alized as powerful supermarkets and agro industrial
59. G 2005 Filtros de pobreza para identificar oportunidades de mercado favorable para peque os productores In Conceptos Pautas y Herramientas CIP Papa Andina p 84 88 interesting to discuss both the final results and the differences obvious among the individual evaluations The latter will allow you to discuss if and why there is consensus among evaluators or if consensus was lack ing why that was the case In certain cases it might be necessary to readjust the evaluation chart as certain impact sub criteria may not be clear enough Which market opportunities should be prioritized is obviously a decision that will depend on the final score in each application Nevertheless it will also be important to consider other issues that have not already been taken into ac count particularly if the assessed market opportunities receive similar scores So for example certain market chain opportunities might better capitalize on assets that are already available e g market information production know how and business contacts etc Strategic issues might also be of relevance So for example the R amp D organization using this tool might want to support a business that generates specific skills that are of strategic interest to the organization or it might be concluded that it would not be wise to focus on an export market without first launching the product in the domestic market The Impact Filter is flexible As a tool it
60. Participatory Market Chain Approach PMCA User Guide Edited by Thomas Bernet Graham Thiele and Thomas Zschocke INTERNACIONAL a u v WdWd V1 30 Participatory Market Chain Approach PMCA User Guide Edited by Thomas Bernet Graham Thiele and Thomas Zschocke This manual describes the Participatory Market Chain Approach PMCA a new R amp D method designed to stimulate innovation along market chains by enhancing stakeholder collaboration and trust This method grew out of a joint effort made by different R amp D organizations and projects see list on the inside of the back cover with the aim of finding new ways of intervening in market chains and improving poor farmers livelihoods The Papa Andina Initiative of the International Potato Center CIP coordinated and guided this work the Swiss Agency for Development and Cooperation SDC the Center for International Agriculture ZIL and the UK Department for International Development DFID provided the necessary financial support Correct reference for this document Bernet T Thiele G and Zschocke T 2006 Participatory Market Chain Approach PMCA User Guide International Potato Center CIP Papa Andina Lima Peru Copyright 2006 International Potato Center ISBN 92 9060 265 1 Technical editing Maria Elena Alva and Jim Weale Layout and design Alfredo Puccini and Thomas Zschocke Press run 500 June 2006 This publication is an
61. Participatory Market CHAIN APPROACH USER GUIDE 3 Prerequisites for gaining leadership legitimacy Overcoming mistrust in market chains Sceptical potato farmers in a meet ing in the Peruvian highlands Within organizations leadership legitimacy can be represented on an organizational chart Outside of formal organizations however where actors are independent and participate freely in a relatively informal environment no one can be a self pro claimed leader in such situations leadership legitimacy must be developed and gained The process by which a person obtains leadership legitimacy involves a series of activities that prove that this person can be trusted Initially a clean history can provide a good start as can the perception that the person is not acting merely out of personal interests Ultimately the granting of leadership legiti macy will depend on the following Whether a person s deeds match their words Whether their ideas and deeds benefit the other actors Whether they are able to listen to others and involve them when forwarding ideas and implementing activities Note Followers are always very alert and will constantly seek to verify the leader s good intentions and to confirm who benefits from his or her leadership Gaining the legitimacy necessary to lead takes time and effort but it can be lost in an instant through a badly judged action or decision Given the low level of
62. Planning and holding the 3 to 5 weeks Tool 2 Market Chain Sketch final event of Phase 2 34 Participatory Market CHAIN APPROACH USER GUIDE Providing relevant information Responding to information needs Choosing the presenters Organizing special visits The first step in Phase 2 should be to provide relevant information to each thematic group thus allowing the R amp D organization leading the process to Give stakeholders baseline information pertinent to the group s interest Get new actors involved and motivate them to actively participate in each thematic group gt Enhance leadership legitimacy by responding to the interests expressed by the market chain actors After the first gathering in the final event of Phase 1 those stakeholders who wish to continue with the joint work will be eager to better understand the market opportunities previously discussed Hence in each thematic group the PMCA facilitator should plan a first session when experts from the group or outside share their information with the group either through formal presentations or informal reflections Selecting these presenters needs care as those not selected to present may feel excluded Thus the facilita tors should be very sensitive when deciding who should carry out this task In general those actors should be chosen whose input seems most relevant to the group and who are most likely to continue participating Facilita
63. a convenient time for those invited to avoid the risk of the participants feeling rushed or leaving early The general sequence for group work given below 1 to 6 is helpful if a new product or marketing concept see Tool 6 is being evaluated If the Focus Group is being used to obtain initial insights for instance to define a new working hypothesis the structure of the meeting may be less rigid giving more room for the discussion of the topics raised by the participants themselves Facilitators must carefully plan the session to ensure that they do not influence participants perceptions For instance confronting participants with the product too early in the session might cause them to make prema ture statements before they have sufficient information to voice a sound opinion see Box T21 It is very important to undertake product sampling after the marketing concept for a product is presented If the product is sampled first consumers could draw misleading conclusions because they lack information and might misinterpret certain product aspects As a result a positive factor might actually be perceived as a negative one simply because the consumer did not have enough information about the product For example people might think a purple potato is spoiled if they don t know that its colour comes from a natural pigment that helps to prevent cancer 88 Participatory Market CHAIN APPROACH USER GUIDE Introductio
64. a supply of high quality tunta the group decided to work with the tunta producers in llave who could supply quality produce With support from the NGO PIWANDES INCOPA s local partner the Association of Tunta Producers of Ullacachi was formed to help its members access new regional mar kets including Lima and La Paz During Phase 2 of the PMCA the group also ex pressed an interest in developing products that would allow them to sell tunta with modern packaging The Catering school students doing culinary research using tunta Native Potatoes First APPLICATIONS OF PMICA PromoTING THE Use oF Native Potatoes IN PERU 121 first initiative was to develop a marketing concept for selected and graded tunta to be sold in plastic bags with its own brand Based on interest expressed by a private company research was also done to determine whether tunta could be used for the industrial production of instant soups This gave rise to various research activities to determine quality standards for processing and using tunta The Native Potatoes group included producers proc essors chefs communication experts researchers and extension agents Because of the interest expressed by the actors during the first event and to get everyone up to speed as quickly as possible the group work began with presentations by different CIP scientists who explained their work with native potatoes T
65. ain Approach presented in stimulate collaboration this user guide provides guidelines for R amp D organiza tions confronted with the question of how to effective ly intervene in market chains Based on a three phase process PMCA aims to foster the market access of small scale farmers by generating fruitful collaboration among the different market chain actors This should help to reverse the declining spiral of competitivity we mentioned above and provide a basis for sustainable rural development see Figure 1 Improved wet Improved market market access qh opportunities Limited Reduced market access market opportunities Poor Low geographic resource base competitiveness wf Vv Improved Improved geographic resource base competitiveness Te ee Figure1 Market chain collaboration overcoming the competitiveness trap that affects rural areas About THIS User GUIDE vil About this user guide Knowing where you want to go is one thing but getting there is quite another Purpose ABC A Audience ABC A The main objective of this guide is to present the Participatory Market Chain Approach PMCA which aims to stimulate market chain innovations by involv ing different stakeholders within a well structured and demand oriented process By presenting both theory and practice this guide should enable the leaders to apply the PMCA method in the specific context in which they are working This g
66. amatization of the main problem and its poten tial solution should encourage stakeholders to begin sharing their ideas and working together see Applica tion A2 The sketch must be planned by a group of R amp D staff who have a good knowledge of the characteristics limitations and opportunities of the market chain in question When the sketch is used as a part of PMCA s Phase 1 event this group may involve those persons who have conducted the market chain survey During the planning stage the group should brain storm the key message of the sketch and consider how it could be dramatized This key message must be rel evant to all the actors of the chain and reflect the need for collaboration along the chain The use of symbolic elements such as costumes and other props should also be discussed as these can be used to illustrate better certain situations and persons however care should be taken not to hurt anyone s feelings when doing so The actors should all be R amp D staff none of the actors should be part of the chain as a clear distinction must be drawn between the dramatization and reality In addition a narrator might be needed to explain the context of the sketch scene by scene When the sketch is over the narrator might want to reinforce the key message with some final thoughts The sketch should be structured in acts or scenes Each act should have a script that is written down by one or two people drawing on
67. and who is responsible for them gt The invitation list which should include PMCA participants other people related to the sector politicians and the media gt Logistics including room reservations and the provision of audio equipment decorations food security etc gt The provision of information which should in clude a folder with information about the project and its innovations etc gt The provision of special gifts i e the products that resulted from the PMCA process etc 54 Participatory Market CHAIN APPROACH USER GUIDE Setting upa sound program A p 53 Securing internal institutional support The most efficient way to organize this final event is to form a coordination team which should consist of the PMCA facilitators a few participants from the different thematic groups and additional staff able to provide logistical support The event can be divided into two parts as suggest ed for the final event of Phase 2 see Step 5 in Phase 2 The first half of the event might involve the thematic groups presenting their work and achievements in an auditorium the second part could then be run in a more creative setting with market chain innovations presented visually by the PMCA participants them selves see Box T16 Because journalists are pressed for time it might be efficient to welcome them sepa rately so that they only attend the second part of the event when innovations are p
68. anda Market Link group Once in these groups the actors continued to inter act getting to know each other better and discussing future plans and opportunities The first group developed its own vision all actors in the chain would buy and process the produce working as a group to add value by improving quality and better balancing supply and demand The group expressed a need for informa tion on the right variety of crops for processing as well as a need to learn about production and value addition and methods of ensuring a good flow of information and of strengthening linkages in the chain The second group emphasized the need to improve the quality of tomato and hot pepper products and the need to train farmers and enhance their understanding of quality standards and seasonal de mands from the market Both groups realized that the opportunity exists for networking training and the sourcing of funds if they worked as a team in the chain Sweetpotato market chain The sweetpotato market chain event was held on November 30 2005 and was attended by 83 actors After presenting the results of the market chain survey and a market chain sketch see Tool 2 participants formed two groups according to their interests The Orange Fleshed Sweetpotato OFSP group and the Non orange Sweetpotato group In the case of the OFSP group the producers complained that OFSP varieties were not very popular and were very difficult to sell on lo
69. arket Chain Approach PMCA 33 PMCA Phase 2 Analyzing potential business opportunities Objective of Phase 2 The objective of Phase 2 of the Participatory Market Chain Approach is to discuss and analyze market op portunities in each thematic group Structure and useful During Phase 2 stakeholders continue their discus tools of Phase 2 sions and collaborative work in the different thematic groups which were formed during the final event of Phase 1 To guarantee that there are sufficient active participants in each group the facilitating R amp D organi zation might want to merge smaller groups consider ing similar topics The activities undertaken in Phase 2 vary from case to case depending on what type of innovations are proposed This said however the following five ge neric steps provide guidance when structuring Phase 2 see Table 3 particularly when thematic groups propose commercial innovations Table3 Overview of the steps involved in Phase 2 Structure of Phase 2 Time frame Useful activities and tools Step 1 Providing relevant 1 to 2 sessions Special visits presentation by information to thematic groups outside experts Step 2 Evaluating potential 3 to 6 sessions SWOT Analysis see Box C9 innovations Tool 1 Impact Filter Tool 3 Rapid Market Appraisal Tool 5 Focus Groups Step 3 Outlining the 1 to 2 sessions Tool 7 Business Plan opportunities analyzed Step 4 Formulating a work plan 1 session Step 5
70. at discussions are demand focused that decisions are taken democratically and that a good level of progress is achieved in each thematic group meeting 20 Participatory Market CHAIN APPROACH USER GUIDE Each phase has its own final event Demand led R amp D activities Providing a set of helpful tools Each phase has its own final event see Figure 7 wherein activities and the results of each phase are presented to a larger audience of interested stakehold ers including market chain actors R amp D organizations and donors etc In Phase 1 the R amp D organization presents the results of the initial market chain survey while in Phases 2 and 3 the stakeholders involved in the different thematic groups present the groups work and achievements These final and larger events are an important methodological element of PMCA as they help to structure the participatory process and visualize the achievements at different stages making progress vis ible maintains motivation and participation At the same time these events provide important opportunities for active interaction empowering par ticipating key actors by allowing them to gain respon sibility and recognition in addition they also facilitate the inclusion of new actors in the PMCA process when for instance the different thematic groups lack specific knowledge or business contacts Since PMCA basically describes a generic three phase structure for market cha
71. ause they are made from what is considered to be a gour met Peruvian potato These findings were used as the starting point to develop an additional marketing concept for Orolitas gourmet mio ah d Meters s Hist potato chips targeted at an adult market A fae ila Packaging of yellow potato chips to target adults in supermarkets Toot 4 Quantitative MARKET STUDY 77 Quantitative Market Study Gaston Lopez Overview Brief description Purpose Use in PMCA A p 72 p 85 p 95 When Phases 2 amp 3 Who Consultant Preparation 1 week Duration 4 7 weeks The Quantitative Market Study is used to measure the potential and size of a market or product opportunity The purpose of the Quantitative Market Study is to gt Understand the characteristics trends and com position of the market associated with a specific product gt Identify the consumer habits of a certain population group i e target consumers in relation to a prod uct or set of competing products gt Assess the size of the potential market for a product in order to estimate investment costs and expected profits The Quantitative Market Study might prove especially useful in Phase 2 of PMCA when market opportunities are assessed see Table 1 The Quantitative Market Study provides the hard facts of a market opportu nity including estimates of volumes and profitability which can later be fed into a sound Business Plan s
72. cal markets in comparison to other varieties as urban consumers are unaware of the health benefits offered by these carotene rich varieties Moreover consumers like sweetpotatoes that stay firm when cooked a characteristic of varieties with a high dry matter content In addition the vines produced are of a poor quality and are difficult to access especially during the dry season Many farmers also find it difficult to differentiate correctly between the different OFSP varieties as they lack opportunities to learn more about these varieties from each other and other market chain actors and researchers In general limited market demand and low prices imply low adoption rates The processors of OFSP mentioned that very few processing machines are available partly because of a lack of capital x S a4 a 2 lt 142 Participatory Market CHAIN APPROACH USER GUIDE Inthe Non orange Sweetpotato group producers complained ofthe scarcity un availability of desirable variet ies such as Kyebandula They also complained that the vines produced were of poor quality and that diseases and pests caused productivity losses The processors were not aware of technologies that could be used to add value and improve processing The service providers and researchers said they had many proven technologies that needed to be scaled up and out but that demand and adoption rates were low The exporters said that they lacked pa
73. cess see Table 1 How many times have we blamed a tool for not work ing properly because we weren t using it correctly To enhance your understanding of when each tool should be used and how each is outlined in detail with the individual steps involved The tools presented in this chapter are not only rel evant for the work done with PMCA On the contrary we very much hope that these tools are also helpful to guide other types of R amp D activities as well You must decide what tool to use when and for what purpose 62 Participatory Market CHAIN APPROACH USER GUIDE A p 85 Impact Filter The Impact Filter allows a qualitative evaluation of expected impacts that result from different market op portunities including the impact on poverty and social and environmental objectives Market Chain Sketch The Market Chain Sketch is an amusing role play performed by R amp D staff as part of a workshop or large event It is used to illustrate the need for better col laboration throughout a specific market chain Rapid Market Appraisal The Rapid Market Appraisal provides a way of quickly assessing a specific market in order to determine the commercial potential of new products or market op portunities Quantitative Market Study The Quantitative Market Study is used to measure the market potential and size of a specific business pro posal Focus Groups Focus Groups help to evaluate and shape products and services t
74. ckaging materials and complained that the products they receive were poorly labeled came in poor packaging and consisted of a mixture of different qualities The consumers were not happy with what goes on in the market the price was high for the poor quality sweetpotatoes that are available at the market In addition they also stated that sweetpotatoes are often sold when they are already hard or rot ten Consumers also lack the knowledge necessary to differentiate between varieties and were not aware that processed products were available The actors appreciated being brought together as this helped them to understand better the players in the chain and the challenges faced by those working in each category Thus all agreed to continue this work in upcoming meetings in PMCA Phase 2 CHALLENGES WHEN USING PMCA 143 Challenges when using PMCA Thomas Bernet Graham Thiele Good preparation means half the job is done Content of this chapter This chapter presents the main challenges you might face when planning and conducting PMCA in the context of your own work Some of the information provided here is also considered in the PMCA chapter but with a different focus Given the importance of this information we consider that such repetition helps to fully explore these issues Introduction The risk of not seeing At first glance you might be convinced that PMCA is other options the right method to use it is logical straightf
75. ctions with Bolivian and Peruvian farmers and processors helped enhance their practical understanding of the method This was of great relevance for the commod ity groups who then formulated their work plans for PMCA Phase 1 In December 2005 a third workshop was held in Uganda to assess the PMCA experience in Kampala and the method s development potential in this new context Participants also made suggestions and iden tified elements and mechanisms that could be used to expand the use of PMCA in Uganda and beyond Phase 1 of PMCA began in August 2005 The partici pating R amp D organizations conducted dozens of inter views with the different market chain actors including farmers processors traders brokers transporters supermarkets hotels fast food restaurants R amp D organizations schools service providers and consum ers Specifically 86 interviews were undertaken with various potato market chain actors in the districts of Kampala and Kabale The vegetable group interviewed 60 different market chain actors focusing on tomatoes and hot pepper in the districts of Kampala and Wakiso In addition 55 interviews were conducted with sweet potato market chain actors from the districts of Kumi Soroti Mpigi Luwero and Kampala The purpose of these surveys was to understand the different market chain actors and their activities including issues like levels of governance in the chain collaboration within the chain and problems
76. ctor well and felt secure about applying PMCA to this new situation Moreover focusing PMCA on the use and com mercialization of native potatoes was highly consistent with CIP s mandate Any success resulting from this work would benefit poor producers in the Andean highlands both directly through income generation and indirectly by promoting the value of neglected crop To ensure a steady supply of native potatoes stronger links were established with potato producers during this application of PMCA In the case of tunta a special event held in Puno the main production area of tunta in Southern Peru helped to inform producers about PMCA and thus involve them in the x S A a 2 lt 128 Participatory Market CHAIN APPROACH USER GUIDE DA NACIONAL DE LA PAPA Celebrating the 1st National Potato Day in Peru at CIP s headquarters E 2000 Revamping people s perception of potato on National Potato Day participatory process This spurred the creation of the Association of Tunta Producers of Ullacachi which was designed to meet the market demand for high quality tunta In the case of native potatoes the commercial ization of T ikapapa created close ties with Andean communities who began to sell their potatoes to those running this new business While two companies took an interest in bringing forward Pur Andino the instant mashed native potato product the Tu
77. cture of Phase 3 Phase 3 of the Participatory Market Chain Approach aims to put into practice the work plan formulated in Phase 2 developing the potential innovations pro posed by each thematic group These innovations are then presented at a large final event to a wider public The activities undertaken during Phase 3 will vary from case to case as each PMCA application will be differ ent and each thematic group will have a specific work plan Consequently the generic steps involved in this phase see Table 4 need to be filled with case specific practical content to turn ideas for innovation into com mercially viable propositions Overview of steps involved in Phase 3 Time frame Useful activities and tools Step 1 Getting thematic group 1 session organized Step 2 Getting innovations designed Step 3 Planing and holding PMCASs final event 5to 10 sessions Tool 5 Focus Groups Tool 6 Marketing Concept Development Tool 7 Business Plan 2 to 3 sessions Visual presentation of innovations 46 Participatory Market CHAIN APPROACH USER GUIDE Getting thematic groups organized Clarifying activities and roles T12 Gradually handing responsibilities over A successful final event of Phase 2 will motivate partici pants to continue working together Even more so if new actors join the process at this stage thus confirm ing that the thematic groups are on the right track To ensure that Phase 3 be
78. d price a square potato The supervisor takes the request to the seller who disconcerted passes it along to the wholesaler intermediary who asks the farmer for a sack of square potatoes Act 3 The farmer tries to respond to the request but the product a rectangular potato which is passed on to the wholesaler and then to the seller and the supermarket does not completely meet the requirements of a square potato and the shopper rejects it Act 4 Because of this unsatisfactory situation one of the characters suggests that all the members of the chain get together to work jointly on the development of a square potato Consequently all actors line up giving the impression of a more organized orderly chain They discuss the problem and apparently find the solution one by one they pass the square potato along the chain from the farmer to the shopper who is very happy with the product Having seen that the market chain has responded well the shopper makes a new request offering an even higher price for a blue square potato a real challenge Toot 3 RAPID MARKET APPRAISAL 73 Rapid Market Appraisal Maria Elena Alva Thomas Bernet and Gast n L pez Overview Brief description Purpose Use in PMCA p 77 p 85 a 95 p 101 When Phase 2 Who R amp D staff Preparation 2 3 hours Duration 2 3 days The Rapid Market Appraisal allows a rapid assess ment of a specific market in or
79. d that nutritional information was lacking They also commented that because they were not familiar with the company mentioned on the package A amp L it would be good to place the International Potato Center s logo on the package as it would inspire greater confidence In general the opinions given after sampling the product reflected the value perceived when view ing the packaging This was confirmed by the fact that the prices noted before and after sampling were consistent The participants mentioned that they would like to purchase the product in supermarkets gas stations and kiosks Ideally there should be different sized packages small for lunchboxes medium sized for family gatherings and large for birthday parties In the end the participants were thanked and given several bags of the products as a gift All agreed to take home a questionnaire to gather their children s opinions these would be filled out at home and the sheet would then be returned to the facilitator One striking result of this additional research was the fact that children over the age of 6 did not like the picture of the boy on the first package stating he looks like a little kid All of this information led to a refined concept that was well received by those that had participated in this Focus Group oyun elated nn ae iti i i Laser ini Pera Initial and improved versions paro aza of Papy Boom packagin masata a PO AA CACA A A
80. der to determine the commercial potential of new or existing products or services In general this tool helps to qualitatively assess market opportunities The tool enables the user to Gain an overview of supply and demand regarding a certain product gt Analyze competing products and the way they are sold gt Detect attributes that add value to the product gt Determine uses preferences and expectations for a specific product gt Define possible research and marketing strategies for product design production planning and posi tioning strategies etc When used as part of PMCA the Rapid Market Apprais al is especially helpful during Phase 2 when different commercial innovations suggested by thematic groups need to be assessed rapidly and at a low cost The results of such rapid appraisal may not always be con clusive sometimes new working hypothesis emerge which can be targeted with other tools detailed later in this guide the Quantitative Market Study see Tool 4 Focus Groups see Tool 5 Marketing Concept Devel opment see Tool 6 or the Business Plan see Tool 7 74 Participatory Market CHAIN APPROACH USER GUIDE Defining expected research results Defining information sources Analyzing the information Although a Rapid Market Appraisal provides qualitative results it is still important to specify what outcomes are expected from using this tool This will allow effi cient plannin
81. different actors the interviewer should ask them the same questions When doing this the interviewer must be careful not to influence the response elicited as he or she might already have a personal opinion on the topic under discussion During each interview the answers given should be re corded on the sheet of paper containing the guidance questions Once all interviews have been completed the interviewers should all sit together and synthesize the information gathered in order to generate inter esting insight and hypotheses for further discussion The first rapid round of group reflection should focus on two main questions gt Are there differences in the answers given by actors who engage in the same type of activity gt Are there differences in answers given by actors who engage in different types of activities When reading through the interviews outstanding comments made by interviewees should be recorded as quotes This valuable information can then be used to underscore the findings of the survey with the actual words spoken by the market chain actors inter viewed 28 Participatory Market CHAIN APPROACH USER GUIDE Definition of thematic groups Forming thematic groups The information obtained from the interviewees will provide an important overview of the current situa tion of the specific market chain being considered At the same time it will make the R amp D organization using PMCA aware of e
82. directly or indirectly by an intervention those who make up the target population might not always be directly involved in an R amp D process or consulted when interventions are planned Tool An instrument that is used in a particular way to produce a defined result outcome or impact In R amp D work the term tool implies clear methodological guidelines consisting of steps that ensure correct application Trust The glue that holds human relations together and makes collaboration possible Trust allows people to share information and resources with a partner in order to achieve together a desired outcome Trust is built upon prior interaction and needs investment to be strengthened It can be lost very rapidly as a result of inappropriate behaviour 163 APPENDIX FSI d Ja1dey Bu euD asi d J31dey Bua ey 6v1 d J31dey abuayjeyD Lv d J91dey abuayjeyD St d J91dey abuayjeyD aseyd yes ul ssai6oJd mous JIA UOl eyUSWUNDOp 12UYM sdnoi6 3neuu u1 ul ssas6oJd JOYUOU 0 SIRIA u SUISIURYIDU Dl y ssa201d WIWd SJOYM ay JOWUOW 0 SBILYI u SUOIUOS S SIn3U31d3 1U9 JUCAT AJ JSOLU SSASSE O qej IPAe SUISIULYIDU BUSY Y YDWd JO s nepyau q ujew y SAJOAUI O MOY J89 SUISIUBYIDUI SY 1V UMOUY UIBUD JOJU BY u D A OAUI SIOJ P JUBAS DA SOW SY DAY Bunleuu uolisi2 p I1 eIDOWAP 0 ANISU S SIOJEYIDOJ DAY dno16 1194 SAJOS NJ 0 9PN11938 pue M1S u1 3ARY Sio1e1l
83. dnoub ay e oq ZUdYM pue 1eUA 104 ajqisuodsa aq IAA oym 1e Y S suoneAouul JUIOf 3y 921128id ul nd 0 payijuap sdajs au Je BY poxeubisap u q Jaded uo seap s dnoi6 y Buizueuuuuns jo aBJeyo ul uosij d ay SeH suoneAouul U10f erusjod u1 0 pa ejaJ passndsip SINSSI y je DY BuIsiuuoid Jsou waas ey u sou2 s niuni1ioddo ssauisng ay Zabpajmouy BUE euonippe 104 padu ay 19402 O UMLIP 10 De Mau aly SuoneAouul en uajod ay asAjeue o pasn sjoo a3enbape y ay 159 193U1 urew sjuedinued punoJe p 1 1u 2 UOISSNISIP ay ay pa4nbas uoneuuoJul BY 3uasaud 0 Bull IAA pue qejieAe suadxa ay ay Zabels siy ye paseys aq p noys 1841 p unu pi uoneuuoJul 9y S seud JO 1u A euu u1 Buip oH dais ue d 410M e Bulnye nulJoy iy dais pazAjeue sanun3loddo y bululjino ze dais suoneAouul enuajod BunenjeA3 z days uolmeuuoJul 1ueA 1 BUIPIAOIJ 1 dais sar uun3loddo ss uisnq enuajod BuisK euv z seud V3Wd User GUIDE Participatory Market CHAIN APPROACH 166 65 d uoas dn mojjo4 423dey gt VIWd 9g d uomas dn MO 0y 491dey VIWd 9s d uondas dn mojjoj 191dey YOWd aed aduasajay LS d aseyd uoldas 191deuD VOWd ue d ss ujsng 6 ool 1d33U0 Bu1 yuelN 8 00 sdno19 snd04 00 Ly d oseyd uolqas 191deY VOWd op d aseyd uoldas J9IALYI V23Wd abed 93u919Joy QYOM 1n1nJ u ssauyed jueyodui
84. duct or group of products in the market A good brand creates commercial value in its own right and needs to be carefully maintained to avoid the brand image being damaged The rights to use a brand are owned and can be transferred totally or partially franchising Collaboration A situation which involves two or more actors working together to achieve a common goal Competitiveness The degree to which a person an enterprise a market chain geographical area or a product is able to outperform its competitors In the short term competitiveness refers to having a more favorable cost benefit ratio than its competitors In the long term competitiveness refers to the ability to add value to processes and products based on a good understanding of consumers needs This implies strategic thinking and the capacity to access combine and use the necessary production factors while maintaining the flexibility required for change Effectiveness The relevance of an activity in relation to a concrete goal Effectiveness can relate to efforts made by individual or collective actors and to some extent gauges the positive impact they generate through either direct interventions or policy measures 158 Participatory Market CHAIN APPROACH USER GUIDE Efficiency The relationship between input and output Efficiency can relate to processes products and actors and is used to assess yield in relation to the use of production factors such as mo
85. e Box T20 A potential impact can be evaluated in different ways One way is to evaluate it by working in a small team made up of people who know the sector well both in terms of production and the market Such an assessment could be done jointly or individu ally If done individually average values would be derived from individual assessments Another way is to undertake the evaluation within a bigger group as part of a participatory process where different market chain actors are involved In this case however it will be impor tant to consider the fact that personal institutional and commer cial interests may distort the process For each business option coefficients are calculated for each sub criterion by multiplying A x B x C where A Weighting factor of general objective B Weighting factor of sub criterion gt C Rating of impact at the sub criterion level 1 10 To compare the overall expected impact across mar ket opportunities the coefficients calculated for each sub criteria are totaled for each case see Table 6 In order to consider the results as fully as possible it is recommended that you discuss and interpret the outcome as a team If the evaluation chart is prepared using average values obtained from individual evaluations it will be 66 Participatory Market CHAIN APPROACH USER GUIDE Drawing sound conclusions Considerations when adapting the tool Devaux A and Thiele
86. e Square Potato In 2002 when PMCA was first applied in Peru a sketch was used to visualize Peru s potato market chain The sketch was used initially to confront the different market chain actors with the key message of PMCA all the actors involved in the chain must collaborate in order to take advantage of new market opportuni ties The four act dramatization clarified the fact that it is the consumer who decides what will sell and that the chain will only be successful if everyone collaborates with the spirit to respond to this demand Act 1 In amonologue the potato producer laments about the technical difficulties of producing good qual ity potatoes and always receiving low prices The wholesaler intermediary comes in and bargains with the farmer making him accept a low price again Then he goes to the seller and offers him the sack of potatoes he just purchased The seller in a corner of the stage also negotiating a low price complains to the wholesaler about the poor quality of the product lack of uniformity dirt and inadequate packaging warning him to do better next time The seller then delivers the potatoes to a supermarket supervisor who is not pleased either and offers to pay the seller in only 30 days with a low price too Act 2 Alittle later a shopper arrives at the supermarket The shopper goes to the supermarket supervisor complains and demands a special type of potato for which she is willing to pay a very goo
87. e Tool 5 Description of the commercial potential of the product 1 2 pages This section provides a detailed description of the market in which the product will be positioned and how it will compete against its competitors Prior qualitative or quantitative research must be used 1 to indicate why the product provides value for its target consumers i e discussion of purchase factors and 2 to estimate the size of the potential market Sources of information Qualitative and quantitative market studies see Tools 3 4 and 5 Description of the production process and its advantages 1 2 pages This section describes all the stages of the production process up to consumption as well as all the actors who will participate in the business along the market chain The information reveals how the process takes advantage of synergies along the market chain and how the process is complemented by other activities that keep costs down At all points in this review the product must be compared with its competitors gt Sources of information In depth interviews Focus Groups see Tool 5 and SWOT Analysis see Box 9 Description of the advantages created for society 1 2 pages This section is not part of an ordinary Business Plan However it is included here to make explicit the justification for public sector support The section should include a qualitative description and explanation of how the business will benefit society for example b
88. ed to obtain good results In any case if the time and the necessary expertise are available in the group the more qualitative forms of market research should be done either by the facilitator or by neutral mem bers of the group This knowledge gained will improve decision making throughout the PMCA process To improve decision making it is important to have access to con sultants who can support the thematic group work with special marketing expertise However supervision might be difficult since such consultants often avoid participatory processes which involve many opinions Thus it is essential that the PMCA facilitators clarify how these consultants are supervised and what mechanisms should be in place to ensure that participants get the chance to comment on the consultants work Is it desirable to confront a consultant with the thematic group s opinions On the one hand such confrontation could stimulate an enriching discussion on the other hand it might hinder active commentary and generate frustration as unprofes sional critiques could hurt the consultant s feelings Once the most promising market opportunities have been analyzed each thematic group should outline the main ideas underlying the innovations that should be put into practice during Phase 3 Such outlines will help the R amp D organization to gt Gather the most relevant information gt Bring about consensus among the group rega
89. ee Tool 7 Results of the quantitative study should be complemented with soft facts from prior qualita tive research into product positioning definition of product characteristics and target consumers etc see Tools 3 5 6 78 Participatory Market CHAIN APPROACH USER GUIDE Defining the study objective A p 73 p 85 Determining the research variables Determining sample size and structure The first step isto determine the study objective gt What market opportunity or product should be analyzed gt What type of consumers are being targeted gt What exactly needs to be measured Qualitative information from secondary sources such as published statistics reports theses etc or from qualitative work undertaken previously might be consulted to answer these initial questions see Tools 3 and 5 Particular care should be taken to understand differences in socio economic status which imply vary ing consumption patterns and different perceptions to determine consumer segments that value a specific product Once the objective of the study is clear all the vari ables that have to be determined through the study are compiled into a list This is fundamental as it helps to ensure that no important data will be missing later on In general these variables clarify purchase and consumption behavior gt Purchase who where amount frequency brands preferences gt Use and consum
90. efining the issues that need to be discussed At the end of each meeting a summary should be prepared so that it can be shared with the whole group later gt Summaries of all the thematic group meetings should be compiled and regularly evaluated by the facilitator to provide him or her with an overview and ensure that the group is kept on track At the end of Phases 2 and 3 these summaries could go CHALLENGES WHEN USING PMCA 155 into a Phase Report to facilitate later assessment of the whole PMCA process At the level of each thematic group the process can be monitored with fairly simple soft indicators such as the degree of participation key learning building of trust and induced collaboration etc Planning session of the sweetpotato commodity group in Uganda v g 9 a U GLOSSARY 157 Glossary Actor An individual person or organization from the public or private sector involved directly or directly in the PMCA or other participatory process Added value The increase in value of a product or service from the perspective of users at any point along the market chain Such growth in perceived value can result from product transformation or improved communication Approach A broad methodological framework that uses general principles to guide the work towards a specific goal Brand A specific legally registered and protected name which generates a specific image for a particular pro
91. ehydrate native potatoes To avoid the excessive losses that result from peeling native potatoes which have very deep eyes it was decided to develop a natural nutritious and healthy whole potato product instant mashed potato flakes made from unpeeled native potatoes The group asked a processing expert from the Ministry of Agriculture to help with the first tests when several varieties were evaluated each with a different colour and flavour Final event Presentation of product ideas during the final event PMCA Phase 3 Tunta group First APPLICATIONS OF PMICA PromoTING THE Use or Native Potatoes IN PERU 123 At the second public event which ended Phase 2 both thematic groups presented their progress and specific work plans for Phase 3 New actors were also invited to the event to reinforce the capacity of the two working groups to implement their plans The event ended with an outstanding luncheon pre pared by two catering schools and a restaurant which had participated in the PMCA process They presented different dishes using tunta and instant mashed na tive potatoes as the main ingredients Over the final six months of PMCA which led up to the final event of Phase 3 most of the ideas proposed were transformed into reality While important decisions were made during group meetings specific tasks were contracted out to specialist consultants including the preparation of marketing concepts the d
92. encountered in activities as well as possible solutions and innovations that could be implemented along the chain All this information gathered from this survey was analyzed and the results were used to help plan the first event for each of the commodity groups All the Follow up Brief evaluation of the experience First APPLICATIONS OF PMCA STARTING TO USE PMCA IN UGANDA 139 actors interviewed with other interested groups were invited to this first event where survey results were presented and discussed in smaller thematic groups based on the possible business opportunities inter viewees mentioned in the survey see Application A8 The commodity groups Phase 1 events have energized the actors and encouraged them to continue PMCA work in Uganda At this stage the challenge remains to obtain further funding to implement Phases 2 and 3 in order to complete the PMCA cycle To this end each commodity group will develop a proposal that specifies the planned activities for these two phases so helping to continue the work and capitalize on the achievements of Phase 1 The facilitators and actors realized that many challeng es have to be faced when focusing R amp D work on the entire market chain All were convinced that collabora tive activities need to be strengthened in order to face these challenges and ensure that business opportuni ties are identified pursued and implemented in a fair transparent and equitable manner
93. er hundreds of years Peru lays claim to around 2 500 different native potato varieties more than any other country They are part of the cultural heritage of the country s highland communities which have conserved them as part of their ancestral legacy along with indigenous knowledge associated with this mar vellous diversity Although Peru s native potato varieties represent nearly 80 percent of this crop s diversity only six of them have a real presence in Lima s markets The other native varieties fell by the wayside as urbaniza tion boosted the commercial development of other agricultural products As a result the majority of native potatoes produced are consumed by those Andean communities that produce them One of the most important products of native potatoes is tunta or white chu o which is naturally freeze dried and processed by small scale farmers liv ing on the Altiplano the high plains of southern Peru and northern Bolivia x 2 a Ad a 2 lt 118 Participatory Market CHAIN APPROACH USER GUIDE Tunta production in Southern Peru PMCA Phase 1 Final event PMCA began with a survey to assess chefs knowledge and preferences for using tunta in Lima Peru s larg est market with 10 million inhabitants In one month 34 interviews were carried out These involved mainly chefs working in restaurants and cooking schools but also a few potato traders who deliver
94. ers users of innovations and the market chain actors producers of innovations To ensure that innovations generate such benefits PMCA facilita tors must encourage the kind of creative thinking that leads to the production of high value low cost solu tions in the form of specific products Since the starting point for this is a coherent understanding of consum ers problems and interests the facilitators should center the group discussions around the following guiding questions 1 What do consumers perceive to be valuable in cer tain products 2 How can value be created at a low cost 3 How can collaboration along the market chain add value to products and lower production costs Challenges 150 Participatory Market CHAIN APPROACH USER GUIDE A p 51 Creating continuous participation value Such a demand driven focus in group discussions will ensure that the consumer near market chain actors get actively involved and maintaining their participation The marketing thinking of these actors will also be important to raise issues of social responsibility see box C11 as a way of defining strategies that help capitalize on social aspects linked to production collaboration with poor pro ducers production without pesticides and fertiliz ers etc Since attendance at PMCA s thematic group meetings is voluntary each actor will legitimately ask is it worth participating They will expect the cost
95. esign of brands and packaging processing trials and shelf life studies Thanks to the culinary research undertaken by the Tunta group more than 30 new recipes were devel oped that used tunta in appetizers entrees soups main dishes and desserts The participants enthusiasm and their media contacts led to the publication of these recipes in newspapers and magazines In addi v S A a 2 lt 124 Participatory Market CHAIN APPROACH USER GUIDE Recipe booklet for tunta Native Potatoes group Recipe booklet for Pur Andino tion with the help of a designer five different tunta recipe booklets were produced and printed At the same time two chefs in the group worked with a food science expert to develop various types of instant soups A taste panel then helped to identify the four most promising formulations for commercial soups A marketing expert evaluated commercial names that could be used for the instant soup and the pack aged tunta The preliminary brand names chosen were Del Cheff and Tunta Andina respectively Just before the final event draft labels and draft commer cial packaging were prepared so that the products could be presented to the public with a more profes sional look The Native Potatoes group held smaller meetings on particular topics to move ahead simultaneously in different areas Concrete steps were taken
96. esses In the latter case actors with different professional backgrounds and ex periences would jointly evaluate the potential impact of different market opportunities When used as part of PMCA the Impact Filter allows the facilitating R amp D organization to take strategic deci sions The participatory process can be guided in such a way that it addresses those innovations that promise 64 Participatory Market CHAIN APPROACH USER GUIDE Developing a simple evaluation chart A p 67 Defining development ojectives A p 68 Weighting of general and specific objectives best impact with regard to the different impact dimen sions mentioned above In the context of PMCA the Impact Filter may be used in Phase 1 to form thematic groups or in Phase 2 as part of the thematic group discussions to focus the group s activities on those potential innovations that are most likely to produce the desired development impact The first step is to identify the different market oppor tunities to be evaluated A matrix is prepared to char acterize the different products according to qualitative criteria such as market size target population produc tion zones etc see Table 5 To compare the impact of the selected market op portunities in more detail a more complete chart is developed This chart is used to evaluate targeted development objectives which interventions should achieve e g poverty alleviation empowerment of
97. essional and the thematic groups to ensure that their work feeds into the thematic group meetings To provide optimal backstopping to consultants facilitators might request technical support and guidance from their colleagues gt Since PMCA requires a high level of organiza tional commitment particularly with regard to the final event facilitators should ensure that their directors are informed from an early stage about the project s progress and preferably involved in PMCA activities The final events of Phase 1 and 2 provide excellent opportunities to do this as such key figures can be engaged by giving them special tasks e g opening the workshop Making PMCA innovations public at the final event 56 Participatory Market CHAIN APPROACH USER GUIDE Follow up Consolidation of innovations Defining a new role for the R amp D organization Providing different types of support Last technical evaluation of potato grader PMCA ends with the final large event of Phase 3 At this point full responsibility for the innovations created is transferred to the market chain actors who must take the reins and capitalize on them in the real world At the same time the R amp D organization which facilitated the PMCA process must distance itself from any com mercial responsibility This however does not mean that the R amp D or ganization cannot continue to provide support On the contrary in most cases follo
98. esults can be expected where trust built with PMCA catalyzes new initiatives i e through low transaction costs In the long term this collaboration process builds social capital that favor cooperation between all the actors involved and enhances the competitiveness of the market chain and the rural areas linked to it UseruL Toots FOR PMCA 61 Useful tools for PMCA Good tools that are not applied correctly are useless Content of this chapter This chapter describes seven different tools that could prove helpful when planning and implementing activi ties as part of the PMCA process Introduction A methodological Swiss Army knife A p 19 New guidance using old tools A p 21 Step by step Helpful in different situations PMCA is designed to be adaptable so that it can be used in the context of different market chains It is the facilitator s task to convert the three phases of PMCA into a set of activities that allow the objectives of each phase to be achieved see Figure 7 During this process of defining analyzing and setting in place new market opportunities different tools might be useful to improve the quality of the work done at each stage The tools presented here provide practical guidance for different aspects of the PMCA process Most of them are not new rather they are existing tools with the potential to increase the quality of PMCA activities undertaken at different stages during the pro
99. et On the contrary PMCA will always be a hurdle race see Figure 9 Facilitators must therefore know where the hurdles are and be as well prepared as possible to overcome them successfully once they appear This chapter should help you to overcome these hurdles Undervtanaing PACA Building Trust Figure9 PMCAisa hurdle race CHALLENGES WHEN USING PMCA 145 Having the right context of application Defining common PMCASs flexibility to adjust to different contexts should ground not be stretched too far All stakeholders involved in PMCASs participatory process should have something in common to allow their interaction to center on an issue of shared interest Such an issue could be a com modity for which specific market opportunities might arise or a production or market related issue with which participating actors have close ties based on commercial or social interests such as organic produc tion or fair trade labeling for instance gt Whatever the case a PMCA application should be able to attract a critical mass of interested stake holders If the focus of the PMCA application is fairly broad at the beginning i e relating to an entire sector it will be necessary to narrow things down and focus on concrete market opportunities by the A p 23 end of PMCA s Phase 1 to allow people to work in smaller better focused thematic groups Isthereroom Before applying PMCA to a specific market chain it i
100. et and began by selling small volumes of the product gt Frying tests were conducted by LUCANA Industries using different varieties of native potatoes These showed that the best varieties for frying were Candelero and Pinta Boca LUCANA Industries was interested in producing chips to expand its own snack line Pilot studies were therefore run to explore the commercialization of small lots of v 2 a Ad a 2 lt 132 Participatory Market CHAIN APPROACH USER GUIDE PMCA Phase 3 Final event native potato chips in retail stores such as ECOF ERIA and NATUREX This involved the production of test packaging and labeling gt The Q rica papa brand of native potatoes was es tablished to sell packaged fresh potatoes to super markets and specialty shops This brand was owned by Candelaria s APROTAC farmers gt Support was provided to establish APROTAC as a legally recognized organization This enabled them to sign supply contracts with LUCANA Moreover PROINPA agreed to support the market promotion of both native potato chips and the potatoes sold in supermarkets Because many of the project s activities progressed more rapidly than expected and because consumers demonstrated considerable interest in acquiring such products Phase 3 continued directly from Phase 2 without a final event Different activities were under taken simultaneously gt Special aluminium fo
101. evelopment objectives T4 Criteria for forming thematic groups Holding the final event Structuring the event in two parts Plenary presentation and discussion Particpatory Market Chain Approach PMCA 29 It is the R amp D organization s responsibility to define the thematic groups that are most promising for the continuing participatory work The following criteria should be considered when defining thematic groups They must be derived from the interviewees interests as mentioned in the market chain survey They must be broad enough to allow everyone involved to feel both comfortable and able to choose a group in which they can actively participate However they should not be too broad to prevent overlaps between the groups They must focus on opportunities that are not only promising for market chain actors but which also have the potential to meet development goals such as impact on poverty natural resource use gender equity etc The final event of Phase 1 brings all the market chain actors together for the first time This event is the actual starting point for PMCA s participatory activities and allows the leading R amp D organization to gt Confront the interviewees and additional stake holders with the results of the market chain survey gt Discuss ideas and subjects of interest regarding col laboration related to concrete market opportunities gt Motivate active involvement in thematic groups
102. ews were conducted A structured standardized questionnaire was designed which contained open and closed questions and attitude measurement scales Interviews were conducted over a two week period by six interviewers who were specifically trained for this task The sample was made up of people of both sexes aged between 8 and 25 and living in the city of Lima by selecting the interviewed persons randomly from different parts of the city The study found that 96 percent of the interviewees customarily buy potato chips Projecting that figure to the total number of possible consumers it was estimated that the potato chip market in Lima consists of approximately 2 650 000 people The analysis of the results showed that consumption patterns were similar in all social classes In all social groups most chips are purchased from small shops and street kiosks and not in supermarkets Information was also obtained concerning the preferred package size the quantity of chips purchased on each occasion the frequency of purchase brand influence and the image and positioning of the main brands As a result it was found that 78 percent of consumers would be open to the idea of purchasing potato chips made from native yellow potatoes given the positive image of the yellow potatoes the novelty of the project and the particular taste of this potato chip In addition 16 percent of consumers said they would not purchase such chips under any circumstances while
103. f novelty Key actors Actors who play an important role in positively influencing the outcome of a participatory effort In participatory R amp D processes key actors might need special attention to make optimal use of their knowledge and influence Leadership The provision of strategic and operational guidance to enable a group of people to achieve their shared goal or goals Market chain All the actors and the entirety of their productive activities involved in the process of adding value to a specific crop or product A market chain involves different interlinked activities production transformation distribution and consumption It involves a flow of a product from production towards consumption and a flow of money back towards production Market chain actor A person involved individually or as part of an organization in a market chain and whose income derives directly from the value generated in the chain 160 Participatory Market CHAIN APPROACH USER GUIDE Market segment niche Part of a consumer market with specific characteristics A market segment can either result from differentiating factors related to 1 consumers e g geographic location of consumers their power of purchase and consumption habits or related to 2 the market e g product quality price range and type of application etc These differentiating factors provide the basis for marketing concept development and product positioning If a market segmen
104. ferent actors from the potato sector to gather qualitative information about the commercialization of native potatoes in Bolivia s major cities La Paz Cochabamba and Santa Cruz The results of these interviews raised interesting ideas for potential agribusinesses however they also revealed the limitations of PROINPA s existing activities in relation to the market chain With this information in hand the final event of Phase 1 was held This involved different actors from the po tato market chain and supporting R amp D organizations After being informed about the results of the survey participants were asked to join a thematic group to ex amine the potential of different kinds of agribusinesses based on their interests Participants agreed to work on the following gt Native potatoes in the community of Candelaria in collaboration with APROTAC a local farmers association which was already conducting research on local native potato varieties and ways to com mercialize them Chu o and tunta in the area of Qollana in the central Altiplano where producers make these tra ditional foods from native potatoes and are eager to improve their production technologies in order to obtain a quality product that can be exported Seed potatoes in the municipalities of Pocona and Morochata where different farmer groups seek to provide high quality potato seed to producers in the mesothermic valleys of Santa Cruz High q
105. g and guide the user through the mass of information available some of which will be irrelevant If the Rapid Market Appraisal is conducted as part of a participatory process an initial brainstorming session might help to define potential sources of information e g market statistics research documents interviews with key actors etc Once all the different information sources have been listed they should rapidly be prioritized within the group based on the following three questions gt How relevant is this information source for the pur pose of the study gt How easily and quickly can the information be ac cessed and analyzed With what sources of information should the study start As a rule the person in charge of the Rapid Market Ap praisal should start to gather information which is 1 easy to access 2 is up to date 3 provides relevant insights and 4 requires little time for analysis The aim is to obtain a fast overview and first key insights in order to make optimum use of time Sources of infor mation that require more time to access and analyze should only be considered in a second round and only if there is a good reason to believe that they provide important additional insight The following activities will help the user to become more familiar with the product that is assessed and its market gt Visiting locations where the product is traded and sold to determine what alternative products are
106. gest other actors for inclusion in the survey In general interviews should be personal and in formal in order to encourage interviewees to express fully their views and opinions It is essential that the fu ture facilitators understand the thinking and feelings of the different stakeholders since this will enable them to focus the discussion on joint interests so prevent ing conflicts Interviewers should probe and ask for clarification when an answer is either vague or incon sistent with previous replies given by the interviewee T3 Triangulating market chain information Evaluating survey results Particpatory Market Chain Approach PMCA 27 Probing should be done using neutral questions like Could you explain what you mean by a good client without leading the interviewee to a particular answer Interesting comments made by interviewees should be recorded as quotes word for word In order to capture different viewpoints and interests related to certain issues it is also important to triangulate information across actors see Box T3 The interviews should clarify the interests and the conflicts that exist among the various actors It is important to understand and evaluate how views vary throughout the chain The interviewer must accept that reality is relative and depends to a great extent on viewpoint of the individual and the interests involved To verify how different issues are perceived by
107. gins well each thematic group should organize itself and aim to gt Integrate new participants gt Adjust the previously formulated work plan for Phase 3 gt Plan and coordinate the different group activities that are proposed Taking into account the observations and comments made at the final event of Phase 2 each thematic group should discuss potential adjustments to the work plan Since new actors might be present each activity should be briefly re discussed clarifying how it will be undertaken and who will be responsible Wherever possible group facilitators should try to hand over responsibilities to key actors so the empow erment process can proceed more quickly and allow key actors to prove their abilities and the fact that they can be trusted see Box T12 Ultimately the R amp D organization should not be the owner of the market chain innovations generated through PMCA For this rea son the group facilitators must give key actors the opportunity to take on responsibilities and prove that they can act in the best interests of the group and not just in their own best interests If they can achieve this they will be granted leadership legitimacy which will empower them To ensure that this happens it is essential that facilitators diminish their own leadership power This is not easy but it is fundamental to the process sustainability will only be achieved once PMCA facilitators are no longer needed
108. gt Reputation in working with other institutions and market chain actors The survey showed that most of these organiza tions faced similar bottlenecks when helping farmers to access markets They lacked gt Staff with marketing skills Sound methodologies designed to improve the efficiency of market chains that benefit the poor Cohesive farmer groups able to maintain continu ous supplies gt A system that generates and diffuses market infor mation 20 participants from 15 R amp D organizations were trained at the first workshop held in Kampala in April 2005 Participants were introduced to PMCA principles and concepts and evaluated a draft PMCA user guide with the objective of improving it In a participatory process they selected four crops to which PMCA could be applied potato sweetpotato vegetables and banana For each of these commodities a proposal was formulated Proposals were evaluated after the work shop Because of limited funds it was agreed to apply PMCA only in the potato sweetpotato and vegetable sectors x 2 a Ad a 2 lt 138 Participatory Market CHAIN APPROACH USER GUIDE Field visit to Bolivia PMCA Phase 1 applications The organizations involved in planning PMCA s Phase 1 application were then invited to the Andes for a second workshop in July 2005 to strengthen their knowledge and help them better understand the prin ciples and concepts of PMCA Face to face intera
109. he group then began to discuss options for promoting native potato consumption One idea that won ap proval was the publication of a recipe book that would also describe the history cultural importance and the enormous diversity of native potato varieties in Peru After several meetings this initiative was enriched with ideas from the Tunta group who wanted to include their culinary innovations in this book Another idea that was taken up was the preparation of a catalogue of Peruvian potatoes to provide practical informa v S A a 2 lt 122 Participatory Market CHAIN APPROACH USER GUIDE Processing trial to produce instant mashed potatoes tion about native varieties with the greatest culinary potential The Native Potato group was also interested in capitalizing on the fact that native potatoes are a natu ral product A designer was hired to develop a pack age to sell fresh native potatoes in supermarkets The group agreed on T ikapapa t ika means flower in Quechua as a generic brand name for 1 5 kilogram bags which could be used for different little known varieties of potato At the same time the group analyzed how the supply of these potatoes could be made less seasonal through better crop planning across different produc tion areas Based on one company s demand for the develop ment of soups made from native potatoes the group also began to think about ways to d
110. here the four cooking schools displayed their star recipes and the two thematic groups presented their innova tions in a display that represented the market chain see Box T16 The event ended with a social luncheon featuring pacha manca potatoes and meat cooked in a pit with hot stones and the dishes developed by the cooking schools x 2 a Ad a 2 lt 126 Participatory Market CHAIN APPROACH USER GUIDE Presentation of star recipes at the final big event Innovations achieved Follow up and consolidation The following products were presented and publicly launched at the final PMCA event gt Tunta Andina a bag containing selected classified tunta and designed to be sold in supermarkets accompanied by appropriate recipes gt Del Cheff an instant soup made from tunta flour and other Andean ingredients gt T ikapapa the first commercial brand of native potatoes sold in Peruvian supermarkets gt Pur Andino a natural instant mashed potato made from unpeeled native potatoes gt Recipe pamphlets different booklets containing recipes for new dishes that use tunta and the instant mashed potato Pur Andino The activities that followed PMCA mainly involved the consolidation of the products presented at the final event The labels for Tunta Andina Pur Andino and T ikapapa were finalized and an additional recipe
111. his guide to communicate both know ledge and do ledge Inevitably this guide will not be able to answer all your questions about how to apply PMCA in the specific situation you face Much learning will take place once you begin us ing PMCA as part of your own work 16 Participatory Market CHAIN APPROACH USER GUIDE Combining old and new ideas What you should learn from this chapter a Practice Figure 6 As an R amp D practitioner you will discover that PMCA builds on concepts and tools that you might already be familiar with So what s new about PMCA PMCA provides a systematic participatory process that will help you and your R amp D organization to intervene more effectively in market chains It does this by integrating old and new ideas concepts and tools Methodologically PMCA seeks to gt Combine R amp D activities in participatory processes gt Build trust among market chain actors as a prereq uisite for successful collaboration gt Stimulate innovation among market chain actors on the basis of demand oriented interactions After reading this chapter you should understand the logic of PMCA how it tries to build a bridge for market chain actors who are themselves part of the bridge built thus enabling them to overcome a difficult context through enhanced collaboration and to profit from tangible benefits see Figure 6 More practical insights are provided in subsequent chapter
112. hrough structured group discussions involv ing six to eight target consumers Marketing Concept Development Marketing Concept Development allows one to deter mine evaluate prioritize and visualize those elements that are valuable in the eyes of target consumers Business Plan The Business Plan is a strategic document that briefly describes all aspects of a proposed market opportunity Toot 1 Impact FILTER 63 Impact Filter Andr Devaux Thomas Bernet Overview Brief description Purpose A p 67 Use in PMCA When Phases 1 amp 2 Who Facilitators Preparation 1 2 day Duration 1day The Impact Filter provides a rapid qualitative evalua tion of the expected impact that different market op portunities are likely to have on poverty and on social and environmental objectives The Impact Filter is a tool that enables R amp D organiza tions to plan and guide interventions more effectively This allows them to promote those market opportuni ties that promise to have the most positive impact The tool explicitly takes into account the following dimen sions of impact see Application A1 gt Economic poverty reduction and income risk gt Social empowerment and gender gt Environmental natural resource management The Impact Filter can be used in the context of a project to define areas of action and supporting inter ventions Being a rapid qualitative tool it can also be applied in participatory proc
113. i2eJ Y OG Uone1ausb an ea uo UOISSNISIP SNIOJ 0 ajqeded siojeyIoe ay ay 9 8 1248 siojeyiney ajqeded 1583 ye jo wea e S VO NWd 104 papaau uone1lu uus duii ajqixay u1 abeuew 0 ajqe aq uolyeziueBJo ANOKA Jo sassad0Jd DANEASIUNUIPE BY J AA VO NWd JO enuajod e52112e1d ayy pue1si pun Juawabeueu s oq VIWd YUM pasa66113 aq edu Jo adA YH ay ue SuoneAOuul Uey aeu JO WOO 3494 S pardde q 01 YDWd Moje 11M U3IUA 1SIX sio1 2e UIIMIS PUNOIB UOWLUOD s oq ssa201d WIWd 24 JoyUOW pue uejd o moy eap Bu AeH nss SJOJ 1upA 1 Y Peye 0 sueau y Bu APeH y anss siis diyssapea pasinbas ay Bu AeH g anss 1ioddns euJa3ul Auessadau ay BUIneH Z anss uone gt 1dde jo 3X91 U0 14611 9y1 BuIney anss sabed gt su 1 J u YDWd asn 0 sabuayjeyp au je Busey uoneied id ULUNIOD 2DUaJaJay BU u p 1e3Ipul se ENUBUI silu JO suon2 s JUdJAYIP BY u PUNOY aq UE UO EWUJOJU p lie1 q suonesijdde yaw Bunoyuov pue Buluue d USym paJapIsuo aq 0 sda s pue sanss y JO A IAJ AO Ue s Uasaid x uuv SIU suonw dde y gt Wd 40 1UOW pue uejd 0 M IAIDAOQ L XSUUY User GUIDE Participatory Market CHAIN APPROACH 164 Y32AS uleyD JOYE 7 1001 6z d aseyd uoldas Ja1deyDd YOWd 191114 edu 001 gz d aseyd uoldas 191deuD VOWd ez d aseyd uol s 13IdPYI VOWd aed aduasajay sdnoJ6 1Je uy au pea 0 qe IBAe
114. ialization of a product within specific market segments using a sound marketing concept that relates to well defined target consumers Rapid Appraisal of Agricultural Knowledge Systems RAAKS An R amp D method that aims to generate a creative environment in which stakeholders can interact learn and solve shared problems Social capital The development potential that results from the organizations networks and institutions that facilitate cooperative action between different actors Stakeholder Anyone who has an interest in or is affected by the outcome of a specific R amp D process or product The influences of such processes or products can be positive or negative and a stakeholder can be passive or active 162 Participatory Market CHAIN APPROACH USER GUIDE Stakeholder platform A space within which stakeholders of different types come together to learn negotiate define roles and collaborate to achieve a common goal that none can achieve independently Such a multi stakeholder environment enables service providers and service users to build trust and enhance market chain competitiveness Target consumer A potential user of the product who represents a specific market segment The characteristics of target consumers can be very general or very specific depending on the characteristics of the product being sold Target population The main beneficiaries of a specific intervention As a target population might be affected
115. ies in relation to native potatoes and in having access to available literature After a brief report from a representative of each group on what had been discussed in the individual meetings the event ended with a tasty lunch that included the sampling of different native potato varie ties x 2 a Ad a 2 lt 120 Participatory Market CHAIN APPROACH USER GUIDE Thematic group discussion during first event PMCA Phase 2 Tunta group After the first event the two thematic groups held par allel meetings every two weeks for nearly six weeks in order to discuss and analyze the different commercial options identified by both groups The Tunta group included chefs from catering schools and restaurants who specialize in nouveau Andean cuisine From the outset the group was main ly interested in researching and creating new dishes using tunta These research activities were made pos sible by shipments of high quality tunta produced by farmers in the community of Ullacachi in the Altiplano region of southern Peru The results of this culinary research were surpris ing the chefs quickly developed culinary creations that pleased the most demanding diners even those unaccustomed to eating tunta and unfamiliar with its particular taste Encouraged by this progress the chefs expressed an interest in creating a cookbook contain ing both traditional and new recipes To ensure
116. ies of tests involving different potato varieties was run and several adjustments were made to the initial design The machine s efficiency was then tested with the help of small scale farmers All this information was later used to document the machine s design and operation in an international scientific journal x S x 2 e lt 116 Participatory Market CHAIN APPROACH USER GUIDE Brief evaluation of the experience The question we must ask when evaluating the proc ess as a whole is how do the results achieved compare with what would have been achieved using a tradi tional approach Altogether the innovations achieved within one year through the use of PMCA seem to be significant The investment in time and funding have been worth while both in terms of the quantity and quality of the innovations produced as well asin terms of the infor mation acquired and the contacts made For both the participants and for CIP these have borne fruit in areas beyond the scope of PMCA Even before the participa tory process was finished for example the new friend ships developed among the participants helped them to initiate business deals Thanks to this multi stakeholder interaction CIP was able to establish important contacts with the pri vate sector which opened new doors for collaboration in other research areas Thus for example CIP scien tists have taken advantage of links with a processor to evaluate the fr
117. iew It is important to remember that the selection pro cess should not distort the representativeness of the sample The questionnaire must cover all the variables that need to be considered see Step 2 Questions must be asked in a logical sequence using straightforward everyday language as this will help the person being interviewed to easily understand the questions The questionnaire can include different types of questions closed those requiring only yes or no answers open those requiring the interviewee to ex plain their answer more fully for example why do you consume this product and those that require the interviewee to respond according to attitude measure ment scales a little a lot etc The questions must be clear and direct avoiding any ambiguity that could bias the information gathered a problem which can easily occur when asking leading questions Unless the participants are being paid interviews should take less than 30 minutes to avoid the qual ity of the answers being affected by the interviewees becoming bored Care must be taken to formulate questions which capture the relationship between price and quality making it possible to make realistic sales projections for different price scenarios 80 Participatory Market CHAIN APPROACH USER GUIDE Pilot testing of the questionnaire Recruiting interviewers Carrying out the interviews The questionnaire sh
118. iled packages were designed to avoid spoilage gt Bags were designed for the native potatoes sold at supermarkets gt Promotional materials were produced such as post ers a TV commercial and special leaflets Another important activity involved organizing APROTAC s potato production and the delivery of its produce to the chip processor LUCANA The two par ties agreed on the volumes dates and delivery prices for the 2003 2004 growing season Another activity was designed to help APROTAC farmers improve po tato storage and selection as a way of improving the quality of the potatoes delivered to their new clients To increase the impact of the innovations developed through PMCA a public product launch was held on July 23 2003 at the Departmental Chamber of Industry in Cochabamba The products benefits were explained to those present at the launch as was the way in which First APPLICATIONS OF PMICA GENERATING New PRODUCTS IN THE BOLIVIAN Potato SECTOR 133 PMCA had stimulated organizational processes and the development of shared business opportunities Partici pants were also able to taste the new potato products which had resulted from PMCA and to take home sample packages When the event was over reporters interviewed the different actors in the chain paying particular attention to the owner of LUCANA Industries and the president of APROTAC Innovations achieved The following products were developed during thi
119. im or herself Overall such a service attitude is essential if positive values for interaction are to be established see Box T6 Such values play a decisive role in motivating participants to actively participate in the thematic group meetings that take place during Phase 2 Facilitators must be aware of the tremendous responsibility they carry with regard to setting a good example and establishing a fruitful culture of interaction Whether or not the participants remain motivated to continue their involvement in the participatory process will depend strongly upon whether the thematic meetings are satis factorily led with beneficial interactions and tangible outcomes The need to generate tangible benefits for the participants implies that the facilitators must clearly understand that they are primarily servants in the PMCA process and that the real experts 32 Participatory Market CHAIN APPROACH USER GUIDE Invitations to join the next phase Practical issues for Phase 1 are the market chain actors themselves as they live the experience every day Such a service attitude coupled with good facilitation skills will build the leadership legitimacy needed to effectively lead the thematic groups at critical moments during the process when the facilitator s guidance might play a crucial part in keeping the participatory work being undertaken on track The event might close with a luncheon to enhance informa
120. in interventions the content of each phase is context specific In other words the lead ing R amp D organization must in each case decide which specific activities are needed to respond to demands from the group and help work progress The activities taken on by each group may vary including group discussions field visits market surveys outsourced re search etc While work is coordinated in the thematic group meetings different persons may be in charge of conducting the different activities participatory mar ket chain actors researchers hired consultants or the facilitator him or herself To provide practical methodological help this guide includes a set of tools that can prove useful when de signing and conducting the different R amp D activities un dertaken at different stages of the PMCA process see Table 1 these are detailed in the following chapter Particpatory Market Chain Approach PMCA 21 Table1 Overview of useful tools included in PMCA Objective for phase Useful tools Phase 1 Get to know the different actors in Tool 1 Impact filter the chain and their situation Tool 2 Market chain sketch Phase 2 Analyze potential business Tool 3 Rapid market appraisal opportunities in a participatory manner Tool 4 Quantitative market study Tool 5 Focus groups Tool 6 Marketing concept development Phase 3 Put into practice joint innovations Tool 7 Business plan Flexibility of PMCA As mentioned previously PMCA is
121. innovate and create value in a changing environment Like products innovations also have a life cycle see Figure 4 The challenge faced by market chains is the need to constantly adapt and respond to changes in the market environment When responding to such change two possible paths may be followed 1 market chain actors can take advantage of a growing market opportunity along its life cycle A in Figure 4 and 2 they can switch to new business opportunities that hold greater promise for the future B in Figure 4 especially if existing opportunities stagnate Maturity Business B Decline Business A Figure 4 Business strategies related to innovations life cycles Actively responding to changing demand C2 Invention versus innovation Identifying options that create uniqueness Basic Concepts FOR MARKET CHAIN COMPETITIVENESS 7 Innovations don t just happen They are part of a process that defines and implements new ideas to enhance consumer satisfaction on the one hand and to use available resources efficiently on the other The changes undertaken to ensure such value adding must focus on real needs and opportunities Innovations do not always have to have a high de gree of novelty and must be distinguished from inven tions many inventions exist that have never generated revenue Innovations may be achieved simply through combining and adapting things which are already known and applying them to
122. is conducive to innovation by gt Increasing the quality of the information exchange fostering creativity and learning Reducing the time taken to reach agreements Facilitating the definition of new activities and encouraging people to assume leadership roles and take risks Increasing the potential for conflict resolution Promoting personal satisfaction and helping to integrate new actors into the interaction gt Allowing trustworthy people to develop leader ship legitimacy enabling them to coordinate activi ties along the market chain Trust does not happen automatically it must be built little by little This is especially true in market chains where trust slowly grows out of positive social interac tions that must be carefully nurtured by wise facilita tors Such facilitators must have the legitimacy and skills necessary to lead such market oriented innova tion processes and must capitalize on the good ideas shared among stakeholders Without such leadership it is very likely that excellent joint market opportunities will never make it to fruition Who displays such leadership legitimacy Their fol lowers would call them trustworthy people people who through their position and actions have proven that their intentions and ideas benefit everyone see Box C3 Such market chain leaders can be insiders e g market chain actors or outsiders e g R amp D staff 10
123. iscussions when interests need to be clarified or conflicts resolved In Phase 3 for an innovation to become a commercial reality market chain actors need to make investments and expect an ap propriate return PMCA facilitators need to ensure that the group deals with the following aspects Who will be the owner of products and brand names Who will co invest in production processing and promotion What commitments are entailed for the different market chain actors What type of support is expected from the R amp D organization The conclusions reached during such discussions should be written down and progressively integrated into a Business Plan see Tool 7 When PMCA is applied in the context of poverty al leviation or the promotion of rural development cor porate social responsibility see Box C11 should be part of the group discussions and mechanisms sought to make the contributions of the private sector in these areas visible to the public e g the creating of special labels Such mechanisms enhance communication of social benefits to the public and consolidate collabora tion between poor producers private enterprises and R amp D organizations For instance effective communica tion via the Internet newsletters product labels etc are important ways of communicating this concept to consumers and can contribute to product differentia tion and eventually higher prices C11 Corporate social responsibi
124. itive market chains are essential Local actors linked to primary production must collaborate with those ac tors who are able to enter the market with products and services that are valuable to consumers and profitable to all involved in the production process for those actors based in rural areas This not only enhances incomes but also local development in general through the cre 4 Participatory Market CHAIN APPROACH USER GUIDE ABc ation and use of social and human capital which opens up new opportunities see Figure 3 Human capital refers to an individual s capacities personal skills and knowledge all of which help to optimize processes and 1 Human and results This type of capital is gained by education and through social capital personal experience It is very different from social capital which is developed between people through positive relationships and networking Through the building of empathy trust and mutual obligations social capital facilitates fruitful interaction and consensus based decision making When doing business social capital lowers transaction costs and reduces the risk involved in taking decisions Like other forms of capital both human and social capital are created and improved through investment While human capital requires investment in personal education and practical experi ence social capital needs investment in the form of continuous interaction among the actors involved Ex
125. ived by consumers A rapid search of the Internet as part of a Rapid Market Appraisal see Tool 3 revealed that similar types of instant mashed potatoes already existed in the United States Retaining the skin could provide an interesting factor that would differentiate the product and motivate people to buy it if they were aware that it added nutritional value in a natural way Preliminary tasting tests indicated that the product might be well received if the consumers were not put off by the fact that it looked different from other types of mashed potatoes because the skin had been retained With this information and the help of a graphic designer a prototype package was prepared This was then evaluated by two Focus Groups see Tool 5 It was concluded that the marketing concept used to sell the new Pur Andino in stant mashed potato should focus more strongly on shoppers who prefer natural products as it contains neither preservatives nor artificial colouring The package should also make clear that the product is ideal for housewives who appreciate that the product is quick and easy to prepare but still has a great taste Final packaging for Pure Andino an instant mashed potato product made from native potatoes Toot 7 Business PLAN 101 Business Plan Miguel Ordinola Thomas Bernet Overview Brief description Purpose Use in PMCA When Phase 3 Who Facilitator or hired consultant Preparation 1
126. ized the thematic groups by providing them with new skills the Selected Potatoes group gained the necessary capacity to help them to implement the proposed commercial system to produce and deliver the new 50 kilogram sacks of potatoes The company which dealt in information which joined at this stage was of par ticular help This new collaboration allowed the group to prepare two potato marketing bulletins one detail ing prices and the other wholesale supply volumes Based on a rapid market survey the Selected Potatoes group chose the brand name Mi Papa or My Potato for their product As a result of discussions about who should own the brand name the actors involved in this thematic group agreed to create a new association called Cadenas Productivas de Calidad en el Peru Quality Market Chains in Peru or CAPAC Peru This would oversee the proper use of the brand name and provide other services designed to promote quality production and the commercialization of pota toes and other agricultural products in Peru Here the expert support from a lawyer was essential to identify and dealing legal issues Moreover based on the interest expressed by a participating NGO part of the group also devoted a considerable amount of time to developing a new potato grader intended to support the new Mi Papa commercialization system in rural areas The Processed Potatoes group carried out Focus Grou
127. jeopardiz ing the margins of both buyers and sellers Daily negotiations over price quality delivery conditions and payment especially in saturated markets where profits are reduced to a minimum give an edge to those who take advantage of others by means of dubious business practices such as offering inferior products providing short weights and delaying payments etc As a conse quence it is not surprising that even above board transactions involve a high level of distrust 12 Participatory Market CHAIN APPROACH USER GUIDE Participatory processes for market chain development Playingthe Because they do not have commercial interests R amp D outsider card organizations are in a good position to lead the partici patory processes required in market chains and bring together actors who mistrust each other but are in terested in sharing ideas about new business options Moreover because of their prestige R amp D organizations may be better placed than other actors to access key information and contacts in order to stimulate innova tion processes Targeting poverty Participatory processes also help economically and geographically marginalized actors to access new op portunities by forming links with other market chain actors Such collaboration not only increases income itacts as a viable strategy of empowerment by enhancing people s access to knowledge skills and contacts All these aspects wil
128. k en and by whom Certain decisions might need to be taken by the R amp D organization such as focusing only on business options that favor the R amp D organization s mission However most other decisions should be taken democratically together with the participants Put bluntly participants must feel that their participa tion is real and that they have both a voice and a vote gt Throughout the PMCA process facilitators must view decisions as bricks in a construction process to build concrete joint innovations On the founda tion of common interests they must be well placed in a logical order and time sequence Where these bricks are not placed well or some bricks are missing the outcome of PMCA is at risk v Y a a U 152 Participatory Market CHAIN APPROACH USER GUIDE Having the means to attract the relevant actors Targeting actors with potential Bringing the main beneficiaries on board Those actors who are interviewed in PMCA s market chain survey and who are then invited to participate in thematic group meetings should meet some basic criteria they must be willing to share information be interested in collaborating and have a certain degree of influence or power to convince other actors gt Importantly the R amp D organization should try to ensure that all the actors that join the process have a good reputation possibly by following the recommendations of
129. ket chain being considered and is based on 20 Rapid assessment of to 40 interviews involving different market chain actors the market chain _ plus staff from governmental and non governmental organizations NGOs The survey enables the leading R amp D organization to do the following 24 Participatory Market CHAIN APPROACH USER GUIDE Characterization of the market chain Planning of interview sessions gt To get to know the various key actors in the chain gt To understand the circumstances and practices of the actors involved in a market being considered gt To identify bottlenecks and opportunities associ ated with the various links in the chain i e pro duction commercialization processing use and consumption gt To explore market opportunities that could be ex ploited by means of better collaboration among the market chain actors gt To make the actors interviewed aware of existing limitations and of possible opportunities for col laboration in the market chain gt To make interviewees feel that they are the real market chain experts and motivate them to par ticipate in the final event of Phase 1 when options for collaboration are discussed Once the market chain is identified information must be gathered in order to gain a better understanding of the different activities of the chain Such information can be obtained from either primary sources e g inter views with people who know the
130. ket opportunities 67 Table 6 Example chart evaluating different business opportunities in the INCOPA Project ssssecicsasssssessesszassssataseocicadecsasodacosseassrbsssspsciedecsdecese iacbasedpseaiabiseay riencia 68 Basic Concepts FOR MARKET CHAIN COMPETITIVENESS 1 Basic concepts for market chain competitiveness Thomas Bernet Graham Thiele The time to compete on your own is over the winners of today are team players with strong relationships builton trust Content of this chapter This chapter presents a set of linked theoretical con cepts that underpin the practical work with the Partici patory Market Chain Approach Introduction Howto competein Market globalization poses a considerable challenge the global market to farmers and those living in rural areas in developing countries where inadequate infrastructure and limited access to information and technology increase both production and transaction costs So how can pro ducers compete in such markets which are more and more demanding with regard to product quality and timely delivery An ongoing process of innovation is needed along the market chain which should enable those involved to constantly identify and take advantage of new market opportunities thus positively affecting rural producers To make this happen the actors involved must be given the opportunity to fruitfully interact and build mutual trust Only in this
131. l event should look for visual and creative ways of portraying the main messages and achievements of the T16 Visualizing innovations ina PMCA process One attractive option is to present the innovations real market chain setting in a living chain where different PMCA participants represent their specific activities production processing wholesaling dis tribution etc Actors can sit or stand on a long table alternatively exhibition booths can be laid out in a larger area where visitors move from one booth to another along a virtual market chain In both scenarios actors from each part of the chain explain their situation the relevance of the innovations they have devel oped and the role of PMCA in enhancing collaboration Careful planning and prior rehearsal is necessary to ensure that the key messages are transmitted clearly and concisely Planning and Because the final event of PMCA may involve far more team work than 100 invited guests and will include all the members of the thematic groups important players in the sector politicians and representatives of the media the R amp D organization must ensure that the event is carefully planned The delivery and follow up of invita tions as well as the planning of the event s activities must be coordinated with the thematic groups Spe cific aspects that require advance planning include gt The planning of the event i e the structure of the activities
132. l interaction further and make participants feel comfortable with the idea of continuing to share their ideas with other market chain actors At this moment the PMCA facilitators should pass around a subscrip tion sheet on which participants note their personal contact information and in what thematic group they want to participate during Phase 2 One person should be able to subscribe to more than one thematic group Later the facilitators will then invite all those persons interested to come to their thematic group meetings in Phase 2 where market opportunities will be further discussed and analyzed gt In contrast to other forms of market chain analy sis where the use of statistics is important PMCA involves an interview based approach which is much more qualitative PMCA is not designed to obtain conclusive and statistically significant an swers Rather it seeks to enhance market chain understanding for the R amp D organization using PMCA and to identify and interest key actors so encouraging them to join a participatory process which allows their knowledge interests and ideas to be capitalized upon Although PMCA imposes no time frame for Phase 1 ideally the necessary interviews should be carried out within two to four months This encourages those being interviewed to perceive the process as responding to their inputs and creates awareness that PMCA produces real results quickly Particpatory M
133. l positively influence the social economic and cultural environment of the actors involved giving them more room to make sound decisions to improve their living conditions see Box C5 ABC A Empowerment and gender are linked concepts Empower ment can be defined as the expansion of poor people s ability C5 Empowerment and gender to participate in negotiate with influence control and hold accountable factors that affect their livelihoods Empowerment focuses on four aspects of an individual s social life and integra tion The individual s ability to make informed and better deci sions The individual s inclusion and participation in decision mak ing processes The level of transparency and accountability associated with the use of resources The capacity to organize cooperative action at a local level United Nations Environment Programme Global Environment Outlook Year Book 2004 5 www unep org Focus on shared interests Facilitating fruitful interactions C6 Developing constructive interactions Basic Concepts FOR MARKET CHAIN COMPETITIVENESS 13 Gender equity is one dimension ofempowerment Gender analysis considers the social cultural and economic roles and relationships that govern the lives of women and men Specifi cally it looks at How masculinity and femininity are defined and how people live according to such definitions How power is distributed between men and women How the social
134. lity Source adapted from http en wikipedia org Holding PMCA s final event Thinking big and strategically PARTICPATORY Market CHAIN Approach PMCA 51 Corporate social responsibility is a new business concept that expresses a company s wish or obligation to be sensitive to the needs of all stakeholders involved in its business opera tions The principle is closely linked to the imperative of ensuring that these operations are sustainable taking into account not only the financial economic dimensions but also the social and environmental consequences There are many ways of reporting activities related to corporate social responsibility It is however important to ensure that all activities and the social impacts that result are reported in a transparent way Nowadays the Internet presents interesting options for this with the potential of linking webpages to product labeling Planning for the third and final event of the PMCA process should begin when the thematic groups are in the final stages of designing their innovations Since the PMCA process officially ends with this large final event it is of great importance to the facilitating R amp D organization providing an opportunity to Present the joint innovations resulting from the process to the wider public while clearly commu nicating that the market chain actors are the real owners of all innovations gt Create an optimal
135. lly if considerable initial investments are needed to start up the business an expected cash flow stream must be derived from estimated annual income and expenditures making visible the capital needs at the different stages of the business In this latter case profitability is calculated based on the Internal Rate of Return IRR which can easily be calculated if Microsoft Excel is used for data analysis Also the Net Present Value NPV can be calculated with Microsoft Excel indicating how much monetary value the business is likely to create in the future Sources of information Quantitative Market Study see Tool 4 in depth interviews cost calculations Investment plan and promotion strategy 1 2 pages This section tells the reader how much financial capital the business requires and specifies investment needs including those for product promotion If strategic partnerships are established as part of the marketing strategy these will be described in detail here If the product creates benefits for the public see Section 5 this section must also explain how R amp D organizations or the government will support the business and its promotion activities gt Sources of information Previous sections of the business plan see Sections 7 and 8 discussions among promoters First APPLICATIONS oF PMCA InTrODUCTION 107 First applications of PMCA Learn from others what you need to learn Content of this chapter
136. ly that this first contact will lead to a fruitful collaboration right away that will bear fruit during Phase 3 and later on The R amp D organization facilitating the process should plan this event creatively and bring across PMCA s spirit of innovation It might be appropriate to divide this event into two parts During the first part the thematic groups could be given the opportunity to present their work visually Empowering key actors T11 Helping key actors gain visibility Particpatory Market Chain Approach PMCA 43 using a presentation software e g PowerPoint This would be followed by a break The second part of the event could consist of presentations by special guests who would consider a hot topic specifically related to PMCA s work Alternatively the second part could take the form of a fair with different stands which would allow different actors and thematic groups to exhibit their ideas or product prototypes to those attending The latter option tends to encourage more lively inter action among the old and new PMCA participants Closing the event with a tasty luncheon is a good idea as it will foster further interaction among actors particularly when some of the thematic groups have developed new products or recipes that can be tasted during the meal Each thematic group should decide who should repre sent the group when the joint work is presented to the plenary Ideally in order to
137. market chain well or secondary sources e g statistical data and studies that provide information about production cycles supply and processing volumes prices volume and frequency of sales and consumption etc Next a team containing two or three interviewers is formed If possible this team should consist of people with different professional backgrounds who together define the structure and content of interviews Guid ance questions are formulated which give a basic structure to the interviews During the interviews these guidance questions can be used as a checklist to ensure that all relevant topics are covered see Box T1 The team should take care to keep interviews short so that the actors involved don t get tired or annoyed T1 Preparation of guidance questions Selecting the interviewees PARTICPATORY Market CHAIN Approach PMCA 25 The guidance questions should cover all the relevant themes included in the market chain survey They should aim to assess current market chain collaboration and potential joint opportuni ties The following guidance questions may help you to structure and guide this type of interview Can you briefly describe your activities and your involvement in this specific market chain Why are you involved in these activities and how do you perceive your business in general Who are your most important suppliers and clients and how well do you collaborate with them What are the main pr
138. n 2 Understanding general perceptions Possible questions during this part of the session A good introduction to the meeting is important as it creates a friendly environment from the beginning This makes participants feel comfortable and encour ages them to share their ideas Every person should introduce her or himself simply by saying their name and nothing more to prevent preconceived percep tions or hierarchy within the group that might hinder free participation During the introduction the goal of the meeting and the rules of the game must be explained every comment is welcome because it is important to gather different viewpoints People s opinions will not be judged Without showing the product being analyzed the facilitator should begin asking general and open ques tions about the product with the aim of understand ing the general perceptions and habits of the consum ers participating All individual answers and comments should be summarized on the flipchart This will stimulate new ideas and will prove helpful when the facilitator or the group wants to return to certain comments Also after the meeting the flipchart sheets make evalua tion easier since all the relevant information is already recorded Based on the comments made the facilitator s aim is to identify the most relevant elements from the participants standpoint The facilitator seeks to under stand the group s shared view on
139. n the Andean highlands implying a better impact potential to con tribute to the project s objective which is poverty alleviation and rural development As a consequence of this exercise and the fact that tunta can easily be stored and traded compared to fresh potatoes for export tunta was prioritized in the first stages of the INCOPA project 68 Participatory Market CHAIN APPROACH USER GUIDE Table 6 Example chart evaluating different business opportunities in the INCOPA project Overall objectives and sub criteria Weighting Economic Impact poverty alleviation Potato chips industrial Mini yellow potatoes export Tunta white chu o Evaluation between 1 amp 10 weighted results 1 1 Potential to increase incomes in rural areas in the short term direct or indirect Potential to increase incomes in rural areas in the long term Potential to reduce the income risks faced by small scale producers Total of weighted coefficients Social Impact empowerment of the poor 0 72 1 28 0 36 2 36 8 0 96 1 44 0 84 3 24 Evaluation between 1 amp 10 weighted results 2 1 Potential to increase small scale producers self esteem 2 2 Potential to generate knowledge and contacts that foster long term development Potential to empower persons who need special attention e g youths women the elderly Total of weighted coefficients Enviro
140. nd cover part of their costs In R amp D work subsidies are an interesting mechanism which can be used to encourage private companies to develop activities that will benefit the public Examples include the commercializa tion of products which will have a positive impact on the poor and on natural resource conservation etc In practice the challenge is to measure the public benefits derived from such subsidies in order to justify them on a case by case basis If such public investments mainly benefit private companies subsidies distort the competition in the market and are a waste of public funds Such a situation must be avoided A special concern of PMCA follow up activities re lates to capacity development Since the innovations developed during PMCA imply changes in the way that things are done learning must continue to support the innovation process and make changes sustainable Capacity building might be needed at different levels of the market chain to address specific bot tlenecks in production storage processing com mercialization and consumption Capacity building is particularly necessary in critical areas that require concerted action across the market chain for example with production quality technology use and develop ing associated organizations see Box T19 T19 Capacity building Capitalizing on new contacts ge Particpatory Market Chain Approach PMCA 59 Capacity building is an integral part of
141. ney time energy raw materials land water etc Empowerment The process of strengthening people s capacity and their ability to access resources that will enable them to manage those variables that most affect their lives Empowerment usually implies strategic action to improve the socio economic environment of the poor and disadvantaged including better integration into market chains Facilitation The active creation of conditions that enable actors to interact learn from each other and take joint action In participatory R amp D processes and other type of interactions a facilitator is needed a person who structures and unobtrusively manages group discussions with the aim of establishing an environment which fosters affinity and trust among actors Gender A person s sex is biological but their gender is defined by society Gender is what society makes of sex it is the accumulation of social norms dictating what men and women should be and do Ideas about gender shape personal relationships and institutions and have an impact at all scales from the household to governmental agencies Gender roles and perceptions are subject to constant change Gender analysis The study of the social cultural and economic relationships between women and men in different arenas Gender analysis is not just about women men are also part of the picture Gender analysis requires one to examine fundamental issues such as the ways in which
142. nity for the market chain actors to come forward and present the innovative products they had produced In the days that followed various interviews were requested and the information was disseminated in newspapers and through radio and TV programs at the national level The following products were presented and launched to the public at the final PMCA event gt Papy Boom a brand of yellow potato chips gt CAPAC Peru a new market chain association designed to improve potato production quality and the commercialization of potato and other crops in Peru gt Mi Papa a registered brand of selected classified potatoes packaged in 50 kilogram sacks which can be used to distribute different varieties of potatoes gt Papa al D a Potato Update and La Madrugada Early Morning two daily bulletins providing prices and supply volumes for more than 20 of the classes of potato sold at Lima s Wholesale Market Follow up and consolidation LA Comerciante Autorizado CAPAC tacque mas TERE A A CAPAC Peru poster displayed at a national trade fair Butler G Bernet T and Manrique K 2004 Mechanization of Potato Grading on Small Scale Farms A Case Study from Peru Experimental Agriculture Vol 41 1 12 First APPLICATIONS OF PMCA INNOVATING THE POTATO SECTOR IN PERU 115 gt Asemi portable potato grader a flexible low cost machine that can be used in different
143. nmental Impact sustainable use of natural resources 0 42 0 90 1 95 8 0 48 1 20 2 31 10 Evaluation between 1 amp 10 weighted results 3 1 Potential for the sustainable use of water and soil 3 2 Potential to renew peoples appreciation of the value and the need to conserve of traditional varieties biodiversity Total of weighted coefficients Result of the Evaluation Economic Impact poverty relief Social Impact empowerment of the poor Environmental Impact sustainable use of natural resources TOTAL Evaluation Scale 1 very negative effect 5 no effect 10 very positive effect 0 60 0 15 0 75 Potato chips industrial 2 36 0 75 5 06 7 1 05 1 05 2 10 Mini yellow potatoes export 3 24 2 31 2 10 Tunta white chu o 3 32 Toot 2 MARKET CHAIN SKETCH 69 Market Chain Sketch Cristina Fonseca Kurt Manrique Overview When Final events of Phases 1 amp 2 Who Facilitators Preparation 1 day Duration 10 15 minutes Brief description The Market Chain Sketch is performed by the facilita tors of a participatory R amp D process at a large event in order to illustrate the need for better collaboration along a specific market chain Purpose The Market Chain Sketch should be used during an event when the goal is to develop a common vision among different actors involved in a market chain Ina very visual
144. notions of masculinity and femininity are defined and enacted in everyday life the social roles needs and power distribution associated with women and men and the gender dimensions within institutions and organizations Human capital The set of capacities possessed by individual actors that can be used for production processes Human capital can be created through investment in learning and is enhanced through training or work opportunities that provide new experiences Human capital is also critical in enhancing social capital among actors GLOSSARY 159 Innovation A new idea or product which is introduced to society or to the market and which changes the way things are done In contrast to inventions innovations always add value to and enhance the competitiveness of their users Innovation system The group of organizations and individuals involved in and around an innovation process together with the institutions norms and rules that govern the interactions that occur between them Institution Unlike the term organization which refers to a group of people with a shared goal the term institution refers to the norms and rules that influence the possibility of collaboration between actors Thus families and firms for instance are organizations while marriage and contract law are institutions Invention A new idea or product When an invention has a commercial value it turns into an innovation with a high degree o
145. nta group lacked a company eager to invest in the launch of an instant tunta soup One entrepreneur was interested initially but pulled out because the product development process ap peared to him too slow and too complicated moreo ver he was not comfortable with the fact that the product and processing information were not strictly confidential The issue of confidentiality in particular demon strates that there are critical issues which need to be taken into account when dealing with the private sec tor So far PMCA has no concrete answers to this and relies rather on very capable facilitators who are able to manage such issues on a case by case basis Hopefully future applications will provide more insight into how PMCA can better attract companies able to co invest and successfully launch and promote new products in the market Not all of the ideas finally led to new products as is generally the case in any innovation process The most important outcome of this work was the very wide pro motion of native potatoes through TV radio and press that led to the institution of the National Potato Day which was celebrated for the first time on May 30 2005 amidst great publicity First APPLICATIONS OF PMICA GENERATING New PRODUCTS IN THE BOLIVIAN Potato SECTOR 129 PMCA Application 3 Generating new products in the Bolivian potato sector Augusto Guidi Pablo Mammani Claudio Velasco Overview Purpose To generate new
146. ntioning who they are and what main interest drew them to par ticipate in that particular thematic group see Box T5 Each person should write their main interest down on a card Each card is then stuck on a board where a general market chain is drawn such that each card indicates in what market chain activities the different actors are involved In this way an initial overview is obtained as it shows the market chain activities rep resented in the group and the main interests shared Based on these joint interests potential joint opportu nities are discussed and missing actors are identified The facilitator asks each person to write on a card the main reason why he or she is participating Participants take turns to state their names the type of business they represent and their motivation for joining this thematic group During each person s introduction the card stating the person s main interest is placed ona board on which a generic market chain has been drawn showing all the activities from producers to consumers Once all the cards have been placed on the board separated by the different activities of the market chain the facilitator should evaluate the cards on the board on two things Which market chain activities are represented and which are not and what interests do the different participants have Which interests are most common and shared among the whole group Potential use of a market chain
147. o contact a lawyer to assist the group with legal issues The event was also attended by several new actors who later joined the thematic groups Special guests were invited from two organizations that manage agricultural information who were asked to present their work and products A fruitful discussion concern ing the possibility of collaboration followed and one ofthe two organizations joined the thematic group meetings in Phase 3 At the end of the event a survey form was distrib uted to evaluate how efficiently PMCA was able to generate interest trust and collaboration among the different actors The summary of these responses con firmed what facilitators had hoped PMCA effectively builds mutual trust through the intense interaction that occurs as a result of participation see Figure 8 Trust at Beginning Trust at Phase 2 Event CIP y Governmental institutions NGOs Processors Retailers Supermarkets Wholesalers Intermediaries Producers Participants of Processed Potatoes Selected Potatoes MN Both thematic groups Figure8 Rating of trust levels from when PMCA started until the end of Phase 2 PMCA Phase 3 Selected Potatoes Processed Potatoes A p 85 First APPLICATIONS OF PMCA INNOVATING THE PoTATO SECTOR IN PERU 113 Thanks to the final event of Phase 2 which energ
148. oblems you face in your activities and in the market chain How well do you feel R amp D organizations support the market chain How do you think your business and the market chain could be improved What new products or services could be of interest to you and the other chain actors Do you have any other comments or ideas you want to share The number of interviews to be conducted will depend on the homogeneity of actors along the market chain being surveyed As a general rule three to five actors involved in the same type of activity should be inter viewed If there are differences among similar actors involved in each activity then more interviews may be conducted to ensure that the views of all the different sub groups of actors are captured In addition to increase the chances of active partici pation of strategic actors for example those close to final consumers etc more interviews may be needed with this group The following criteria are important when making up a list of people to interview They should know the market chain and their activ ity well They should be willing and able to improve the situ ation of the market chain They should be interested in and open to the idea of collaborating and sharing information 26 Participatory Market CHAIN APPROACH USER GUIDE Conducting the interviews T2 Interview planning time and place Interviews should ideally be conducted by those staff
149. oduce with a good flavour and smell Overall the product is little used in Lima s gourmet cuisine Some chefs mentioned that tunta has major shortcomings such as an apparent lack of versatility and a strong smell and taste which consumers in Lima tend to shun After the presentation of the survey results the PMCA facilitators performed a sketch see Tool 2 to emphasize the need for collaboration among market chain actors to promote native potatoes After a break guided by PMCA facilitators the par ticipants divided into two thematic groups the Native Potatoes group and the Tunta group The various actors then introduced themselves and mentioned the main reason why they were interested in participating in these activities Based on those interests possibili ties for collaboration were discussed The Native Potatoes group came up with the following potential innovations the production of a recipe book about native potatoes the development of a marketing concept which could be used to sell native potatoes in supermarkets and the formulation of instant soups based on native varieties The Tunta group concluded that new recipes for using this tra ditional but forgotten product should be promoted with catering schools They identified the need for a permanent supply of high quality tunta to satisfy the demanding market in Lima Both groups expressed in terest in knowing more about CIP s activit
150. oduct also involved a market study carried out by three University students which included two Focus Groups one focusing on Peruvian consumers and one on U S citizens living in Lima This work helped to optimize the marketing concept which was later realized by a graphic designer who was supervised by the group s PMCA facilitator Just before the final event various publications were produced including two information sheets one on T ikapapa and another on Pur Andino and a booklet of recipes for the new instant mashed potato including well known Peruvian recipes such as causa rellena and stuffed potatoes The final event of Phase 3 was held at CIP s headquar ters in Lima and involved nearly 200 participants including producers processors exporters chefs researchers and representatives of government agen cies and non governmental organizations About 30 journalists from television stations newspapers and specialist magazines also attended The program included a brief review of PMCA s achievements by the Minister of Production and 28 tasty dishes prepared and presented by four distinguished catering schools using tunta and native potatoes The program consisted of two parts The first was held in CIP s auditorium where the market chain actors of each thematic group presented their activities and achievements The second part of the program took place in a special tent set up in CIP s gardens w
151. of participa tion to be compensated with tangible benefits It is the role of facilitators to provide the necessary leadership during the PMCA process to ensure that the partici pants are benefitted at every stage of the participa tory process Initially gains may have the form of valuable lessons learned relevant contacts made or simply personal satisfaction from working as part of an interesting team Later on economic benefits derived from innovations and partnerships will pay it for the continuing participation gt Most crucial to the generation of such tangible ben efits during the PMCA process is the facilitators at titude Being the only ones paid to participate in the thematic group meetings facilitators must be clear in their own minds that they work for the partici pants and not vice versa Thus meetings must be planned and held with a high degree of dedication and enthusiasm In addition efforts must be made to enhance values that promote mutual respect and trust even more so if discrepancies in views and in terests exist among the participating stakeholders Cargo haulers demonstrating the advantages of the new 50 kg bag Wise management of decision making CHALLENGES WHEN USING PMCA 151 Since active participation in PMCA is driven by stake holder interest facilitators must be very sensitive to how decisions are taken especially when they relate to what activities are undertaken how they are underta
152. order to obtain all the information needed each Fo cus Group session must be well structured and consid er the key issues to be discussed in a logical sequence The art of facilitation is to ensure that this pre defined structure is followed during the session without the participants realizing it A homogeneous group of 6 to 8 potential consum ers will be invited to each session Ideally they should be of the same sex and have the same socio economic status and similar consumer preferences Hence the type of persons to be invited will vary depending upon the product being discussed A facilitator with the capacity to guide such discus sions should be chosen for the meeting The facilitator must have an affinity with the type of people attend Conducting the session T21 Be careful not to influence perceptions Toot 5 Focus Groups 87 ing the meeting If different Focus Group sessions are conducted on the same topic the same facilitator should be used so that the results are not biased be cause of differences in facilitation style or the sequence in which issues are raised The facilitator should have an assistant who will help to organize and distribute materials This person should also take notes on a flipchart during the ses sion in legible writing and remind the facilitator if key issues are omitted by mistake A Focus Group session should not last longer than an hour and a half The meetings should be planned at
153. orward and promises practical results while enabling market chain actors and the leading R amp D organization to gain important insights and develop new contacts Moreo ver beyond the concrete results achieved through the innovation process PMCA can also bring R amp D organi zations closer to the market helping them to re spond better to the demand from market chain actors and the private sector This said however PMCA is not the best method in all circumstances For instance no appropriate organi zation may be available to facilitate the process or the market chain in question might not be suited to its application Facing the challenges A PMCA application is a major endeavour which has systematically important implications for the R amp D organization leading the process It not only requires the allocation of staff and financial resources but also exposes the R amp D organization to a truly commercial environment Challenges 144 Participatory Market CHAIN APPROACH USER GUIDE implying a willingness to respond to the demands expressed by market chain actors Bearing this in mind itis wise for potential PMCA fa cilitators to systematically evaluate the internal and ex ternal challenges they face By the same token it must also be realized that certain critical factors must be tackled as they appear during the application of PMCA Even with excellent preparation not all obstacles can be foreseen at the outs
154. ould be presented and discussed in thematic groups When used outside of the PMCA other R amp D special ists might be invited to the presentation of the results Further R amp D steps should then be defined during such a meeting if the findings outlined are positive Screening to determine the export potential of native potatoes at a trade fair 76 Participatory Market CHAIN APPROACH USER GUIDE A3 Assessing consumers perceptions of potato chips made from native yellow potatoes During the first application of PMCA in Peru a new product for children was developed chips made from yellow fleshed native potatoes Since yellow fleshed potatoes are sold in supermarkets at a higher price than conventional white potatoes doubt arose whether these chips would also sell well to richer consum ers in Peru ifa different marketing concept was used Because the International Potato Center CIP had been invited i to participate in an export fair at which different new products were exhibited it was decided to make use of this opportunity to assess i the yellow potato chips being developed As the product was being sampled visitors to the fair were asked for their opinion on the chips taste and their presentation they were also asked how much market potential they felt the product had This rapid assessment confirmed that these chips are in fact very much appreciated by potential consumers 1 because they taste good and 2 bec
155. ould be tested before it is used in the field A few persons already known to interviewers can be used for this purpose as they may have more patience if the interview takes too long or if questions are a little confusing and so need to be revised At the same time these persons might be more open and willing to share other interesting and relevant information related to the product which might not be explicitly considered in the questionnaire the questionnaire can then be revised to ensure that such issues are addressed with later respondents Based on the comments and insights gained from this initial experience the questionnaire should be im proved and then photocopied so that the interviewers recruited for the study can use it The profile of the interviewer age social class sex should be appropriate for the product being studied For instance men should not conduct interviews con cerning lipstick Interviewers should be carefully trained The train ing should include a presentation of the objectives of the study and how the interviews should be conduct ed Emphasis must be given to the following aspects of the study gt Good interviewer interviewee interaction gt The best way to ask the questions The correct way of recording the information If the interviewers are inexperienced it might be useful for them to assist in an interview conducted by an experienced interviewer The interviews should be
156. p research see Tool 5 to improve the design and packaging of Papy Boom the native yellow potato chips crisps aimed at children Further processing tri als were also conducted to optimize chip production To ensure a supply of clean uniform yellow pota toes the processor also began to participate in the other thematic group Selected Potatoes x 2 a Ad a 2 lt 114 Participatory Market CHAIN APPROACH USER GUIDE Final event Innovations achieved After five months of thematic group meetings the final event of Phase 3 was held on June 11 2003 The event was carefully organized and carried out with the aid of CIP s Communication Department More than 100 different actors were invited not including the media who received a special welcome During the first part of the event the thematic groups presented their progress and achievements after which a video about Peru s potato commercializa tion was shown The second part of the event was held in CIP s garden where the potato market chain was displayed using special exhibition booths illustrating the differ ent activities that occur along the chain With this as a pleasing backdrop the market chain actors played out their real life roles with each one explaining the daily challenges they face and what the innovations obtained as a result of PMCA meant to them The dem onstration was well received by everyone providing an excellent opportu
157. potato to restau rants and other commercial users Based on the results of this survey the first PMCA event was organized in close collaboration with the Ministry of Agriculture s General Office for Agricultural Promotion DGPA About 60 participants from the potato sector were present at this event including pro ducers traders processors retailers chefs researchers and tourist agents The survey s results presented during the first part of the event together with the discussion which fol lowed this presentation confirmed that there was gen eral interest in promoting the use of native varieties particularly through improved packaging and novel dishes However survey results also revealed certain limitations in relation to the use of native potatoes 1 a lack of knowledge about cooking times and how to prepare native potatoes 2 the fact that they are difficult to peel and 3 the pronounced seasonality of supply May to August The survey found that tunta is mainly consumed by people whose roots are in the Altiplano and south First APPLICATIONS OF PMICA PROMOTING THE Use oF Native Potatoes IN PERU 119 ern highlands and mainly by the older generations of immigrants the younger generations are losing the habit of consuming tunta Only a few restaurants offer tunta as a regional specialty from the regions of Puno Cuzco and Arequipa however these were hav ing difficulties obtaining quality pr
158. ption for what amount frequen cy who where Since price and quality strongly influence people s pur chase and consumption behavior these two aspects must always be considered The next step is to determine the sample size In general the more factors consumer habits education sex age etc influencing the variables that need to be measured the bigger the sample will need to be The size and structure of the sample also depends on how homogenous the population is and how ac curate the results must be especially when consider ing the interaction between variables e g preference for brands x product use etc If the research results must be statistically significant the sample size should be calculated using the standard formulas that take Designing the questionnaire Toot 4 Quantitative MARKET STUDY 79 into account the margin of error Marketing books state that as a general rule a minimum of around 250 interviews are required for a Quantitative Market Study to give statistically significant results The process of selecting interviewees may vary depending to a great extent on what product is being studied One way is to randomly select interviewees that have the characteristics of the target consumer see Application A4 Another way forward is to find a database containing the details of potential consum ers People can then be selected from this and asked if they would be willing to participate in an interv
159. r instance the market chain survey the final events money for hiring consultants etc This flex ibility will need to be maintained when the budget is actually spent If a flexible donor agency is willing to finance particular PMCA applications this inter nal negotiation process might become much easier CHALLENGES WHEN USING PMCA 149 Having the required leadership skills Formingateam A team of three to six capable and willing persons of facilitators trained in the method should be on hand to apply PMCA The person who knows PMCA best should take the lead in bringing the method across to his or her team mates Within the team two or three of the members should have good facilitation skills to lead thematic groups a lack of technical knowledge con cerning a specific market chain is less relevant at this stage as it can be gained during PMCA s Phase 1 when the market chain survey is undertaken gt If an R amp D organization lacks the skilled staff needed to implement PMCA specialized consultants can be hired for facilitation Alternatively partnerships with other R amp D organizations can be formed to access complementary skills and contacts From an insti tutional point of view such partnerships could be interesting as they potentially add value to future R amp D projects Focusingon How successful PMCA is judged to be will depend value creation upon whether or not real benefits are generated for both consum
160. rate T15 Attracting one or media interest in the PMCA s final event These special guests two big shots help the PMCA participants to gain the self confidence needed to continue their work after the final event has ended To ensure that these VIPs don t steal the show with their own agenda it is wise to ask them to comment on the PMCA s accomplishments as part of the event program This will ensure that the journalists attending will learn more about PMCA and its outcomes which will in turn improve media coverage Visual presentation To enhance the media s interest in covering this event of innovations and encourage key actors to take the innovations produced further market chain actors should person ally present their achievements This can best be done using a market chain setting where different PMCA participants representing their business are lined up according to their activities from production to con aP 53 sumption see Box T16 This visual representation is attractive to media representatives and communicates effectively PMCA s main message that collaboration along the chain is the key for success and reinforces the perception that the market chain actors are the owners of all the PMCA innovations produced This perception of ownership is further consolidated when the media interviews the market chain actors taking part Particpatory Market Chain Approach PMCA 53 Those planning the fina
161. rding the most promising market opportunities gt Prepare a document that clearly communicates the ideas which have been agreed upon regarding the market opportunities to be implemented in Phase 3 40 Participatory Market CHAIN APPROACH USER GUIDE Consolidating ideas within the group Writing a concise summary O Formulating a work plan A special session might be needed to pull together dif ferent pieces of information and agree on the charac teristics of the market opportunities proposed In order to make sure that the discussion covers all the different aspects of the market opportunity the facili tator might use a checklist containing all the elements to be considered An important point of reference is provided by the Business Plan see Tool 7 which spec ifies essential elements for commercial products but which can also be used to guide the discussion about technologies or public goods that the group intends to develop e g websites and other information material for the public The Business Plan forces participants to think carefully about the target population and product positioning etc To prevent misunderstandings during this impor tant session PMCA facilitators should synthesize on a whiteboard or flipchart the consensus reached by the group concerning the different aspects of the market opportunity discussed Once the group s ideas about their market opportuni ties have been
162. resented and VIPs share their views and ideas about PMCA and its achieve ments see Box T15 If sufficient funds are available a luncheon nicely closes the event to celebrate PMCA s joint achieve ments Novel dishes cultural dances and other crea tive presentations add a special touch to this occasion The size of the large final event coupled with the amount of exposure required demands a strong com mitment from the R amp D organization Its directors must be aware of this event and the impact it could have Ideally directors should attend the event in order to build new alliances with actors present events of this type provide excellent opportunities for production focused R amp D organizations to make new contacts with businesspeople managers of public sector organiza tions and politicians all of whom might be interested in collaborating in other areas Particpatory Market Chain Approach PMCA 55 Practicalissues The length of Phase 3 depends on the amount of for Phase 3 work that needs to be done to bring to fruition the different innovations proposed The time frame for Phase 3 should not exceed 6 months to ensure that active participation does not decrease because the participants cannot see an end to the PMCA process gt If needed the process should be reinforced by making use of competent external professionals This said however a good level of coordina tion must be established between the outside prof
163. resting product attributes A p 85 Achieving greater value at a lower cost gt For the private sector marketing concepts are powerful tools for focusing product sales towards particular market segments or target consumers while differentiating the products from others by emphasizing its distinctive qualities gt For the public sector marketing concepts can be an interesting way of fostering rural development by promoting products and services that enhance collaboration and incomes in disadvantaged areas e g food products with local brand names The starting point for any marketing concept is the identification of product attributes that add value to a product on the one hand and differentiate the prod uct from competing products on the other hand To ensure that a product is really pleasing to con sumers Rapid Market Appraisal see Tool 3 or Focus Group research see Tool 5 may be conducted before the market concept is developed Whatever method used those asked for their opinion must feel that they are being looked on as experts and should feel that their perceptions are valuable even if they are nega tive If Step 1 confirms that a product has interesting prod uct attributes i e purchase factors which add value to the product in the eyes of consumers production options need to be identified that can deliver these unique product attributes at the lowest possible cost This will enhance the product
164. rg CIAT Bolivia Thomas Bernet t bernet cgiar org CIP Peru Andr Devaux a devaux cgiar org CIP Papa Andina Peru Cristina Fonseca c fonseca cgiar org CIP Incopa Peru Augusto Guidi aguidi proinpa org Proinpa Bolivia Gast n L pez gastlop yahoo com Consultor Per Pablo Mamani pmamani proinpa org Proinpa Bolivia Kurt Manrique k manrique cgiar org CIP Incopa Per Miguel Ordinola cip incopa cgiar org CIP Incopa Peru Graham Thiele g thiele cgiar org CIP Papa Andina Ecuador Claudio Velasco cvelasco proinpa org CIP Innova Bolivia Notes The Participatory Market Chain Approach PMCA evolved out of a broad learning process involving many different R amp D actors We want to thank all those who have co invested funds time and ideas in the PMCA construction process We are especially grateful to the following organizations and projects whose contribu tions made this PMCA user guide a reality os Pr The International Potato Center CIP hosted the projects where PMCA was developed Moreover its Training Department provided important technical backstopping in the PMCA training workshops and design of this document T1 EHU ce As a regional initiative Papa Andina played a key role in validating PMCA and promoted its wider use especially in Bolivia and Uganda ad CIP s INCOPA project provided the incubation center for PMCA as the gt N NCOP A me
165. roles and needs of women and men are defined How institutions are shaped to include gender dimensions Because market chains are often characterized by in formality and distrust R amp D organizations must ensure that there is fruitful interaction and that people active ly participate in participatory processes To this end therefore they must focus the process on the shared interests of the stakeholders This will help to generate a joint vision and activities that tend to benefit all or at least most of the stakeholders involved The creation of an environment that favors an open and positive exchange of ideas is fundamental to the construction of effective market chains Since such a favourable environment for interaction is not given per se it must be actively put into practice by explicit proc ess facilitators see Box C6 Interaction is only constructive if the actors participate actively and respectfully in the exchange of information involved This re quires a facilitator who is able to integrate and motivate different actors and coordinate an exchange of information so as to arrive at a common vision based on shared interests The facilitator must create an environment for interaction where The style and content of the interaction build trust Jointly formulated interests guide the innovation process There is a culture of tolerance which allows people to accept and learn from errors Key actors receive special a
166. ronment enhances learning and reinforces the group s identity The Processed Potatoes group initially had more trouble focusing on a specific product The participants proposed different options for adding value to the po tatoes But only after several meetings did they finally settle on one option when one processor expressed his willingness to invest if the group would help him develop the option of potato chips made from native yellow potatoes The group began to analyze the frying character istics of different potato varieties and complemented this work with a Quantitative Market Study see Tool 4 For CIP the idea of working with native potatoes was extremely interesting as it would be of particular benefit to small scale producers in the Andean high lands where these potatoes are grown v 2 a Ad a 2 lt 112 Participatory Market CHAIN APPROACH USER GUIDE Finalevent After about four months of group meetings the members of both thematic groups presented their results at a second major event i e final event of Phase 2 Around 80 people from the sector were present Their feedback helped to ensure that the two thematic groups were taking the right steps to move forwards Both thematic groups also took advantage of this opportunity to indicate the additional persons or capacities that they would need to implement their proposals in Phase 3 As a result the Selected Pota toes group was able t
167. round to allow those present to indicate in which group they would like to participate in the near future The meeting closed with a relaxed lunch PMCA Phase 2 Selected Potatoes Traditional work of a cargo hauler Processed Potatoes Processing trial using yellow potatoes First APPLICATIONS OF PMCA INNOVATING THE POTATO SECTOR IN PERU 111 Because the Processed Potatoes and Potatoes for Export groups reached similar conclusions during this first event it was decided to merge them Consequently the participatory process continued with two thematic groups one focusing on Selected Potatoes and the other evaluating options for Processed Potatoes At its first meeting the Selected Potatoes group con cluded that a high quality product was needed The suggestion was a standardized 50 kilogram bag con taining potatoes that would be selected and classified by producers applying strict selection criteria Such a quality product would contrast with the produce of the informal marketing system which uses 120 kilogram sacks that contain besides usable potatoes rotten and damaged ones as well as dirt and even stones Over the next three months the group met eight times to evaluate and define the details of the new business proposition The last meeting was held at the wholesale market in the offices of the Cargo Haulers Union At that time the PMCA facilitator realized that such a change of envi
168. rts should be prepared showing the responses to each question Whenever possible statistical evidence should be used to back up the differences in percep tions among sample sub groups for instance differ ences of consumption behavior between men and women or older and younger consumers Clear think ing will be needed to explain and derive the potential market size of the product see Step 10 taking into account different price scenarios The final report must make clear the objectives of the study the way the sample was selected the process used to analyze the results of the study and the conclusions drawn The study will be more credible if the conclusions can be backed up statistically and significance levels included Since the report might be rather extensive a one or two page executive sum mary is helpful to allow the reader to quickly grasp key results Toot 4 Quantitative MARKET STUDY 83 A4 Assessing the potential market size for potato chips made from native potatoes Once the qualitative study showed that consumers had a positive attitude toward native potato chips a quantitative market study was conducted as part of Peru s first application of PMCA The objective was to examine the structure of the potato chip market in the city of Lima and estimate the market potential for potato chips made from native yellow potatoes Based on the standard recommendations for marketing studies such as this 250 personal intervi
169. ructure Of a Business Plan ou esesssssecsssssseesssecsnccssscssscsssccssscessccssecsnecsnsessnecssscsasesssessseesees 104 A8 Implementation of PMCA Phase 1 in Uganda 140 Figures Figure 1 Market chain collaboration overcoming the competitiveness trap that affects r ral ars ramiro acia aia ani VI Figure 2 PMCA creates a virtuous circle for enhancing rural development 2 Figure 3 Market chain competitiveness and local development 4 Figure 4 Business strategies related to innovations life cycles 6 Figure 5 Internal I and external trust E in market chains 8 Figure 6 PMCA as a conceptual plan to construct a bridge A well grounded platform that generates tangible benefits for its users 16 Figure 7 Structure and objectives of the three phases of the PMCA 19 Figure 8 PMCA as a hurdle Cc ia 144 Tables Table 1 Overview of useful tools included in PMCA 21 Table 2 Overview of steps involved in Phase 1 a 23 Table 3 Overview of steps involved in Phase 2 a 33 Table 4 Overview of steps involved in Phase 3 45 Table 5 Matrix for characterizing different mar
170. rview Context Purpose To generate innovative market opportunities for potato sweetpotato and vegetables in Uganda Who A coalition of 15 R amp D organizations with PRAPACE as the Coordinating Partner Duration January December 2005 up to PMCA Phase 1 Sweetpotato is an important food and cash crop in Uganda In fact Uganda is the second largest producer of sweetpotato in the world after China and its pro duction levels continue to increase In 2003 the UK s Department for International Development DFID financed a project with the objective of improving farmers livelihoods by improving their access to the sweetpotato market In this project farmers were con nected to various local markets and significant strides were made in increasing the export of fresh storage roots to Europe by sea During the process it was discovered that a more participatory approach would be needed to create effective collaboration between sweetpotato farmers and other market chain actors However the coalition partners lacked the expertise required to implement such an approach In January 2005 DFID approved a one year joint research pilot project to synthesize PMCA s achieve ments in Peru and Bolivia and test adapt and promote this approach in a participatory manner for use in the Ugandan context Knowledge and experiences of PMCA from the Andes were shared with Uganda through human and institutional capacity building In consultation with
171. ry Market Chain Approach PMCA 15 Participatory market chain approach PMCA Thomas Bernet Graham Thiele Shared interests and mutual trust are the pillars ofany good collaboration Content of this chapter This chapter presents the three phase structure of PMCA It details the objectives and content of each phase and gives advice for coping with the practical is sues when implementing PMCA and consolidating the outcome achieved Introduction Shift from project The PMCA s process based way of approaching market to process thinking chains challenges ordinary project based thinking For years public R amp D work has targeted production constraints leaving market related issues to the pri vate sector In many cases despite improved technol ogy producers are not better off since market access problems and low prices have kept incomes down R amp D organizations need to play a more active role in enhancing market access and the competitiveness of their main beneficiaries This requires substantial changes in current R amp D practice organizations need new approaches to intervene systematically in market chains and new skills to do this efficiently Bridging theory We are aware of the difficulty in closing the gap be and practice tween 1 understanding a new method and 2 having the skills necessary to adopt and apply it in practice That s why we present both the theoretical and prac tical aspects of PMCA in t
172. s application of PMCA gt Potato chips in a specially designed opaque lightproof metallic colored packaging in a size that responded to market demand 100 g Native potatoes for sale in supermarkets with labels that emphasize the diversity and virtues of native potatoes grown by small farmers The label includes a distinctive caricature potato man and the logo of the PROINPA Foundation next to its web site address from which consumers can obtain ad ditional information Marketing conceptfor A television commercial which was aired for a native potato chips month immediately after the product launch to pro mote LUCANA s new native potato chips gt Two types of publicity posters demonstrating the products benefits to stimulate consumer interest Follow up and The process of supplying potatoes to both the market consolidation and industry posed difficulties The follow up actions therefore included gt Helping APROTAC farmers to supply high quality seed from different native potato varieties gt Providing training in administration and business management to APROTAC gt Conducting further frying trials with native pota toes in order to reduce oil absorption gt Conducting a market study to better define the profile of native potato consumers and determine those characteristics that help improve customer satisfaction v 2 a Ad a 2 lt 134 Participatory Market CHAIN APPROACH USER GUIDE
173. s which describe useful tools and the first applications of PMCA Methodological _inachung crake hglder platform 1 Conbert tt PMCA as a conceptual plan to construct a bridge A well grounded platform that generates tangible benefits for its users Particpatory Market Chain Approach PMCA 17 What is PMCA PMCA in brief C7 PMCA letter by letter C8 Definition of tool method and approach PMCA is an approach that helps to structure participa tory processes that involve different market chain ac tors In this way it aims to stimulate joint innovations based on shared ideas and trust see Box C7 P stands for Participatory PMCA involves interested stake holders making them part of a process in which most decisions are taken democratically MC stands for Market Chain PMCA links the different actors involved in a market chain from producers to consumers A stands for Approach PMCA provides a methodological framework the content of which can be adapted As an approach see Box C8 PMCA provides proc ess based guidelines and concepts that can be adapt ed to specific market chain situations Thus how PMCA is implemented will vary from case to case as different contexts will require different activities and tools to solve specific problems In other words the common denominator of PMCA is not so much what is being done but rather how it is done with
174. s for innovation advisable to make certain that the chain in question is not completely dominated by one very strong actor or only a few such actors as this might stop other market chain actors from innovating because they fear retali ation gt Ifa market chain appears to be rigid and actors have little room to negotiate changes PMCA s initial assessment of the market chain see Step 1 of Phase 1 should reveal whether there is actually scope for innovation If there is no room for in novation the survey will at least provide valuable information to explain why this is so and may sug gest interventions for policy makers to change this situation Challenges 146 Participatory Market CHAIN APPROACH USER GUIDE Triggering the desired type of impact Farmers with native potatoes in Bolivia How can they benefit from PMCA Since every R amp D organization has a specific mission it will be essential to ensure that PMCA is likely to gener ate the right type of impact e g poverty alleviation sustainable natural resource management empower ment gender equity or export promotion gt It will therefore be important for the R amp D organi zation using PMCA to focus the process primarily on innovations that tend to produce the desired impact This might not be an easy task since participants might suggest market opportunities that would link up with strong actors not the poor ones who are better placed in
175. s Group sessions the designer will correct and improve the marketing concept The goal is to obtain an attractive but honest product package Once the final design of the product has been completed it might be worth asking those Toor 6 MARKETING Concept DEVELOPMENT 99 people who participated in the Focus Group to revalu ate it Later on once the product is on the market it would be ideal to conduct a survey of those buying the product to ask them if the product s packaging reflects the real value of the product and if they perceived the product differently at the moment of purchase and at the moment of consumption A6 Creating Pur Andino When PMCA was applied for the second time in Peru a new potato product was developed Spurred by a company s interest in developing an instant soup made from native potatoes those involved in PMCA discussed how to process these potatoes taking into consideration the fact that many native potatoes have very deep eyes In order to reduce processing losses it was suggested that the potatoes should be processed into flakes without being peeled thus retaining more fibre and more nutrients This suggestion was interesting from an economic standpoint as it both increases the amount of raw material that can be utilized and keeps costs low It was suggested that these flakes could also be used to produce mashed potatoes however it was necessary to find out how such a product might be rece
176. s ambi guous results the exercise could be enhanced by using the Impact Filter tool which assesses expected impact in a more systematic manner see Tool 1 Whatever the case PMCA facilitators must carefully guide this important interaction ensuring that those actors who know market demand best are given considerable room to express themselves thus also preventing never ending production oriented discussions which might discourage consumer near actors from partici pating see Box T8 There is a risk that certain actors particularly producers NGO workers and researchers will tend to focus the discussion on production themes which they are most familiar with To ensure that the group identifies opportunities with real market potential in the first place those actors who are closest to consumers and who understand market demand best should contribute actively to the discussion Therefore it is important for the facilitator to actively encour age the participation of these key actors the more so because they tend to be under represented in the group because they bear the highest relative cost when participating as they invest their time in activities with a clear pay off So if attention is not paid to them and their interests sooner or later they will cease to attend the meetings putting the PMCA work at great risk Visualizing the market chain Systematic analysis of options A p 38 Filling information gaps
177. short weight sacks many actors expressed an interest in developing a standardized bag which would contain well graded potatoes Most were also eager to explore other marketing opportunities associated with the production of processed potatoes All these survey results were presented at a major event in CIP s auditorium i e final event of Phase 1 This was attended by the actors who where inter viewed as well as others from the sector including representatives of governmental and non governmen tal organizations NGOs After a PowerPoint presenta tion on the survey s results a plenary discussion and a motivational sketch see Tool 2 three thematic groups were formed to analyze potential joint business opportunities gt Selected Potatoes gt Processed Potatoes gt Potatoes for Export After a coffee break each group facilitator began the participatory work with a round of introductions in which the participants stated their names and their reason for participating Cards were placed on a black board so that participants could indicate what activity of the market chain they represent from production left to consumption right see Box T5 This led to an initial discussion about what market opportuni ties could be approached in each group based on the interests expressed by the individual participants Each thematic group informed the others of its main conclusions A sign up sheet was then passed a
178. small producers sustainable use of natural resources etc This finer grained analysis of impact is achieved by attributing sub criteria to each of the three general objectives economic social and environmental see Table 6 To ensure that each overall objective and its sub criteria are assigned the correct level of importance these criteria are weighted in two steps see Table 6 1 Weighting of each general objective the relative importance of each overall objective is defined by assigning a percentage representing its respective weight total sum 100 2 Weighting of each sub criterion the relative impor tance of each sub criterion is defined by assigning a percentage that represents its relative weight at the level of each general objective total sum 100 Rating different market opportunities T20 Designing the evaluation process Calculating potential impact Interpreting the results Toot 1 Impact FILTER 65 To determine which market opportunity would con tribute best to the development objectives each opportunity is evaluated each sub criterion is rated by assigning it a number ranging from 1 to 10 using the following approximate scale gt 1 impact is very negative gt 5 impact is neutral gt 10 impact is very positive The process used to obtain this rating may vary from case to case depending on whether this tool is used in a participatory setting or not se
179. sseesneeeesneceese 42 T11 Helping key actors gain visibility arranc 43 T12 Gradually handing responsabilities over 46 T13 Capitalizing on visual progre miooo dio 49 T14 Managing tricky transparency discussions u 50 T15 Attracting one or two big shots arcano 52 T16 Visualizing innovations in a real market chain setting 53 T17 Consolidation of PMCA innovations a a 57 T18 Subsidizing the private Sector ninia 58 T19 Capacity building usasqa susu qanqa da 59 T20 Designing the evaluation process u u a 65 T21 Be careful to not influence perceptions l u 87 T22 Using brand names for differentiation sarrianet 97 T23 Checking first the quality of work a iii 102 CONTENTS XI Concrete Applications A1 Initial application of the Impact Filter 67 A2 A mun aaa h kana ma 72 A3 Assessing consumer s perceptions of potato chips made from native yellow potato 76 A4 Assessing the potential market size for potato chips made from native potato X 83 A5 Evaluating the marketing concept for yellow potato CHIPS 93 A6 Creating POT ARIS viscannmnusmiannmncnnusieniantiacieennmalmanubtnamenin 99 A7 St
180. st in which specific tasks are scheduled and assigned to actors These actors should take the lead and ensure the implementation of their assigned task Whatever the case the list must be constructed in a participatory manner care must be taken to ensure that both those assigned and those not assigned to the list agree upon its content The development of this work plan should allow each thematic group to identify their needs for special support and the key actors to be involved in Phase 3 Possible strategies to meet these needs should be discussed as the final event of Phase 2 provides an excellent opportunity to involve new actors As a con sequence the group facilitators must make sure that each thematic group s needs are taken into account when this event is planned The final event of Phase 2 is the second event which a larger audience is invited to attend This event allows the lead R amp D organization to gt Create an opportunity for new key actors to learn about PMCA activities thus motivating them to join the implementation process undertaken in Phase 3 gt Give the thematic groups the opportunity to pres ent their work and request specific support to enhance their work 42 Participatory Market CHAIN APPROACH USER GUIDE Responding to the groups needs T10 Involving new key actors in the PMCA process Setting up a sound event program gt Empower market chain actors who have actively participa
181. t A Glossary of relevant technical terms gt An Annex which contains an overview of the PMCA process and which can be used to help plan imple ment and evaluate PMCA activities In order to enhance learning different sections of this guide contain textboxes designed to provide the reader with insights into the theoretical and practical aspects of PMCA Each textbox is marked with a sym bol which describes its function gt Basic Concepts C present important theoretical ideas gt Methodological Tips T provide help when deal ing with practical aspects of R amp D work gt Concrete Applications A illustrate examples from different PMCA applications To make this guide easier to use different sections of the text have been cross referenced A small arrow in the left hand column indicates the section and the page where related information on a subject can be found CONTENTS Table of contents Prologue X III Addressing the development challenge for rural areas V Abo tthiSuiseriguId eu u uns AA VII Table OF CONTENTS ierices NN IX Basic concepts for market chain competitiveness 1 Local development and market chain competitiveness 3 Innovations along market chains l a a 6 Building trust among different stakeholders
182. t and Large and Urban supermarkets Housewives youths and industrial highlands medium and shops children Mini yellow Highlands Small Urban and export Adults abroad potatoes export Tunta High altitude Small Urban markets Housewives descended from white chu o Altiplano highland families As all three of these market opportunities seemed attractive the project team decided to screen them more systematically to determine their potential to benefit small scale potato growers Consequently the initial table was transformed into a matrix to assess the potential of these market opportunities to produce the right type of impact as requested by the project This matrix mutated into a detailed MS Excel spreadsheet in which the main impact dimensions of the project economic social and environmental were specified along with relevant sub criteria and then weighted to reflect their overall and relative importance see Table 6 Then a numerical ranking from 1 a very negative impact to 10 a very positive impact was used to rate the expected effect each market opportunity would have on the different impact dimensions Finally the weighted results from all impact sub criteria were summed to allow comparison of the overall impact potential of the three market opportunities see Table 6 The yellow mini potatoes for export and tunta chu o blanco received equally high ratings as both are produced by small scale farmers i
183. t chains is oftrust the creation of a high level of trust among the actors involved trust allows actors to communicate efficient ly develop a shared vision and strategically implement activities that put that vision into practice The higher the degree of trust the better the results that can be expected from collaborative processes Smoothing In market chains internal trust I in Figure 5 is the collaboration grease that ensures that there is an optimal amount of contact between the productive activities this avoids undesired friction among the actors in the chain as such friction could damage the chain At the same time external trust E in Figure 5 ensures an optimal level of interaction with outside actors i e those who are not part of the chain but whose activi ties affect it in different ways through the provision of services and technologies research laws financial support etc Private and public actors who affect the market chain Po Private actors of the market chain Producer lt Processor lt gt Distributor lt gt Seller Figure5 Internal I and external trust E in market chains Catalysing joint innovations Creating trust with leadership Actors with leadership legitimacy Basic Concepts FOR MARKET CHAIN COMPETITIVENESS 9 Trust among the actors involved in a market chain and those influencing it creates an environment that
184. t is small it is usually referred to as a niche Marketing concept First a marketing concept is a theoretical construct consisting of a set of prioritized or weighted positive product attributes linked to specific market segments Second the term also refers to the visual implementation of this theoretical construct of positive attributes in the form of a product package which helps targeted consumers perceive the product s benefits Marketing strategy A structured proposal for how and where to sell a specific product A marketing strategy implies a clear understanding of the market segment which a specific product should target bearing in mind both the product s particular characteristics and the needs of potential consumers A marketing strategy implies the explicit definition of the four P s product price place and promotion Methodology A set of procedures and guidelines that systematically help to achieve certain objectives In R amp D work methodologies may relate to broader approaches and may refer to the use of specific tools which should be used in specific situations Non governmental organization NGO An organization characterized by its not for profit status NGOs are commonly financed through external funding and may provide important services to those undertaking different activities within market chains In some cases commercial services are provided by an NGO to cover its R amp D budget Organiza
185. t only has a very short amount of time in which to be seen and attract attention Overall a valid package design must respond to three key moments when interacting with potential consumers gt Attracting attention with its appearance Forcing the consumer to study the package more closely gt Convincing the consumer to buy it because he or she detects additional information that makes the product even more valuable When designing the packaging for the product it is also important to take into account the efficient distribution and display of the product For example a product for children should not have a design which forces the retailer to place it at the top of the display rack where it cannot be seen or away from similar products elsewhere in the store just because its pack aging won t fit on the right rack Because the success of a product sold in a super market depends greatly on the quality of the design i e the visual implementation of a sound marketing concept it is advisable to work with a good designer who has a good knowledge of marketing The fact is that not every graphic designer is capable of convert ing a marketing concept into an attractive commercial package The moment of truth comes once the marketing concept has been transformed into the first prototype packaging The ideal tool for evaluating the quality of this work is the Focus Group see Tool 5 Based on the conclusions of Focu
186. t the trader level The actors concluded that they must work together to overcome these challenges They agreed to focus on the following areas to improve the Ugandan potato market chain 1 the creation of a farmer organization for the collective marketing of quality potatoes 2 the improvement of the flow of market information along the chain 3 the better organization of wholesale marketing and 4 the development of improved packaging materials and the identification of the best varieties for use when making chips and crisps Vegetable market chain The vegetable market chain event was held on November 29 2005 In all 46 actors linked to the produc tion and commercialization of tomatoes and hot pepper participated After the findings of the vegetable market chain survey were presented the actors expressed an interest in improving the chain in order to Obtain a stronger presence on the worldwide market throughout the year Match supply with demand for vegetable products with differing quality standards Minimize unnecessary losses by applying proper post harvest practices and product development Improve competitiveness and compliance with EUREPGAP standards framework for exports towards Europe based on product traceability First APPLICATIONS OF PMCA STARTING TO USE PMCA IN UGANDA 141 Based on the desired impacts outlined above the actors formed two groups the Uganda Reliable Vegetable Market Suppliers group and the Ug
187. ted in the PMCA process and who are most relevant to the future success of the innovations being undertaken The overall planning of the final event of Phase 2 is in the hands of the R amp D staff facilitating the PMCA pro cess They will arrange the overall program and send out the invitations Nonetheless as the main objective of this event is to allow the thematic groups to demon strate their progress outline the market opportunities they have identified and present their work plans for Phase 3 the thematic groups themselves should be strongly involved in the planning of the event or at the very least their needs must be taken into account First the thematic groups should put forward the names of the new stakeholders they feel should be invited to strengthen the group see Box T10 sec ond each group should indicate how much time they require for their group presentation The final event of Phase 2 provides an excellent opportunity to involve new stakeholders One option is to simply ask them to attend the event in the hope that they will assist and become ex cited about the concrete ideas presented by the thematic groups Another option is to invite them to attend as special guests or speakers giving them the opportunity to present their work and ideas which provides a particularly strong incentive for them to attend As these new actors and the thematic groups share their work interests ideas and future plans it is like
188. ternal support Strategy for structuring the market chain i Supply Market chain Demand opportunities gt competitiveness lt opportunities Local development Figure3 Market chain competitiveness and local development Strategic external support ABC A A p 4 A p 4 Overcoming hurdles Basic Concepts FOR MARKET CHAIN COMPETITIVENESS 5 External R amp D organizations can help bring together different actors involved in the market chain and de fine viable commercial strategies for the entire market chain As external entities such organizations can suggest and promote new ways of commercialization and provide facilitation for participatory processes that enhance collaboration among market chain actors build human and social capital see Box C1 and foster market chain competitiveness and hence rural devel opment see Figure 3 A major challenge faced by any effort to link rural areas with competitive market chains relates to quality standards Food safety for example has become an important concern of today s consumers This global issue puts developing countries in a difficult situation as they have to respond to this emerging require ment with standards for traceability and certification schemes that ensure that good manufacturing prac tices are followed These new market requirements are an obstacle but they also offer an opportunity for those who seek to enhance both production and product quality
189. that need attention to avoid failure Opportunities e What changes in technology markets policy and social and lifestyle patterns tend to favor the market opportunity e What interesting trends are you aware of Threats What obstacles do you face that are outside your control What are competing products and competitors doing better Might you face cash flow problems Could any of your weaknesses put in danger the success of your market opportunity Linking with To ensure that no time is lost in the process the facili marketing specialists tating R amp D organization might hire consultants to feed market related information into the PMCA process thus enabling the thematic groups to make better decisions However when doing so the facilitators involved must carefully coordinate this work as par ticipating stakeholders must be involved in planning the outsourcing of these activities and have the chance to comment on the progress of the work being under taken by the expert The facilitator has the difficult task T9 Managing consultants Outlining the opportunities analyzed Particpatory Market CHAIN Approach PMCA 39 of acting as the best possible interface between the group and the consultant see Box T9 Collaboration with consultants is especially impor tant when conducting a Quantitative Market Study see Tool 4 to assess market size and profitability of a specific business opportunity as special skills are requir
190. the meeting At the end of the meeting it is important to thank the Focus Group participants not just with words but also with a little gift The ideal gift is the product that they have been evaluating but only if they like it In addition giving the product to the participants as a gift also allows you to conduct a follow up survey in which you can ask more detailed questions about the practical use of the product at home for example The Focus Group session should be evaluated as soon as itends The facilitator together with the assistant should rapidly evaluate the information obtained from the flip chart sheets and any notes that were taken The main conclusions should be written down The prices that participants were prepared to pay at different times should be analyzed to determine their willingness to pay for the product gt If the second price noted at the moment of con sumption is higher than the first noted at the moment of seeing purchasing the product the conclusion is that the product actually delivers more than the marketing concept and packaging promise it would gt If the second price is lower than the first the ex pectations raised by the marketing concept and packaging are too high compared to the perceived quality of the product when consumed In either case it is important to analyze what would be the best way to readjust the marketing concept for the product in order to ensure that the consumer
191. the chance to interact with other market chain actors Linked to these events special visits to the facilities of certain actors e g processing plants and supermarkets might be set up to provide further occasions for interaction and trust building If producers live in distant loca tions special trips to the field could also be organ ized for the market near actors in the thematic groups so that they are able to meet producers on their farms Assessing enterprises PMCA is likely to attract small and medium sized enter before involving them prises SMEs as the method offers them considerable opportunities such as access to relevant information new contacts and potential funding that could be used to develop business opportunities However the lack of commercial strength and professionalism of some of these enterprises might jeopardize PMCA s outcome The leading R amp D organization must try to assess the quality and reputation of enterprises before trusting them completely and passing on to them commercial responsibility for jointly developed products If their reputation is good PMCA can help strengthen such small or medium sized enterprises But if the assessment reveals weaknesses the fa cilitators should try to bring other more promising enterprises into the process a y Ku 6 U Informal interaction between an entrepreneur and potato growers at one of the large final events 154 Participa
192. the different market chain actors with their activities interests ideas and problems etc Market chain survey gt Event 1 Phase 2 To analyze in a participatory manner potential joint business opportunities Facilitation Work in thematic groups gt Event 2 Phase 3 Particpatory Market Chain Approach PMCA 19 PMCA has three explicit phases addressing each objective that systematically promote this shift in roles Each phase has a clear general objective and its own logic although specific activities in each phase vary as needs dictate see Figure 7 Market chain actors Leading R amp D institution To implement joint market innovations new products new technologies new institutions Work in thematic groups gt Final Event Figure 7 Core work in thematic groups Collaboration Backstopping Structure and objectives of the three phases of the PMCA PMCA seeks to involve market chain actors actively in the participatory process To do this effectively an initial rapid market chain survey is conducted dur ing Phase 1 in order to identify two to three central themes This allows stakeholders to interact in smaller groups based on these themes during Phases 2 and 3 Each thematic group contains 10 to 20 people and the R amp D organization involved provides facilitators that lead the interaction It is their responsibility to ensure th
193. the ideas of the group discussion Such a script serves as a guide for the ac tors allowing creative improvisation as long as the main argument of the sketch and the script is followed Toot 2 MARKET CHAIN SKETCH 71 The sketch should not be more than 10 minutes long as this will 1 ensure that the audience does not become bored and 2 force the actors to communi cate their key message in a very concise and clear way Step The performance of such a sketch requires at least one rehearsal so that the actors become familiar with Performing their characters and the script If the sketch will be thesketch performed in front of a large audience microphones should be used during rehearsal This helps actors get used to the microphone and make sure that it is passed along to the next actor before he or she starts to talk The actors must use simple local language and wear costumes that help the audience identify the characters they portray To guarantee optimal under standing on the part of the audience it might also be useful to use simple signs e g producer processor wholesaler to identify each character and his or her specific location in the market chain In most cases simple scenery will do and it will not be worthwhile setting up a more sophisticated back drop for the sketch PMCA facilitators dealing with a Square Potato 72 Participatory Market CHAIN APPROACH USER GUIDE A2 Th
194. the market chain in terms of supply and quality The Impact Filter see Tool 1 can be helpful when evaluating and choos ing the most promising options from a develop ment perspective CHALLENGES WHEN USING PMCA 147 Having the necessary internal support Making sure that In R amp D organizations with a production oriented focus management backs the PMCA might come across as an abstract concept youup N otall staff will find it easy to perceive the practical value of the method particularly when they discover that several of the tools used are not new to them To ensure internal commitment to this demand driven approach and mobilize the necessary resources in terms of staff and funds PMCA s usefulness must be clearly communicated and understood at higher levels of the organization This can be achieved by 1 Demonstrating that current approaches do not tackle the main problem which relates to market chain deficiencies 2 Revealing PMCA s logic and structure and explain ing the implications of its three phase process for the R amp D organization and the market chain actors A p 19 involved see Figure 7 3 Explaining that in the context of the organization s work PMCA could have an impact similar to that described for the cases outlined in this user guide see First PMCA Applications 4 Showing how PMCA could be adapted and used in this new case and what specific outcomes might be expected gh gt If
195. thing that has never been seen before Rather their novelty may be attrib uted to a new processing idea or simply a novel package design gt Technological innovations involve the imple mentation of new technologies or the application of new practices From the perspective of the user however it may mean that existing technologies or practices are simply adapted and adopted in a new context gt Institutional innovations are new ways of interact ing or collaborating These can be formal or infor mal in character In practice they might involve the reinforcement of mutual obligations e g contract agriculture or the constitution of legally recognized organizations e g an association of market chain actors The PMCA involves market chain actors in a well struc tured and well led participatory R amp D process that aims to 1 identify 2 analyze and 3 put in practice new joint innovations During this process PMCA is used to try and gradu ally increase the level of 1 interest 2 trust and 3 collaboration among the market chain actors involved In order to empower market chain actors and ensure that they develop ownership of the innovations gener ated the role of the R amp D organization applying PMCA should progressively shift from 1 leadership towards 2 facilitation and finally 3 backstopping 2 4 months x lt o E wn m 4 6 months Objective per phase Phase 1 To get to know
196. thod grew out of its activities in the Peruvian potato sector L A Ninova The INNOVA project applied PMCA in Bolivia and actively promoted it k among national partner organizations and government agencies The PROINPA Foundation was the key organization driving PMCA s uptake in Bolivia It also provided first training workshops to make the method available to other R amp D organization in the country The Prapace network in Sub Saharan Africa helped to validate PMCA in a totally new context in a capacity building project involving more than 10 different R amp D organizations from Uganda The Swiss Agency for Development and Cooperation SDC funded much of the PMCA activities in the Andes through Papa Andina the INCOPA project and ZIL The Center for International Agriculture ZIL supported a special project for developing new methods to improve small scale farmers market access Most of these activities were conducted within CIP s INCOPA project D F I D Department for The Department For International Development DFID supported the PMCA Development work in Bolivia Innova project through its Crop Production Programme CPP and Crop Post Harvest Programme CPHP The latter also funded a one year project that allowed to train PMCA in Uganda and to develop and publish this user guide
197. tion A group of people who collaborate to achieve a common goal and who see themselves and who are seen by others as a unit Hence organizations can be formal with a legal institutional framework or informal Families churches and private companies are all organizations Organizations are shaped by a set of norms institutions that govern the behaviour of their members and their interactions GLOSSARY 161 Participatory Market Chain Approach PMCA A generic R amp D process that seeks to generate innovations together with market chain actors Public sector That part of a country s economic and administrative life that deals with the delivery of goods and services by and to the government aiming to enhance social welfare Public sector goods are provided at different levels national regional and local Purchase factors Product attributes which underlie the consumers decisions to purchase a specific product To become effective they must clearly be communicated through sound package design and promotion material Private sector That part of a nation s economy that is not managed by the government In the context of development the term private sector refers mainly to private companies that engage in R amp D work as a result of their commercial interests Thus by definition farmers are a part of the private sector although usually the term is used to refer to private companies Product positioning The strategic commerc
198. tions e New technologies generated through PMCA might require further adjustment to optimize their use in practice The adoption of technologies might imply investments in extension for example to guarantee optimal uptake by small scale producers Potential support for commercial innovations e Solving or optimization of technical aspects of the product s elaboration process Assistance with product promotion and public awareness during the market launch of products Fostering of the developed products uptake with additional market studies and help in improving marketing concepts Presentation of culinary innovations with tunta to the media 58 Participatory Market CHAIN APPROACH USER GUIDE Being careful with subsidies T18 Subsidizing the private sector Building capacity for new opportunities When backing commercial activities an R amp D organi zation needs to be careful in using public funds that benefit the private sector Subsidies must be carefully evaluated and are only justified if they also contribute to social or environmental goals directly or indirectly The use of subsidies should be made explicit see Box T18 In economics subsidies are defined as monetary grants given by governments and non profit organizations to the private sector in order to promote activities that are in the interest of the public In other words subsidies provide an incentive for the production of public goods a
199. titive ness of small scale potato producers in Peru CIP has shown great interest in this approach and its contri bution to the pro poor research and development cycle part of its new vision for contributing to poverty reduction Early on a Swiss research fellow was integrated into the INCOPA project so adding methodological strength to it His task was to develop and validate new approaches to link small scale farmers to markets He suggested applying RAAKS Rapid Appraisal of Agricul tural Knowledge Systems in the context of a market chain using this action research method to discuss and resolve specific sectoral problems with a range of dif ferent stakeholders This new area the market chain required a strong focus on market demand and the development of joint business opportunities Thus leading eventually to the creation of the Participatory Market Chain Approach or PMCA specific guidelines to generate joint in novations in market chains in agricultural and other sectors In 2003 the positive results obtained using PMCA in Peru were shared through Papa Andina a Regional Initiative of CIP supported by the SDC with partners in Bolivia and Ecuador The lessons learned from Peru stimulated Bolivian partners to validate the principles and practice of PMCA In 2005 Papa Andina helped share the PMCA experience with organizations in Uganda through a special project financed by DFID s IV Participatory Market
200. to involve a publishing house in the production of the book on Peruvian potatoes Unfortunately however the launch of a similar book by another author during this phase brought this initiative to a temporary standstill More successful was the development of Pur And ino the mashed potato product made from native varieties and T ikapapa Since a Lima supermarket chain expressed considerable interest in selling fresh native potatoes the T ikapapa marketing concept was quickly completed and the product was actually launched commercially before the final PMCA event This said further Focus Group research was still conducted see Tool 5 to refine the final presentation and to determine an appropriate sale price To ensure continuity of supply the trading company involved reached purchase and sales agreements with potato producers In collaboration with the D Gallia Catering School an active participant in this thematic group promotional activities were planned in supermarket stores After several industrial tests of the instant mashed potato products made from native varieties process Package of the instant mashed potatoes produced Final event First APPLICATIONS OF PMICA PROMOTING THE Use oF Native Potatoes IN PERU 125 ing was fine tuned using the yellow potato variety Amarilla Tumbay This variety was outstanding in taste tests including those conducted in Switzerland and Germany Work on this pr
201. tory Market CHAIN APPROACH USER GUIDE Having clear how to plan and monitor the PMCA process Defining a general PMCA supervisor 16 Monitoring the process in thematic groups The facilitators involved in the daily business of PMCA are in great danger of losing their ability to see the big picture This risk is even higher when researchers lead the thematic groups as they tend to get lost in technical details gt For the R amp D organization using the PMCA it is therefore prudent to have one person supervising the whole PMCA process helping the facilitators to plan each phase and ensure that their activities remain true to the principles underlying PMCA see Figure 7 Such a supervisor should ensure a par ticipatory working style and involve the different PMCA facilitators when planning and assessing the general activities of each phase and the work within the thematic groups Key moments to hold such meetings with facilitators might be 1 when a new phase is planned and 2 when a final event is to be organized The Annex of this guide provides a use ful overview for this planning and evaluation task How successful PMCA is will mainly depend on the quality of the work conducted in the individual the matic groups Good progress requires well planned meetings Thus facilitators should invite their group participants to the meetings with an established agenda clarifying the objective of each meeting and d
202. trust within many market chains it is particularly important to establish good leadership Market chain leaders help to build a trust enhanc ing environment conducive to the innovations being sought Because dysfunctional chains tend to suffer from horizontal and vertical competition among their members see Box C4 trust building needs to address these two different dimensions of competition in an explicit way C4 Horizontal and vertical mistrust in market chains Wholesalers competing in Lima s main potato market Basic Concepts FOR MARKET CHAIN COMPETITIVENESS 11 Two different dimensions of mistrust occur within market chains and both need to be targeted but with different measures Horizontal mistrust Actors with similar activities in a market chain compete when selling or purchasing specific products and services Hence they fight to obtain the best market share prices and transaction conditions Such competition is very pronounced if commodities are involved when large volumes of merchandise are commercialized wholesale in a saturated market The proxim ity of the actors i e the producers in the production area the merchants in the wholesale market processors and supermarkets in urban areas aggravates the situation because it enhances jealousy and makes any existing opportunism visible Vertical mistrust Actors taking part in different activities along the market chain fight to safeguard their own profits
203. ts exactly what the product is really offering It never oversells a product since this would only frustrate consumers and ultimately harm the product s reputation and success in the market Although marketing concepts relate mainly to commercial innovations we strongly recommend that marketing concept thinking is also used when designing technological and institutional innovations The fact is that technologies and institutions to be successful must also be targeted specifically at those users who will benefit from their use 48 Participatory Market CHAIN APPROACH USER GUIDE Helpful R amp D tools Accessing professional support The way in which marketing concepts are consolidated varies from one case to another In some cases the marketing concept might be determined purely by the thematic group in other cases further market research may be needed to better understand consumers views and identify the relevant features of the product In ei ther case the Focus Group tool see Tool 5 will prove helpful to those organizing structured discussions to determine a marketing concept Focus Groups can be used at two different stages of the marketing concept development process gt Before starting the design work to clarify the main product features or elements of the marketing concept gt When prototype products exist to validate the marketing concept and its visualization through the product s design
204. ttention 14 Participatory Market CHAIN APPROACH USER GUIDE Fast learning is needed Practical challenge with guidance New culinary creations made from dehydrated potatoes However though they do have certain advantages R amp D organizations are challenged by the fact that they often have only a limited understanding of all the fac tors and interests affecting the various links in the mar ket chain and the transactions which occur between them Initially facilitators from R amp D organizations will likely lack insights into the different tricks of com mercialization and may feel insecure when facilitating interactions among real life experts who know the entire business inside out As a consequence it is essential that facilitators learn rapidly from market chain actors as this will allow them to maintain the quality of the participatory proc ess and enhance their own leadership legitimacy Intervening in market chains in such a way that all the actors involved feel comfortable to collaborate in creating shared innovations is a tough task A good understanding of the market chain is needed on both a conceptual and a practical level and this must be coupled with adequate facilitation skills We hope that reading this chapter has provided you with important insights and has helped you to take on this important task or has at least motivated you suf ficiently to read the next chapter Particpato
205. uality potatoes in the area of Comarapa and Saipina where farmers are interested in sup plying potatoes to supermarkets the potato chip industry fast food outlets specialty chicken restau rants and snack shops First APPLICATIONS OF PMICA GENERATING New PRODUCTS IN THE BOLIVIAN Potato SECTOR 131 Stakeholder meeting with APROTAC in Cochabamba PMCA Phase 2 Based on the first public event APROTAC farmers in Candelaria who were already working with native po tatoes became very involved in the PMCA process to identify new market opportunities for these varieties PROINPA had already provided organizational support and training to help farmers meet market demand by providing an adequate supply of produce In addition a previous project had provided equipment for potato selection washing and packaging Despite these ef forts options for marketing native potatoes remained limited Producers therefore hoped that PMCA would help them to make their potato business more dy namic During three meetings of different market chain actors the best agribusiness options were identified Based on the interests expressed by the actors in volved the following was done gt Work was initiated with the Slam supermarket in Santa Cruz and the Econatural store in Cochabam ba both of which had expressed an interest in promoting and selling native potatoes in 2 kilo gram packages under their own labels The stores decided to test the mark
206. uide will help gt Researchers and development staff to gain important insights and skills which will allow them to adapt and use PMCA in the context of their own work gt R amp D project managers and policy makers to understand plan and supervise demand oriented participatory R amp D processes that target market chains Teachers and students to learn more about rural development market chain competitiveness par ticipatory R amp D and marketing The different devel opment concepts and practical tools described are helpful in their own right Vill Participatory Market CHAIN APPROACH USER GUIDE Structure and content Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 ABC A Useful textboxes Meld Cross references ap The guide includes the following gt Basic concepts of market chain competitiveness that influence rural development processes gt The Participatory Market Chain Approach PMCA which describes a three phase structure aiming to 1 define 2 analyze and 3 put in place innovations in partnership with market chain actors gt Useful tools which can be applied in conjunction with PMCA gt First applications of PMCA describing four initial experiences with PMCA in Peru Bolivia and Uganda and drawing important conclusions in each case gt Challenges when using PMCA illustrating the problems R amp D organizations might face when ap plying PMCA in their own context g
207. ve Once the hierarchy of different product attributes has been defined the task is to convert this information into a viable design that reflects these values and com municates them effectively to the target consumers In other words the hierarchy of purchase factors needs to be transformed into package design A key element in this work is the use of trademarks or brand names which help to differentiate the product by giving it its own identity with a name and face see Box T22 When creating new brands it is essential that they respect and reinforce the hierarchy of product values Moreover the brand name chosen must be easy to read pronounce and memorize so that the consumer becomes familiar with it and is able to relate it to the set of values that stand behind the product In general brand names should be registered to prevent others from simply copying the product and its marketing concept where the brand is key This is especially true when the brand is well known to consumers The graphic designer s task will be to bring all important product elements into visual harmony The packaging alone should attract consumers attention 98 Participatory Market CHAIN APPROACH USER GUIDE Evaluating the visual marketing concept A p 85 through its use of shape colour and design The fact is that a supermarket shopper for instance looks at dozens of products in a few seconds Therefore the produc
208. ved and if it enhances the purchase factors that should be communicated to consumers For instance the facilitator might ask questions such as What is the most relevant informa tion on the package and why Also with the product in front of them it is impor tant to determine how much the participants would be willing to pay To make sure that each person expresses his or her opinion everyone is asked to write the price they would pay on a piece of paper without letting others see it n What do you think of this product Do the size and shape of the package seem appropriate e Does the packaging reflect the product s advantages e Isit clearly distinguishable from other products e Is there anything you don t like about the packaging and that you feel should be improved Where should this product be sold How much would you pay for it 9 Participatory Market CHAIN APPROACH USER GUIDE 4 Evaluating the perception gap Possible questions during this part of the session When analyzing a product that will be consumed particularly a food sampling is a very helpful way of as sessing if the product is what it promises to be In other words the facilitator needs to find out if the consum er s perception at the moment of consumption match es his or her expectations at the moment of purchase If there are differences the marketing concept needs to be changed or the product improved gt Ifthe
209. w up activities will be essential though they must be conducted within a new institutional setting where the R amp D organization responds to specific demands from partners Thus the R amp D organization should plan its new interventions very carefully so it confirms and does not question the market chain actors ownership of the innovations obtained In this sense the R amp D organization s new role must be one of a service provider responding only to demands made by the market chain actors The type of support required from the R amp D organiza tion will depend on the specific needs that arise at the end of each PMCA application In general market chain actors dealing with institutional and technological in novations might require more support to help consoli date and diffuse those innovations while commercial innovations might require only short term support see Box T17 Particpatory Market CHAIN Approach PMCA 57 Potential support for institutional innovations e New organizations such as associations require substantial T17 Consolidation of support at start up to function properly PMCA innovations The implementation of new ways of cooperation such as contract farming might require professional assistance to consolidate the partnerships involved The definition of new rules of the game such as norms for product quality might require further capacity building Potential support for technological innova
210. which will continue during Phases 2 and 3 The final event of Phase 1 should have two parts 1 the presentation and general discussion of the market chain findings in plenary and 2 work done in two or three thematic groups To set up an attractive program for the event both parts must be well and creatively planned and responsibility for specific actions must be assigned to individual persons The logistics will depend greatly upon the number of people invited to attend During the first part of the event after a brief introduc tion sufficient time should be used for the presenta tion and discussion of the market survey Ideally this presentation should be very visual presenters should 30 Participatory Market CHAIN APPROACH USER GUIDE Work in thematic groups T5 Getting to know each other in the thematic groups bear in mind that most of the guests are not scientists This presentation should conclude with suggestions for the thematic groups by the reading R amp D organiza tion to allow participants to interact in smaller groups see Step 2 During the second part of the event following a break participants choose the thematic group they want to join If groups are uneven either in size or composition facilitators may distribute participants more equally or merge groups Whatever the case each group facilitator should begin with an activity that allows the partici pants to present themselves to the others me
211. xceed 25 pages The draft of the document should only be shared with those actually involved in the business proposal their comments will reveal if the document is good enough or if adjustments are needed Also this first round of revision will help those involved in the venture consoli date their main business idea enhancing consensus and commitment If the key actors of the business venture do not con sider the Business Plan to be confidential it can also be presented to a larger group for discussion in the hope that new actors get involved and help to catalyze the implementation of the business proposal When used as part of PMCA such a Business Plan could be pre sented at the final large event of PMCA with the aim of attracting additional partners or potential investors 104 Participatory Market CHAIN APPROACH USER GUIDE A7 Structure of a Business Plan 1 Executive summary 1 page This section summarizes concisely the different aspects of a Business Plan Sources of information The different sections of the Business Plan Name and brief description of the product 1 2 paragraphs This section gives the name of the product and a brief description of it It also explains which consum ers will be targeted and why the product is valuable for them gt Sources of information Discussions and agreements among those involved in the business and use of the Rapid Market Appraisal see Tool 3 and Focus Groups se
212. xisting or potential conflicts and potential opportunities that could drive the participa tory process Based on these concrete ideas thematic groups should be formed for the final event of Phase 1 in order to achieve the following objectives gt To discuss concrete opportunities for collaboration in smaller groups as this allows stakeholders to become actively involved based on real interest gt To create an environment of trust where ideas and interests can be shared and confidence can be built despite differences in views interests and socio economic backgrounds gt To understand better the circumstances practices and needs of the actors involved in the targeted market chain The thematic groups that are defined for the final event of Phase 1 play a key role in subsequent partici patory PMCA work Clear thinking is therefore required on the part of the leading R amp D organization to create groups that promote collaboration with market chain actors around potential market opportunities which have desirable development outcomes see Box T4 To anticipate which market opportunities are most likely to have a positive impact on the poor or on rural development for instance a rapid ex ante assessment might be conducted before forming the thematic groups Here the Impact Filter see Tool 1 can help the R amp D organization using PMCA to systematically assess how different market opportunities will influence spe cific d
213. y alleviating poverty fostering rural development conserving biodiversity etc gt Sources of information Impact Filter see Tool 1 in depth interviews with key stakeholders Toot 7 Business PLAN 105 6 Description of actors involved and of their roles 1 2 pages This section presents the actors who will participate in the business i e business partners empha sizing the specific role of each one and the skills they have It must also indicate how the actors will work as a team keeping interaction costs as low as possible gt Sources of information Discussions among promoters Evaluation of critical factors 1 2 pages This section reflects on critical factors that may stimulate or jeopardize business success These fac tors may be internal under the control of those involved in the business or external outside their control The reader must understand the degree of uncertainty associated with these factors how they interrelate and how the business partners might influence each one Sources of information SWOT analysis see Box C9 in depth interviews Profitability estimates based on different scenarios 2 3 pages This section considers the economic side of the business When the exact size of the market is uncer tain three reasonable scenarios might be considered If the Business Plan is simple expected profit ability levels can be derived from income and cost estimates if it is well prepared and especia
214. ying quality of new potato varieties CIP s relationship with the Ministry of Agriculture has also improved thanks to the PMCA experience which has allowed both organizations to collaborate on other occasions Perhaps the greatest weakness of the experience was the fact that small scale producers were only marginally involved in the thematic group meetings This was because of the distances involved in actually attending the meeting i e getting to the meetings took potato producers at least one day Since INCOPA only paid travel expenses for small scale producers for attending the major events most production related issues were dealt with by NGOs who work directly with these farmers As a result high levels of trust were not developed between the potato producers and the other market chain actors However this deficiency is now being addressed through CAPAC Peru s work which facilitates access to information and market op portunities PMCA Application 2 First APPLICATIONS oF PMICA PromoTING THE Use or Native Potatoes IN PERU 117 Promoting the use of native potatoes in Peru Kurt Manrique Cristina Fonseca Thomas Bernet Overview Context Purpose To improve the image of native potatoes in Peru Who INCOPA Project CIP in conjunction with the Ministry of Agriculture Duration June 2003 to September 2004 Native potatoes unlike improved varieties are the result of potato domestication by pre Incan cultures ov

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