BDS market development guide.pdf - PACA

18
Figure 6: Quadrant of Demand-side Conditions
Recognition
of a need for
a solution
high
low
WEAK
DEMAND
NO DEMAND
EFFECTIVE
DEMAND
WEAK
DEMAND
low
high
Willingness to pay for a solution
KEY CHARACTERISTICS OF EFFECTIVE SUPPLY
We choose two factors to define effective supply: the ability to present an attractive offer
(such as products) that SMEs want and the technical know-how to solve problems. Like the
demand side of the market equation, these factors must be present and they are likely to
evolve along separate paths. Specifically, one could imagine a situation where a BDS
supplier is very good at packaging an attractive offer—convincing the consumer to purchase
a service—but is unable to deliver a solution to the SME’s problem. The supplier may be
effective at marketing a training product, for example, but is unable to deliver a business
solution as advertised. The converse is also true when a supplier has the technical know-how
to solve the problem (it has skills, a track record), but it lacks the ability to package an
attractive offer, perhaps because it lacks marketing skills or because of more fundamental
structural problems like cost base or location (see Box 3). Suppliers may begin to sell their
service below costs, or may not be able to develop repeat clients because the client did not
perceive the benefit to be worth the cost even though the problem was actually solved. Both
of these factors—an attractive offer consumers want and the technical know-how to
deliver—must be present to develop effective supply over time.
When service providers have both the offer and the technical know-how, supply is effective.
If, in contrast, a service provider has the technical know-how but lacks the ability to package
and present attractive offers, supply is weak. The converse also describes weak supply—
suppliers are good at marketing but are unable to solve problems with their products. (In
reality, a combination of both scenarios often lies behind supply-side weakness.) Nonexistent
supply results from service providers lacking both appropriate skills and the ability to
make an attractive offer to SMEs.
Microenterprise Best Practices
Development Alternatives, Inc.