Ajaita Shah is the Founder of Frontier Markets. She has 4 years of microfinance experience as a Credit Plus Manager at Ujjivan Financial Services, and Director for Swayam Krishi Sangam (SKS). She has consulted with the Social Performance Task Force through CGAP and Ford Foundation about microfinance in South Asia. Ajaita holds her B.A. in International Relations from Tufts University.

The Bottom of the Pyramid (BOP) is a demand heavy and relatively accessible market growing at a steady rate every year. However, there are some major challenges to fully penetrate this market: low infrastructure and accessibility for product distribution, insufficient understanding of the rural consumer, high upfront investments for staffing, and transportation, and high levels of illiteracy. Therefore, alternatives to traditional mass marketing strategies and tactics are necessary to open up rural markets and create consumer demand efficiently and effectively. Frontier Markets is creating the most sustainable and cost-effective model for base-of-the-pyramid market entry through its affiliation with Microfinance Institutions.

Frontier Markets, a start-up founded by microfinance professionals, has studied the barriers to BOP market entry and will test an innovative approach to address these challenges. Our aim is to provide the “last mile connectivity” through a network of microfinance institutions without diluting their core lending business.  We focus on non-financial health and hygiene, clean water and energy alternatives that will make the greatest impact on the lives of rural villagers.  Customer insight certainly drives product selection but it is our understanding of the MFI dynamic that determines which products and services can be linked to the microfinance model successfully.

Frontier Markets emulates the MFIs in one key respect:  the consumer is at the center of the equation.  Our methodology is to gather insight from consumers; market to them directly; and, use our understanding of the BOP to inform MFIs and manufacturers of emerging opportunities and persistent risks that may thwart their plans for market penetration. We shift the initial conversation from product promotion to a deeper understanding of women’s needs and “shared human aspirations — for safety, for dignity, for a better life for one’s children.”¹ Our “high touch,” below-the-line marketing strategy encompasses two critical steps: (1) educating consumers about health, hygiene, clean water and energy alternatives; and, (2) retailer capacity building to maintain product availability and quality assurance.

In October 2009, Frontier Markets completed a small scale pilot to market health and hygiene products to BOP households with Ujjivan Financial Services in Northern Karnataka. The pilot was successful, proving that P2P marketing encourages BOP women to consider healthy alternatives.

During the pilot, Frontier Markets trained local field staff to reach out to consumers at multiple touch points in peri-urban and rural areas. FM field staff placed Proctor & Gamble and Ranbaxy products directly with MFI “preferred retailers.” During this intervention, the Frontier Markets team provided basic product and financial literacy training for retailers. Finally, the FM team validated whether the products and services introduced were meeting the expectations of consumers, in terms of utility, value and quality.

Additionally, Frontier Markets developed reporting tools with MNC clients in mind, to ensure that we captured meaningful data to inform future product development, pricing, marketing and distribution strategies. While in Karnataka, our field staff and Project Managers continually sharpened the focus of marketing messages; improved operational processes; and, verified the accuracy and meaningfulness of daily reporting.

Here are the results of the pilot:

• Reached 734 MFI members + 56 non-MFI members in 43 center meetings.
• Placed product in 25 kirana shops.
• Achieved a 13% conversion rate (one time sales) among 778 members for Whisper Sanitary Napkins.
• Achieved a 23% conversion rate (one time sales) among 778 members for Volini Gel.
• Conducted 40 product feedback surveys at center meetings.
  • 80% of women respondents liked Whisper napkins.
  • 76% of women respondents said they will use Whisper napkins in the future.
  • 80% of women respondents liked Volini Gel.
  • 76% of women respondents said they will use Volini Gel in the future.
• Conducted 43 1:1 customer insight surveys.
• Conducted 25 retailer surveys.
  • 68% of retailers were willing to re-stock Whisper.
  • 76% of retailers think it is a useful product for consumers.
  • 80% of retailers were willing to re-stock Volini.
  • 76% of retailers think it is a useful product for consumers.

The pilot proved that the model of peer-to-peer marketing works. FM’s Peer-to-Peer strategy focused on a ground up approach instead of top down marketing push.  Using dynamic field staff to engage women directly, they became actively involved in understanding the product and its relevance to their daily lives. FM will continue using Peer-to-Peer marketing and retailer network-building as an effective means of community engagement. Additionally, we provided an easy mechanism for retailer sales reporting. FM require a tracking system to ensure that kirana shops within our network will maintain their performance over time as we plan to launch other products through this same channel.  We also asked these members to provide us feedback on our engagement. Women responded positively and appreciated our intention to educate them about health and hygiene and introduce products that provide an immediate benefit.  One woman said, “I think it is such a great opportunity for us to learn. I did not know about any of these things before you came. You teach us, talk to us, and make us feel good. Please keep coming.”

Frontier Market’s goal for 2010 is to conduct one large pilot covering an entire MFI branch. We will most likely work with Grameen Koota on this pilot, which can lead to a full scale product launch throughout the state of Karnataka in 2011.

Our core mission is to benefit the Microfinance sector through innovation and service to its members. Frontier Markets educates and brings high quality, affordable products that address a real need for MFI members. We conduct community engagement and discourse which re-inscribes the spirit of belonging that MFI members enjoy. Through our activities in the field, we seek to reinforce the trust and burnish the MFI brand.

1 – Judith Warner, “Domestic Disturbances,” The New York Times, October 1, 2009