Reproductive Health Supplies Market Development Approaches Presentation to the Coalition

2 What MDAs should achieve Efficiency – MDA interventions will serve to move people up the value chain from heavily subsidized products to wholly commercial and non-subsidized products Effectiveness – MDA interventions will result in overall market growth Equity – The success of MDA interventions relies on a better targeting of subsidies MDA interventions are worthwhile only if the money saved is reinvested to the benefit of the poorest

3 Market Development Approaches – Ends and means Manufacturers model +RH Efficiency Reduced donor spend Improved sustainability Ends/ Outcomes NGO/ Branded/ Distribution model Source: Adopted from Francoise Armand, Futures Group Donors fund an NGO (typically an international network like PSI) to provide subsidised services and products Develop and market their own brands with aim to maximize usage (share) in target group May have some cost recovery May establish own distribution infrastructure Key agencies: PSI, MSI, IPPF Sample countries: Angola, Eritrea, Uganda, Vietnam Offers NGO/ donor full flexibility/ control over all aspects of marketing mix – extending reach to the poorest/ neediest Proven ability to create demand Can be mobilized relatively quickly, by experienced NGOs Inherently unsustainable – relies on continued donor funding May crowd out commercial sector May not build local capabilities May not be very cost effective -> unnecessarily high cost per CYP Donor/ agency forms partnership with commercial players to co-fund marketing or other activities in exchange for commitment to furthering social goals (e.g. through lowering price, extending distribution) Key agencies: Futures Group, CMS Sample countries: Brazil, Cameroon, Morocco, Mexico Inherent potential for sustainability Can be much more cost-effective than NGO model Sustainability is not automatic – incentives for commercial partners have to be right Will only work in countries with a minimum level of commercial potential – may not be viable in the poorest countries May not reach poorest/ neediest Increasingly, there are variations/ hybrids of the above models, E.g. NGO programs with increased/ full cost recovery, or Manufacturers model with strong commitment to reach the poorest Sample countries: Bolivia, Ghana, Thailand Depends on program, but generally aim to build on the strengths and minimize the weaknesses of the classical models Depends on program, but generally include a high level of complexity and a poor fit with the core capabilities of the implementing agency (a an NGO increasingly trying to act like a 100% commercial player) NGO/ Branded/ Distribution model + RH Effective-ness Improved RH access Improved RH + Reallo- cation to the Poor + Cost recovery Charging those who can pay + Commercial methodologies Including marketing, distribution, procurement etc. + Commercial incentives Providing market-based incentives  Peripheral MDA e.g. public sector introducing charging for some segments, or outsourcing part of supply chain to private sector  Core MDA e.g. introducing new commercial player to attract users from public sector  Not MDA e.g. public sector expanding scope of free distribution program  Peripheral MDA e.g. introducing new commercial player to add to method mix Means/ Approaches Non-CommercialCommercial Improved RH effici- ency Improved RH effec- tiveness Initiatives to grow supply or demand in the commercial market (I.e. some/ full cost recovery, commercial channels) Initiatives to grow supply or demand in the non-commercial market (I.e. little or no cost- recovery, non-commercial distribution) Lowering cost/ increasing sustainability of achieving a given RH outcome Achieving a better RH outcome

4 Example of MDAs Shift costs from public sector purse to private pockets so that poor and vulnerable can be better served: –Targeting subsidies –Transitioning consumers to higher priced products –Alternative financing mechanisms –Reduce commodity costs for procurers and consumers

5 Example of MDAs Reduce the costs of and increase the effectiveness of distribution –Public to private distribution –Private provider training –Partnership for commercial distribution (with FMCG companies) –Effective distribution –Social franchising

6 Example of MDAs Create a policy/enabling environment tat encourages competition and choice –Registration facilitation –Taxation and duty reduction –Increased number of products / offer (crowding in) –Authorize new distribution channels / type of outlets for hormonals

7 Example of MDAs Marketing and demand creation –Category demand creation (vs branded) –Greater freedom with advertising / distribution –Better communications (effectiveness of BCC)

8 Priorities and Gaps Define success – what programme aims to achieve: health impact, sustainability, cost to donor/government, targeting of subsidy, availability/choice for consumer, enabling environment Take a Total Market Approach – requires recognition of market dynamics and collaboration across projects Understand Markets – including consumer segmentation, before programmes are designed

9 Recommendations Develop more tools (and pay for them to be used!) –Market assessment –Targeting mechanisms –Market segmentation –Willingness to pay surveys –4 Ps: Product, Price, Place, Promotion –Post-project evaluation Try out more and various approaches, evaluate them & share results quickly

Creating a Country Typology for Market Development Approaches RHSC MDA Subgroup

11 Proposed Criteria Market Potential CPR levels x Population of Women of Reproductive Age Competitive environment – esp. efficiency, affordability and targeting of public sector vs private sector Financial Potential Ability to Pay Willingness to Pay Business environment (regulations, taxes, distribution, promotion)

12 High CPR and/or favorable competitive environment Little ATP and/or WTP and/or unfavorable business environment Ex: Kenya Characterizing country environment MarketPotential FinancialPotential Low High Low High Low CPR and/or competitive environment unfavorable Little ATP and/or WTP and/or unfavorable business environment Ex: Benin, Congo High CPR and/or favorable competitive environment High ability to pay and/or WTP and/or favorable business environment Ex: Morocco, Venezuela Low CPR and/or competitive environment unfavorable High ability to pay and/or WTP and/or favorable business environment Ex: Ukraine

13 MarketPotential FinancialPotential Low High Low High High CPR and/or favorable competitive environment Little ATP and/or WTP and/or unfavorable business environment Ex: Kenya Low CPR and/or competitive environment unfavorable Little ATP and/or WTP and/or unfavorable business environment Ex: Benin, Congo High CPR and/or favorable competitive environment High ability to pay and/or WTP and/or favorable business environment Ex: Morocco, Venezuela Low CPR and/or competitive environment unfavorable High ability to pay and/or WTP and/or favorable business environment Ex: Ukraine Characterizing country environment

14 High CPR and/or favorable competitive environment Little ATP and/or WTP and/or unfavorable business environment Ex: Kenya Low CPR and/or competitive environment unfavorable Little ATP and/or WTP and/or unfavorable business environment Ex: Benin, Congo High CPR and/or favorable competitive environment High ability to pay and/or WTP and/or favorable business environment Ex: Morocco, Venezuela Low CPR and/or competitive environment unfavorable High ability to pay and/or WTP and/or favorable business environment Ex: Ukraine MarketPotential FinancialPotential Low High Low High Characterizing country environment

15 High CPR and/or favorable competitive environment Little ATP and/or WTP and/or unfavorable business environment Ex: Kenya Low CPR and/or competitive environment unfavorable Little ATP and/or WTP and/or unfavorable business environment Ex: Benin, Congo High CPR and/or favorable competitive environment High ability to pay and/or WTP and/or favorable business environment Ex: Morocco, Venezuela Low CPR and/or competitive environment unfavorable High ability to pay and/or WTP and/or favorable business environment Ex: Ukraine MarketPotential FinancialPotential Low High Low High Characterizing country environment

16 MarketPotential FinancialPotential Low High Low High Demand creation / BCC Demand creation / BCC Target subsidies Target subsidies Improve policy environment for private sector Improve policy environment for private sector Offer low cost products in private sector Offer low cost products in private sector Matching MDAs and country environment

17 MarketPotential FinancialPotential Low High Low High Value creation (new products, advertising, marketing) Value creation (new products, advertising, marketing) Segmentation strategies Segmentation strategies More targeted public sector More targeted public sector Extend offer / outreach of private sector Extend offer / outreach of private sector Matching MDAs and country environment

18 Next Steps Finalize a country typology tool with clear source of data identified and a methodology for classifying countries Make tool available (RHSC website)