Social Entrepreneurship - 5 - Reach Clients through Appropriate Channels

Abstract

Upon graduating with his MBA, Mwanzu promptly decided to quit his job at a Nairobi-based bank and move back to his shagz to start a new business. As long as Mwanzu could remember, his family held 10 acres in Kwale for cassava and sweet potato farming. He agreed with his family to repurpose the land and focus on growing tomatoes, small chili peppers, and special new herbs in coast-modified greenhouses. In order to control a large span of the value chain, Mwanzu endeavoured to then process the new farm produce into a special Mexican-styled sauce. Thrilled with the feeling of working for himself, building his own company, and supporting his community, Mwanzu finally entered the high-end sauce market in Kenya. He decided to sell his products through Naivas in Naivasha as his first point-of-sale. However, following six months of disappointing sales and no real growth experienced, Mwanzu turned to his former business school professor for assistance. Those reading Business Talk might clearly realise Mwanzu’s mistake. He implemented the wrong channel for his business. Channels describe how a company communicates with and reaches its customer segments to deliver a value proposition. Please review last week’s Business Talk to understand how to derive value propositions for your startup business. Then, once you garnish your proposed value, determine your appropriate channel. In order to contemplate your appropriate channel, authors Osterwalder and Pigneur encourage entrepreneurs to ask themselves through which channels do your customer segments want to be reached? How do you already reach your customers now? How are your customer segments integrated? Which channel works best? Which channels produce the most cost-efficient results? How do you integrate your channel with customers’ routines? As an example, Mwanzu failed to identify his appropriate channel on several fronts. First, wealthier consumers who buy specialty foods tend to concentrate in Nyali at the Coast, select neighborhoods’ in Nairobi, and Milimani in Kisumu. Placing his first point-of-sale in Naivasha did not match with his prospective customers’ routines. What high-end purchaser drives to Naivasha to buy their groceries? Next, Mwanzu neglected to choose the appropriate grocery store chain to feature his product. A higher end food item should sell through a grocery store that wealthier customer segments desire to be reached. Higher end consumers prefer niche grocers or selected Nakumatt stores. Inasmuch, the choice of Naivas that targets the middle and lower-middle classes based on competitive prices proved ineffective for Mwanzu’s premium priced sauce.