Final Documentation

Developing the advertising market for SMEs in northern Bangladesh, Katalyst 2007

    Description
    Small and medium enterprises (SMEs) in northern Bangladesh are facing increasing competition from products and services from Dhaka and abroad. They need more and better advertising to help them compete. Katalyst is developing the advertising market in Bogra in order to help SMEs in northern Bangladesh compete more effectively.

    Katalyst found that the quality of advertising services offered in Bogra was too low to help SMEs compete against Dhaka and foreign products. The poor quality was a result of four interlocking problems:

    - Providers lacked skills and knowledge
    - Providers did not offer appropriate services
    - Providers lacked new technologies and high-quality inputs
    - SMEs were not demanding appropriate advertising

    Katalyst chose to address two key constraints underlying these problems: lack of group action among advertising providers, and poor flow of new information, ideas and skills.

    In 2005-2006, Katalyst and its Bangladeshi partner, ChangeMaker, implemented a series of interventions to address these underlying constraints. ChangeMaker helped advertising providers form and strengthen a business membership organization (BMO), called the Bogra Media Forum, which has been a focal point for developing the advertising sector. Other interventions include training advertising providers, promoting the Bogra advertising sector through trade fairs, and helping advertising providers customize their services to specific
    SME sectors.

    Summary of results
    Katalyst found that some of its strategies were effective, and others were not. For example, working with the BMF has enabled Katalyst to efficiently reach out to advertising providers. Introducing new skills, ideas, and ways of doing things has had a significant impact on the Bogra advertising sector. However, Katalyst's primary focus on the BMF has been risky. Katalyst's aim of developing a commercial training market for advertising providers was premature and too narrow to address the market problem. As a result of this learning, Katalyst's approach has evolved. Katalyst had broadened its strategies and is strengthening the flow of information, skills and ideas in multiple ways. Katalyst has also developed ways to adjust interventions more quickly. Lastly, Katalyst is focusing on understanding how interventions reduce poverty, and using that knowledge to maximize poverty reduction.

    Katalyst's interventions have improved the quality of advertising services in Bogra and benefited approximately 6,800 SMEs in northern Bangladesh. Katalyst estimates that, as of December 2006, changes have resulted in 735 new jobs and US$680,000 in additional income for SME owners and new workers. For every US$1 that Katalyst has invested, SME owners and workers have received approximately US$4.43 in additional income. It is expected that this impact will increase substantially as the advertising market changes more broadly over the next few years. Katalyst found that interventions have reduced poverty not only in SMEs
    benefiting directly, but also in the advertising sector itself and in the supply chains of SMEs using improved advertising.

    The case highlights key lessons learned and challenges for donors and practitioners involved in pro-poor market development. For example, working in foundation markets, which underpin growth in many sectors, can improve SME competitiveness. Developing sustainable learning mechanisms in markets is essential if enterprises are to adapt to changing conditions and improve skills and quality. To maximize poverty reduction from market development, agencies must plan and regularly examine how interventions lead, through a series of changes in markets, to concrete benefits for poor people.

     
    Associated Activities and Documents
    Programme Design
    »Design of the Katalyst project, Bangladesh, June 2004
    Implementation
    »KATALYST - Implementation, Bangladesh 2002-2007