Market Systems Insights for DRG - Market Segmentation

Apr 24, 2019 by David Jacobstein Comments (0)

For some time now, I’ve been interested in the market systems approaches that USAID supports for work in developing markets as part of economic growth and food security work. I find a lot of energy in the market systems work that I think could be a helpful complement to traditional DRG frames of reference. Recently, in Serbia, I found Catalyst, a local partner conducting great work that intersects both DRG and Economic Growth. Through conversations with these offices and with Catalyst, I found myself looking differently at DRG work -- applying a market systems lens. I thought it would be useful to put some of my thoughts to paper and invite a wider discussion around what DRG can borrow from a market systems way of working.

Market systems really incorporates incentives and power dynamics into economic development work, something I’m always pushing as part of making USAID programming more context-driven and adaptive. There field also has engaged in some valuable self-reflection about how older value-chain based approaches are updated to a market systems approach. Market systems facilitation demonstrates how systems thinking - recognized as a best practice but sometimes hard to undertake - can be applied in a concrete, tangible ways.

Technique: Market Segmentation

I want to start with a straightforward process done in a lot of market systems work that I think could be very useful in DRG work. This includes segmenting the market which assists in better considering how different changes might meet uptake. This basically entails taking a host of data around the customers or potential customers of certain products - demographics like age, gender, marital status, and income, as well as information on their interests and purchasing patterns - and parsing it to find clusters or categories of similar people. Often, these clusters will be given a “persona,” as in Brian the single young man just starting his own business, or Margaret the married woman with two children who is selling housewares at the weekend market to make extra money for school fees.

These personas help to better define who is using or could be using certain products, and to tailor the design or marketing of products to certain audiences. For an external donor trying to catalyze market systems change, personas like this can help to trace the potential diffusion of innovation and unpack who is being served how well by different firms in the market.

Comparison Point: Segmentation in DRG?

In typical DRG programming, by contrast, demographic considerations are usually painted in broad strokes. Initial assessments might reflect demographics in the sense of the breadth of a challenge - how long a typical court backlog is for different ethnic groups, or rates of the population who perceive corruption during their daily life disaggregated by gender. Gender and youth analysis are also often initially conducted to provide information that helps programming orient itself to benefit marginalized populations. However, these tend to be very large groupings, and they are organized more around the development circumstances facing the population than around segmenting the population based on interest and potential contributions in DRG areas, such as civic participation or being active in political parties or local governance.

Understanding which segments of the market (or democratic polity) are responding in which ways requires much more detailed and regular data around who and how people are behaving in different ways. While there is a lot of attention paid to adaptive management in the DRG sector, and we’ve been historically pretty flexible and adaptive in our pursuit of challenging outcomes to obtain, the adaptive management is more conditioned against understandings of the evolving context than against shifts in who is taking up ideas spurred by our programming.

The few exceptions to this rule that I’ve seen in DRG programming tend to be in spaces driven by necessity. For example, civil society programming in Belarus invested heavily in surveying citizens and understanding their thoughts about different civic ideas and CSOs, because information was so hard to obtain. Pact’s Belarus Reforms and Media Assistance Project (BRAMA) invested more in understanding citizens and their relationship to civil society than any effort I know. They commissioned national polls, sector-specific political economy analyses, stakeholder studies, community feedback surveys, and weekly media monitoring, pulled into a weekly digest called the Friday Report, which has been going for more than 350 weeks. This digest provides a balanced picture of civil society developments inside the country.

By tracking who had heard of which work or campaigns led by which CSOs, in its early years BRAMA found an opportunity to change attitudes about civil society by simply sharing the breadth of energy there, most of it not related to formal politics or advocacy - things like park clean-ups, heritage celebrations, and work in consumer protection. These surprising insights shifted the trajectory of the programming, causing funding to flow into new areas (and new partners) as part of a strategic approach to both strengthening civil society and rebranding it as more than opposition politics, which over time has taken root and led to more citizen engagement (and perhaps positions CSOs to take advantage of openings in the political space as they emerge). It’s always struck me as funny that I can speak with more confidence to how many citizens were aware of different civil society advocacy campaigns in Belarus than in any other country where I’ve worked on or with civil society.

Implications: Market Segmentation for Citizen Engagement

One of the implications of DRG not using market segmentation is that we sometimes struggle to get citizens engaged in our programming. Indeed, one of the common complaints I hear about DRG programming with civil society is that our partners “aren’t connected to the grassroots.” We tend to have a track record of picking partners who can articulate reforms well and analyze policies and laws with expertise, who we then push to connect to all citizens. Sometimes we ask partners and communities to serve as accountability monitors for a government service or process we rate as vital.

If, instead, from the outset our programming had a set of data-backed personas of local people, perhaps we could value civil society with credibility and reach with different segments of society. Indeed, locals could help us both gather data and make sense of it in order to develop such personas in the first place. Such personas further might push DRG programming to work with a more diverse array of partners that are already in dialogue with different parts of society, whether that be faith-based organizations, trade unions, membership bodies, alumni associations, or more.

The typical data collected to inform a program for municipal governance or civil society advocacy does not yield sufficient information about people’s behavior to distill nine or 10 “personas” and tailor outreach to them - we don’t have models of “Rita Rabble-Rouser, 25, with two young kids and a busy hairdressing day job, who attends community planning meetings regularly, is active in her PTA, and always pushes for more to be done in education” to contrast with “Donna Disaffected, 33, active in her church, who is caring for elderly parents and is torn over her kids plans to emigrate, and has posted comments on online forums about frustrations with national government decisions related to religion on state identity cards but has never spoken to a local government official or joined a protest.”

That’s a good look at how I think the practice of market segmentation could benefit DRG programming. In my second post, I explore differences in broader orientation toward the connection between the work and the public. In much of DRG work, citizens are viewed as as beneficiaries or stakeholders whose support is instrumental to achieve a given governance reform and not as the actors who comprise the system itself. In market systems work, the customers are both the beneficiaries of successful programming and the ones whose ideas and actions will make change in the system itself. In the meanwhile, I invite feedback from readers - does this resonate with you? Have you seen personas or similar data-backed breaking down of audiences applied in DRG programming, and how did it work?