Developing a strategy for revenue growth for an onion cooperative in Burkina Faso

Abstract

Burkina Faso ranks amongst the least developed nations in the world with a Human Development Index ranking of 182 out of 189 (Frontier & Development, 2021). The landlocked West-African country is since 2019 the centre of the ongoing Sahel crisis (Raleigh et al., 2021). Despite the humanitarian and COVID-19 crisis, different cooperatives have been formed to meet the country’s rising food demand. One of these cooperatives is the Union Provinciale des Coopératives de Producteurs d'Oignons du Sanmatenga (UPCPO, a union of onion cooperatives based in the Sanmatenga region of Burkina Faso). In partnership with the Belgian non-profit organisation Trias, the union aims to improve the standard of living of its members and to become financially independent as a cooperative in the future. This research is conducted in partnership with Trias and the UPCPO to provide feasible recommendations that the UPCPO can execute to boost profits for its members in the Sanmatenga region of Burkina Faso. Using the human-centered design provided by IDEO (2015) as a methodology, a marketing plan for the UPCPO has been formulated. The marketing plan follows 6 P’s provided by Booms & Bitner (1981): Price, Product, Place, Promotion, People, Process & Physical Evidence. The 7th P, physical evidence, is out of the scope of this research. First, the most important recommendation that has to be implemented on the short term, is highly feasible and will have a huge impact: process. The UPCPO can increase revenues through investments in stock capacity. Through additional storage units, the UPCPO can increase 2 revenue streams: the sale of onions and the rental of storage space. The former relates to onions being sold at a higher price during the wet season while the latter refers to the rental of storage by the UPCPO to the farmers. Combined with this investment, a sale strategy and roadmap were integrated. As a Union with the cooperative principles in mind, there needs to be a shift towards a business mindset in the UPCPO. Therefore, it is necessary to increase their managerial capital. This can be done though trainings and specialisation. Trainings should be on three levels: organisational, specific and individual. Next to that, for key functions, there should be one responsible who can focus on performing that exact task. Those specialists should get permanent training, support and guidance in their roles. With onions falling under the commodity trap, the UPCPO needs to differentiate their product and services in order to stand out from its competition. Differentiation is key to increasing sales and attracting new buyers (Harvard Business Review, 2007). If the UPCPO starts to provide extra services, innovate on its products or delivery, they can escape the commodity trap and increase its revenues. Four opportunities for service and product differentiation were identified: the use of UPCPO branded packaging, provide different quantities of onions, new product development and an extra service with the introduction of mobile payments. The current pricing strategy of the UPCPO is a combination of cost plus pricing and competitive pricing. Cost plus pricing has a few major deficiencies, with its major one being inefficient (Garrison et al., 2013). Competitive pricing does not take demand related aspects into account (Heil & Helsen, 2001). Ideally, the UPCPO should move towards value-based pricing. It is confirmed that value-based pricing is a key component in receiving larger returns and creating a competitive advantage (Debruyne et al., 2003). Since value-based pricing is all about understanding the willingness to pay (WTP) of the consumer, the UPCPO could try to perform a conjoint analysis in order to obtain the WTP. Currently, the UPCPO has 2 marketing channels (or distribution channels): the institutional clients and the wholesalers. It is recommended that the UPCPO should keep working with its current channels. Intermediaries are more efficient in making goods.