Marketing Compost - A Guide for Compost Producers in Low and Middle-Income Countries

Abstract

The many benefits of compost to agriculture, the environment and society are often poorly understood and little appreciated. As a result, compost producers around the world face great difficulties selling their high-quality products. Some initiatives are forced to close, as their premises become choked with mountains of compost they cannot even give away. This book is designed to help compost producers in low and middle-income countries run viable initiatives by unlocking the financial value of their product. It draws on techniques usually applied to popular consumer products such as cars and televisions, and adapts them to compost. The marketing approach is present-ed step-by-step, including sections on how to • understand the business environment • identify and quantify your market • ensure your product and production meet customer needs • price your product appropriately • locate your business optimally, and • promote and brand your product. The book includes practical advice, templates and inspiring examples of how marketing techniques have been used in composting initiatives around the world.

Full text

Marketing Compost
A Guide for Compost Producers in Low and Middle-Income Countries
Sandec: Department of Water and Sanitation in Developing Countries
Eawag
Überlandstrasse 133, P.O. Box 611
8600 Dübendorf, Switzerland
Phone +41 (0)44 823 52 86
Fax +41 (0)44 823 53 99
caterina.dallatorre@eawag.ch
www.eawag.ch
www.sandec.ch
Unlocking the value in compost
The many benefits of compost to agriculture, the environment and society are
often poorly understood and little appreciated. As a result, compost producers
around the world face great difficulties selling their high-quality products. Some
initiatives are forced to close, as their premises become choked with mountains
of compost they cannot even give away.
This book is designed to help compost producers in low and middle-income
countries run viable initiatives by unlocking the financial value of their product. It
draws on techniques usually applied to popular consumer products such as cars
and televisions, and adapts them to compost. The marketing approach is present-
ed step-by-step, including sections on how to
• understand the business environment
• identify and quantify your market
• ensure your product and production meet customer needs
• price your product appropriately
• locate your business optimally, and
• promote and brand your product.
The book includes practical advice, templates and inspiring examples of how
marketing techniques have been used in composting initiatives around the world.
Jonathan Rouse
Silke Rothenberger
Chris Zurbrügg
Marketing Compost A Guide for Compost Producers in Low and Middle-Income Countries

Marketing Compost
A Guide for Compost Producers
in Low and Middle-Income Countries
Jonathan Rouse
Silke Rothenberger
Chris Zurbrügg
With financial support from
the Swiss Agency for Development and Cooperation (SDC) and
the Swiss National Centre for Competence in Research (NCCR) North-South
1

2
Impressum
Publisher: Eawag, P.O. Box 611, 8600 Dübendorf, Switzerland
Phone +41 (0)44 823 52 86, Fax +41 (0)44 823 53 99
Editors: Sylvie Peter and Yvonne Vögeli, Eawag
Copyright: Published texts and figures may be reproduced freely
for non-commercial purposes only (except when reproduction
or translation rights are explicitly reserved), provided that mention is
made of the author and this publication.
Cover: Pawel Gaul (www.iStockphoto.com)
Layout: Pia Thür, Visuelle Gestaltung, Zürich
Figures: Yvonne Lehnhard, Eawag
Published: 2008
Printer: Binkert Druck AG, Laufenburg, Switzerland
Circulation: 3500 copies printed on original recycled paper
ISBN 978-3-906484-46-4
Eawag: Swiss Federal Institute of Aquatic Science and Technology

3
Contents
1 Introduction 7
2 Background 1
1
2.1 What is marketing? 1
1
2.2 Why is marketing important for compost producers? 1
4
2.3 What is compost? 1
7
2.4 Basics of market research and marketing 2
2
3 The marketing environment 3
1
3.1 Competition 3
2
3.2 Legislation 3
3
3.3 Opportunities and threats 3
5
4 Market assessment 3
9
4.1 Segmenting your market 3
9
4.2 The customer 4
4
4.3 Understanding your market better
48
4.4 Quantifying market demand 4
9
4.5 Profiles of market segments 5
1
4.6 Targeting market segments 5
2
5 Product, positioning and location 5
3
5.1 Defining your product 5
3
5.2 Quality 5
7
5.3 Meeting demand through production 6
1
5.4 Business location 6
3
5.5 Distribution channels 6
7
6 Product pricing 7
1
6.1 Production costs and profit 7
1
6.2 Customer attitudes, needs and resources 7
3
6.3 Terms of payment 7
5

4
7 Key principles of promotion 79
7.1 Communication: The key to promotion 8
0
7.2 Promotion in practice 8
3
7.3 Establishing alliances with composting associations 9
2
8 Final words 9
5
9 Annexes 9
7
Annex 1 Compost quality standards 9
7
Annex 2 Table to structure market segments 9
9
Annex 3 Examples of market segment profiles 10
0
Annex 4 Marketing questionnaires 10
3
Annex 5 Map of Kathmandu’s compost market 10
5
Acknowledgements 10
6
Bibliography 10
8
- References 108
- General literature on composting 111

Key terms
Compost The product of controlled biological decomposition of organic mat-
ter into a humus-like, odourless product with soil-conditioning properties and
varying nutrient value.
Chemical fertiliser An agricultural input largely intended to provide plant
nutrients without any soil-conditioning properties such as ‘NPK’ fertiliser
(nitrogen, phosphorous and potassium).
Competitive edge Something about your product/service, which is partic-
ularly attractive to the customer, such as a low-price for good quality, free
delivery and convenient location.
Humus The component of soil consisting of decomposed vegetable matter,
which gives soil its water and nutrient-retaining properties.
Manure Animal waste (e.g. cow dung, chicken droppings). Often relatively
rich in plant nutrients. Usually matured prior to land application.
Market segment A group of consumers/customers with similar characteris-
tics and requirements.
Marketing environment External factors and forces, some of which are un-
controllable, which present both opportunities and threats to a business.
Organic waste Decomposable matter, including vegetable waste (peelings,
spoiled market produce), waste food and garden waste (e. g. grass clippings,
dead plants).
Prospecting The process of identifying and assessing potential customers.
Soil conditioner A product which enhances the water and nutrient retaining
properties of soil.
Value/cash markets Customer groups purchasing small quantities of a prod-
uct at a higher price (e. g. householders buying 10-kg compost bags).
Volume/bulk markets Customer groups tending to buy large quantities of a
product at a lower price (e. g. farmers buying truckloads of compost).
Qualitative data Relates to opinions and perceptions, e. g.: how? why?
Quantitative data Relates to countable data, e. g.: how many? how much?
how often? where?

1 Introduction
For many years, businesses, municipalities and NGOs around the world have
successfully produced large volumes of high-quality compost. Compost of-
fers greater benefits to society and the environment than a can of soft drink
or the latest mobile phone, but unlike these it does not enjoy a ready market.
It is often considered to be dirty, and it lacks an immediate benefit to people.
Of course, compost is a valuable agricultural input which can improve the con-
dition of soil and reduce the need for chemical fertilisers. Despite these qual-
ities, selling compost remains a challenge and some producers cannot even
give it away. Lack of markets has caused many businesses to fail.
Composting can be approached in two main ways.
The solid waste management approach, wherein composting is a way of
treating organic waste within the solid waste management system. Compost
is seen as a by-product.
The marketing approach, wherein composting is a way of producing a valu-
able product that can be sold. Compost is the core of all activities.
The marketing approach focuses on producing and selling a high-quality pro-
duct. In contrast to the solid waste management approach, it is driven more
by customer demand than material supply. However, a successful marketing
approach to composting will usually result in all solid waste management ob-
jectives being met.
This guide describes a marketing approach to composting, and is intended to
help compost producers run more viable initiatives by unlocking the value of
their product. The handbook does not cover everything there is to know about
marketing, but starts from basics and introduces the key principles and tech-
niques. These include understanding the ‘marketing environment’, identifying
appropriate target customer groups, and developing and promoting products
to suit the market.


Marketing Compost—Introduction 7

The term ‘composting business’ is used throughout as an all-encompassing
description of NGO as well as public and private sector composting initiatives.
This reflects the assumption that all initiatives at least need to shift their prod-
uct from their premises, and that most want to cover their costs or make prof-
it through the sale of compost. Thus, they have the basic character of a busi-
ness.
There is no single solution to compost marketing: every situation is differ-
ent. Therefore, the handbook presents a mix of contextual theory and hands-
on tools and ideas for your business. It focuses on some of the problems
frequently encountered in low and middle-income countries and ways to over-
come them. Although this handbook is about marketing compost made from
organic urban waste, many of the principles are universal.
Sources of information
Much has been written about marketing, and most literature focuses on
high-income countries. The authors have drawn heavily on this body of litera-
ture but combined it with information and case studies from low and middle-
income countries. All literature consulted is listed in the literature section.
Key messages
customer satisfaction is of key importance;
there is no magic solution to compost marketing, but applying principles
can increase the chances of success;
compost is generally not a product with a ready-made market, however,
worldwide experience indicates that it is possible to develop one;
investing time in identifying and analysing your market can yield important
returns for your business;
the packaging and image of your products to target markets is vital for suc-
cess;
the basis for success is a consistently high-quality product with clear speci-
fications. It will sell better and yield returns;






8 Marketing Compost—Introduction
Studies conducted in India have revealed that because marketing
approaches are rarely applied, many composting businesses have
failed to realise their potential. This is not attributed to a lack of
interest or business-mindedness, but simply to a lack of available
information. In India, the marketing approach is ideal for guiding
compost ventures towards sustainability and profitability.
Richardson, 2002

marketing is not a one-off task: it is crucial to invest regularly in marketing,
in developing products and in refining the selected strategy;
demonstration projects proved to be one of the most successful marketing
strategies to conquer new markets.
Target audience
This handbook is of relevance to a wide range of individuals and organisations,
including:
entrepreneurs and private investors intending to fund, set up or manage a
composting plant;
local authorities wanting to invest in or operate organic waste composting
plants as an option for sustainable waste management;
contractors managing composting plants; and
staff of donor organisations funding and planning composting projects.
No prior understanding of marketing compost is necessary.
Structure
Marketing is not a clear-cut ‘linear process’ and various aspects are interde-
pendent. For example:
product development is dependent on and driven by the choice of target
markets;
your location may determine the markets available to you or you may
choose your location in order to target a certain market;
target customers may affect your pricing decisions or high production costs
may require you to focus on a wealthy market.
Although marketing is presented as a series of sequential steps in this hand-
book, it is important to apply these flexibly and to keep revisiting certain areas.
The first two chapters of this handbook provide background information and
introduce the broad concepts of marketing and composting.
The book is structured around five key areas:
The marketing environment
Market assessment
Product, positioning and location
Product pricing
Key principles of promotion















Marketing Compost—Introduction 9

2 Background
2.1 What is marketing?
Marketing is about identifying and targeting customers and succeeding to sell
products that satisfy customers at a price and in sufficient quantity to ensure
the success of a business.
The aims of marketing are to:
understand and assess the external environment that affects your busi-
ness. This includes external forces such as legislation, environment, technol-
ogy, and competition;
identify appropriate target markets and develop good relationships;
satisfy customers by offering appropriate products at the right price;
communicate the benefits of products to stimulate demand;
ensure the sale of products at a price and quantity that ensures viability and
profitability.
Customer satisfaction is central to marketing and is the key to successful busi-
ness. Marketing recognises that customers are free to make purchases from
anywhere in the marketplace. Marketing principles can help a business max-
imise the chances of acquiring a slice of the market.
Too little effort spent on determining whether or not customers nd a
product attractive or are willing to pay for it will often result in costly
products without any market appeal.
Adapted from Alexander, 2003
The following diagram illustrates the components of the marketing process.





Marketing Compost—Background 11

The ‘Marketing Mix’
Marketing professionals focus on four main parameters to attain a successful
marketing strategy: Product, Price, Place, and Promotion. These are the so-
called “4 Ps” of the marketing mix. The following section and Figure 2.2 pro-
vide more details on what they are and how they can be useful.
The four Ps of the marketing mix
Product: Relates to features, benefits, quality, packaging, presentation, but
also to service and abstract messages such as image or principles.
Example: Compost is produced from organic solid waste and is, hence, an envi-
ronmentally friendly and high-quality product. Compost is high in organic matter
and, therefore, an important soil amendment for agriculture and horticulture.
Price: Dependent on your customers’ financial circumstances, on compost
demand and on the prices of competing market products. However, it is also
determined by your production costs and expected profit margin.
Example: Compost has to compete with chemical fertilisers and other natural
manures. The market price will have to reflect customers’ willingness to buy
compost and cover production costs.
Place: Relates to the accessibility of your product by customers, e. g. location
of your business, distribution network etc.
Example: You decide to market the compost via a retailer who has already es-
tablished a distribution network for other agricultural products. Customers can
purchase the compost locally at low transport costs.
Figure 2.1: Marketing Process after Kotler et al. (2006): Principles of Marketing
12 Marketing Compost—Background
Create value for customers and build customer relationship –
capture value from customers in return
Step 1
Understand the
marketplace
and customer
needs and
wants
Step 2
Design a
customer-
driven
marketing
strategy
Step 3
Construct a
marketing
program
that delivers
superior value
Research
consumers and
marketplaces
Manage
marketing
information and
customer data
Select
customers by
market
segmentation
Decide on a
value
proposition:
differentiation
and positioning
Product:
Build strong
brands
Price: Create
real value
Place:
Manage
demand and
supply chains
Promotion:
Communicate
the value
proposition
Build strong
relationship
with chosen
customers
Build strong
relationships
with marketing
partners
Harness marketing technolgies
Ensure ethical and social responsibility

Promotion: Informs your customers about the benefits of using compost,
building awareness and overcoming negative attitudes or perceptions to en-
sure the sale of your product.
Example: Your compost has an official quality label. The customer opts for
your product as he/she trusts the label or is aware of your company’s good
reputation.
Marketing and ethics
For some, selling a freezer to an Eskimo may be the ultimate in great market-
ing, but convincing people to buy a product they do not need has no place
in ethical marketing. Marketing is not always used as a force for good, and
aggressive marketing is seen by some as a modern-day evil. Marketing ap-
proaches are sometimes used to convince customers to buy a product they
do not want - or even need - which is of little utility and has a short life. Some
products, such as cigarettes, may even harm the consumer, while others sim-
ply waste consumers’ money and the world’s resources. Marketing also pro-
motes competitiveness. This can sometimes be positive, but small business-
es can be particularly vulnerable to large companies monopolising markets
and forcing them out of business. So what place do ethics have in the mar-
ketplace?
The basic marketing concept holds that success depends on knowing the
needs and wants of target markets and delivering the desired satisfaction bet-
ter than competitors (Kotler et al. 2006). However, it is possible for marketing
to go beyond profit and customer sales alone, and to consider the long-term
social and environmental implications of business.
A composting business can consider consumer interests by delivering a high-
quality and safe product. It has the potential to improve and transform waste
management in low-income countries, thus benefiting society as a whole. It
also provides an opportunity to create decent and dignified livelihood oppor-
tunities. Although good quality compost can be a genuine asset to many, it is
important that people’s expectations are realistic, and that they are properly
Figure 2.2: The four Ps of the marketing mix (adapted
after Kotler et al. 2006)
Figure 2.3: Marketing and ethics: Selling refrigerators
to Eskimos?
P
r
o
d
u
c
t
P
r
i
c
e
P
l
a
c
e
P
r
o
m
o
t
i
o
n
Variety
Design
Packaging
Service
Quality
Brand name
List price
Discounts
Channels
Credit terms
Payment
Preriod
Allowances
Transportation
Inventory
Locations
Assortments
Coverage
Logistics
Public
relation
Sales
promotion
Personal
selling
Advertising
Features
Target
customer
Intended
positioning
Marketing Compost—Background 13

informed about its use and limitations in order for them to make an informed
choice.
What about ethical competition? In many countries, markets for compost are
untapped or underdeveloped. There is room for new businesses to emerge
and coexist with other producers. Moreover, competition itself can be turned
into an opportunity: joining forces to lobby for supportive legislation, sharing
distribution infrastructure or even sharing marketing through Compost Asso-
ciations.
Finally, sound social and environmental principles at the heart of your business
can be a powerful sales asset for your product, as markets around the world
become increasingly concerned with ethical consumption.
2.2 Why is marketing important for compost producers?
Marketing is just a jargon-filled discipline and only tells you what you
already know.
Gartner (no date)
Although many people are sceptical about marketing, in fact it underpins most
successful businesses. It helps ensure investments are worthwhile and iden-
tify appropriate products for achievable markets.
Improving the image of compost
Although compost is a highly effective soil conditioner, which can reduce
the need for chemical fertilisers, it does not enjoy a ready-made market. A
number of factors account for this fact, including:
lack of awareness and knowledge on how, how much and when to use
compost;
misunderstanding about what compost is (e. g. expecting it to behave in the
same way as a chemical fertiliser);


Successful compost marketing in Sri Lanka
By contrast, government and NGO projects have failed to establish markets for their product. This
led to such an overwhelming stock of compost that some have had to cease production or even close
down. The government had not considered marketing, and the NGO did not have the capacity to
invest in marketing activities.
Ali, 2004
14 Marketing Compost—Background

concerns about the quality of compost made from organic urban waste –
sometimes based on negative associations or past experience;
the inclination of many farmers to focus on optimising their yield within a
short time;
competition with chemical fertilisers, similar low-cost products like manure
or products perceived to be the same (e.g. raw waste);
high transport costs relative to product value, as compost is often produced
far from its market;
unfair regulations and policies (e. g. subsidies for chemical fertilisers) hin
-
dering the composting approach.
Barriers to overcome when promoting compost in India
A report from India illustrates some of the basic problems faced when pro-
moting compost. In contrast to chemical fertilisers, the use of compost
is not considered respectable, but instead an ‘old-fashioned’ product as it
has to be used in large quantities and is relatively slow-acting. The Indian
Government promotes the use of chemical fertilisers through regular cam-
paigns and via subsidies and incentives.
Composting is not widely pursued by the formal sector, as it is bulky,
transport over long distances is expensive and its marketability limited. In
short, it is not perceived to be as attractive or convenient a product as pel-
let chemical fertiliser.
Finally, the report suggests that the chemical fertiliser industry may be try-
ing to defame compost, for example by informing farmers that it causes
pest damage and spreads disease.
Adapted from Mehta in Hart and Pluimers, 1996
Consequently, compost benefits are little known or appreciated, and when
compost is made from organic waste, it is often stigmatised. Marketing can
help a business overcome these attitudes and barriers, as well as identify and
develop markets for compost, as illustrated by the following case from Sri
Lanka.





Photograph: Jonathan Rouse
Marketing Compost—Background 15

Successful compost marketing in Sri Lanka
In Sri Lanka three composting ventures (a business, a university and a
community project) have succeeded in securing good markets for com-
post for different reasons:
the business invested heavily in a skilled marketing team, which worked
over many years to develop the market;
the university has come to an arrangement with an agricultural company,
which buys, handles, markets and transports all the compost.
communities found a local market, and generated demand by word of
mouth and demonstration projects.
An essential part of business planning
It is essential that any prospective investor (public or private-sector) considers
marketing as part of the feasibility assessment. Market research can help you
understand your position in the marketplace, your potential customers and
your competitors. A market analysis may reveal that you have a market ready
for your product as it is. It may identify that you need to make changes to your
strategy and production in order to secure a market. Sometimes, however, it
will reveal that there is no market for your product. Knowing this before invest-
ing can save you the losses of a failed business.
Marketing should not be seen as a one-off activity or something just for new
businesses. Markets can change over time, and your business will need to
use marketing to keep abreast of (or better still, ahead of) changes and ensure
you are targeting the right people with the right product and promotion, at the
right price.
A particular need in low and middle-income countries
Revenue from sales of compost is particularly important in low and middle-in-
come countries where subsidy and tipping fees are much less readily availa-
ble than in Europe or the United States. In Europe, composting plants charge
a fee to all commercial enterprises dumping waste (e. g. tree surgeons and
gardeners), which is slightly lower than the cost of dumping waste in landfills.
This is backed up by legislation, which encourages (or makes compulsory) the
recycling of ‘green waste’. Therefore, in some cases compost can be given
away free because tipping fees cover all costs. Nevertheless, these compost-
ing plants are increasingly selling their products, as the market for ‘eco com-
post’ develops. Few such situations exist in low and middle-income countries,
so costs need to be covered by sales, generated through marketing.



16 Marketing Compost—Background

2.3 What is compost?
Anyone concerned with marketing compost must have a good basic under-
standing of the product, its uses and methods of production. This chapter
briefly sets down some definitions, and outlines some of the ways compost
can be made from urban organic waste.
Why make compost from waste?
Urban waste consists of many elements including inert material (sand and
soil from street sweepings), recyclable material (such as metal, plastic, paper,
and glass), hazardous substances (toxic chemicals and healthcare waste) and
in rare instances human waste. However, in many low-income countries as
much as 60–70 per cent of household waste is biodegradable, including vege-
table peelings, waste food and garden waste. Vegetable markets and the food
processing industry also produce large quantities of organic waste. Compost-
ing is an important element of sustainable solid waste management as it of-
fers a way of processing the biodegradable waste fraction. Composting reduc-
es the amount of waste to be transported and disposed of, thus also reducing
negative effects to the environment.
What is compost and how is it used?
Compost is the product of a controlled aerobic decomposition of organic mat-
ter. It is a stable, dark brown, soil-like material. Contrary to popular belief,
mature compost does not smell bad; it can smell as fresh as a forest floor.
Sometimes the process of making compost may, however, result in smells of
rotting-waste, although careful management will minimise these.
Compost contains important plant nutrients (e. g. nitrogen, potassium and
phosphorus), though usually not as much as animal manure or chemical fer-
tilisers. It can also contain a range of beneficial minerals and is rich in humus
and microorganisms beneficial to plant growth.
Mistaken identity of compost
Compost is sometimes mistakenly referred to as ‘manure’ or ‘fertiliser’,
though it has completely different characteristics.
Manure is generally understood to be animal waste such as chicken drop-
pings or cow manure. It contains nutrients and some organic matter. It is a
strong fertiliser that can damage young plants.

Marketing Compost—Background 17

Chemical fertilisers usually consist of concentrated plant nutrients. For ex-
ample “urea” is a nitrogen fertiliser and “DAP” is a phosphorus fertiliser. Nei-
ther has any soil conditioning properties.
Compost is a soil-like substance with a moderate nutrient content slowly
released over the cropping period. Thus, it is most useful for its soil condition-
ing properties.
Depleted soils have too much inert material (sand) and too little humus (de-
composed vegetable matter). Humus acts as a sponge, holding water and nu-
trients. Amending soil with compost replaces humus, thus increasing the ca-
pacity of soil to absorb and retain nutrients and water, and reducing the need
for chemical fertilisers. Indeed, where land is carefully managed, with soil
structure maintained by compost and a range of nutrients supplied through
the application of manure, chemical fertilisers are rendered unnecessary. This
is one of the underlying principles of organic farming, as increasingly practised
by farmers around the world.
Key benefits of using compost
Improves soil structure, creating a better plant root environment
Supplies significant quantities of organic matter
Improves drainage of soil and reduces erosion
Improves moisture holding capacity of soils
Improves and stabilises soil pH
Supplies a variety of nutrients
Supplies the soil with beneficial micro-organisms
Alexander, 2003
Quality
Customers expect the compost they buy to be of high quality, effective and
safe to use. Producing consistently high-quality compost is the key to better
prices and marketing success. Quality is determined by a number of factors,
but most of all by input materials. It is essential to ensure that raw materials are
not contaminated (e. g. with chemicals or heavy metals) and that the final prod
-
uct does not contain dangerous or unsightly products, such as needles, shards
of glass or pieces of plastic. This topic is further discussed in Section 5.2.









18 Marketing Compost—Background

How is compost produced?
Compost is produced through controlled aerobic decomposition of organic
matter by microorganisms. Microorganisms thrive in a moist, warm environ-
ment with an abundance of organic matter and air. If conditions are too hot,
cold, wet or dry, the composting process will be compromised. Through their
activity, the microorganisms generate heat, which can kill pathogens and de-
nature weed seeds. Turning compost, though not always necessary, can help
ensure that all organic matter has been exposed to high temperatures during
production.
Composting can be undertaken at a very small or very large scale. Some pro-
ducers have a series of decentralised production units, while others have a
single centralised facility. The composting process can take as little as two
months, though compost is ideally matured prior to use, which takes up to
three or four months. In cold weather, high altitudes or very dry conditions,
the composting process may slow down or even stop.
There are many different methods of making compost. They range from a
simple pile or ‘windrow’ to complex fully automated plants. The following box
briefly presents some examples. Some issues relating to compost production
and quality are discussed in Sections 5.2 and 5.3. For further information on
methods of making compost, refer to the General Composting Literature sec-
tion in Chapter 10.
It is assumed that selection of appropriate of technology, availability of organic
waste, climatic considerations, and water supply will have been considered in
your feasibility assessment. Understanding your market is a complementary
aspect of the feasibility assessment.
Further information on composting technologies and how to set up a com-
posting scheme is provided in the book Rothenberger et al. (2006) Decentral-
ised Composting for Cities of Low and Middle-Income Countries. This book
can be downloaded for free at www.sandec.ch.
Marketing Compost—Background 19

Barrel composting (Dhaka, Bangladesh)
This barrel is installed in a low-income area in
Dhaka, Bangladesh. It receives organic waste
from four families. The compost produced is of
high quality as the waste is uncontaminated. It
is sold to a local NGO.
Vermi composting (Bais City, Philippines)
Vermi composting predominantly uses worms
rather than microorganisms to digest the waste.
Raw materials are spread daily in thin layers and
cannot be piled very high, so the technique re-
quires much more space than other methods.
Worms are also more sensitive to temperature
and contamination than microorganisms. The ad-
vantage of vermi-composting is the high nutrient
content and public acceptance of the product.
Pit composting (Pune, India)
Biodegradable waste is placed in shallow pits
and left to decompose for several months.
This method is very simple and often practised
in public parks or domestic gardens. In rainy
conditions, it is susceptible to water logging.
Pile composting (Jordan, Palestinian
Territories)
In Arab countries, various types of waste, such
as animal manure, saw dust, straw, and agri-
cultural waste are piled in layers and covered
with soil and plastic. The pile, which remains
untouched for about ten months, undergoes
slow decomposition under anaerobic condi-
tions. The decomposed material is applied to
the field prior to planting.
Composting methods
Photograph: Jonathan Rouse
Photograph: Johannes Paul
Photograph: Silke Rothenberger
Photograph: Silke Rothenberger

Manual windrow composting (Dhaka,
Bangladesh)
A windrow with a triangular cross-section is a
convenient way of piling in long rows organic
matter for composting. Windrows can make
fairly efficient use of space and make compost
turning relatively easy. In the case illustrated,
windrows are turned manually to allow suffi-
cient air supply. The aerobic condition allows
the compost to mature within three months.
Mechanical windrow composting (Luxor,
Egypt)
This system is comparable to manual windrow
composting but is operated at a larger scale as
mechanical equipment is used. Mixed waste
is screened prior to composting. The organic
waste, piled onto long windrows, is turned fre-
quently by a machine.
Compost chute (Sri Lanka)
In this compost chute in Sri Lanka, waste is fed
at the top. As more waste is added over a peri-
od of a few months, mature compost emerges
at the bottom. Other techniques require rotat-
ing drums or several conveyor belts.
High-tech aerated static pile composting
(Bali, Indonesia)
Instead of manual or mechanical turning of
the compost, in this case the pile remains un-
turned. Air is forced through the material by
pipes using a mechanical ventilator. In Europe,
the piles are additional covered by a geo-textile
to reduce moisture losses.
Photograph: Jonathan Rouse
Photograph: Jonathan Rouse
Photograph: Silke Rothenberger
Photograph: David Kuper

2.4 Basics of market research and marketing
Marketing requires research on customers, opportunities, competitors, and
products. High-quality market research will take time and cost your business
money, however, it is an investment that pays dividends in the long run. This
section presents an overview of important aspects of market research, some
of which are more comprehensively covered further on.
Who should undertake market research?
Internal staff or marketing specialists can conduct market research. Internal
staff should have a thorough knowledge of the product and business, but may
lack specific marketing expertise. However, one clear benefit of using existing
staff is that they are already on the payroll. Marketing specialists, on the oth-
er hand, will have to be contracted, but they can offer specialised marketing
knowledge as well as impartiality. If they are not compost specialists, they are
best suited to providing support to the internal staff in market research. Many
composting companies employ an agronomist or agricultural engineer with
marketing training.
Linking the business with the market
A composting plant in Mysore, India, employs several agricultural engi-
neers who advise farmers in rural areas. This direct contact allows the em-
ployees to assess farmers’ demand patterns, their needs, and experience
in compost use.
Grüschow Entsorgungs- und Umwelttechnik, a German company, also
employs an agricultural expert who is in direct contact with the farmers
and feeds back information to the production manager. Furthermore, the
company has signed a consulting contract with a regional research insti-
tute to support the development of new products which comply with lo-
cal legislation.
You will need to decide who undertakes market research based on your busi-
ness resources. Some of the tools described in this section require consider-
able skills. As an alternative to hiring a marketing specialist, your organisation
may choose to seek training, or enter into partnership with another organisa-
tion experienced in market research.
22 Marketing Compost—Background

Marketing requires careful planning
Most market researchers don’t need more information, they need
better information.
Alexander 2003
Market research requires careful planning. It is vital to ensure that only relevant
data are collected, from relevant people, in an efficient manner. Before embar-
king on any research, carefully consider what you need to find out. What ques-
tions will you ask and of whom? What is your budget, and how can expenditure
on marketing be kept low? Collecting irrelevant or unnecessary data will waste
time and money, and make analysis much more difficult.
Particularly for small businesses, cost saving is a high priority. There are many
ways of keeping costs low, particularly by:
making use of existing data and research; and
carefully planning your own research to avoid wastage.
There are various strategies for collecting information on potential compost
markets. The most common sources are secondary data (existing reports, sta-
tistics, articles etc.) and primary data (that collected from scratch). Both meth-
ods can generate two types of data: qualitative or quantitative. Both types of
data are important to understand the market for your products.
Secondary data collection
Since it is possible that some market research has already been conducted, it is
well worth consulting it before embarking on your own. This can be an impor-
tant way of saving time and money. Secondary data should be relevant for your
local condition: data from other cities or even countries may have limited value
because of the diversity of conditions. Secondary sources of data include:
maps;
population data (e. g. income levels, interests, spending on gardening);
statistics on chemical fertiliser use;
price lists for fertilisers or manure;
data on nurseries and farms in the area;
studies assessing the use of manure or compost on farms;
magazines, newspapers and newsletters associated with nurseries, agricul-
ture and even home-gardening;
brochures of fertiliser companies and other composting businesses; and
relevant publications by local universities.











Marketing Compost—Background 23

Quantitative Data
Quantitative data reflect information
that can be counted. Questions seek
to quantify issues.
Typical questions include:
How many farmers are located
within a radius of 20 km from my
location?
How many nurseries exist in this
city along the main roads?
How much fertiliser do they
apply?
How much compost could they
apply?
How often do they apply?
Where (at what distance) are
other potential customers located?






Qualitative Data
Qualitative data reflect opinions and
perceptions. This information pro-
vides insight into customer prefer-
ences and behaviour. It helps you
design your product and marketing
strategies.
Typical questions include:
Why do farmers choose this prod-
uct?
What do farmers consider to be
the most appropriate product for
their purpose?
For what is compost used?
What are the advantages/disad-
vantages?
What features must compost/fer-
tiliser have?
How and when do farmers use
compost/fertiliser?






Table 2.1: How to assess quantitative and qualitative data
Data can also be collected directly from NGOs, trade and agricultural organi-
sations, local and regional research institutes or municipal departments.
Secondary data sources can provide a preliminary overview of the market en-
vironment. However, they will not be perfectly tailored to your information
needs, and their accuracy may be difficult to guarantee. Also, information will
not be unique: one of your competitors may have already benefited from the
insights so you will not have the ‘knowledge advantage’.
Data collection in the Palestinian Territories: The NGO ‘Palestinian Wastewater Engineers Group’ (PWEG),
wanted to conduct a survey among farmers. As they were not familiar with the sector, they looked for a
suitable way of accessing farmers. Agricultural supply shops where farmers frequently came to buy
pesticides, fertilisers, seeds or mechanical equipment turned out to be an ideal location. PWEG conducted
some interviews in partnership with the shopkeepers who were then asked to continue the interviews
themselves. This strategy saved the small marketing team a lot of time.
PWEG developed two different questionnaires –one for compost users and one for compost producers.
Annex 4 contains one of these questionnaires.
24 Marketing Compost—Background

Primary data collection
There is no substitute for face-to-face contact for really understanding the
attitudes, perceptions and needs of a customer.
If you want to generate unique data, suited exactly to your needs, you will
have to undertake primary data collection. This is well suited to gauging the in-
terest in your specific product, assessing willingness and ability to pay and un-
derstanding attitudes towards compost in general.
Researchers may use various tools, including:
Informal discussions. These can take the form of visits to individuals and
businesses to discuss compost and its use. Such discussions need not follow
a list of questions, but researchers should keep in mind key areas for discus-
sion (e. g. level of knowledge about the use of compost, quantities required
etc.). This is a resource-intensive option but allows direct contact with exist-
ing or potential customers. Observation can be a useful way of corroborating
findings from discussions.
Questionnaires. These can be administered by post, e-mail, the Internet,
in person or even by telephone. Questionnaires are a relatively expensive op-
tion and can require considerable human resources, skills and time for anal-
ysis. This method can also be less effective due to low response rates, and
may be inappropriate for certain groups (e. g. illiterate respondents).
Focus group discussions. These can be a highly effective method of col-
lecting information from a group of individuals. A focus group usually involves a
facilitator and about ten participants. Discussions may be quite free but centred
on particular topics by the facilitator. For example, a group of nursery owners or
a group of farmers could be invited to a discussion.
Focus groups are particularly useful for in-depth investigations on attitudes
and perceptions. They are not so useful for collecting quantitative data. It is
important to bear in mind that opinions expressed by a focus group may not



Photograph: PWEG
Marketing Compost—Background 25

represent those of the population at large. Conducting and analysing focus
group discussions require skills and experience.
Who should you consult?
Just as one carefully chosen spoon of food will let you know how a dish
tastes, a carefully selected sample will tell you about your market.
Adapted from Kotler et al. 2006
Before embarking on any market research, you need to categorise your sub-
jects into segments (cf. Section 4.1) and then select a representative ‘sample’.
For instance, if your household market consists of middle and high-income
households, your sample should reflect this.
Selecting a group of people to interview requires some thought, as it is easy
to ‘bias’ data by choosing a non-representative group. If you want to find out
about willingness and ability to pay for compost among nurseries, you will not
only ask wealthy nursery owners, as it is likely that their response will not be
representative of all nurseries. Smaller, poorer nurseries should also be con-
sulted, as their financial status may be very different and they could also be a
viable market for your business.
The number of people consulted is termed ‘sample size’. By making your sam-
ple size too large, you will waste time and money collecting and analysing un-
necessary data. On the other hand, if you consult too few people, your findings
may not be representative. Defining the adequate sample size is a science of
its own. However, the following table provides a rough guide to the number of
individuals or companies to be interviewed to draw a reliable conclusion.
26 Marketing Compost—Background

Total number of Low Medium Still acceptable
target group sampling sampling sampling
(market segment) error error error
100 50 50 49
250 152 110 70
500 217 141 81
750 254 165 85
100 278 164 88
2500 333 182 93
5000 357 189 94
10 000 370 192 95
50 000 381 195 96
Table 2.2: Overview of representative sample sizes for surveys (adapted from Barlett et
al. (2001) and Rothenberger et al. (2006)
Data collection examples
Household survey
From statistics you know that about 500 households are located in your neigh-
bourhood and you would like to asses their need for compost in home garden-
ing. You choose to interview 40 to 50 households, including wealthy and mid-
dle-income households. This provides you with fairly representative data of all
households.
Market sector survey
According to the register of companies, there are 50 nurseries in town. You re-
alise there is no need to visit all of them, so you randomly select 10 nurseries
of varying size and location, which you visit to conduct interviews. You contact
the manager to arrange your visit, and to ensure that the person responsible
for purchasing compost will be present during discussions. The information
provided allows further evaluation of the overall market size.
Farmers’ attitudes
You want to learn more about farmers’ perceptions and needs. You visit a vil-
lage and ask farmers to meet as a group to discuss their farming practices
with respect to fertiliser use and seasonal patterns. They give you one hour
of their time and a lot of useful information. In return, you offer them a 50 per
cent reduction on their first compost purchase.
Once you select a representative sample, you will need to carefully determine
exactly whom you wish to interview. The following example illustrates the im-
portance of this step.
Marketing Compost—Background 27

Remember that participants in any research have a right to confidentiality. Be
sure to explain the purpose of the research and ask permission to use and
record their responses. Participation in any research should be voluntary.
Asking questions
It is important to phrase questions in such a way that they do not influence the
response. Questions can be posed in different ways to reveal different infor-
mation as illustrated in the following examples:
Open questions reveal general information and indicate how much the
person knows about the issue. Example: Can you tell me about the difference
between compost and manure?
Closed questions are more restrictive and allow mainly “yes” or “no” or
one clear answer focusing on a topic. They can be useful when you need to
generate quantitative data, (i.e. numbers to analyse: 70 per cent say ‘yes’, 30
per cent say ‘no’). Example: Do you think compost is more beneficial to plants
than manure? These closed questions are often followed by an open question
asking “Why” or “How”.
Leading questions can influence the answer of the person asked. They
should be avoided except when used in gentle provocation, as individuals will
oppose a leading question only in case of strong objections. Example: Com-
post is much better than manure, isn’t it?
Alternative questions give a choice of answers and preferences. Ex-
ample: For your seedlings do you prefer a soil mixture with compost or
with manure?




Choosing appropriate respondents
A small composting business wishes to conduct market research among
local householders to assess their interest in the product. They pay visits
to homes in the evenings and briefly interview the head of each house-
hold. Although they had carefully developed the questionnaire and spent
time analysing the data, they realise that they had interviewed the wrong
people. In these households, the head of the household generally has no
interest in gardening and simply pays the gardener a monthly salary for his
work. They should have interviewed the gardener to understand his atti-
tude and views on compost, the products he currently uses and his budg-
et. This mistake costs the business time and money.
28 Marketing Compost—Background

Open questions invite people to express their considered opinions in their
own words. People tend to respond more honestly to open questions than to
closed or leading questions. It is also more difficult to answer an open-ended
question if it has not been properly understood, whereas answering a closed
question only requires a simple yes or no.
Designing questionnaires
Questionnaires will be designed differently depending on whether you
are collecting quantitative or qualitative data. However, all questionnaires
need to be pilot tested, and the following factors must be considered in
their design:
Does the flow of the questions work (i. e. are they in a logical order)?
Are the words understood? Are they too difficult, too simple or ambigu-
ous (e. g. confusion between compost and chemical fertiliser)?
Do the response categories in quantitative surveys capture all options?
Is there any cultural sensitivity in relation to specific questions? Could
any questions be offensive?
Are the questions interpreted in the same way by different respond-
ents? (This is referred to as reliability).
Do they measure what they are supposed to measure? (This is referred
to as validity).
Are the questions answered in the same way if repeated with the same
respondent? (This is referred to as reproducibility).
Adapted from WHO, 2008
The time at which questions are asked can make a difference to the data you
collect. Just as the supply of raw materials to your composting plants is sea-
sonal, so are some markets. If you ask a householder how much compost he
uses in summer, he may give a different figure than if you ask him the same
question in winter.
Data analysis and reporting
There are many sophisticated pieces of software on the market to help with
analysis, but it is probably unnecessary for most composting businesses to
invest in these. By keeping your research simple and relevant, your analysis
should remain fairly simple. A calculator or common spreadsheet programme
(e. g. Excel) will often be sufficient for analysing quantitative data.







Marketing Compost—Background 29

Present your findings in a way you and your colleagues can understand now
and in the future. Prepare a full report containing tables, figures and com-
ments and prepare graphs and charts to summarise data. Graphs and charts
can be particularly useful for making impressive presentations to investors for
your business. The report will be an important tool for monitoring and evaluat-
ing your business and marketing efforts.
30 Marketing Compost—Background

3 The marketing environment
So far, we have introduced the concept of marketing, considered why it is
important for compost businesses and described some of the main research
methods. This section is concerned with the first marketing step, i.e. under-
standing the marketing environment.
Composting businesses operate within a highly complex and dynamic envi-
ronment, which is largely impossible to control and often difficult to predict. It
is important for a business to understand the marketing environment, as it can
present a multitude of opportunities and threats. The following table summa-
rises the external factors and forces of the marketing environment.
Figure 3.1: Factors influencing a business environment. These factors are hardly ever
static but constantly changing. They may affect your business directly or indirectly
Understanding the marketing environment should not be viewed as a one-off
activity. Since the environment may be constantly changing, it is imperative
for a business to keep abreast of changes.
Some elements of the marketing environment are discussed hereafter in
more detail. Others, such as people’s attitudes, perceptions and awareness,
are discussed in Chapter 4: Market assessment.
Economic Political/Legal Environmental Technical
Competitors
Alternative
products
Income of
customers
Economic
cycle
Subsidies for
relevant
sectors
Cultural behaviour
Values, taboos
Attitude towards
waste or compost
Demographic
trends
Education, skills
Environmental
awareness
Sympathetic
waste
management
policies
Subsidies for
agriculture
Import/export
regulations
Land reforms
Technological
innovations
Change of
agricultural
techniques
Improved
transport
infrastructure
Climate
Soil
conditions
Water
availability
Agricultural
activities
Land use
planning
Social
Marketing Compost—The marketing environment 31

3.1 Competition
Competitors are the other businesses offering compost or other products
used in a similar way, such as topsoil, manure or fertiliser. Businesses must al-
ways consider their competitors as a potential source of information, threats
or alliance.
Typical competing products for compost are:
fertile topsoils mined and transported to the end user (peat, red soil etc.);
chemical fertilisers;
animal waste (chicken manure, cow dung etc.);
raw municipal refuse;
human faecal sludge (from pit latrines and septic tanks) and wastewater
sludge;
nutrient-rich waste from industrial processing (neem cake, brewery and
distillery waste); and
mined decomposed landfill material.
Competitors can be seen as a source of information on what works and what
does not. They can guide you towards (or away from) certain choices about
products and customers. They can even present you with an opportunity to
collaborate, for example, sharing distribution networks.
You need to assess what products and businesses will compete with you.
Consider if there is room in the market (i. e. a sufficient number of custom
-
ers) for you to sell compost to the same market segment as your competi-
tors. Could your business offer something unique, such as better value, higher
quality or convenience to customers? If not, you may consider offering a dif-
ferent product or simply targeting different market segments.
A historical and prospective view on the environment can also be illuminating.
For example:
Have any other businesses tried composting locally before? Did they suc-
ceed or fail, and why? What is different about your business?
Are any businesses planning to set up in the future and, thus, become
competitors?
Is any legislation emerging which could support or threaten your venture?
Are your neighbours likely to copy your idea and become your competitors?











32 Marketing Compost—The marketing environment

3.2 Legislation
Policies, regulations and laws can affect decisions about your composting
plant location, method of production, target markets and so on. Some legis-
lation restricts composting: for example, EU laws addressing prevention of
diseases dictate that food waste from canteens or restaurants must be heat-
treated prior to composting or composted in enclosed areas, with no vector
pathway to transmit disease (EC-Ordinance No. 1774/2002). This means that
many composting plants only accept garden waste. Other forms of legislation
support composting. For instance, local authorities in India are bound by the
Municipal Solid Waste (MSW) Rules 2000 to prevent organic fraction from be-
ing landfilled. Composting is one of several official treatment options for or-
ganic waste. This has a supporting function for new composting ventures, and
municipal authorities may provide land or support new businesses in market
development.
EU policy driving commercial composting in the United Kingdom
There are currently two driving forces behind composting in the UK. The
first is obviously to compost for environmental reasons to reduce the use
of chemical fertilisers and to slow the rate at which landfills are being
filled.
The second driving force is the European Union Landfill Directive. If the
UK (or any other EU Member Country) fails to achieve the targets to re-
duce the total quantity of landfilled organic material, they are subject to
fines.
Enviros Consulting, 2006
Regulations and legislation relating to composting vary from country to
country. Prior to starting a composting project, the laws and regulations like-
ly to influence the project need to be examined thoroughly to avoid delays
or even cancellation of the project. If necessary, seek advice from a lawyer,
NGOs, agricultural or business associations, agricultural research institutes
or the municipal authorities.
The following are a selection of laws and regulations which can affect com-
posting businesses:
Environmental laws – may include legislation supporting or limiting waste
recycling and reuse.

Marketing Compost—The marketing environment 33

Solid waste management rules and regulations – may support waste recycling
and reuse.
Land use regulations and urban planning strategies – may include regulations
regarding the construction and operation of waste treatment plants. In some
cases, the setting up of such plants in residential areas is prohibited.
Agricultural laws – may regulate how agricultural waste is reused (e. g. quality
certificates, reuse limitations, pollution control). Check the policy related to sub-
sidies for chemical fertiliser use.
Trade laws and regulations – you may have to register the product if you
want to market compost.
Regulations governing organic farming – particularly important if you want
to focus on export-oriented fruit and vegetable cultivation.
How NGO activity can influence legislation
Waste Concern, an NGO based in Bangladesh, began composting a
number of years before any solid waste management legislation was in
place. Thanks to their practical activities, the NGO gained considerable ex-
perience in solid waste management. Since it always maintained close
contact with municipal and environmental authorities, its efforts, research
and practical experience actually helped shape the policy now in place.
Impact of international standards at local level
International standards can also impact the market. One business in Sri
Lanka was producing high-quality compost but was unable to sell it to or-
ganic tea plantations – one of the largest compost users. The various in-
ternational organisations issuing organic certificates to plantations do not
allow application of urban waste-derived compost for quality reasons. The
standards of such compost are considered too difficult to ensure because
of the possibility of contamination.





Enforced environmental laws as an opportunity in Jordan: In the past, farmers in the Jordan Valley
used untreated chicken and cow manure as organic fertiliser. The hot and humid conditions favour y
breeding, thus causing unbearable conditions for neighbouring residents. Particularly tourists visiting the
Dead Sea area – an important source of income for Jordan – complained about the nuisance. In 2007, the
Ministry of Environment introduced a bylaw prohibiting the use of untreated manure and forcing farmers
to look for alternative fertilisers. Compost, which was not competitive in the past, has become a viable
alternative. The market potential is estimated at about 400 000 tonnes per year. Existing compost
producers are trying to develop this large new market before new competitors catch up.
34 Marketing Compost—The marketing environment

The role of subsidies
Subsidies are often linked to national policies from which compost business-
es can derive benefits or disadvantages. In India, since chemical fertilisers are
subsidised, they are far cheaper (at least in the short run) than compost and,
thus, reduce the competitiveness of compost producers, as these are exclud-
ed from the subsidies. However, subsidies can support compost producers
if, for example, local authorities allot compost producers some of the savings
achieved from reduced landfilling costs as a result of composting activities. In
Sri Lanka, many compost producers feel that the introduction of such a subsi-
dy would revolutionise the business and make them profitable.
3.3 Opportunities and threats
Analysing opportunities and threats is an aid to understanding the marketing
environment. It involves taking each element of the market environmental in
turn and considering the direct and indirect opportunities and threats. These
can then be ranked according to:
the significance of their potential effect;
their imminence – how soon they will have an impact; and
the degree to which it is possible to react, either to maximise benefits from
an opportunity or minimise the effects of a threat.
Revisit Figure 3.1: Factors influencing a business environment. The diagram
can be used to help structure your opportunities and threats analysis. Consi-
der the following questions:
How have each of these factors affected you in the past? How have they
affected your decisions? Which have led to success, and which have caused
you problems?
How could you transform threats into opportunities? For example, peo-
ple’s preference for cheap manure may be a threat. However, this indicates





Photograph: Silke Rothenberger
Marketing Compost—The marketing environment 35

an awareness of the need for organic matter, which could be turned into an
opportunity for your business.
How can you react to other threats, such as responding to changing legis-
lation?
How can you capitalise on opportunities?
You may find it helpful to express your historical and future opportunities and
threats assessment in a matrix similar to the one below. The left-hand side is
concerned with the past, the right-hand side with the future. Writing down
your thoughts will enable you to consult them in the future.
Figure 3.2: Matrix to evaluate success, opportunities, failures or threats for your business
or project. List all the factors influencing your current project in the matrix
Examples of opportunities and threats
Technological innovations: These can strongly influence your project. Tech-
nical development can create new opportunities. Sound and appropriate tech-
nology can help ensure a high-quality product and long-term success of your
initiative.
Climate: The climate may already have caused your composting project to
fail (e.g. heavy rainfall saturating the composting windrows). Although you can-
not change the prevailing climatic conditions, you can adjust your technology,
for example by roofing your composting site or providing a drainage system.
Competing products: Cow dung or poultry manure may compete with com-
post, especially if they are abundantly available at a low price. Such competing
products pose a considerable threat. In such instances it may be difficult to in-





Today
external
factors
external
factors
Opportunities
Successes
Threats
Failures
Past
developments
Future trends
internal
factors
internal
factors
36 Marketing Compost—The marketing environment

fluence the market unless you are able to provide compost at a lower price or
convince customers of its higher quality.
Import regulations: These cannot be controlled but can offer an opportuni-
ty. Where fertiliser or compost imports are restricted or difficult, locally pro-
duced products have a better chance on the market.

Marketing Compost—The marketing environment 37

4 Market assessment
So far, you have studied the marketing environment and should have acquired
a better understanding of how competition, legislation, standards, and sub-
sidies influence your business. Now we turn attention to target customers.
What do you need to know about them?
Since customers make or break any business, satisfying them is central to
marketing. This section deals with developing a detailed understanding of
markets and customers in order to target them and win them in the long-term
for your business. It describes what makes a customer; how to categorise
them; and how customer attitudes, perceptions and willingness and ability to
pay affect your business.
Market assessment demands gathering information from current and poten-
tial customers on a range of topics.
4.1 Segmenting your market
The market for compost is diverse, ranging from farmers with seasonal bulk
requirements to domestic gardeners wishing to purchase a small but steady
supply of compost year-round. Segmenting provides a way to categorise your
customers into groups with similar characteristics and requirements. Markets
can be segmented according to:
occupation (farmers, nurseries, estate developers, gardeners etc.);
location (rural / urban);
purchasing power / ability to pay (large cash crop farms vs poor rural farmers);
crop type (food, non-food);
frequency of compost purchase (frequent, perennial, seasonal);
scale of demand:
‘bulk’ or ‘volume’ markets demanding large quantities but not willing to
pay high prices; and
‘cash’ or ‘value’ markets paying higher prices but requiring less compost.






–
–
Marketing Compost—Market assessment 39

‘Scale of demand’ can be a useful first step in categorising the market seg-
ments. Some examples relating to each market are given in Table 4.1 below.
This list is not exhaustive and your research may reveal many more.
Bulk/Volume market Cash/Value market
urban and peri-urban agriculture
nurseries rural agriculture
viticulture (wine)
green space management
(parks, zoos, sport arenas)
forestry
landfill rehabilitation, mining
rehabilitation
fertilisers/distribution company
municipalities








horticulture (flowers and trees)
home gardening
vegetable gardening
hotels and company premises
landscaping, land development
fertiliser companies (retailers)
industrial use (biofilters)







Beware of treating segments as homogenous when they are actually diverse.
For example, the segment of ‘farmers’ may need to be further divided into:
large-scale cash crop farmers;
smallholders; and
organic farmers.
Each may have very different characteristics, needs, attitudes, knowledge,
and financial status.



Table 4.1: Typical bulk and cash markets for compost or products containing compost
40 Marketing Compost—Market assessment
Market segments in Karachi, Pakistan
Over the years, Waste Busters have developed a niche in three market
segments.
50 per cent of the compost market goes to high-value crop growers,
such as vegetable and fruit farmers, horticulturists, flower growers, and
landscapers. Compost is considered more environmentally friendly than
raw cow dung or other manure.
30 per cent of the compost market is home gardens where the com-
post is sold through nurseries in small bags.



Present market
It is usually less expensive to make current customers happy than it is
to find new ones.
Alexander, 2003
Market segments are usually dealt with in two groups: current and potential. If
you are still planning your composting business, you will not have any current
customers, so you will focus on potential customers from the outset. If your
composting business is already established, you will hopefully already have
some customers.
List your current market segments in a table and describe and quantify your cus-
tomers. This will provide a first comprehensive overview of your current market.
Table 4.2 below contains some examples and basic information. A blank version
of the table is included in Annex 2.
Your current customers will only remain loyal if they continue to feel satisfied
with your product. Asking your customers the following questions will help
assess their level of satisfaction, as well as build your relationship with them.
Your response will hopefully result in increased customer satisfaction.
Key questions with regard to current customers:
Are your customers generally satisfied or dissatisfied with the compost?
What do customers think of the quality of the compost?
What problems have customers had with the compost?
What improvements would your customers like to see in your product?
Potential for expansion:
Is each of your present market segments ‘saturated’ (i.e. are you selling to
everyone in the segment as much as they want/need)?
Which segments of your present market could be expanded?






Marketing Compost—Market assessment 41
20 per cent of the compost market is landowners with problem soils
(e. g. salinity). Compost is used to improve the soil.
Compost is sold in bulk (1500 Rs/ton) or in small bags (15 Rs/kg) for home
gardens.
Adapted from Ali, 2004


Segment
Description and
geographic location
Volume
Frequency of
demand
Number of
customers in
this segment
Comments
(e. g. location, income, reliability,
payment terms etc.)
Farmers Rural agriculture, farmers
hesitate to apply compost
High Seasonal / an-
nual demand
600 Considerable distances – transport
implications. Low ability to pay,
reliable demand. Low value but high-
volume segment.
Cash crop
farmers
Several farms (tea, banana)
in the urban vicinity. High
demand but also high quality
requirements
High Seasonal -
twice a year
5 High ability to pay, expect high qual-
ity and delivery in time.
Nurseries Mostly urban or peri-urban
flower or plant growers
Medium Frequent de-
mand
60 Often a local market. Medium ability
to pay, reliable market but consider-
able competition, including from
homemade compost.
Real
estate de-
velopers
Urban customers require
compost as soil substitute for
landscaping in different areas
High Irregular but
high demand at
one time
5 Require delivery on demand; check
estate development announcements
to identify new projects.
Middle/
high-
income
house-
holds
Private gardeners in urban
vicinity using compost for
vegetables or flowers
Low Not strongly
seasonal,
though peaks
during spring
1000 Local market, high ability to pay and
repeat custom / simple distribution
via retailers or pick up. High price
segment.
Table 4.2: Describing the present market by segment - some hypothetical examples from ‘Town X’
42 Marketing Compost—Market assessment

Potential market
The potential market is the market of tomorrow, comprising:
those who want or need compost but do not know about it or are not
convinced of its benefits;
those who are buying compost from a competitor; and
those who still use competing products such as cow manure or artificial
fertiliser.
Identifying your potential market segments (known as ‘prospecting’) begins
with brainstorming. The following questions may focus your ideas:
What conventional customers could you reach which you have not already?
What new/future uses of compost can you foresee, and who would be
the users?
Which groups are most willing to try new ideas? Which can afford to take
risks and which are risk-averse
1
?
New-customer prospecting in Germany
A compost producer wanted to assess the market in housing development
areas. He knew a family that moved into the new area. When the family de-
cided to develop its garden, the producer provided them with a free truck-
load of compost-amended top soil (delivered on a Saturday afternoon when
all new house owners were in their gardens). Neighbours, who saw the
truck with the logo of the company, became interested. The first orders for
compost-amended top soil were placed with the company even before the
truck returned to the plant.
Grüschow, 2006
The marketing principles presented in this handbook apply as much to current
customers as to new customers. Make a list of potential customers similar to
that for current customers in Table 4.2.
1
This issue is described by the ‘adoption curve’. Cf. Kotler et al. (2006), p 160 for more
details. It suggests that ‘Innovators’ and ‘Early adopters’ are those taking the risk of pio-
neering the use of a new product.






Marketing Compost—Market assessment 43

Scenario Need Want Able
$$$
Willing
$$$
Market
?
1. A rural farmer needs and wants to
buy compost to improve the very poor
soil quality of his fields. However,
although he thinks the price is reason-
able, he is simply not able to pay for
the product, as he is too poor.
√ √ x √ x
2. A wealthy householder uses com-
post for growing flowers in his garden.
He wants compost but has no great
need for it: his plants can grow without
it and he can afford chemical fertilisers.
He nevertheless purchases compost.
x √ √ √ √
3. A nursery owner needs compost for
healthy plant growth and wants to buy
some on a monthly basis. He is a
successful businessman and is able
to pay the price, but considers it too
expensive compared to cow manure.
He is therefore not willing to buy it.
√ √ √ x x
4. A tea grower is not convinced of the
usefulness of compost but has been
advised that since his soils are degrad-
ing, he needs to add organic matter as
soil conditioner. He is able and willing
to pay for compost.
√ x √ √ √
5. The government wishes to expand
organic farming and subsidises com-
post use. Farmers are hesitant to use
compost but are able to buy it as the
government provides loans.
√ x √ √ √
4.2 The customer
What makes a customer?
A customer is someone who wants or needs your product and is willing and
able to pay for it. The following table presents a range of scenarios, indicating
whether the customer needs or wants your product, and whether he is will-
ing and able to pay for it. The last column indicates whether or not the scenario
comprises a market.
1
Table 4.3: Matrix for customer assessment (Adapted from Ali, 2004)
1
Of course, customers must also know about your product, be convinced of its benefits
and be able to access it. These important issues are dealt with later in this handbook.
44 Marketing Compost—Market assessment

Willingness and ability to pay
A compost producer in South-East Asia said ‘customers are willing to pay for
our compost because of our proven performance, quality assurance, reliabil-
ity, and transparent pricing policy’.
Table 4.3 reveals that customers must always want or need your product and be
both willing and able to pay for it.
Ability to pay is related to people’s financial situation, including their income and
access to credit. It may also be related to seasonal flow of finance, or even de-
cision-making power. Ability to pay is a relatively fixed figure, although providing
credit or flexible terms of payment can increase it.
Willingness to pay is a more flexible concept, as it is partly dependent on priori-
ties and perceptions. It reflects the appreciation for a product rather than a real
market price. Willingness to pay can increase through education, but can also
be damaged by bad reputation. In Section 2.2 we deal with a list of reasons why
marketing is of particular importance to composting businesses. Many reasons
relate to quality concerns, competition with other products and stigmatisation
of waste-derived compost. Since these factors affect people’s willingness to
purchase compost, they need to be well understood and tackled through mar-
keting. These issues are also vital for pricing decisions discussed in detail in
Section 6.2.
The following diagram illustrates the willingness and ability to pay relative to
production costs for four scenarios, described below.
Figure 4.1: Evaluation of willingness and ability to pay
Marketing Compost—Market assessment 45
ATP
WTP
PC
Case 1
ATP
WTP
PC
Case 2
Loss
ATP
WTP
PC
Case 3
Viability
Problem
ATP
WTP
PC
Case 4
Misunder-
standing
Price
Ability
to Pay
Willingness
to Pay
Production
to Costs

Case 1: If willingness to pay is higher than production costs and compost is
priced accordingly, the business is likely to make profits.
Case 2: Willingness to pay is lower than production costs but the ability to pay
is high. This indicates a lack of appreciation for the product. Find the reasons
and improve willingness to pay by promotional activities and education.
Case 3: Ability to pay must be higher than production costs; otherwise it will
be impossible for your business to ever cover costs through sales alone. If cus-
tomer ability to pay is below production costs, either reduce the costs or look
for new customers and other income opportunities (e. g. subsidies).
Case 4: Data suggesting that willingness to pay exceeds ability to pay should
be viewed with caution. In such a case, respondents have either not under-
stood the question or have accounted for some other factors in their answer
(e. g. subsidies).
Key considerations for willingness and ability to pay
Are customers willing to pay the present price of compost?
Why/why not? Understanding the reasons can help you understand how
to increase customer willingness to pay, i. e. education, promotion etc.
What would make them more willing to pay for compost or willing to pay
a higher price?
How easily are the customers able to pay the present price of compost?
Knowing what customers are able to pay can help you develop products
or product units (quantities) affordable to specific segments.
Are customers able to purchase as much compost as they want at this
price?
If customers are limiting the amount they purchase because they are un-
able to pay the price, your business could benefit by lowering the price
and, thus, increase sales.

–
–

–

–
46 Marketing Compost—Market assessment

Farmers’ willingness but inability to pay in Bangladesh
A market assessment in Bangladesh revealed that organic farmers, who
require regular compost supplies for their land, are one of the largest po-
tential markets for compost. Many farmers are keen to switch to organic
methods because of the premium prices fetched by organically grown pro-
duce. They also face health problems associated with the use of chemical
fertilisers and spiralling costs, as the quality of their land deteriorates and
requires more chemical inputs year after year.
During the first year, a farmer switches to organic farming and requires
a very large quantity of compost to improve soil quality. However, this
first year can prove more expensive than buying chemical fertilisers for a
whole year. Despite savings for subsequent years when less compost is
required as the condition of the soil improves, this first year can prove too
great a barrier for many farmers. It is a major disincentive to the adoption
of organic practices in Bangladesh.
Ali, 2004
Farmers’ willingness and ability to pay in Nepal
The NGO ENPHO conducted a market survey among farmers to evaluate
their willingness to pay for compost. During a group discussion, the farm-
ers expressed their willingness to pay up to 4–5 NRs/ kg for compost. A
comparison with a previous study (2004) revealed contradicting results at
first glance. Here, farmers were willing to pay 0.5 NRs/kg for compost –
a price far below the current production costs. However, these farmers
also stated that they buy raw material for their own compost production
at 1.2 NRs/kg. Accounting for a 60 % volume loss during composting and
production costs, these farmers pay up to 4 NRs/kg for their own compost.
Consequently, effective promotion could turn this ability to pay into will-
ingness to pay.
Frömelt, 2007
Marketing Compost—Market assessment 47

48 Marketing Compost—Market assessment
4.3 Understanding your market better
It is necessary for you to acquire a detailed understanding of your market.
Some information can be obtained from secondary sources, but you really
need to spend time talking directly to customers; these hold the answers to
the key questions you should be asking.
This section introduces some of the key questions you need to ask in order to
develop profiles of your market segments. The list of questions below is only a
guide; questions need to be adapted for your own customers and compiled into
a coherent questionnaire. Annex 4 offers two examples of such questionnaires.
Geographical
Where are your customers located?
Do they have means of transport (i. e. can they collect compost them
-
selves)?
How can they access your compost?
Uses
What do customers want or need from compost?
How will they use it?
Why do they want compost?
Quantity
How much compost will they use and how often?
Is the market limited by the number of customers, cost or supply of compost?
(i. e. do people buy as much as they can afford or as much as is available?)
If compost is limited by supply, how much would the customer like to buy?
Quality
What quality do customers require?
Why? (e. g. aesthetics or safety for food crops)
What types of input materials are acceptable? (e. g. agricultural waste, ur
-
ban waste, sewerage sludge, human waste)
Attitudes and perceptions
When assessing a market segment, consider customer attitudes toward com-
post.
Do customers know about compost? Do they want it or feel they need it?
What are customers’ expectations and perceptions of compost?
Do customers consider it a worthwhile form of recycling organic waste or a
dirty waste product?
These topics are revisited in more detail when we consider product, pricing
and promotion.








–







Marketing Compost—Market assessment 49
4.4 Quantifying market demand
We are now beginning to understand the range of market segments. We now
need to quantify how much compost is required by each segment, and con-
sider the business’ ability to provide it. Demand is measured in terms of finan-
cial value based on volume per year. Data can be collected from representa-
tive groups in each market segment. The following two examples illustrate
calculations of current and potential demand for two hypothetical market
segments.
1. Market segment: ‘Farms around Lucknow’
How many farmers buy compost? 5 farmers
How much compost is required per acre per year? 5 tonnes
What is the size of the farms? 20 acres
Compost price/tonne? 2 $/tonne
[Total current market for this segment] = 1000 $/y
[Number of customers] x [tonnage purchased per year]
x [tonnage price]
This indicates the market value of this market segment in $/year.
2. Market segment: Nurseries in Banani District, Dhaka
This example illustrates different ways of assessing demand.
How many nurseries are in this area? 15 nurseries
How much compost is required per nursery per year? 30 tonnes/y
How much compost are nurseries willing and
able to buy each year? 10 tonnes/y
Compost price/tonne 1.5 $/tonne
[Total potential market for this segment] =
either: [Number of nurseries] x [tonnage required per year]
x [tonnage price]
675 $/y
or: [Number of nurseries] x [tonnage nurseries willing and
able to buy each year] x [tonnage price]
225 $/y
The first figure is the size of your potential market if you can convince all
nurseries to purchase as much compost as they require. The second lower
figure indicates the existing market.

When demand has been calculated for each of the current and potential mar-
ket segments, they can be added to obtain an indication of the overall market
demand.
Three other important considerations include:
Trends: Are the market segments expanding or reducing? (i. e. is the number of
customers in each market segment buying compost increasing or decreasing?)
Seasonal dependence: Is demand for compost seasonal or steady in each
market segment? (e. g. compost used for mulching during winter or planting
seedlings during the dry season?) Do your data reflect a particular season?
Seasonal payment: Can farmers pay at time of purchase or only after harvest?
Seasonal demand for compost in Tanzania
Studies in Tanzania have revealed that compost demand varies seasonally:
Nurseries raising trees and flower seedlings need compost year-round:
particularly during the dry season so that the trees and flower seedlings
are ready for sale during the long rainy season.
Growers of vegetables and potted ornamental plants use compost year-
round, but demand is higher during the rainy season.
Flower gardens and crop farms require more compost during the rainy
season.
Farmers in the flood areas need more compost during the dry season.
Adapted from Eawag/Sandec, 2002







50 Marketing Compost—Market assessment

Marketing Compost—Market assessment 51
4.5 Proles of market segments
You can now consolidate the information collected for each market segment into pro-
files as shown below. Further examples and a blank table are provided in Annex 3.
Customer Group: Horticulture/Nurseries
Geographic location Urban and peri-urban area, frequently along road
sides and on vacant plots.
Attitudes and Compost is well known and understood, so
perceptions perceptions are realistic and nursery owners are
well informed.
Uses Compost is used as soil substrate and potting mix-
ture for container plants such as trees, flowers,
ornamental plants, and seedlings.
Quantity Compost alone is not recommended for use as soil
substrate, however, mixed with sand or soil it gives
an excellent potting mix. Potting soil typically is
amended with 5–40 per cent compost (by volume).
Quality Seedlings require well-matured and finely sieved
compost. Less mature compost can be used as
mulch for adult plants.
Ability to pay This customer segment usually draws a regular but
not necessarily high income from a continuous and
reliable market. Thus, the ability to pay is assumed
to be average.
Willingness to pay Willingness to pay is dependent on the level of
awareness and knowledge on how to use compost.
Self-made compost by the nurseries or animal
manure may compete with your product and reduce
willingness to pay.
Purchasing behaviour Seasonal fluctuations in purchase are generally
expected.
Competing products Self-made compost, animal manure, peat, subsoil.
Estimated potential X numbers of nurseries have been identified in the
city. The annual demand of a nursery is estimated
at Y tonnes of raw compost. Data is based on local
business statistics and own observations. (Multiply
the X value with the average of all Y values).

52 Marketing Compost—Market assessment
4.6 Targeting market segments
You have now segmented your market and developed detailed market
profiles, including scale of demand, seasonal dependence, attitudes, and
quality requirements. You should now be able to make an informed deci-
sion about which segments your business can serve well and thus, which
markets to target.
It is usually an advantage for a business to target marketing towards a limited
but diverse number of market segments (e.g. bulk markets: farmers and real
estate developers, and cash market: domestic users). Your product, price and
location are likely to be better suited to certain segments than others. Being
selective in your targeting operations means you focus your energy and re-
sources on segments most likely to result in sales. Many businesses find it
useful to focus on a mixture of bulk and cash markets as a strategy to secure
a steady and reliable market, i. e. mitigate risk.
Remaining flexible
Although you can now make informed choices about which segments to tar-
get, but your decisions need not be final. As you think more about your pro-
duct, market position and pricing, you may have to refocus. Also, markets are
not static; in time, new opportunities may arise or existing ones cease to be
profitable.
This does not mark the end of your market research, as further information
about your customers is required to develop effective promotional strate-
gies. It is also important to review and update the market study frequently
(e. g. every year).

So far, you have assessed the market environment and understood the trends,
competition and legislation affecting your business. You have also conduct-
ed market research and identified potential target market segments. The next
step is to determine what your business can offer the market. What will you
produce, how will it appeal to your customers, and how will they access it?
5.1 Dening your product
Compost is a diverse product and it would be wrong to consider all compost
as the same.