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Rio Tinto and CARA, Madagascar: A Look at Differentiation Among Local Handicraft Markets

June 5, 2017

Writer: Aaron Rockwell 

Gasy Rugs, Madagascar: Seeing the value of differentiation is more apparent in developing markets.

Our current Thunderbird Emerging Markets Lab team has been working in Madagascar with local businesses and cooperatives to see how they can increase their capacities and capability. After taking the long haul over to Madagascar’s capital (Antananarivo) from our little piece of the world which we often times refer to as home (Thunderbird), we were able to see business enterprises from a new perspective.

Thunderbird Consulting Lab Goes to Madagascar

Member of cooperative Kanto

Handicrafts

We visited a local industries and local enterprises fair to see what Madagascar had to offer; at the same time, our client had also set up a booth to promote their business and businesses they support. One of the items that the client supports is hand-made local handicrafts from the southern part of the country.

They look like typical indigenous handicrafts, using grass and straw to weave designs onto placemats, baskets, wall art, and rugs. The products are essentially a commodity because all the handicrafts from all the different cooperatives and locals all look the same and sell the exact same products.

Quick Side Note

The example of lack of differentiation was also seen while walking down one of the more secluded beaches near some local villages. Three women, with baskets full of colorful seashells, laid down their blankets and started neatly putting out the seashells. The idea was to have us look at their shells and potentially buy one or two. The interesting thing about the three women's seashells was that there was no difference between one blanket to the next. It was almost as if they had been trained to copy each other exactly. How was a buyer to choose between them? What differentiation did they offer?

Thunderbird Consulting Lab Goes to Madagascar

Seashell Vendor on Fort Dauphin Beach

Differentiated Handicrafts

Across from the indigenous handicrafts booth was a French man who had taken the handicrafts business to a whole new level. He had cross-bred handicrafts with elegant design. The price of a local handicraft basket was 5,000 Ariary ($1.33), but the price of the French man’s handcraft art was 600,000 Ariary ($200). Through talking with the man we found out that he was making a sustainable living and expanding his business furthermore to include art certifications and courses on how to make handcraft art.

Thunderbird Consulting Lab Goes to Madagascar

French Design Meets Local Crafts

Why Differentiation Matters

People do not know what will sell because they do not understand the customer; at times they also are oblivious to changing their product in a huge way because there’s no guarantee of finding a market. I think the biggest take-away from the handicraft experience was that to elevate from commodity to character is the necessity to try new things. This is especially the case with local goods, where they can change the label, the bottling, and the design more fluidly from the base level.

Thunderbird Consulting Lab Goes to Madagascar

Juan Carlos Quiroga and Jason Harris with Local Handicraft Cooperative

The biggest barrier for local goods creators here in Madagascar is the disconnect between seller and customer. Most of the Malagasy people speak only Malagasy which limits their ability to ask their buyers what they would prefer to buy or ‘what if’ questions. For example, “What if this handi craft had your name on it? What could I do differently that would entice you or someone like you to buy in the future?”

Tying It All Together

Our team was brought to Madagascar to help a business incubator really understand all the facets of business. Since our first day in country we have been able to see new, simple, and brilliant examples of businesses thriving, and others being marginalized. Our project has allowed the team to not only build great friendships, but truly understand the importance of innovation on a ground zero scale. So far we have been in the discovery phase of asking questions and looking toward the stars for insights; but so far, the example of Gasy Rugs has definitely led us down the right path.