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Developed By: Prince Joseph

For COMMUNITIES

KIND ATTN: COMMUNITY LEADERS


COMMUNITY NETWORK BUSINESS MODEL
(CNBM)
Document by PRINCE JOSEPH
princeparannur@gmail.com

I started to love my community very much from the day I started to live out side Kerala.
The seed of this concept of Community Network Business Model (CNBM) grew from
this. A pre-draft of this document was submitted to The Secretary, Malayalee Catholic
Fellowship (MACAF) Ahemedabad for discussions and brain storming sessions in the
MACAF CO-OPERATIVE AND SUPPLY SOCIETY, Ahmedabad. The main changes
made in the document is in respect of its conversion to a accepted general concept which
can implement any where not withstanding the place, community and time.

I have actively participated and actively watched the era of Multilevel Marketing
Networking initiatives by different organizations including International Institutions.
However, I have noticed that the benefit of being in a community highly enjoyed
whoever joined in the networks but later almost all have given up the same without
getting any benefits to themselves or for the community. This situation forced me to
think about having a business model for the communities who live in the numerous
cities. This is an attempt to make a tailor made Business Model which can be
successfully implemented for the beneficial of the members of such community. I have
tried to make serious effort to look at this problem strategically and make a gap
analysis. I have been seriously thinking on this issue for quite some time and finally the
God almighty has revealed some idea, which I would like to put it as a business model
that could be put for a brain storming and implemented for the larger interest of any
community.

A good business model by the society should be an arm in our endeavor in attaining our
goal.

Our Vision/Goal

The community will launch a New Scheme (under a name, we may call it ‘Society’) in
which all members of such community can be a member and avail all the benefits of the
scheme. There will not be any rights to these members except availing the benefits
offered to them. Implementation Part of this document will describe how to achieve
maximum enrollment.
The value proposition
The dispersed consumer is brought under a single umbrella which creates win-win
situation for consumers (members), the marketer and Society. The retailers can offer
the targeted customers a special discount on purchase, which otherwise a consumer
would not have availed. The retailers can get a regular group of customers which can
generate more business volume and a percentage of trade margin can be shared with
targeted consumers and Society and the trade margin passed on to these two trade link
would be covered up by generating more volume business. Here the customers
(members) get the benefits like quality products, better service and a discounted price,
which is called Customer value triad. Value increases with quality and service and
decreases with price. Apart from this price benefits, we can simultaneously include our
own products in a larger scale and in a more profitable way. More and more items can
be added to it, as we will know each ones requirement from the enrollment form and the
discussions we have at grass root level. Our business vision will get more cleared once
we complete the enrollment. Based on this, we can mark/form the different segment(s)
of clients that are addressed by the value proposition. Considering the large number of
members of Society, we can have large groups who have the specific service/goods. This
can be transformed to our business targets even through the direct offers from the
Society. Depending upon the numbers we can also negotiate with the manufactures
directly.
The communication and distribution channels to reach clients and offer them the value
proposition.
Since the Society volunteers are ready to work without any financial benefits we cannot
over burden them with targets. Proportionate profit can be divided. They also cannot
afford door-to-door selling. Considering the time aspect of the volunteers, the overall
pyramid will be as follows:
(Everything is flexible according to the situation/necessary)
One executive for a group of 10 customers/members.
One Sr. Executive for 10 groups
One Manager for each group of 10 Sr. Executives
One Area Manager for 10 Sr. Executives (10000) who will report the business to the
committee
(Director Board) constituted for running the business.
There will be 5 Area Managers if there are 10,000 members.
Suppose we have a base of 10 thousand families/members:
Stage Total Groups of Total Groups or required persons:

Stage Total Groups of Total Groups or


required persons
1 10000 10 (family) 1000
2 1000 10*10 100
3 100 10*10*10 10
4 10 10*10*10*10 1

The above set up is designed to accommodate every members of Society into our
circle and at the same time reduce the problems of time constraint of the executives who
will be Society Executive Members. When every member is striving for livelihood they
cannot afford to spare extra time for social purposes. However, this model does not take
away much time as one Society member does not have to meet more than 10 people
directly. The Flow of information will be from stage 4 to stage 1.

The key resources needed to make the business model possible:

We do not have to incur any capital investment or cost involved resources to run this
business.(Of course some sundry expenses will be there). Our key resource is the
strength, vision and commitment of members of community and their social contacts. If
we can capitalize on this strength we can make wonders. (Other initial requirement is
detailed in implementation part)
The revenue streams generated by the business model (constituting the revenue model);
Society will be able to sell anything regularly to the end users ( eg. seasonal things (rice,
wheat, etc.). This will be easily possible as we will have the exact requirement of
members from our database.
What else the new business we can do?
This is a stage where we have to calculate the total purchasing power of the group as a
whole. A simple calculation will be as follows:
10,000 families spends Rs.5000/- per month. That means Rs. 5,00,00,000/- per month.
5% of the same will come Rs. 25,00,000/- per month. Multiplied by 12 means
Rs.3,00,00,000/- per annum. This amount can be divided with members and the society
according to the proposition decided later.
The above calculation is based on the Business Model-Main. The revenue generated
from the Business Model -Supplementary will be much more than this and it depends
the business practice we follow.

The process path of Business model-Main

Although there is a large customer base, they are scattered across the city and it is not
viable for them to buy from a single window/store. Moreover, we are also not interested
in selling all items ourselves. Here we can utilize the chain stores such as Big Bazar,
Reliance, etc. Again the problem arises, how our customers will be identified in the
stores to give some discounts. If they start any mechanism, it is bound to fail, as they
have to give the same to everybody. Reverse logic can play an important role here. If
our members can use coupons, specially designed for it as a medium of exchange
(money) in these stores there is no problem to get the discounts on every purchase, as
the coupons will be sold to our customers at a premium. Society will make repayment
after the premium offered by the stores. For example, if one store is offering 5% special
discount for our customers, this five percent can be divided as 4% to the customers and
1% for the society. That means, for a coupon of Rs.100/- our members have to give only
Rs. 96/- to purchase the coupons from our executives. Another important aspect of this
is, our customers should have some identification such as identity card to make the
stores to be rest assured that they could verify any moment of time, that the genuine
customers use the coupons.
The other alternative to the special coupons is that all most all stores are having gift
coupons, which can be brought in bulk with a premium they offer and can distribute it
to our members. This will also reduce the administrative expense but scope will be
reduced to single stores. That means if we have a tie up with 10 stores, then there will be
10 different types of coupons for 10 different stores. Once we reach the agreement with
the stores, our own branded items can be sold through the same stores with double
benefits.

To force the stores to come our way, we have to furnish the market study, which shows
the average spending capacity of our customers/members. Through this drive, with the
help of the questionnaire, we will also come to know the preferences /requirement of our
customers/members.
This model will help our members to avail all the benefits they offer to the general
public plus our special benefits.
The process path of Business model-Supplementary
Based on information received through enrollment form we can calculate the demand
for a particular item and can develop business on it.
Example 1. Based on Ex.No of children under the age of 15 a special offer on health
drink can be extended by the stores/or directly.
Example 2. Number of families who do not own Microwave oven –A special scheme by
durable companies can be communicated.
There will be multiple options for us … each durable will offer a different option for us.
We can also think sales of durables with the help of ( Sales India)etc…….Water purifier
….Selling houses for rented house families ( make tie up with builders) etc………..You
can
add many more like this.
I have personally believe that some times it happens that main will become
supplementary and vice versa.

Implementation Part

i) Enrollment of all members of Society is the first and most important part . The model
Form with Questionnaire shown below should have to be modified to collect all other
relevant information which may helpful for our future plans. Enrollment procedure
should achieve another object also. Through this drive, we should be able to achieve
wide publicity for the project. At this stage there should not be any Executives.
Everybody will be allowed to do this work. Apart from our own channel, we can use any
the existing infrastructure .New Letters of Society if existis, will be handy in this regard.

ii) Creation of a computer database through which we can easily segregate the etails
group wise.( Executive wise, Sr. Executive wise, Manager wise, AreaManager wise).
This will also help us who are in a need of a particular item of service/goods. As you are
well aware the fact that, to take decisions quickly there should be some type of
Management Information System available. Ten digit code will be given to each
members through which we can identify the members higher ups. First two digits will
identify the Area, next two will be for Manager, and next two digits will be for Sr.
Executive and Executive and last two digits for members of primary group. This
method will also will accommodate even if there is an increment at any level ie. up to 99.
The software should have the flexibility to accommodate any new item /information at
any stage of running the business. This database itself is saleable.

iii) Appointment of Executives, Sr. Executives, Managers, Area Managers. All the
appointment will be done at the approval of the Executive Committee of Society. After
division of the Area, Area Managers will be appointed first. Twenty names should be
proposed by the Area Managers to select as Managers under them. And so on.

iv) It is possible to form a group of persons who are qualified MBA to critically analyze
and suggest solutions to clear the road blocks from time to time. This group will be
work as an advisory board.
v) Simultaneously, we can identify and start negotiations with the Chain stores(eg.
Sales India, Big Bazaar, Reliance Fresh, Reliance Mart, Star Bazaar, More, Value
Bazaar, etc). We should negotiate in a way that we will get a same discount from all the
stores. Or we have to take care of the discount we offer for our members.

vi) This is the right time to enter such a business as the recession is really hitting all
the stores around the world and any city is not an exception. If anybody complete till
this stage, one thing is sure that they are going to build up a business model for
ourselves.

Model Enrollment Form with Questionaire:

For Office Use:- Area: Area Code: Executive Code:


Sr.Exe.Code: Manager Code: Area Manager Code:
Personal details
1.Name ----------------------------------------2. Address:-----------------------------------------------
-
Phone(Res.______________________(M)______________________
Email id:
3.Monthly income (approx)-
4.Details of members of Family:
Details of Family members Age Occupation
Head of family
Wife
Aged Parent 1
Aged Parent 2
Son/Daughter 1
Son/Daughter 2
Son/Daughter 1
Son/Daughter 1
Grand child 1
Grand child 2
Others (servant)
5. Own House ----------------------------- Rented House …………………….
6.Details of Durables Owned ( TV/Washing Machine/Refrgerator/AC/Oven/Others)
7.Deatils of any family member working abroad--------------------------------------------------
8.The Name of Stores regularly visiting:
9. Frequency: Weekly/Monthly
10. Do you get any loyalty bonus/discounts
11.Will you be interested in shopping from one retail outlet if you can get a discounted
price ?
Yes No
12. Total amount normally spend during a month:
13. What are the durables going to purchase in near future:
14. What are the items would like to purchase annually?:(rice,wheet,Chilli Powder,
Coriander, etc)
15.Health Drink used for Children:
16.Tea used :
17.Nearest community stores with frequency of visit:
18.Any information of interest of business.