Bundling of inputs and services for sustainable smallholder agriculture: the concepts, theoretical arguments and bundle designs using conjoint analysis

Figures & data

Figure 1. A conceptual framework showing the influence of agricultural input product and service bundling on adoption, diffusion and impact of agricultural technologies.

Table 1. An overview of key insights, bundle attributes and levels to be used in conjoint design.

No.	Insights from empathizing	Bundle attributes	Explanations of how attributes increase adoption intention	Bundle attribute levels
1.	Smallholders experience complementarity value from using a combination of soybean seed, inoculant and phosphorus fertilizer. Constrained availability and high costs of transaction hinder adoption.	Technology bundling	Offering a package of complementary input products may enhance perceived convenience, performance (yield) and cost-saving leading to enhanced adoption intention.	Soybean seed alone Soybean seed and inoculant Soybean seed, inoculant and fertilizer
2.	Smallholders ascribe different values to seeds from different sources. Information asymmetry due to lack of branding makes product evaluation and adoption difficult.	Brand name	Branding may ease the evaluation of seed quality and its association with perceived added value (yield) thereby influencing adoption decisions.	Anno-agro industry Ethiopian seed enterprise Bore Bako Cooperative Union
3.	Smallholders have capital constraints to buy seed and fertilizer. They also need input package sizes that fit with the land area that they wish to allocate to soybeans.	Package size	Offering product bundles in options of package sizes may increase perceived convenience while handling and application leading to enhanced adoption intention	"Small (for quarter-hectare of land)" "Medium (for a half-hectare land)"
4.	Smallholders have difficulty with inoculant application to soybean seed due to the knowledge gap	Manuals	Manuals that pictorially show how inoculants are applied can minimize the perceived costs of information searching and increase complementarity	Manuals on inoculant application included in the product bundle Manuals on inoculant application not included
5.	Smallholders have labour constraints for soybean hand weeding. They are accustomed to using herbicides to control weeds in maize and expect the same for soybean.	Herbicide service	Adding herbicides to the product bundle could increase perceived added value (yield) and increase intention to adopt.	Herbicides are made available additionally at the union shop No further arrangement was made with herbicide
6.	The soybean grain market is unpredictable so smallholders are not sure if they can have a buyer or that prices may be lower.	Buyer contract	Offering buyer contract terms can increase the perceived performance (income gain) of the product bundle and increase the adoption intention	Buyer contract terms included No buyer contract terms included
7.	Low soybean household consumption due to drudgery in processing that hinders adoption	Common bean seed for home consumption	Offering an extra common bean seed, which is rich in protein and easier to process to be grown for home consumption may increase perceived food value and encourage soybean adoption as an income source.	Protein supplement included Protein supplements not included

NB: We used cost-based pricing for product bundles. So, price is not added as a stand-alone attribute. Actual costs were attached to each product bundle based on the constituents of the respective product bundles.

Figure 2. Sample card of product bundles as used in eliciting preference rating task (translated to English).

Table 2. Description of respondents taking part in the preference ratings of product bundles.

Characteristics	n	Mean	Std. Deviation
Age (years)	252	41.00	10.54
		Frequency	Per cent
Sex	Male	224	88.9
	Female	28	11.1
Respondent is household-head	No	21	8.3
	Yes	231	91.7
Education	No school	35	13.9
	Adult educ.	7	2.8
	Primary	132	52.4
	Secondary	61	24.2
	Post-Secondary	17	6.7
Stopped growing soybean after trial	No	154	61.1
	Yes	98	38.9

Figure 3. Average importance scores of soybean input product bundle attributes.

Table 3. Analysis of variance to smallholder soybean product bundle preferences (main and interaction effects).

Dependent Variable: Smallholder preferences to soybean product bundles
(a) Main effects					(b) Interaction effects (blocks)				(c) Interaction effects (blocks and farmer characteristics)
Source	df	F	Sig.	Partial η^2	df	F	Sig.	Partial η^2	df	F	Sig.	Partial η^2
Corrected Model	9	628.65	0.00	0.57	19	308.02	0.00	0.58	59	108.17	0.00	0.588
Technology bundling	2	286.07	0.00	0.12	2	292.43	0.00	0.12	2	313.86	0.00	0.123
Brand name	2	1.21	0.30	0.00	2	1.23	0.29	0.00	2	1.32	0.29	0.001
Buyer contract	1	4548.90	0.00	0.52	1	4635.63	0.00	0.52	1	4974.36	0.00	0.526
Herbicide service	1	221.52	0.00	0.05	1	230.78	0.00	0.05	1	247.72	0.00	0.052
Manual	1	78.71	0.00	0.02	1	88.83	0.00	0.02	1	95.17	0.00	0.021
Package size	1	42.74	0.00	0.01	1	46.86	0.00	0.01	1	50.31	0.00	0.011
Common bean seed for home consumption	1	91.08	0.00	0.02	1	81.60	0.00	0.02	1	87.56	0.00	0.019
Technology bundling*
Block					2	15.69	0.00	0.01	2	16.90	0.00	0.008
Age									2	2.79	0.06	0.001
Education									2	0.89	0.41	0.000
Extension									2	0.90	0.41	0.000
Hours to market									2	5.90	0.00	0.003
Brand name*
Block					2	12.60	0.00	0.01	2	11.68	0.00	0.005
Age									2	1.65	0.19	0.001
Education									2	1.24	0.29	0.001
Extension									2	0.44	0.64	0.000
Hours to market									2	0.54	0.58	0.000
Buyer contract*
Block					1	0.80	0.37	0.00	1	0.65	0.42	0.000
Age									1	4.71	0.03	0.001
Education									1	8.45	0.00	0.002
Extension									1	9.50	0.00	0.002
Hours to market									1	10.44	0.00	0.002
Herbicide service*
Block					1	1.33	0.25	0.00	1	2.23	0.14	0.001
Age									1	0.53	0.47	0.000
Education									1	0.13	0.72	0.000
Extension									1	2.79	0.09	0.001
Hours to market									1	0.07	0.80	0.000
Manual*
Block					1	0.22	0.64	0.00	1	0.26	0.61	0.000
Age									1	3.08	0.08	0.001
Education									1	7.47	0.01	0.002
Extension									1	0.82	0.36	0.000
Hours to market									1	2.54	0.11	0.001
Package size*
Block					1	23.19	0.00	0.01	1	24.38	0.00	0.006
Age									1	0.24	0.62	0.000
Education									1	0.00	0.98	0.000
Extension									1	2.01	0.16	0.000
Hours to market									1	0.54	0.46	0.000
Common bean seed for home consumption*
Block					1	5.37	0.02	0.00	1	3.50	0.06	0.001
Age									1	2.92	0.09	0.001
Education									1	0.04	0.84	0.000
Extension									1	1.94	0.16	0.000
Hours to market									1	0.01	0.91	0.000
Error	4275				4265				4225

Table 4. Smallholder preferences (utility estimates) for the bundle attribute levels.

Parameter Estimates
Dependent Variable: Farmer preferences for soybean product bundles
	Parameters	B	Std. Error	t	Sig.	Partial η^2
Bundle attributes	Attribute levels
Technology bundling	Soybean seed alone	−1.10	0.05	−24.59	0.00	0.12
	Soybean seed with inoculant	−0.51	0.05	−11.32	0.00	0.03
	Soybean seed with inoculant and fertilizer	0^a
Brand name	Anno agro	−0.06	0.05	−1.35	0.18	0.00
	Ethiopian seed enterprise	0.00	0.05	0.07	0.94	0.00
	Bore Bako	0^a
Buyer contract	Buyer contract included	2.55	0.04	69.40	0.00	0.52
	No buyer contract	0^a
Herbicide service	Herbicides made available at union shop	0.56	0.04	15.31	0.00	0.05
	No arrangement for herbicides	0^a
Manuals	Manuals included	0.34	0.04	9.13	0.00	0.02
	Manuals not included	0^a
Package size	Small (for quarter-hectare of land)	0.25	0.04	6.73	0.00	0.01
	Medium (for a half-hectare land)	0^a
Common bean seed for home consumption	Bean seed included	0.36	0.04	9.82	0.00	0.02
	Bean seed not included	0^a

^a This parameter is set to zero because it is redundant.

Table 5. A step-wise flow chart for designing a product bundle for the smallholders.

Steps in bundle design	Explanation	Key references
1. Technology development	Aim: Find a technological solution to increase smallholder sustainable productivity, food security and/or income Activity: Basic research in, for example, crop variety improvement and fertilizer development, identify synergistic and complementarity effects Outcomes: Selection and development of effective technologies	Evenson and Gollin (2003), Giller et al. (2013)
2. Empathize	Aim: Understand smallholders' needs, motivations barriers to adoption and perception of the technologies Activities: Observations, smallholder and expert interviews, focus groups Outcome: Identification of potential products and services (bundle attributes) that can meet expectations and provide solutions to the adoption barriers	Luchs et al. (2015), Brown (2008), Ingenbleek et al. (2013)
3. Market research	Aim: Understand the importance of the bundle attributes to determine which attributes make optimal product bundles for specific market segments Activities: Design and conduct a conjoint study. Combine the bundle attributes, develop hypothetical alternative product bundles and examine smallholders' preferences for the alternatives Outcome: Selection of preferred bundle attributes that compose optimal product bundle(s)	Ingenbleek et al. (2013), Goldberg et al. (1984), Green and Srinivasan (1978), Rao (2009)
4. Engage stakeholders (product development)	Aim: Communicate research findings and sensitize stakeholders for coordinated action in product development and marketing Activities: Identify stakeholders, conduct stakeholder consultations and workshops, define roles, functions and benefits Outcomes: Consensus on coordinated action and development of product bundle	Rivera-Santos et al. (2012), Parmigiani and Rivera-Santos (2015)
5. Pilot and test	Aim: Test the effect of the new product (product bundle) on smallholder actual adoption behaviour Activities: Conduct a field experiment, like an RCT or test market Outcomes: Modified and improved product bundle, insights into expected costs and potential earnings	Duflo et al. (2007), Gaurav et al. (2011)
6. Implement the product bundle	Aim: Create access for smallholders to the productivity-increasing technologies as product bundles Activities: Create awareness with smallholders, train agro-dealers and agents, organize supply chain, logistics and market the product Outcomes: Adoption of productivity-increasing technologies, wide-scale production and marketing	Cooper (2019), Parmigiani and Rivera-Santos (2015)
7. Evaluation	Aim: Check satisfaction, impact on productivity, income and food security Activities: Track purchases, impact evaluation through interviews and contribution analysis Outcome: Improved offerings for sustainable smallholder development (incremental innovation)	Kotler and Armstrong (2010), Befani and Mayne (2014)

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