Seminar on Microfinance Management

ASSIGNMENT

“Marketing Research and Marketing Environment in

Microfinance.”

SUBMITTED TO: Ms. Ankita Bharadwaj

SUBMITTED BY: Pooja Miglani

ROLLNO: 22

COURSE: Mcom ( Hons), 1st Year

UNIVERSITY BUSINESS
SCHOOL, PANJAB
UNIVERSITY,
(CHANDIGARH)

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● Marketing: According to Philip Kotler," Marketing is a social process by
which individuals and groups obtain what they need and want through
creating, offering and freely exchanging products and services of value with
others".
● Marketing Research: According to Philip Kotler, Market research is a
systematic design, collection analysis, and reporting of data about the market
and finding relevant to specific market situations facing the company.

Market research is a systematic process of design, collection, analysis and

reporting of data about the market and its preferences, opinion and trends.

● CLASSIFICATION OF MARKET RESEARCH:

Market Research

Exploratory Research Descriptive Research Casual Research

➢ Exploratory research. It is fundamentally done to explore and classify

thoughts and opinions.

For example: an MFI might want to know the important factors which affect
the purchasing behaviour of the microfinance products and. drop out of
clients from an MFI.

➢ Descriptive Research: It is of two types i.e.

❏ Longitudinal Studies: These are conducted over a period of time, for a
sample of respondents. For example - An MFI wants to understand the
pattern of purchase of microfinance products over 5 years in an area.
❏ Cross sectional research: It is a simple study conducted at a given
point of time. For example - An MFI wants to understand the need of
insurance products in an area for the coming year.
❏ Causal research: This is a need based research like diagn study and
investigative study. For example - An MFI wants to understand what

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 will happen on the sale of the microcredit products if the rate of
interest is increased by 1%.

● Market research to intensive market penetration:

Marked/MFI New MFI Developing MFI Developed MFI

Developed No action Limited market Extensive marks

market research research.

Developing Extensive marks Limited market Extensive marks

market research. research research.

New market Extensive marks Extensive marks Extensive marks

research. research. research.

1. No action - The new MFIs should not venture into a developed mature
market.
2. Limited market research - The intermediate MFI in a mature microfinance
market should:

● Make use of existing products and capture the clients perception,

refine and redesign the existing product by client's feedback and
market research.
● Track client perception of the quality of products and services
Offered.

● Evaluate the product specific issues associated with delinquency,

dropout etc.

● Innovate new marketing strategies.

● Re-examine the innovative marketing strategies.

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3. Extensive market research - The developed MFI in a mature microfinance
market should
● Scan the competition environment regarding microfinance and find
out the business opportunities and new market segments.
● Track client's perception of the quality of products and services
offered.

● Innovate microfinance products, delivery systems and new marketing

strategies.

● Critically evaluate pricing issues and staff training, and market

synonyms for present and future markets.

➢ New market: It is a market where less financial products and services are
available. The demand for financial products and services are also less. In
new markets. MFI focuses on development of appropriate products and
creation of a market for microfinance products.
➢ Developing market: It is a mascot where the demand for Financial product
and services is high but MFIs are unable to meet the demand. The focus of
the MFI in development market is on development of effective and efficient
institution systems to meet the demand for financial products and services.
➢ Developed market: It is a market where financial products and services are
readily available to the population. There is a high competition coming MFIs
in the developed market. The MFIs in developed should focus on imposing
their client responsiveness and product diversification to provide tailor
made and customized products to clients. In developed markets, the effective
demand is nearer to the level of potential demands.

● BENEFITS OF MARKET RESEARCH

1) Customer satisfaction: It provides important information to MFIs on the

satisfaction level of customers, and the gap between demand-supply of
microfinance products in microfinance market.

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 2) Redesigned & refined products & services: A systematic and well-
Structured market research can enable MFIs to redesign and refine their
current product and services, Innovate new products and integrate existing
products as a package for the clients.

3) Upgradation of technology: Market research can enable MFIs to upgrade

technology like product and service distribution, increase organizational
efficiency and organization’s effectiveness.

4) Identification of potential target markets: Appropriate market research

and careful analysis of demands and demand-supply gap will help MFIs in
identification of potential target markets for MFIs products and diseases and
also help MFIs in internalizing clients perception on product and delivery
models.

5) Scanning of marketing environment: Market research helps MFIs in

identification of the cause for low repayment rates, overdue, wilful demands
& defaults, competitors activities and the impact of competition on clients. It
can scan marketing environments including external shocks.

6) Tracking clients: MFIs can be able to track clients and monitor the
programme by a systematic market research programme.

● MARKETING ENVIRONMENT FOR MICROFINANCE

It is very important for MFIs to understand the marketing environment for
marketing financial products & services. The marketing environment influences
directly and indirectly and impacts the marketing of financial products positively
or negatively.

It includes:

I. 4 P’s
II. PESTEL Analysis

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I. 4 P's: Four P’s in microfinance are product, price, place and promotion
which helps in scanning the business environment of microfinance
institutions .

❖ Price: This considers the demand, profit sustainability objective using

various strategies that include cost-based, cost plus, demand-based
and break even. It looks at behavioural attitudes, perceived value,
prestige etc. It seeks to determine what the buyer must give up for the
product.
❖ Product: It examines such issues as product adaptability, idea
generation, idea screening, prototype development, concept
development, commercialisation, product growth and quality.
❖ Place: This involves making sure that the service/product is accessible
where and when it is wanted. Important lessons can be withdrawn
from the informal sector.

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 ❖ Promotion: This refers to sales communication, which includes
advertising public relations etc. It informs and persuades and
sometimes dissuaded.

II. PESTEL Analysis: The Pestel analysis is a tool devised by Harvard

professor Francis Aguilar to conduct a thorough external analysis of the
business environment of any industry for which data. is available. PESTEL
is an amalgam of initials of various factors which are namely Political,
Economical, Social, Technological, Environmental and legal.

● Marketing Environment in Microfinance

1) Economic environment: The purchase of microfinance depends on

the economic environment i.e. economic status of the people and
potential clients, aggregate demand, income of households etc.
Interestingly, sale of most of the marketable products is directly
related to the good economic condition of people or potential clients,
but sale of microfinance products is inversely related to economic
condition of people or potential clients. So, the sale of microfinance
products will be more when the economic condition of people is not
good.
2) Demographic Environment: It includes the population class and
population spread, age, sex , et. MFIs are interested to understand the
demographic environment to make their programme, planning
opening of branch offices, Staff distribution etc. For Ex: An MFI’
decision on opening a branch office and development of staff may
depend upon other geographical area coverage or cliental density. On
this decision, An MFImay have multiple branches in one district and
multiple districts under one branch.
3) Technological Environment: MFis need to scan the environment to
know if various Innovative microfinance products & services are

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 made available to clients MFIs will have to understand the level of
innovation coming out in the microfinance sector and how a particular
Innovation has competitive advantage in the microfinance market.
4) Cultural and social Environment: It includes the social and cultural
factors and relationships among people which include caste, class,
religion, social bindings, social conflicts, pattern of recreation,
thought process of people and existence of superstitions among
people. The product penetration and product designing for tailoring to
people's needs depend on an in depth understanding of cultural &
social environment.
5) Competitive Environment: The competitive environment includes
the nature and degree of competition among the MFIs and between
Mfl and non-institutional financial sources, for the provision of
microfinance. It includes the existence of various players in the
market who are providing microfinance products & services.
6) Political & Legal Environment: Microfinance services and the MFIs
will have to operate under the political & legal environment. So MFIs
will have to analyze the political and legal environment constantly.
Any change in the political & legal environment including political
stability, political lobby, legal policies, acts, franworks etc. influences
the operations of MFisconsiderably.

● Example of Primary Market research in MICRO-FINANCE

Important signals for new product development can come in the form of direct
feedback from staff / officers who have established relationships with these
customers. This customer provider interaction is often built into the methodology,
as is the case with many group-based lending strategies.

For example, The mission of SEWA Bank in India is to create “People's economic
organisation."

Accordingly. SEWA has helped organise its microenterprise borrowers into trade
unions and smaller committees to address different needs, such as input sourcing,

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networking and bulk purchasing. During group meetings, ideas of new products are
generated:

“We have many forums in which women can talk to trade unions, executive
committees, cooperative bank meetings; just by listening. We hear what their needs
are; that's how we get our ideas for new products".

 REFERENCES
Debadutta k. Panda, Understanding Microfinance, Wiley India PVT LTD., New
Delhi, 2014
http://www.microsave.net/files/pdf/1371125442_Market_Research_for_Microfinance_Participant_s_M
anual_1.pdf

https://www.fernsoftware.com/blog/the-importance-of-analysing-the-market-for-microfinance-
institutions/

https://www.microfinancegateway.org/sites/default/files/mfg-en-toolkit-marketing-for-microfinance-
dec-2007_0.pdf