module 1, session 2 designing a rural finance product: overview of the product development process...
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Module 1, Session 2
Designing a Rural Finance Product:Overview of the Product Development
Process
MICRO AGRI PRODUCT
Session ObjectivesBy the end of the session, the trainees are expected to:
• Define market research
• Identify and list the steps involved in market research
• Conduct market research
What is Market Research?
“It is the systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the company.”
-Philip Kotler
What is Market Research
• Define the objective or research problem
• Design – determine how you will go about the market research, and what tools to use.
• Collect and process
• Analyze
• Report
Steps Involved
Why do Market Research?
• PRODUCT-DRIVEN – produce something and try to sell it without much regard to market demand.
• MARKET-DRIVEN –identify and meet clients’ needs on a profitable basis.
Product vs. Market-Driven Approaches
Market Research Process
Product Development Product Test
Product Review and Modification
Secondary data
FGD Area mapping
Satisfaction FGDs
Exit survey
Survey
Product Development: Market Research
FrameworkMarket Size and Risks
Research Problems:
Is there sufficient market for the bank’s microfinance operation?
What are the risks?
If GO, proceed to Market Survey
If NO GO, look for other sites
and repeat the same process
Gathering
Assessment
Market
by Competitors
Secondary Data
Competitor
Market Size
Size of Market Served
Size of “Unserved” Market
Decision Point:
Market Risks
Go/No Go
Product Development: Market Research
FrameworkProduct Development and Business Planning
Research Problems: What product (s) would be suitable? What is the potential market share of the bank?
Market Survey
Area Mapping
Assessment of Demand & Supply Characteristics
Estimation of Bank’s Target Market Share
Product Concept Design
Financial Projections
Secondary Data
“What do clients want?”Focus Group Discussions (FGD)
OUTPUTS
PRODUCT DEVELOPMENT CYCLE
Market Research
Product Rollout
Product Design Product Test
Product Review
Guidelines in Conducting Market Research for Micro-Agri Product
Use Hand-out and Survey Tables
and Questionnaire
Secondary Data(Handout 1, MR Tables 1 - 2)
Data Element Source
• Population NSO• # of households NSO• # of Farming Households Mun.Agri. Office
Barangay Office
• # of HH w/ at least 1 ME MPDO/ Brgy. Office
activity• Major sources of income MPDO, interviews
Data on Competition(Handout 1, MR Tables 3 – 4)
Information
• Loans: Types, terms & conditions Table 3- Formal and informal sources
• Savings: Types, terms Table 4- Rural banks- Commercial/thrift banks- Credit unions- Paluwagan
Data on Target Market(Survey Questionnaire)
Profile of Target Market
1. Agricultural Activities2. Non-Agricultural Activities (Micro-
enterprises)3. Credit Practices4. Savings Habits
MARKET RESEARCH
What is Market Research?
• Market research is a scientific technique of identifying the possible opportunities available to microfinance institutions (MFIs), and the risks involved.
• There are different tools the bank can use to identify the nature of the demand for microfinance services (microenterprise & micro agri), the size of the market, competition, and the demographics of the target clients.
PRODUCT DESIGN
Product Design involves:• Designing and developing a product
• Developing a product manual (containing loan policies and procedures)
• Determining any adjustment to MIS requirements (MIS gap analysis)
• Preparing financial projections
PRODUCT TEST
Product Test involves:
Hiring and Training of Account Officers
Orientation of Bank Officers and Staff
Product Testing
Product Monitoring
PRODUCT REVIEW
Product Review is conducted 6 months after the Product Pilot Test or Bank has already 100 clients. The review is conducted to assess whether:
– Projected # of borrowers, portfolio quality and revenues are met? If not, why?
– Staff and clients like or dislike the product? If it’s the latter, what are the ways by which the product can be improved?
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