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Technical InputsTechnical Inputs

1)1)Workshop on Choosing Market Workshop on Choosing Market Growth StrategiesGrowth Strategies

2) Workshop on Choosing Priority 2) Workshop on Choosing Priority Strategies and InitiativesStrategies and Initiatives

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Technical Input for theTechnical Input for the

Workshop onWorkshop on

Choosing Market Growth StrategiesChoosing Market Growth Strategies

Initial Market Phase I

T I M E

Characteristics:1st MFI/MFIs begin lending;Use similar methodology; similar products; Few overall borrowers in the marketBorrowers are very timid

Market Dev.Phase II

Market Expansion

Phase III

Market SaturationPhase IV

Characteristics:No. of MFIs grows; No. of borrowers grows; Additional products begin to emerge; Clients mostly loyal or feel they have few other options

Characteristics:Borrowers have more choices & exercise choice; multiple loans; delinquency becomes a problem;New & innovative products begin to emerge; Some MFIs introduce with new lending technologies

Characteristics:Market offers a range of products tailored for specific MF market segments; A range of lending methodologies; More competition; clients have more choices; multiple borrowings;PAR problems may become more serious; Price competition; More wholesalers offer funds to retailers

Workshop on Market Phase1. Participants group by branch or area of operations. 2. Based on the market phase characteristics, each

group will identify the market phase the branch finds itself in.

3. With inputs from the account officers, identify all the competitors in the market. Then, narrow the competitors to the major ones that the branch competes with head-on.

4. Write group outputs in a piece of Manila paper for presentation.

Strategic Choices & Risks Factor

A.Penetration

65%

B. New Product Development

30%

C. Market Extension

45%

D.Diversification

15%

Existing

MARKETS

New

Existing PRODUCTS New

Source: Peter Cheverton, Key Marketing Skills, 2nd Edition, Kogan Page, 2004

Note: % in red refers to rate of success.

9 Ways to Build Demand –Strategic Choices

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P R O D U C T S

Existing Modified New

M

A

R

K

E

T

Existing Sell more of existing products to our existing types of customers(Market Penetration)

Modify current products and sell more of them to our existing customers (Product Modification)

Design new products that will appeal to existing customers (New Product Dev.)

Geographical Enter and sell our products in other geographic areas (Geographic expansion)

Offer and sell modified products to new geographical markets

Design new products for prospects in new geographic areas

New Sell our existing products to new types of customers (Segment Invasion)

Offer and sell modified products to new types of customers

Design new products to sell to new customers (Diversification)

Source: Philip Kotler, International Marketing Guru & Professor, Kellog School of Mgmt, Northwestern University, Illinois

Matrix of Strategies, Conditions &Market Research Tools

Strategies Requirements Market Research Tools

Market Penetration There is still an un-served market Product offering is superior to attract served

market Ability to modify and enhance product to respond

to market needs

Usage, Awareness and Image (UAI)

Study Focus Group Discussion Competitors analysisCustomer Tracking System Customer Satisfaction Survey

Market Extension There is still an un-served market Product offering is superior to attract served

market Capacity of the existing distribution channel/ or

putting up additional distribution channel Ability to modify product to respond to the market

needs in the expansion area

Secondary Market Data Analysis and

Market Survey Focus Group Discussion Competitors analysis

New Product Development Existing clients have a need for new financial services or solutions Bank has the ability to design and pilot-test

Market SurveyFocus Group Discussion

Diversification A new market or customer segment that is untapped but shows growth potential when pursued by the bank

Rapid Market AppraisalMarket Survey Focus Group Discussion

Workshop on Strategies Bank Will Pursue

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ProductExisting Modified New

M

A

R

K

E

T

Existing (Market Penetration) (Product Modification)

(New Product Development)

Geographic-ally Modified

(Geographic expansion)

New (Segment Invasion) (Diversification)

Group Outputs on Strategies to Pursue

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Product

Existing Modified New

M

A

R

K

E

T

Existing (Market Penetration)

Example: Branch A, Branch C, Branch F

(Product Modification)

Branch A, B, C, D, F, G

(New Product Development)

Micro Agri loan – Branch A, D, E

Educational loan – Branch B, E

Geographic-ally Modified

(Geographic expansion)

Branch A, C, G, F

New (Segment Invasion)

Branch C, E,

(Diversification)

Pawn lending – Branch B, C, D

The Question Is:Which of the strategies should be prioritized? To answer the question, there are a few matters to consider.

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Technical Inputs Technical Inputs On Choosing the Priority On Choosing the Priority Strategies and InitiativesStrategies and Initiatives

Three Key Questions What should we do? Why should we do It? Can we do it?

What Should We Do?

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MF Growth Strategy

2007 – 2009

Introduce a new loan products to existing clients?

Exploit new distribution channels?

Form alliance with other institutions or insurance co.?

Introduce new loan products to new markets

segments?

? ? ?

Move upmarket to target bigger customers?

Expand branch network to new region?

1. What’s my strategic growth objective?

2. How do I assess competing opportunities?

S T R A T E G I Z I N G

Why Should We Do It?

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• Increase efficiency?• Improve distribution?• Improve cost-effectiveness?• Expand markets?• Improve income?

Why This Technology?

Why This Product Innovation?

• Respond to client needs?• Increase Client Retention?• Remain competitive?• Fill market gap?• Expand markets?• Improve Income?

But Before You Get There… Key Preparation Steps

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Planning the Planning the Product IntroductionProduct Introduction

Planning the Planning the Product IntroductionProduct Introduction

Implementing the Implementing the New ProductNew Product

Implementing the Implementing the New ProductNew Product

Integrating the Integrating the ProductProduct

Integrating the Integrating the ProductProduct

Change

Process

Guided

by

Vision

and

Strategy

Change

Process

Guided

by

Vision

and

Strategy

Consistent CommunicationConsistent Communication

What should we

do: choosing the

right innovation

Why should we do it: clarifying

goals

Can we do it:

assessing capabilities

and competitors

A Three-Step Process as You Introduce a New Product or Technology

Conduct client segmentation Assess demand for new

product among current and potential clientele

Design a product responsive to the targeted segment’s characteristics

Prepare financial forecast Assess implications of a new

product’s introduction on key institutional dimensions.

Assess the readiness of the organization

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Change

Process

Guided

by

Vision

and

Strategy

Change

Process

Guided

by

Vision

and

Strategy

Planning the Product Planning the Product IntroductionIntroduction

Planning the Product Planning the Product IntroductionIntroduction

Implementing the Implementing the New ProductNew Product

Implementing the Implementing the New ProductNew Product

Integrating the ProductIntegrating the ProductIntegrating the ProductIntegrating the Product Pilot test On the basis of

the pilot, make relevant adjustments in product design, systems, processes and procedures

Roll out

Track progress Align

organization Capture

learning Transform

cultureConsistent CommunicationConsistent Communication

Can We Do It?

Position B with Advantage Z

Position B with Advantage Z

Position A with Advantage Y

Position A with Advantage Y

Understand Your Industry

Research Your Customers

Assess Your Capabilities

Analyze Your Competitors

Make StrategicChoice

Or . . .

• Who participates in our industry?

• What does the industry look like now? How attractive is it?

• How is the industry changing?

• How big is our potential market, and how saturated is it?

• Who are our customers?

• What do our customers value?

• How well are we serving them now?

• What else do they need?

• What capabilities do we need to reach and serve our chosen customers?

• How do our capabilities stack up against those of other MFI’s?

• How do our costs stack up against those of other MFI’s?

• Who are our primary competitors?

• Which customers are they serving?

• How are they serving customers, and how well?

Assessing internal capabilities, customer demands, competitors and the industry

Workshop on Prioritizing Strategies From the choices shown in the last Workshop

Output, discuss and agree which ones the bank should designate as Priorities, ranked as 1st, 2nd, 3rd, etc.

For each of the top 3 priorities, discuss the objectives.

And assess whether the bank has the capability to do each of these 3 priorities, and what adjustments are needed in order to do so.