Thursday, February 12, 2009

Market research for pro-poor product development

MFIs can research just about anything, but to ensure products offered match client needs, most frequently they will research clients, competition, market trends, and gather data for special projects driven by management request e.g. projects to research new product ideas. Unfortunately, too often MFIs rely upon the latter - research for special projects - and neglect the former. Market research really should be ongoing, especially since new pro-poor product ideas can come out of research on the competition, market trends, client satisfaction, etc.
However, once you've got a new product concept, the MFI really needs to "drill down" to determine the product's "fit" with its current or expected client base. In other words, understanding your client is critical for pro-poor product development.

It's easy to believe we know our clients well, but do you know them well enough to write a biography for them? One of the most important outcomes of client research is the development of client profiles for each market segment. A profile answers the question, “who are your clients?” In addition to the more obvious characteristics, such as gender, age, and type of business, profiles should also address:

Needs and preferences: What do your clients want? Remember the core, actual, and augmented product? Your clients will have needs regarding features, regarding augmented issues such as speed and customer service. You need to know what your clients needs are in order to design the best product. This is important from an impact and a sales perspective.

Benefits: What benefits are the clients looking for? Ability to send their children to school? Ability to cover expenses during difficult periods? Ability to expand the business? If you don’t know what CORE product they want, what benefits they want, you’ll have to be very lucky in your product development to create the right product. Again, understanding the benefits the client receives is important both for social performance management and product marketing.

Attitudes: What do they believe about loans? How do they feel about savings? What attitudes do they have toward borrowing? Toward banks? MFIs?

Not everyone wants a loan from your MFI, so it’s important to understand who wants your financial products and services. Then you can tailor your pricing, products, distribution channels (place) and promotion to these client types, or segments.
Action item:
If you can't write a profile or biography for your typical client, you probably don't know them well enough! Make profile writing a regular part of your product development exercise, and use it as a red flag - if you can't write one, it's time to go back and do more research.

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