Monday, February 9, 2009

Product design and integrated marketing

Product development is part of the marketing process and MFIs are most effective at product design when they integrate it into their marketing program. This is because commercial product design is driven by clients – not MFI managers.

In marketing parlance, we talk of the “5 Ps”: People, Price, Product, Place (distribution), and Promotion. People – or the clients – are at the heart at the process, or the top of the pyramid. Everything else flows from an understanding of the clients, i.e. from what we learn from market research, as illustrated in the figure above.

If the goal is to provide the best possible, most beneficial products to poor and low-income people, then MFIs need to figure out exactly who those people are and what they need. However, MFIs often skip this step – they’re given product “templates” from donors or other international MFIs and simply begin selling the product in the market. Sure, they may sell a lot of loans, but are the products benefiting their clients? Are they really providing what their poor and low-income clients want or need?
So MFIs conduct market research and hopefully this research, such as client drop out and satisfaction, is done continuously. But is it fully utilized in the product development process? If product development is a separate special project, it's unlikely that prior research will be maximized, or special research will be cross-checked against what we've learned elsewhere.
For this reason, I like to see the market research and product development functions sit together within a single marketing department. When this happens, there's a greater likelihood of our client knowledge driving the product development process. But integrated marketing doesn't stop there. An integrated marketing program ensures MFIs maximize what they learn, by flowing market research data in a loop through the institution.
Ideally, research findings should flow up to management and down to loan officers, and loan officers and managers should provide feedback to the researchers. Do they agree or disagree with the findings? Would they like research to explore other issues or to explore certain findings more deeply?

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