How to make the rural credit product work Approaches to the assessment of rural market

1
(No Transcript)
2
How to make the rural credit product work?

Approaches to the assessment of rural market
Dorota Szubert and Michal Matul May 2005
3
Agenda of the Workshop

• Introduction
• Cases

4
Entering rural areas why important?

• From the point of view of social mission
  fulfillment
• A lot of people live in the rural areas in
  transition countries
• Armenia 35 of the whole population
• Tajikistan 75
• Bosnia and Herzegovina 57
• Most of them are poor
• From the point of view of building a strong
  institution
• Product and area expansion are among the growth
  strategies available
• The rural market is not so saturated as urban
  one

Source UNDP Human Development Report 2002
5
What is so different about rural areas?

• Cash-flow patterns and their seasonality
• Composition of portfolio of household assets
• Risk exposure
• Financial behavior and literacy
• Financial landscape
• Lower population density
• Remoteness
• Weather risks related to agricultural production
• Specific institutional context (norms, values,
  institutions)

6
Product development process and questions
to be answered
How to address particular needs
of potential clients?
Can a new product be developed?
INTERNAL PREPARATION
MARKET ASSESSMENT
CONCEPT DEVELOPMENT
REVISION AND ROLL-OUT
Were the needs and wants addressed through a
product?
PILOT TEST
What is the potential for product success /
expansion?
7
Market research options in the new product
development process
Exploratory market research
INTERNAL PREPARATION
MARKET ASSESSMENT
Feasibility study
Concept test
CONCEPT DEVELOPMENT
REVISION AND ROLL-OUT
PILOT TEST
8
Feasibility study is there a green light?
Exploratory market research
INTERNAL PREPARATION
MARKET ASSESSMENT
Feasibility study
Concept test
Client Monitoring and Evaluation
CONCEPT DEVELOPMENT
REVISION AND ROLL-OUT
PILOT TEST
Market survey
9
Feasibility study objectives and methodology

• Objectives
• What are the core financial needs in rural areas
  and which products can
  satisfy them?
• Is there sufficient demand in rural areas for the
  specific products to make the provision
  sustainable? What
  products are opportunities for the provider?

• Methodology
• Secondary data (national statistics, competitors
  data, previously conducted studies, staff
  knowledge
• Primary research (experts interviews, short
  interviews with key informants and potential
  clients)
• Primary quantitative research is not recommended
  here.

10
Exploratory market research
what is really needed?
Exploratory market research
INTERNAL PREPARATION
MARKET ASSESSMENT
Feasibility study
Concept test
Client Monitoring and Evaluation
CONCEPT DEVELOPMENT
REVISION AND ROLL-OUT
PILOT TEST
Market survey
11
Exploratory market research objectives and
methodology

• Objectives
• Which groups of rural households are in need of
  specific product(s) and which market segments
  show the most promise?
• How the product(s) should be designed and what
  specific product design features are important
  to respond to clients needs, attract future
  clients and make it sustainable for the provider?

• Methodology
• Qualitative techniques (focus group discussions
  and individual in-depth interviews)

12
Concept test Am I right?
Exploratory market research
INTERNAL PREPARATION
MARKET ASSESSMENT
Feasibility study
Concept test
Client Monitoring and Evaluation
CONCEPT DEVELOPMENT
REVISION AND ROLL-OUT
PILOT TEST
Market survey
13
Concept test objectives and methodology

• Objectives
• Is the product concept attractive for the
  potential clients?
• How will it be used? / How may it influence the
  potential clients lives?

• Methodology
• Qualitative (focus group discussions) or
  quantitative (questionnaire-based interview)
  techniques
• The product concept presenting product attributes
  is needed

14
Client Monitoring and Evaluation
how am I doing?
Exploratory market research
INTERNAL PREPARATION
MARKET ASSESSMENT
Feasibility study
Concept test
Client Monitoring and Evaluation
CONCEPT DEVELOPMENT
REVISION AND ROLL-OUT
PILOT TEST
Market survey
15
Client Monitoring and Evaluation
objectives and methodology

• Objectives
• How to further refine the product in order to
  emphasize its benefits and limit the weaknesses?
• Who is attracted by the new product?
• What is the satisfaction level with the product
  and its attributes?
• What are main benefits for clients?
• What is the repayment culture and characteristics
  of troublesome clients?
• What is the profitability of certain
  sub-segments sub-areas?
• What are the differences between branches and
  villages?

• Methodology
• Many methods and techniques available (client
  database, focus groups with the staff,
  self-completion forms, individual interviews,
  etc.)

16
Market survey what then?
Exploratory market research
INTERNAL PREPARATION
MARKET ASSESSMENT
Feasibility study
Concept test
Client Monitoring and Evaluation
CONCEPT DEVELOPMENT
REVISION AND ROLL-OUT
PILOT TEST
Market survey
17
Market survey objectives and methodology

• Objectives
• To segment the market based socio-demographic
  characteristics and financial behavior/literacy
  in order to inform the further strategic
  planning
• What are the further market opportunities
  (willingness to buy/recommend)?
• What is the most promising target?

• Methodology
• Quantitative techniques (questionnaire-based
  interview) based on the representative sampling
• Timing is important

18
Questions

• What resources (financial and non-financial) are
  needed to conduct the research?
• What are other requirements to conduct
  research?
• What are the benefits (both institutional and for
  the clients)?
• How to make decisions based on the results?