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Horizon: Challenging Task for MFIs in Rural Areas ` borrowers. Apart from savings and loan products, poor people also need insurance products. Health related expenditure at times far exceeds the income levels of many households, which leads them to a situation of debt trap. The insurance companies, also need to design low cost health insurance products for the rural poor. The need is also for weather insurance products to provide relief to farmers in cases of losses due to excess/deficient rainfall. The key to enhanced financial inclusion is reduction in transaction costs. The experience of some institutions in the country as well as in other countries, however, suggests that an appropriate use of technology could significantly reduce the operating cost of financial inclusion and make it a viable and sustainable activity. The availability of new information technology, expansion of credit information services, innovations in micro-finance and the non-conventional modes of delivery of financial products offer further opportunities for reducing transaction costs in dealing with small savers and borrowers. Product Marketing Strategy: Product marketing should be perfected during the pilot test. Success factors include the effectiveness of internal marketing; the level of pre-existing marketing competencies, adequate marketing plans and budgets; and the degree of focus on customers services. During the test period, the effectiveness of marketing should be closely monitored. Marketing concepts focuses MFI’s approach to offer products to its current and potential clientele. Marketing is not only a means of selling more products more effectively or of developing new and more customer-oriented financial products, but also it seeks the involvement of the entire management and staff of the MFI. Marketing collects information from internal and external sources to answer questions, such as [i] which products and services are needed and will be bought?[ii] what price is acceptable to clients?[iii] how can products and services be sold in the most effective and efficient manner?[iv] which information channel is best able to reach clients to make the product known, valued and demanded? Clients and markets often change over time. Therefore, client-oriented MFIs need to continuously adjust, improve and innovate in order to offer customer services that are demanded, valued and useful. Marketing management is the key to the long-term sustainability of the MFI. It is a continuous process that includes [i] planning i.e setting of clear goals and the design of strategies to achieve those goals [ii] implementation i.e forming and staffing the marketing team and directing the actual operation of the team according to plan and [iii] evaluating performance i.e analyzing perform-

ance in relation to the organizational goals in order to effect necessary changes and adjustments‌ The product marketing strategy emphasizes the development and differentiation of products. It is a process of continually and systematically assessing needs of the market and its different segments to support product development and innovation that caters for those needs in the most feasible and profitable manner. Among others, following are critical areas of marketing strategy. Trust: financial service provision involves an intimate relationship between the producer and the consumer. Thus, financial relationships are often built over a long period of time and are very sensitive to changes in mutual trust. Growth balanced with risk: Selling financial products, particularly loan products, involve risk. Accordingly, organizational growth must be well balanced with the risk capacity of the MFI to manage risk. Market segmentation: It is the process of dividing the market into distinct target groups that share specific characteristics. Determining target market segments helps the MFI identify opportunities to improve and expand its current products and services. Each segment targeted should be large enough to be easily accessible and profitable Marketing mix: The marketing mix combines determining which products to offer; and how they will be priced, distributed and promoted?


About the Author Dr Amrit Patel is PhD in Banking & Finance, has 25 years experience in Bank of Baroda & since 1995 has been senior consultant Rural/MF with projects funded by World Bank, ADB, IFAD in Azerbaijan, Tajikistan, Kazakhstan, Bangladesh, Uganda. He has contributed over 600 articles/papers in leading financial dailies, journals, Microfinance Gateway.

Microfinance Focus [ April 2009 ] 19

Microfinance Focus April issue 2009  
Microfinance Focus April issue 2009  

A Global Magazine on Microfinance and Sustainable Development