Entering New Markets: How Market Research Can Inform Product Development
This note discusses how market research can inform and lower the risks associated with new product development done by urban micro-lenders entering rural areas. The note focuses on technical considerations regarding various market research options in situations when one enters a completely new market. The content is based on research work undertaken jointly by the Microfinance Centre for CEE and the NIS (MFC) and its Armenian partner MDF-Kamurj during 2002-2004 within the SEEP Network Practitioner Learning Program.
MDF-Kamurj has taken a strategic decision to enter rural areas due to limited growth opportunities in markets currently being served. As an urban micro-lender, MDF-Kamurj lacked rural market intelligence. MDF-Kamurj is not the only MFI that has faced this challenge. According to MFC 2003 regional microfinance industry mapping, 56% of NGO MFIs from Europe and Central Asia planned to enter rural areas. This is perceived as a major institutional challenge. If urban MFIs are to be successful in serving rural populations they need to better understand rural market needs associated risks. This can be achieved by informing new product development through various market research activities. Market research not only has the potential for reducing operational risks, thus cutting costs of product development and roll-out, but it also inspires the development of innovative solutions.
This note aims to guide the reader through some possible options for market research that can be undertaken at various stages of product development:
- Internal preparation
- Market research
- Concept development
- Pilot test
- Revision and roll-out
For each option there are considerations related to its purpose, practical application, key methodological principles and lessons learned. These points are illustrated the case study and completed by information on the costs of the research in section 7.
In conducting the project, a holistic approach was taken to experiment and test different alternative market research options in order to generate lessons for the microfinance industry. The note is designed to be a menu of different option, from which microfinance practitioners can draw whatever is relevant for each of them.
- Resource type Article
- Author Matul, M., Szubert, D., Vardanyan, G., Lalayan, M., Tomilova, O.
- OrganisationMicrofinance Centre (MFC)
- Year of Publication2005
- Number of pages24 pp.
- EditionMFC Spotlight Note
- Keywords Market Research, Product Development, Rural Finance