Market expansion through Product Diversification
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The document discusses strategies for expanding market share through product diversification. It outlines 9 ways to build demand, including selling existing products to new customer segments, modifying products for new geographic markets, and designing new products for new customers. Regulations provide opportunities to diversify microfinance products, such as housing loans up to 15 years. The document also discusses approaches to agricultural microfinance lending.
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Market expansion through Product Diversification
- 1. Market Expansion via Product Diversification Training on Expansion Strategies September 13, 2011 RBAP Bldg, Intramuros
- 2. What Should We Do? MF Growth Strategy 2011 – 2014 Introduce new loan products to existing clients? Exploit new distribution channels? Form strategic alliance with other institutions & cos.? Introduce new loan products to new markets segments? Growth Objectives Move upmarket to target bigger customers? Expand branch network to new region? 1. What’s my strategic growth objective? 2. How do I assess competing opportunities? STRATEGIZING – OPTIONS! OPTIONS!
- 3. 9 Ways to Build Demand: Mix and Match Source: Philip Kotler, International Marketing Guru & Professor, Kellog School of Mgmt, Northwestern University, Illinois P R O D U C T S Existing Modified New MA R K E T Existing Sell more of existing products to our existing types of customers (Market Penetration) Modify current products and sell more of them to our existing customers (Product Modification) Design new products that will appeal to existing customers (New Product Dev.) Geographical Enter and sell our products in other geographic areas (Geographic expansion) Offer and sell modified products to new geographical markets Design new products for prospects in new geographic areas New Sell our existing products to new types of customers (Segment Invasion) Offer and sell modified products to new types of customers Design new products to sell to new customers (Diversification)
- 5. Regulations provide opportunities to diversify MF products
- 8. BSP recognizes loans for housing to low income groups as microfinance but with loan amount and term that may extend beyond P150k and 12 months, respectively. Micro Agri Loan Small loans up to P150k Short term: up to 12 months
- 10. Better Credit History Improved Asset, Shelter & Home-based Enterprise Stronger Community & Economy OUTPUTS Progressive Housing Outputs
- 13. Examples of Agricultural Products Financed Under MAP ABACA VEGETABLE COPRA POULTRY SMALL FARM TOOLS and EQUIPMENT FRUITS MARINE PRODUCTS RICE FARM ANIMAL
Editor's Notes
- Clarify that HMF consists mainly of loans to the poor and low-income households for home improvement/repairs, housing construction, house and/or lot acquisition, and/or access to basic infrastructure or public services. Clarify that Agri Microfinance refers to loans for small farmers and fisherfolk for primary production purposes, tools and equipment, or for purchases of farm produce and/or processing.
- ALTHOUGH APPROVED BY THE BSP, THIS IS NOT SOMETHING THAT YOU USUALLY ADOPT. WE RECOMMEND MAXIMUM TERM OF 5 YEARS.
- * Those marked with asterisks are inherent risk mitigating features of the MABS Approach to micro-agri
- In the past, small loans to farmers or micro agri loans were considered agricultural credit, thus requiring traditional collateral and stringent documentary requirements. What are requirements: FS, TIN, According to the BSP, these conditions had been the major barrier for small farmers seeking access to much-needed financial services to increase their economic activity. With the new classification, the product will enjoy the benefits of microfinance such as the acceptance of cash collateral and other innovative guarantees, character and cash flow based lending, small and frequent amortizations, and simpler documentary requirements. The move by the BSP has shown that when applied appropriately, the microfinance technology could be extended to other types of products and services of the bank.
- THESE ARE EXAMPLES OF AGRI PRODUCTS THAT BANKS OFFERING MAP ARE SERVICING. THE BANK MAY CHOOSE TO IDENTIFY A SPECIFIC AGRI SUB-SECTOR FOR A START AND EVENTUALLY DIVERSIFY TO OTHER AGRI SUB-SECTORS TO REDUCE CONCENTRATED RISKS.