Technical Inputs Workshop on Choosing Market Growth Strategies

1. Technical Inputs • Workshop on Choosing Market Growth Strategies • 2) Workshop on Choosing Priority Strategies and Initiatives

2. Technical Input for the Workshop on Choosing Market Growth Strategies 2

3. Characteristics: Market offers a range of products tailored for specific MF market segments; A range of lending methodologies; More competition; clients have more choices; multiple borrowings; PAR problems may become more serious; Price competition; More wholesalers offer funds to retailers Market Saturation Phase IV Market Expansion Phase III Characteristics: No. of MFIs grows; No. of borrowers grows; Additional products begin to emerge; Clients mostly loyal or feel they have few other options Characteristics: Borrowers have more choices & exercise choice; multiple loans; delinquency becomes a problem; New & innovative products begin to emerge; Some MFIs introduce with new lending technologies Market Dev. Phase II Characteristics: 1st MFI/MFIs begin lending; Use similar methodology; similar products; Few overall borrowers in the market Borrowers are very timid Initial Market Phase I T I M E

4. Workshop on Market Phase • Participants group by branch or area of operations. • Based on the market phase characteristics, each group will identify the market phase the branch finds itself in. • With inputs from the account officers, identify all the competitors in the market. Then, narrow the competitors to the major ones that the branch competes with head-on. • Write group outputs in a piece of Manila paper for presentation.

5. Strategic Choices& Risks Factor PRODUCTS Note: % in red refers to rate of success. Existing New Existing MARKETS New Source: Peter Cheverton, Key Marketing Skills, 2nd Edition, Kogan Page, 2004

6. 9 Ways to Build Demand –Strategic Choices Source: Philip Kotler, International Marketing Guru & Professor, Kellog School of Mgmt, Northwestern University, Illinois

7. Matrix of Strategies, Conditions &Market Research Tools

8. Workshop on Strategies Bank Will Pursue

9. Group Outputs on Strategies to Pursue 9

10. The Question Is: Which of the strategies should be prioritized? To answer the question, there are a few matters to consider.

11. Technical Inputs On Choosing the Priority Strategies and Initiatives 11

12. Three Key Questions • What should we do? • Why should we do It? • Can we do it?

13. What Should We Do? S T R A T E G I Z I N G Introduce a new loan products to existing clients? Introduce new loan products to new markets segments? MF Growth Strategy 2007 – 2009 Exploit new distribution channels? ? ? ? Expand branch network to new region? Move upmarket to target bigger customers? Form alliance with other institutions or insurance co.? 1. What’s my strategic growth objective? 2. How do I assess competing opportunities?

14. Why Should We Do It? Why This Technology? • Increase efficiency? • Improve distribution? • Improve cost-effectiveness? • Expand markets? • Improve income? Why This Product Innovation? • Respond to client needs? • Increase Client Retention? • Remain competitive? • Fill market gap? • Expand markets? • Improve Income?

15. But Before You Get There… Key Preparation Steps Whatshould we do: choosing the right innovation Planning the Product Introduction Change Process Guided by Vision and Strategy Implementing the New Product Why should we do it: clarifying goals Integrating the Product Can we do it: assessing capabilities and competitors Consistent Communication

16. A Three-Step Process as You Introduce a New Product or Technology Planning the Product Introduction Change Process Guided by Vision and Strategy Implementing the New Product Integrating the Product • Pilot test • On the basis of the pilot, make relevant adjustments in product design, systems, processes and procedures • Roll out • Track progress • Align organization • Capture learning • Transform culture Consistent Communication Conduct client segmentation Assess demand for new product among current and potential clientele Design a product responsive to the targeted segment’s characteristics Prepare financial forecast Assess implications of a new product’s introduction on key institutional dimensions. Assess the readiness of the organization

17. Can We Do It? Assessing internal capabilities, customer demands, competitors and the industry Understand Your Industry Analyze Your Competitors Research Your Customers Assess Your Capabilities Make StrategicChoice • Who participates in our industry? • What does the industry look like now? How attractive is it? • How is the industry changing? • How big is our potential market, and how saturated is it? • Who are our primary competitors? • Which customers are they serving? • How are they serving customers, and how well? • Who are our customers? • What do our customers value? • How well are we serving them now? • What else do they need? • What capabilities do we need to reach and serve our chosen customers? • How do our capabilities stack up against those of other MFI’s? • How do our costs stack up against those of other MFI’s? Position A with Advantage Y Or . . . Position B with Advantage Z

18. Workshop on Prioritizing Strategies • From the choices shown in the last Workshop Output, discuss and agree which ones the bank should designate as Priorities, ranked as 1st, 2nd, 3rd, etc. • For each of the top 3 priorities, discuss the objectives. • And assess whether the bank has the capability to do each of these 3 priorities, and what adjustments are needed in order to do so.