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  • MicroSave – Market-led solutions for financial services

    Offices across Africa, Asia and Latin America

    www.MicroSave.net

    [email protected]

    Strategic Marketing for Microfinance

    Institutions Toolkit

    Graham A.N. Wright and David Cracknell

    http://www.microsave.net/ mailto:[email protected]

  • Strategic Marketing for Microfinance Institutions Toolkit

    MicroSave – Market-led solutions for financial services

    i

    Acknowledgements

    This toolkit was developed by Graham A.N. Wright and David Cracknell with assistance from

    Lisa Parrott, Madhurantika Moulick, Olivia Leland, Yasmina McCarty, Cheryl Frankiewicz,

    Martin Holtman and Mattias Grammling to name but a few.

    However we received invaluable inputs and assistance from

    •Rob Hudson, Director, TMS Financial

    •Fiona Bloxham, Marketing Manager, Teba Bank

    •Brett Gray, Marketing Manager, Credit Indemnity

    •David Case, Director, Moringa-Olgivy

    All errors, omissions and howlers remain the property and responsibility of MicroSave

  • Strategic Marketing for Microfinance Institutions Toolkit

    MicroSave – Market-led solutions for financial services

    1

    Session One: Introduction 1

    Background to the Study:

    In 2002 MicroSave reviewed the marketing strategies of eight diverse Action Research Partners (ARPs)

    in collaboration with TMS Financial a marketing company based in South Africa. These ARPs include a

    wide variety of organisations:

     NGO-MFIs (FINCA-Uganda and Uganda Microfinance Union)  Commercial banks (Centenary Rural Development Bank and Teba Bank)  Government owned financial institutions (Kenya Post Office Savings Bank and Tanzania Postal

    Bank)

     Non-bank financial institutions (Equity Building Society and Credit Indemnity). This diversity allowed the reviewers to gain significant insights into generic issues facing the industry.

    The reviews looked at all aspects of the ARPs‘ marketing strategies using marketing defined in its

    broadest terms.

    Conclusions

    The MicroSave ARPs have started developing marketing functions, but the scope of their activities and

    their roles and responsibilities vary significantly. Furthermore there is some degree of confusion amongst

    the top management of the ARPs (as throughout the microfinance industry) as to what strategic

    marketing entails and how it interfaces with operations, human resource development, IT etc. ―Although

    what is distinct is the growing number of leading organisations that are building their business strategy

    around their marketing strategy and not the other way around (to an increasing extent marketing strategy

    is becoming business strategy). In association with the development of the strategic marketing in

    business today, the scope of the function is also rapidly diversifying‖ (Hudson and Mutesasira, 2002).

    In developing a market-led business strategy clearly the basic questions are:

    1. Who are the MFI‘s customers now and which new customers does the MFI want to attract? 2. What are these customers and potential customers needs and wants in relation to the market? and

    (for those MFIs focusing on sustainability)

    3. What are the profitable markets and products to serve2?

    The Strategic Marketing Framework Developed by TMS and MicroSave

    As a result of the review, TMS developed a Strategic Marketing Framework and this was adopted and

    adapted by MicroSave for use in the microfinance industry. MicroSave developed and tested a workshop

    to introduce Strategic Marketing for MFIs on the basis of this Framework and this was well received by

    the ARP CEOs and Marketing/Operations Directors.

    The Marketing Strategy comprises three legs:

    1. Corporate Brand Strategy; 2. Product Strategy; and 3. Product Delivery and Customer Service Strategy.

    that are based on information generated from four sources:

    1. Competitor Analysis; 2. Market Analysis; 3. Customer Analysis; and 4. Political, Economic, Social and Technological (PEST) Environment Analysis.

    1 The initial slides in the presentation encourage introduction of participants and suggested ground rules. All participants should receive a

    session plan, if it is not already included in their notebooks/handouts. 2 MicroSave‘s ―Costing and Pricing of Financial Services Toolkit‖ helps MFIs to analyse the profitability of profits. Once the

    MFI has understood the profitability of various products, it can start to look at modifying terms and conditions or delivery

    systems to reduce costs or increase revenue.

  • Strategic Marketing for Microfinance Institutions Toolkit

    MicroSave – Market-led solutions for financial services

    2

    Q. Where does this course lead? The participants are expected to complete two assignments after the training. The two follow up activities

    of the training are:

    Marketing Audit – The marketing audit allows an institution to look at all aspects of its marketing

    function. It is very helpful to do this as a cross audit in which one MFI evaluates a similar type of

    financial service provider in a different market, then that institution reviews the other MFI‘s marketing

    strategy.

    If a cross audit is not possible, a marketing audit done together with an external consultant (such as

    MicroSave Certified Service Providers) can be arranged. Alternatively, an MFI can attempt to do an in-

    house audit of their marketing functions, but it is very helpful to have the outside perspective. Based on

    the results of the marketing audit the MFI will then prepare a marketing plan for the institution, or revise

    their existing strategy.

    Marketing Plan - Prepare to write or revise existing strategic marketing plan for the institution.

    Typically marketing audits take 3-5 days, depending on the amount of information to review, the size of

    the team and the number of branches to be visited.

    Q. What is MicroSave’s training philosophy and strategy3? MicroSave is committed to building capacity for training delivery and use of its toolkits among MFIs

    pursuing a market-led, client-responsive approach to developing and delivering financial services.

    MicroSave‘s training approach is distinguished by its practice-based training philosophy and strategy:

     MicroSave‘s toolkits are developed on the basis of rigorous, field-based research and testing of the approaches and tools with a diverse range of MFIs operating in a variety of markets.

     MicroSave training then focuses on transferring the knowledge, skills and attitudes necessary for effective use of each toolkit through hands-on, practical application of the tools as part of the training

    process.

    To ensure the training is translated into relevant change in institutional performance MicroSave employs

    four complementary training strategies:

    1. Classroom training is always followed by practical field work 2. Training materials are developed as a complete package of resources 3. Training is designed for specific skill sets, not particular microfinance models 4. Certified Service Providers extend the capacity for high-quality training and use of the toolkits

    Most of the practical work of MicroSave is carried on with its Action Research Partners in the four

    African countries. The Action Research Partners of MicroSave as of February 2005 are:

    Kenya: Kenya Post office Savings Bank and Equity Bank

    Tanzania: Tanzania Postal Bank, FINCA Tanzania, PRIDE Tanzania

    Uganda: Uganda Microfinance Union (UMU), Centenary Rural Development Bank, U- trust and FINCA

    Uganda

    South Africa: TEBA Bank and Credit Indemnity

    Q. How does the MicroSave training work? MicroSave is firmly committed to practice-based training. For all the toolkits MicroSave follows the

    same basic approach. The courses offered in each toolkit begin with 2-3 days of classroom theory,

    exercises and discussion. The complete training process - classroom and practical - involves interactive

    discussions and debates, hands-on exercises, exchange of experiences by participants and coaching by

    others certified in the skill area. This is followed by at least two to four weeks of practical on-site

    3 See MicroSave’s Briefing Note 32: Beyond the Classroom: MicroSave’s Training Philosophy and Strategy by Lisa Parrott and

    Graham A.N Wright.

  • Strategic Marketing for Microfinance Institutions Toolkit

    MicroSave – Market-led solutions for financial services

    3

    application of the tool with the MFIs 4 . Sometimes a 1-2 days are spent back in the classroom to analyse

    the implementation process, consolidate learning and to wrap-up and decide on the way forward for

    institutionalisation of the tool.

    A summary of all the toolkits developed by MicroSave are in Annex 1.

    Q. What does it mean to move from a product-drive